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LABOR RELATIONS

TABLE OF CONTENTS

FACILITIES V. SUPPLEMENTS ............................ 33


WAGE DISTORTION/RECTIFICATION ................... 33
DIVISOR TO DETERMINE DAILY RATE ................. 34

LABOR LAW
Fundamental Principles and
Policies ...................................... 1

REST DAY ....................................... 35

WEEKLY REST DAY ..........................................35


EMERGENCY REST DAY WORK ...........................35

CONSTITUTIONAL PROVISIONS ....... 1

HOLIDAY PAY/PREMIUM PAY ....... 35

CIVIL CODE ...................................... 4

HOLIDAYS......................................................35
COVERAGE.....................................................35
REGULAR HOLIDAYS........................................36
HOLIDAY PAY COMPUTATION ............................36
RIGHT TO HOLIDAY PAY................................... 38
TEACHERS, PIECE WORKERS, SEAFARERS,
SEASONAL WORKERS, ETC. ............................. 38

LABOR CODE ................................... 5

Recruitment and Placement .. 9


RECRUITMENT OF LOCAL AND
MIGRANT WORKERS ....................... 9

ILLEGAL RECRUITMENT.................................... 10
DIRECT HIRING ............................................... 17

LEAVES ......................................... 40

SERVICE INCENTIVE LEAVE PAY ........................ 40


MATERNITY LEAVE .......................................... 41
PATERNITY LEAVE ........................................... 41
PARENTAL LEAVE .......................................... 42
LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN

REGULATION AND ENFORCEMENT


........................................................ 18
SUSPENSION OR CANCELLATION OF LICENSE OR
AUTHORITY ................................................... 18
REGULATORY AND VISITORIAL POWERS ............. 18
REMITTANCE OF FOREIGN EXCHANGE EARNING ... 19

................................................................... 43

SPECIAL
LEAVE
BENEFITS
(SLB)
FOR
WOMEN......................................................................44

SERVICE CHARGES ....................... 46

Labor Standards.................... 19

COVERAGE.................................................... 46
EXCEPTIONS ................................................. 46
DISTRIBUTION ............................................... 46
INTEGRATION ............................................... 46

COVERAGE ..................................... 19

GOVERNMENT EMPLOYEES ............................... 19


MANAGERIAL EMPLOYEES ................................ 19
FIELD PERSONNEL ......................................... 20
DEPENDENT FAMILY MEMBERS ........................ 20
GOVERNMENT EMPLOYEES .............................. 20
DOMESTIC HELPERS ........................................ 21
PERSONS IN PERSONAL SERVICE OF ANOTHER .... 21
WORKERS PAID BY RESULT............................... 21

THIRTEENTH (13TH) MONTH PAY


AND OTHER BONUSES ................... 47

RATIONALE....................................................47
COVERAGE.....................................................47
EXCLUSIONS/EXEMPTIONS FROM COVERAGE ......47
13TH MONTH PAY IN SPECIAL CASES ................. 48

HOURS OF WORK .......................... 21

COVERAGE/EXCLUSIONS ................................. 21
NORMAL HOURS OF WORK ............................... 21
MEAL BREAK ................................................. 25
WAITING TIME ............................................... 26
OVERTIME WORK, OVERTIME PAY ..................... 26
NIGHT WORK, NIGHT SHIFT DIFFERENTIAL ......... 28
PART-TIME WORK.......................................... 28
CONTRACT FOR PIECE OF WORK ...................... 29

SEPARATION PAY .......................... 49

DEFINITION................................................... 49
GENERAL RULE ............................................. 49
EXCEPTION ................................................... 49
AMOUNT ...................................................... 49
NOTICE OF TERMINATION ................................ 50
BASIS OF SEPARATION PAY ............................. 50
INCLUSION OF REGULAR ALLOWANCE IN THE
COMPUTATION .............................................. 50

WAGES ...........................................29

GENERAL CONCEPT ........................................ 29


WAGE VS. SALARY.......................................... 29
MINIMUM WAGE ............................................ 29
MINIMUM WAGE OF WORKERS PAID BY RESULTS . 31
COMMISSIONS................................................ 31
DEDUCTIONS FROM WAGES ............................. 31
NON-DIMINUTION OF BENEFITS ........................ 32

RETIREMENT PAY.......................... 50

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RATIONALE................................................... 50
ELIGIBILITY ................................................... 50
AMOUNT OF RETIREMENT PAY .......................... 51
RETIREMENT BENEFITS OF WORKERS WHO ARE
PAID BY RESULTS............................................ 51
RETIREMENT BENEFIT OF PART-TIME WORKERS . 52

TABLE OF CONTENTS

TAXABILITY ...................................................

52

PREVENTIVE SUSPENSION ............92


DEFINITION...................................................

WOMEN WORKERS ........................52


PROVISIONS AGAINST DISCRIMINATION ............ 52
STIPULATION AGAINST MARRIAGE ................... 52
PROHIBITED ACTS ...........................................53
ANTI-SEXUAL HARASSMENT ACT.......................53

92

CONSTRUCTIVE DISMISSAL ...........92

Management Prerogative .... 92


DISCIPLINE .....................................93
TRANSFER OF EMPLOYEES ............93
PRODUCTIVITY STANDARD............93
GRANT OF BONUS ......................... 94
CHANGE OF WORKING HOURS ..... 94
RULES ON MARRIAGE BETWEEN
EMPLOYEES
OF
COMPETITOREMPLOYERS .................................. 94
POST-EMPLOYMENT BAN ............. 94

MINOR WORKERS ......................... 54

CONSTITUTIONAL BASIS.................................. 54
EMPLOYMENT OF CHILDREN FROM 15 TO 18 ...... 55
REGULATION OF WORKING HOURS OF A CHILD ... 55

EMPLOYMENT OF HOUSEHELPERS55
DEFINITION................................................... 55
RIGHTS AND PRIVILEGES .................................56
TERMINATION ................................................ 57

EMPLOYMENT OF HOMEWORKERS58

DEFINITION................................................... 58
RIGHTS AND BENEFITS ACCORDED HOMEWORKERS 58
CONDITIONS FOR DEDUCTION FROM
HOMEWORKERS EARNINGS ............................ 59

APPRENTICES AND LEARNERS ..... 59

APPRENTICES ............................................... 59
LEARNERS ..................................................... 61

Social and Welfare Legislation


............................................... 95
SSS LAW ........................................ 95

COVERAGE.................................................... 95
EXCLUSIONS FROM COVERAGE ......................... 95
BENEFITS ..................................................... 95
BENEFICIARIES ............................................... 97

GSIS ................................................ 97

HANDICAPPED
WORKERS
DIFFERENTLY-ABLED WORKERS ...63

COVERAGE..................................................... 97
EXCLUSIONS FROM COVERAGE .......................... 97
BENEFITS ...................................................... 97
BENEFICIARIES .............................................. 99

DEFINITIONS ..................................................63
RIGHTS OF DISABLED WORKERS ........................63
PROHIBITIONS ON DISCRIMINATION AGAINST
DISABLED PERSON ......................................... 64
INCENTIVES FOR EMPLOYERS .......................... 66

LIMITED PORTABILITY LAW ......... 103

COVERAGE................................................... 103
PROCESS ..................................................... 103
WHY? ......................................................... 103

Termination of Employment 66
EMPLOYER-EMPLOYEE
RELATIONSHIP .............................. 66

EMPLOYEES COMPENSATION
COVERAGE AND WHEN
COMPENSABLE ............................ 103

FOUR-FOLD TEST ........................................... 66


ECONOMIC DEPENDENCE TEST .......................... 67
KINDS OF EMPLOYMENT .................................. 67
JOB CONTRACTING ..........................................74

COVERAGE................................................... 103
EFFECTIVITY................................................. 103
WHEN COMPENSABLE ................................... 103

DISMISSAL FROM EMPLOYMENT .. 80

Labor Relations Law ........... 104

SECURITY OF TENURE ..................................... 80


CONFLICT WITH MANAGEMENT PREROGATIVES ... 81
JUST CAUSES ................................................. 81
AUTHORIZED CAUSES ..................................... 82
DUE PROCESS ................................................87

RIGHT TO SELF-ORGANIZATION .. 104

BASIS OF RIGHT TO SELF-ORGANIZATION ......... 104


RIGHT TO SELF-ORGANIZATION: A FUNDAMENTAL
RIGHT ......................................................... 104
INFRINGEMENT OF THE RIGHT TO SELFORGANIZATION ............................................ 104
SCOPE OF RIGHT TO SELF-ORGANIZATION ........ 104
WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE
BARGAINING ................................................ 104

RELIEFS FOR ILLEGAL DISMISSAL 89


REINSTATEMENT ........................................... 89
BACKWAGES ................................................. 90

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TABLE OF CONTENTS

WHO CANNOT FORM, JOIN, OR ASSIST LABOR


ORGANIZATIONS .......................................... 106
BARGAINING UNIT ........................................ 107
VOLUNTARY RECOGNITION ..............................110
CERTIFICATION ELECTION ...............................110

NATURE OF PROCEEDINGS ............................. 147


CONCILIATION VS. MEDIATION ........................ 148

RIGHT TO COLLECTIVE BARGAINING


...................................................... 120

DOLE SECRETARY ........................ 149

DOLE REGIONAL DIRECTORS ....... 148

JURISDICTION .............................................. 148

VISITORIAL AND ENFORCEMENT POWERS ...........93


POWER TO SUSPEND EFFECTS OF TERMINATION ..93
ASSUMPTION OF JURISDICTION ........................ 94
APPELLATE JURISDICTION ............................... 94
VOLUNTARY ARBITRATION POWERS ................. 94

DUTY TO BARGAIN COLLECTIVELY .................... 120


MANDATORY PROVISIONS OF CBA ................... 124
UNION SECURITY .......................................... 128
UNFAIR LABOR PRACTICE IN COLLECTIVE
BARGAINING ................................................ 129
UNFAIR LABOR PRACTICE (ULP) ...................... 130

GRIEVANCE MACHINERY AND


VOLUNTARY ARBITRATORS......... 150

RIGHT TO PEACEFUL CONCERTED


ACTIVITIES .................................... 132

SUBJECT MATTER OF GRIEVANCE .................... 150


VOLUNTARY ARBITRATOR .............................. 150

CONSTITUTIONAL BASIS................................. 132


STATUTORY BASIS ........................................ 132
FORMS OF CONCERTED ACTIVITIES .................. 133
WHO MAY DECLARE A STRIKE OR LOCKOUT ....... 134
REQUISITES OF A VALID STRIKE ....................... 134
REQUISITES OF A VALID LOCKOUT ................... 136
REQUISITES FOR LAWFUL PICKETING ............... 137
ASSUMPTION OF JURISDICTION BY THE DOLE
SECRETARY OR CERTIFICATION OF THE LABOR
DISPUTE TO THE NLRC FOR COMPULSORY
ARBITRATION .............................................. 138
NATURE OF ASSUMPTION ORDER OR CERTIFICATION
ORDER ........................................................ 138
EFFECT OF DEFIANCE OF ASSUMPTION OR
CERTIFICATION ORDERS ................................ 139
ILLEGAL STRIKE ............................................ 140
INJUNCTIONS ............................................... 142

COURT OF APPEALS ...................... 151

RULE 65, RULES OF COURT ............................. 151

SUPREME COURT ......................... 152

RULE 45, RULES OF COURT ............................ 152

PRESCRIPTION OF ACTIONS ........ 152

MONEY CLAIMS ............................................ 152


ILLEGAL DISMISSAL ....................................... 152
UNFAIR LABOR PRACTICE............................... 153
OFFENSES PENALIZED BY THE LABOR CODE AND IRR
ISSUED PURSUANT THERETO .......................... 153
PRESCRIPTIVE PERIOD OF ILLEGAL RECRUITMENT
CASES ......................................................... 153

Procedure and Jurisdiction . 143


LABOR ARBITER ........................... 143

JURISDICTION .............................................. 143


REINSTATEMENT PENDING APPEAL ................. 144
REQUIREMENTS TO PERFECT APPEAL TO NLRC .. 145

NATIONAL LABOR RELATIONS


COMMISSION................................ 145

JURISDICTION .............................................. 145


EFFECT OF NLRC REVERSAL OF LABOR ARBITERS
ORDER OF REINSTATEMENT ........................... 145
REMEDIES ................................................... 145
CERTIFIED CASES .......................................... 146

BUREAU OF LABOR RELATIONS


(BLR) MED ARBITERS ................ 147
JURISDICTION (ORIGINAL AND APPELLATE)

...... 147

NATIONAL CONCILIATION AND


MEDIATION BOARD (NCMB) ........ 147
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LABOR STANDARDS

Fundamental Principles
and Policies

LABOR LAW

Article II, Section 9. The State shall promote a


just and dynamic social order that will ensure
the prosperity and independence of the nation
and free the people from poverty through
policies that provide adequate social services,
promote full employment, a rising standard of
living, and an improved quality of life for all

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

Article II, Section 10. The State shall promote


social justice in all phases of national
development.

Article II, Section 10. The State shall promote


social justice in all phases of national
development.

Article II, Section 13. The State recognizes the


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

Article II, Section 11. The State values the


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

General definition of Social Justice


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

Article II, Section 14. The State recognizes the


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

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

Article II, Section 20. The State recognizes the


indispensable role of the private sector,
encourages private enterprise, and provides
incentives to needed investments.
Limits of Social Justice
Social justice should be used only to correct an
injustice. It must be founded on the recognition
of the necessity of interdependence among
diverse units of a society, and of the protection
that should be equally and evenly extended to
all groups as a combined force in our social and
economic life. As partners in nation-building,
labor and management need each other to
foster productivity and economic growth; hence,
the need to weigh and balance the rights and
welfare of both the employee and employer.
[Agabon vs. NLRC (2004)]
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LABOR STANDARDS

LABOR LAW

Due process requirements are two-fold


substantive (dismissal should be for a valid and
authorized cause as provided by law) and
procedural (due notice and hearing). [Salaw vs.
NLRC (1991)]

The policy of social justice is not intended to


countenance wrongdoing simply because it is
committed by the underprivileged. At best it
may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is
an imperative of every humane society but only
when the recipient is not a rascal claiming an
undeserved privilege. Social justice cannot be
permitted to be a refuge of scoundrels any more
than can equity be an impediment to the
punishment of the guilty. Those who invoke
social justice may do so only if their hands are
clean and their motives blameless and not
simply because they happen to be poor. This
great policy of our Constitution is not meant for
the protection of those who have proved they
are not worthy of it, like the workers who have
tainted the cause of labor with the blemishes of
their own character. [Tirazona vs. Philippine EDS
Techno-Service Inc. (2009)]

To constitute valid dismissal from employment,


two requisites must concur: (1) the dismissal
must be for a just or authorized cause and (2)
the employee must be afforded an opportunity
to be heard and to defend himself. [Jeffrey
Nacague vs. Sulpicio Lines, Inc. (2010)]
Labor as Property Right
Ones employment is a property right, and the
wrongful interference therewith is an actionable
wrong. [Sibal vs. Notre Dame of Greater Manila
(1990)]
Article III, Section 4. No law shall be passed
abridging the freedom of speech, of
expression, or of the press, or the right of the
people peaceably to assemble and petition
the government for redress of grievances.

Liberty of Contract/Laissez Faire


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

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


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

Art. XIII, Secs. 1, 2, 3, 13, 14


Article XIII, Section 1. The Congress shall give
highest priority to the enactment of measures
that protect and enhance the right of all the
people to human dignity, reduce social,
economic, and political inequalities, and
remove cultural inequities by equitably
diffusing wealth and political power for the
common good.

The Constitution is primarily a document of


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

To this end, the State shall regulate the


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

Article III, Secs. 1, 4, 8


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

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.

Due Process

Article XIII, Section 3. The State shall afford


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LABOR STANDARDS

LABOR LAW

full protection to labor, local and overseas,


organized and unorganized, and promote full
employment and equality of employment
opportunities for all.

the inherent economic inequality between labor


and management. Never should the scale be so
tilted if the result is an injustice to the employer.
[Phil. Geothermal Inc. vs. NLRC (1994)]

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.

This Court held that the employers right to


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

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.

(1) Good faith


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

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

(2) Without grave abuse of discretion


But, like other rights, there are limits thereto.
The managerial prerogative to transfer
personnel must be exercised without grave
abuse of discretion, bearing in mind the basic
elements of justice and fair play. Having the
right should not be confused with the manner in
which the right is exercised. [Tinio vs. CA (2007)]
(3) Assumption of jurisdiction by the Secretary of
Labor
This Court declared that it recognizes the
exercise of management prerogatives and it
often declines to interfere with the legitimate
business decisions of the employerHowever,
as expressed in PAL vs. NLRC, the privilege is
not absolute, but subject to exceptions. One of
these exceptions is when the Secretary of Labor
assumes jurisdiction over labor disputes involving

Management and the Constitution: Management


Function/Prerogative
The law in protecting the rights of the
employees authorizes neither oppression nor
self-destruction of the employer. It should be
made clear that when the law tilts the scale of
justice in favor of labor, it is but a recognition of
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LABOR STANDARDS

industries indispensable to the national interest


under Article 263(g) of the Labor Code.
[University of Immaculate Concepcion Inc. vs.
Sec. of Labor (2005)]

LABOR LAW

pertinent labor laws, the provisions of said laws


would prevail over the terms of the contract,
and private respondent would still be entitled to
overtime pay. [PAL Employees Savings and Loan
Assn., Inc. vs. NLRC (1996)]

Article XIII, Section 14. The State shall protect


working women by providing safe and
healthful working conditions, taking into
account their maternal functions, and such
facilities and opportunities that will enhance
their welfare and enable them to realize their
full potential in the service of the nation.

Indeed, a contract of employment is impressed


with public interest. For this reason, provisions
of applicable statutes are deemed written into
the contract. Hence, the parties are not at
liberty to insulate themselves and their
relationships from the impact of labor laws and
regulations by simply contracting with each
other. Moreover, in case of doubt, the terms of a
contract should be construed in favor of labor.
[Innodata Philippines, Inc. vs. Quejada-Lopez
(2006)]

Article XIII, Section 13. The State recognizes


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

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

CIVIL CODE
Article 19, Civil Code, Articles 19, 1700, 1702
Art. 19. Every person must, in the exercise of
his rights and in the performance of his duties,
act with justice, give everyone his due, and
observe honesty and good faith.
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.

When there is doubt between the evidence


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

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.
Contracts
Under the Civil Code, contracts of labor are
explicitly subject to the police power of the state
because they are not ordinary contracts but are
impressed with public interest. Inasmuch as in
this particular instance the contract in question
would have been deemed in violation of

Fair treatment
The right of an employer to dismiss an
employee differs from and should not be
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LABOR STANDARDS

confused with the manner in which such right is


exercised. It must not be oppressive and abusive
since it affects one's person and property.
[General Bank and Trust Co. vs. CA (1985)]

LABOR LAW

Art. 4. Construction in favor of labor. All doubts


in the implementation and interpretation of
the provisions of this Code, including its
implementing rules and regulations, shall be
resolved in favor of labor

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

Liberality in Application of Rules


We stress at this point that it is the spirit and
intention of labor legislation that the NLRC and
the labor arbiters shall use every reasonable
means to ascertain the facts in each case
speedily and objectively, without regard to
technicalities of law or procedure, provided due
process is duly observed. xxx The application of
technical rules of procedure in labor cases may
be relaxed to serve the demands of substantial
justice. [Manila Electric Co. vs. Jan Carlo Gala
(2012)]

Compliance with law


It is also important to emphasize that the
return-to-work order not so much confers a
right as it imposes a duty; and while as a right it
may be waived, it must be discharged as a duty
even against the worker's will. [Sarmiento vs.
Tuico (1988)]

It is settled that subsequent and substantial


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

Employee's compliance and obedience to


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

Article 172, Labor Code

LABOR CODE

Art. 172. Policy. The State shall promote and


develop
a
tax-exempt
employees
compensation program whereby employees
and their dependents, in the event of workconnected disability or death, may promptly
secure adequate income benefit and medical
related benefits.

Article 3, Labor Code

Article 217, Labor Code

Art. 3. Declaration of basic policy. The State


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

1. Art. 217, Declaration of Policy.


2. A. It is the policy of the State:

Article 4, Labor Code

2. (b) To promote free trade unionism as an


instrument for the enhancement of
democracy and the promotion of social

1.

PAGE 5

(a) To promote and emphasize the


primacy of free collective bargaining and
negotiations,
including
voluntary
arbitration, mediation and conciliation, as
modes of settling labor or industrial
disputes;

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justice

LABOR STANDARDS

and

development;

LABOR LAW

amended.
(e) "Employer" includes any person acting in
the interest of an employer, directly or
indirectly. The term shall not include any
labor organization or any of its officers or
agents except when acting as employer.
(f) "Employee" includes any person in the
employ of an employer. The term shall
not be limited to the employees of a
particular employer, unless the Code so
explicitly states. It shall include any
individual whose work has ceased as a
result of or in connection with any current
labor dispute or because of any unfair
labor practice if he has not obtained any
other substantially equivalent and regular
employment.
(g) "Labor organization" means any union or
association of employees which exists in
whole or in part for the purpose of
collective bargaining or of dealing with
employers concerning terms and
conditions of employment.
(h) "Legitimate labor organization" means any
labor organization duly registered with
the
Department
of
Labor
and
Employment, and includes any branch or
local thereof.
(i) "Company union" means any labor
organization whose formation, function or
administration has been assisted by any
act defined as unfair labor practice by this
Code.
(j) "Bargaining representative" means a
legitimate labor organization whether or
not employed by the employer.
(k) "Unfair labor practice" means any unfair
labor practice as expressly defined by the
Code.
(l) "Labor dispute" includes any controversy or
matter concerning terms and conditions
of employment or the association or
representation of persons in negotiating,
fixing, maintaining, changing or arranging
the terms and conditions of employment,
regardless of whether the disputants
stand in the proximate relation of
employer and employee.
(m) "Managerial employee" is one who is
vested with the powers or prerogatives to
lay down and execute management

3. (c) To foster the free and voluntary


organization of a strong and united labor
movement;
4. (d) To promote the enlightenment of
workers concerning their rights and
obligations as union members and as
employees;
5. (e) To provide an adequate administrative
machinery for the expeditious settlement
of labor or industrial disputes;
6. (f) To ensure a stable but dynamic and
just
industrial
peace;
and
7. (g) To ensure the participation of workers
in decision and policy-making processes
affecting their rights, duties and welfare.
To encourage a truly democratic method of
regulating the relations between the
employers and employees by means of
agreements freely entered into through
collective
bargaining,
no
court
or
administrative agency or official shall have the
power to set or fix wages, rates of pay, hours
of work or other terms and conditions of
employment, except as otherwise provided
under this Code. [As amended by Section 3,
Republic Act No. 6715, March 21, 1989]
Article 218, Labor Code
Art. 218. Definitions
(a) "Commission" means the National Labor
Relations Commission or any of its
divisions, as the case may be, as provided
under this Code.
(b) "Bureau" means the Bureau of Labor
Relations and/or the Labor Relations
Divisions in the regional offices
established under Presidential Decree No.
1, in the Department of Labor.
(c)"Board" means the National Conciliation
and Mediation Board established under
Executive Order No. 126.
(d) "Council" means the Tripartite Voluntary
Arbitration Advisory Council established
under Executive Order No. 126, as
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policies and/or to hire, transfer, suspend,


lay-off, recall, discharge, assign or
discipline
employees.
Supervisory
employees are those who, in the interest
of the employer, effectively recommend
such managerial actions if the exercise of
such authority is not merely routinary or
clerical in nature but requires the use of
independent judgment. All employees not
falling within any of the above definitions
are considered rank-and-file employees
for purposes of this Book.
(n) "Voluntary Arbitrator" means any person
accredited by the Board as such or any
person named or designated in the
Collective Bargaining Agreement by the
parties to act as their Voluntary Arbitrator,
or one chosen with or without the
assistance of the National Conciliation
and Mediation Board, pursuant to a
selection procedure agreed upon in the
Collective Bargaining Agreement, or any
official that may be authorized by the
Secretary of Labor and Employment to
act as Voluntary Arbitrator upon the
written request and agreement of the
parties to a labor dispute.
(o) "Strike" means any temporary stoppage of
work by the concerted action of
employees as a result of an industrial or
labor dispute.
(p) "Lockout" means any temporary refusal of
an employer to furnish work as a result of
an industrial or labor dispute.
(q) "Internal union dispute" includes all
disputes or grievances arising from any
violation of or disagreement over any
provision of the constitution and by-laws
of a union, including any violation of the
rights and conditions of union
membership provided for in this Code.
(r) "Strike-breaker" means any person who
obstructs, impedes, or interferes with by
force, violence, coercion, threats, or
intimidation any peaceful picketing
affecting wages, hours or conditions of
work or in the exercise of the right of selforganization or collective bargaining.
(s) "Strike area" means the establishment,
warehouses, depots, plants or offices,
including the sites or premises used as

LABOR LAW

runaway shops, of the employer struck


against, as well as the immediate vicinity
actually used by picketing strikers in
moving to and fro before all points of
entrance to and exit from said
establishment.
Article 261, Labor Code
Art. 261. Exclusive bargaining representation
and workers participation in policy and
decision-making. The labor organization
designated or selected by the majority of the
employees in an appropriate collective
bargaining unit shall be the exclusive
representative of the employees in such unit
for the purpose of collective bargaining.
However, an individual employee or group of
employees shall have the right at any time to
present grievances to their employer.
Any provision of law to the contrary
notwithstanding, workers shall have the right,
subject to such rules and regulations as the
Secretary of Labor and Employment may
promulgate, to participate in policy and
decision-making
processes
of
the
establishment where they are employed
insofar as said processes will directly affect
their rights, benefits and welfare. For this
purpose, workers and employers may form
labor-management councils: Provided, that
the representatives of the workers in such
labor-management councils shall be elected
by at least the majority of all employees in
said establishment. [As amended by Section
22, Republic Act No. 6715, March 21, 1989]
Article 283, Labor Code

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Article 283.Miscellaneous provisions.


All unions are authorized to collect
reasonable membership fees, union dues,
assessments
and
fines
and
other
contributions for labor education and
research, mutual death and hospitalization
benefits, welfare fund, strike fund and credit
and cooperative undertakings. [As amended
by Section 33, Republic Act No. 6715, March 21,
1989]

LABOR LAW

Republic Act No. 6715)


No docket fee shall be assessed in labor
standards disputes. In all other disputes,
docket fees may be assessed against the filing
party, provided that in bargaining deadlock,
such fees shall be shared equally by the
negotiating parties.
The Minister of Labor and Employment and
the Minister of the Budget shall cause to be
created or reclassified in accordance with law
such positions as may be necessary to carry
out the objectives of this Code and cause the
upgrading of the salaries of the personnel
involved in the Labor Relations System of the
Ministry. Funds needed for this purpose shall
be provided out of the Special Activities Fund
appropriated by Batas Pambansa Blg. 80 and
from annual appropriations thereafter.
(Incorporated by Batas Pambansa Bilang 130,
August 21, 1981)

Subject to the constitutional right of workers


to security of tenure and their right to be
protected against dismissal except for a just
and authorized cause and without prejudice
to the requirement of notice under Article 283
of this Code, the employer shall furnish the
worker whose employment is sought to be
terminated a written notice containing a
statement of the causes for termination and
shall afford the latter ample opportunity to be
heard and to defend himself with the
assistance of his representative if he so
desires in accordance with company rules and
regulations promulgated pursuant to
guidelines set by the Department of Labor
and Employment. Any decision taken by the
employer shall be without prejudice to the
right of the worker to contest the validity or
legality of his dismissal by filing a complaint
with the regional branch of the National Labor
Relations Commission. The burden of proving
that the termination was for a valid or
authorized cause shall rest on the employer.
The Secretary of the Department of Labor and
Employment may suspend the effects of the
termination pending resolution of the dispute
in the event of a prima facie finding by the
appropriate official of the Department of
Labor and Employment before whom such
dispute is pending that the termination may
cause a serious labor dispute or is in
implementation of a mass lay-off. [As
amended by Section 33, Republic Act No. 6715,
March 21, 1989]

A special Voluntary Arbitration Fund is hereby


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

Any employee, whether employed for a


definite period or not, shall, beginning on his
first day of service, be considered as an
employee for purposes of membership in any
labor union. (As amended by Section 33,

The Fund shall also be utilized for the


operation of the Council, the training and
education of Voluntary Arbitrators, and the

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Voluntary Arbitration Program. (As amended


by Section 33, Republic Act No. 6715, March
21, 1989)

LABOR LAW

mandatory period, the aforesaid officials shall,


without prejudice to any liability which may
have been incurred as a consequence thereof,
see to it that the case or matter shall be
decided or resolved without any further delay.
[Incorporated by Section 33, Republic Act No.
6715, March 21, 1989]

The Ministry shall help promote and gradually


develop, with the agreement of labor
organizations
and
employers,
labormanagement cooperation programs at
appropriate levels of the enterprise based on
the shared responsibility and mutual respect
in order to ensure industrial peace and
improvement in productivity, working
conditions and the quality of working life.
(Incorporated by Batas Pambansa Bilang 130,
August 21, 1981)
In establishments where no legitimate labor
organization
exists,
labor-management
committees may be formed voluntarily by
workers and employers for the purpose of
promoting industrial peace. The Department
of Labor and Employment shall endeavor to
enlighten and educate the workers and
employers on their rights and responsibilities
through labor education with emphasis on the
policy thrusts of this Code. [As amended by
Section 33, Republic Act No. 6715, March 21,
1989]

Recruitment and
Placement
RECRUITMENT OF LOCAL AND
MIGRANT WORKERS
LICENSE AND AUTHORITY

A license is a document issued by the


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

To ensure speedy labor justice, the periods


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

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

Private employment agency (PEA)


recruitment entity (PRE)
Type
Definition
Private
Any person or entity
employment engaged
in
agency
recruitment
and
placement
of
workers for a fee
Private
Any person or
recruitment association
entity
engaged in the
recruitment
and
placement
of
workers, locally or
overseas, without

Despite the expiration of the applicable

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v. Private
Requires
License

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LABOR STANDARDS

charging, directly or
indirectly, any fee

LABOR LAW

Citizenship requirement
(1) Only Filipino citizens or
(2) Corporations, partnerships or entities at
least seventy-five percent (75%) of the
authorized and voting capital stock of which
is owned and controlled by Filipino citizens
shall be permitted to participate in the
recruitment and placement of workers,
locally or overseas. [Art. 27, LC]
SEE: POEA Rules, Part II, Rule I, Sec. 1(a)

Entities disqualified from being issued a license


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

Capitalization requirement
All applicants for authority to hire or renewal of
license to recruit are required to have such
substantial capitalization as determined by the
Secretary of Labor. [Art. 28, LC]
Based on POEA Rules the following are the
substantial capital requirements:
(1) Single proprietorships or partnerships with
minimum capitalization of P2,000,000.
(2) Corporations with minimum paid-up capital
of P2,000,000.

ESSENTIAL ELEMENTS OF ILLEGAL


RECRUITMENT

Non-transferability of license or authority


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

Recruitment and placement" - refers to any act


of
(1) Canvassing,
(2) Enlisting,
(3) Contracting,
(4) Transporting,
(5) Utilizing, or
(6) Hiring procuring workers,

Any transfer of business address, appointment


or designation of any agent or representative
including the establishment of additional offices
anywhere shall be subject to the prior approval
of the Department of Labor. [Art. 29, LC]
SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and 9.

And also includes


(1) referrals,
(2) contract services,
(3) promising, or
(4) advertising for employment, locally or
abroad, whether for profit or not

Enforceability of the license


Licensed agencies are prohibited from
conducting any recruitment activities of any
form outside of the address stated in the
license, acknowledged branch or extension
office, without securing prior authority from the
POEA. [People vs. Buli-e (2003)]

Provided, That any person or entity which, in any


manner, offers or promises for a fee
employment to two or more persons shall be
deemed engaged in recruitment and
placement. [Art. 13 (b), LC]
Any of the acts mentioned above constitutes
recruitment and placement.

Duration of Validity
4 years [POEA Rules of 2002]
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The proviso provides for a presumption that a


person or entity so described engages in
recruitment and placement [People v. Panis
(1988)]

LABOR LAW

(a) The person charged with the crime must


have undertaken recruitment activities
defined under Art. 13(b) or prohibited
activities defined under Art. 34; and
(b)The said person does not have a license or
authority to do so. [Art. 38, LC]

What constitutes recruitment


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

Profit or lack thereof is immaterial


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

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

Contract Substitution amounts to Illegal


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

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

Prohibited practices
It shall be unlawful for any individual, entity,
licensee, or holder of authority:
(a) To charge or accept, directly or indirectly, any
amount greater than that specified in the
schedule of allowable fees prescribed by the
Secretary of Labor, or to make a worker pay
any amount greater than that actually
received by him as a loan or advance;
(b) To furnish or publish any false notice or
information or document in relation to
recruitment or employment;
(c) To give any false notice, testimony,
information or document or commit any act
of misrepresentation for the purpose of
securing a license or authority under this
Code.

Note: To determine which law applies, the place


of work is the determining factor:
(1) If in the Philippines: Labor Code (LC) applies
(2) If abroad: Migrant Workers Act [R.A. 8042,
as amended by R.A. 10022].

ILLEGAL RECRUITMENT FOR LOCAL


WORKERS (GOVERNED BY THE
LABOR CODE)
SIMPLE ILLEGAL RECRUITMENT
Elements:

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(d) To induce or attempt to induce a worker


already employed to quit his employment in
order to offer him to another unless the
transfer is designed to liberate the worker
from oppressive terms and conditions of
employment;
(e) To influence or to attempt to influence any
person or entity not to employ any worker
who has not applied for employment
through his agency;
(f) To engage in the recruitment or placement of
workers in jobs harmful to public health or
morality or to the dignity of the Republic of
the Philippines;
(g) To obstruct or attempt to obstruct inspection
by the Secretary of Labor or by his duly
authorized representatives;
(h) To fail to file reports on the status of
employment,
placement
vacancies,
remittance of foreign exchange earnings,
separation from jobs, departures and such
other matters or information as may be
required by the Secretary of Labor.
(i) To substitute or alter employment contracts
approved and verified by the Department of
Labor from the time of actual signing
thereof by the parties up to and including
the periods of expiration of the same
without the approval of the Secretary of
Labor;
(j) To become an officer or member of the Board
of any corporation engaged in travel agency
or to be engaged directly or indirectly in the
management of a travel agency; and
(k) To withhold or deny travel documents from
applicant workers before departure for
monetary or financial considerations other
than those authorized under this Code and
its implementing rules and regulations. [Art.
34, LC]

LABOR LAW

Illegal recruitment by a syndicate


(1) The offender undertakes either any activity
within the meaning of "recruitment and
placement" defined under Article 13(b), or
any of the prohibited practices enumerated
under Art. 34 of the Labor Code;
(2) He has no valid license or authority required
by law to enable one to lawfully engage in
recruitment and placement of workers; AND
(3) The illegal recruitment is committed by a
group of three (3) or more persons
conspiring or confederating with one
another. [People v. Gallo (2010)]
Illegal recruitment in large scale
The acts committed by the accused constituted
illegal recruitment in large scale, whose
essential elements are the following:
(a) The accused engages in acts of recruitment
and placement of workers defined under
Article 13(b) of the Labor Code or in any
prohibited activities under Article 43 of the
Labor Code;
(b) The accused has not complied with the
guidelines issued by the Secretary of Labor
and Employment, particularly with respect
to the securing of license or an authority to
recruit and deploy workers, either locally or
overseas; and
(c) The accused commits the unlawful acts
against three or more persons individually
or as a group.
Three or more complainants must be in a single
case
When the Labor Code speaks of illegal
recruitment "committed against three (3) or
more persons individually or as a group," it must
be understood as referring to the number of
complainants in each case who are
complainants therein, otherwise, prosecutions
for single crimes of illegal recruitment can be
cumulated to make out a case of large scale
illegal recruitment.

OFFENSE INVOLVING ECONOMIC SABOTAGE


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

In other words, a conviction for large scale


illegal recruitment must be based on a finding
in each case of illegal recruitment of three or
more persons whether individually or as a
group. [People vs. Reyes (1995)]
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1st type:
(1) Person charged undertakes any recruitment
activity as defined in Art.13 (b) of the Labor
Code; and
(2) Said person does not have a license or
authority to do so.

Illegal recruitment vs. Estafa


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

2nd type:
(1) Person charged commits any of the
enumerated acts under Sec. 6 of R.A. 8042, as
amended by, R.A. 10022.
(2) It is immaterial whether he is a holder or not
of any license or authority
Illegal recruitment - shall mean any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers
and includes
referring, contract services, promising
advertising for employment abroad,

One convicted for illegal recruitment may still be


convicted of estafa
In People v. Cortez the Court explained that: In
this jurisdiction, it is settled that a person who
commits illegal recruitment may be charged
and convicted separately of illegal recruitment
under the Labor Code and estafa under par. 2(a)
of Art. 315 of the Revised Penal Code. The
offense of illegal recruitment is malum
prohibitum where the criminal intent of the
accused is not necessary for conviction, while
estafa is malum in se where the criminal intent
of the accused is crucial for conviction.
Conviction for offenses under the Labor Code
does not bar conviction for offenses punishable
by other laws. Conversely, conviction for estafa
under par. 2(a) of Art. 315 of the Revised Penal
Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows
that one's acquittal of the crime of estafa will
not necessarily result in his acquittal of the
crime of illegal recruitment in large scale, and
vice versa. [People v. Ochoa (2011); People v.
Ocden (2011)]

or

whether for profit or not,


when undertaken by non-licensee or non-holder
of authority contemplated under Article 13(f) of
Presidential Decree No. 442, as amended,
otherwise known as the Labor Code of the
Philippines
Provided,
That any such non-licensee or non-holder who,
in any manner, offers or promises for a fee
employment abroad to two or more persons
shall be deemed so engaged. [Sec. 6, RA 8042
as amended]
Other prohibited acts
It shall likewise include the following acts,
whether committed by any person, whether a
non-licensee, non-holder, licensee or holder of
authority:
(1) To charge or accept directly or indirectly any
amount greater than that specified in the
schedule of allowable fees prescribed by the
Secretary of Labor and Employment, or to
make a worker pay or acknowledge any
amount greater than that actually received
by him as a loan or advance;
(2) To furnish or publish any false notice or
information or document in relation to
recruitment or employment;

ILLEGAL RECRUITMENT FOR


MIGRANT WORKERS (GOVERNED BY
R.A. 8042, AS AMENDED BY R.A.
10022)
SIMPLE ILLEGAL RECRUITMENT

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(3) To give any false notice, testimony,


information or document or commit any act
of misrepresentation for the purpose of
securing a license or authority under the
Labor Code, or for the purpose of
documenting hired workers with the POEA,
which include the act of reprocessing
workers through a job order that pertains to
nonexistent work, work different from the
actual overseas work, or work with a
different employer whether registered or
not with the POEA;
(4) To include or attempt to induce a worker
already employed to quit his employment in
order to offer him another unless the
transfer is designed to liberate a worker
from oppressive terms and conditions of
employment;
(5) 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;
(6) To engage in the recruitment or placement
of workers in jobs harmful to public health
or morality or to the dignity of the Republic
of the Philippines;
(7) To 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;
(8) To substitute or alter to the prejudice of the
worker, employment contracts approved
and verified by the Department of Labor
and Employment from the time of actual
signing thereof by the parties up to and
including the period of the expiration of the
same without the approval of the
Department of Labor and Employment;
(9) 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;
(10) To withhold or deny travel documents from
applicant workers before departure for

LABOR LAW

monetary or financial considerations, or for


any other reasons, other than those
authorized under the Labor Code and its
implementing rules and regulations;
(11) Failure to actually deploy a contracted
worker without valid reason as determined
by the Department of Labor and
Employment;
(12) 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
(13) To allow a non-Filipino citizen to head or
manage a licensed recruitment/manning
agency.
In addition to the acts enumerated above, it
shall also be unlawful for any person or entity to
commit the following prohibited acts:
(1) Grant a loan to an overseas Filipino worker
with interest exceeding eight percent (8%)
per annum, which will be used for payment
of legal and allowable placement fees and
make the migrant worker issue, either
personally or through a guarantor or
accommodation party, postdated checks in
relation to the said loan;
(2) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to avail of a loan only
from specifically designated institutions,
entities or persons;
(3) Refuse to condone or renegotiate a loan
incurred by an overseas Filipino worker after
the latter's employment contract has been
prematurely terminated through no fault of
his or her own;
(4) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
worker is required to undergo health
examinations only from specifically
designated medical clinics, institutions,
entities or persons, except in the case of a
seafarer whose medical examination cost is
shouldered by the principal/shipowner;
(6) Impose a compulsory and exclusive
arrangement whereby an overseas Filipino
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LABOR STANDARDS

worker is required to undergo training,


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

scale if committed against three (3) or more


persons individually or as a group.

LIABILITIES AND PENALTIES FOR


ILLEGAL RECRUITMENT
Illegal Recruitment Involving Local Workers [Art.
39, LC]
Act
Penalty
Illegal recruitment
Life imprisonment
constituting economic AND
sabotage
Fine: P100,000.00
Licensee or holder or
2 years
authority violating or
Imprisonment 5
causing another to
years OR
violate Title I, Book I,
P10,000 Fine
LC
P50,000 OR both
Violating or causing
4 years
another to violate Title Imprisonment 8
I, Book I, LC
years OR
P20,000 Fine
P100,000 OR both

Migrant Workers Act (MWA) expands the


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

Applicabil
ity
Local
Workers

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

RA
8042
as
amend
ed by
RA
10022

Migrant
Workers

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

LABOR LAW

If the offender is a corporation, partnership,


association or entity, the penalty shall be
imposed upon the officer or officers of the
corporation, partnership, association or entity
responsible for violation.

Who can be
punished

If such officer is an alien, he shall, in addition to


the penalties herein prescribed, be deported
without further proceedings.

Nonlicensee
Nonlicensee
Nonlicensee

In every case, conviction shall cause and carry


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

Licensee/N
on-licensee

Illegal Recruitment Involving Migrant Workers


[Sec. 7, RA 8042 as amended by RA 10022]
Act
Penalty
Illegal
12 years and 1 day
recruitment
Imprisonment 20 years AND
P1M Fine P2M

OFFENSE INVOLVING ECONOMIC SABOTAGE


(LARGE-SCALE OR BY A SYNDICATE)
Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or
more persons conspiring or confederating with
one another. It is deemed committed in large
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Illegal
recruitment
constituting
economic
sabotage
Prohibited
Act/s

LABOR STANDARDS

Life imprisonment AND


P2M Fine P5M

LABOR LAW

meant to assure the aggrieved worker of


immediate and sufficient payment of what is
due him. [Becmen Service Exporter and
Promotion, Inc. v. Spouses Cuaresma, G.R.
182978-79, April 7, 2009]

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

(3) If the recruitment/placement agency is a


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

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


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

(4) Foreign employer shall assume joint and


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

In every case, conviction shall cause and carry


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

Theory of imputed knowledge


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

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


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

Since the local employment agency is


considered the agent of the foreign employer,
the principal, knowledge of the former of
existing labor and social legislation in the
Philippines is binding on the latter.
Consequently, notice to the former of any
violation thereof is notice to the latter.
Joint and Several Liability of Agent and Principal
The written application for a license to operate a
private employment or manning agency shall
be submitted with, among others, a VERIFIED
UNDERTAKING stating that the applicant:
11

(2) Local Employment Agency is solidarily liable


with foreign principal. Severance of relations
between local agent and foreign principal does
not affect liability of local recruiter. Private
employment agencies are held jointly and
severally liable with the foreign-based employer
for any violation of the recruitment agreement
or contract of employment. This joint and
solidary liability imposed by law against
recruitment agencies and foreign employers is

(1) Shall assume full and complete responsibility


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

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LABOR STANDARDS

(2) Shall assume joint and solidary liability with


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

LABOR LAW

Pre-Termination of Contract of Migrant Worker


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

(3) Shall guarantee compliance with the existing


labor and social legislations of the Philippines
and of the country of employment of recruited
workers [POEA Rules, Book II, Rule II, Sec. 1 (f) (25)]

The worker shall be entitled to the full


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

Joint and solidary liability is meant to assure


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

Rule before Serrano: 3-month salary rule applies


The employment contract involved in the
instant case covers a two-year period but the
overseas contract worker actually worked for
only 26 days prior to his illegal dismissal. Thus,
the three months salary rule applies [Flourish
Maritime Shipping v. Almanzor, G.R. No. 177948,
March 14, 2008]
Serrano ruling: invalidated the 3-month salary
cap
The issue in this case is the constitutionality of
the last clause of Sec.10 of RA 8042:
Sec. 10. Money Claims. - x x x In case of
termination of overseas employment without
just, valid or authorized cause as defined by law
or contract, the workers shall be entitled to the
full reimbursement of his placement fee with
interest of twelve percent (12%) per annum, plus
his salaries for the unexpired portion of his
employment contract or for three (3) months for
every year of the unexpired term, whichever is less.

Common Rules on Illegal Recruitment (Local or


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

The Court held that said clause is


unconstitutional for being an invalid
classification, in violation of the equal protection
clause. [Serrano v. Gallant Maritime Services, Inc.,
G.R. No. 167614, March 24, 2009]

Prescriptive Periods
(1) Simple Illegal Recruitment 5 years
(2) Illegal Recruitment involving Economic
Sabotage 20 years. [Sec. 12, R.A. 8042 [this
part was not amended by R.A, 10022].

DIRECT HIRING

General Rule: No employer may hire a Filipino


worker for overseas employment except through
the Boards and entities authorized by the
Secretary of Labor. [Art. 18, LC]
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LABOR STANDARDS

LABOR LAW

REGULATORY AND VISITORIAL


POWERS OF THE DOLE SECRETARY

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

Regulatory powers [Art. 36, LC]


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

GOVERNMENT TECHNIQUES OF
REGULATION AND
ENFORCEMENT
See also: 2002 POEA Rules Governing the
Recruitment and Employment of Land-based
Overseas Workers

POEA STANDARD EMPLOYMENT


CONTRACT

Document containing the standard terms and


condition of the seafarers employment in
foreign ocean-going vessels

SUSPENSION OR CANCELLATION OF
LICENSE OR AUTHORITY

The Secretary of Labor shall have the power to


suspend or cancel any license or authority to
recruit employees for overseas employment for
(1) violation of rules and regulations issued by
the Department of Labor, the Overseas
Employment Development Board, and the
National Seamen Board
(2) violation of the provisions of this and other
applicable laws, General Orders and Letters of
Instructions. [Article 35, LC]

To be integrated in every seafarers contract


The POEA rules and regulations require that the
POEA Standard Employment Contractbe
integrated in every seafarers contract. This,
together with the contract the employees sign
every time they are hired, constitutes the law
between the parties. [Wallen Martitime Services,
Inc. v. Tanawan (2012)]
Construction: liberal
The POEA standard employment contract for
seamen was designed primarily for the
protection and benefit of Filipino seamen in the
pursuit of their employment on board oceangoing vessels. Its provisions must be construed
and applied fairly, reasonably and liberally in
their favor. Only then can its beneficent
provisions be fully carried into effect. [Abante v.
KJGS Fleet Management (2009)]

The acts prohibited under Article 34 are


grounds for suspension or cancellation of
license. Note that they likewise constitute illegal
recruitment under R.A. 8042 as amended by
R.A. 10022.
Who can suspend or cancel the license?
(1) DOLE Secretary
(2) POEA Administrator
The power to suspend or cancel any license or
authority to recruit employees for overseas
employment is concurrently vested with the
POEA and the Secretary of Labor. [People v.
Diaz, 259 SCRA 441 (1996)]

Breach of contract may give rise to a cause of


action even before commencement of EE-ER
relationship

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LABOR STANDARDS

LABOR LAW

Even if by the standard contract employment


commences only upon actual departure of the
seafarer, this does not mean that the seafarer
has no remedy in case of non-deployment
without any valid reason. Even before the start
of any employer-employee relationship,
contemporaneous with the perfection of the
employment contract was the birth of certain
rights and obligations, the breach of which may
give rise to a cause of action for damages under
the Civil Code against the erring party. [StoltNielsen v. Medequillo (2012)]

(3) Immigrants and Filipino professionals


working with the United Nations and its
agencies or other specialized bodies.

REMITTANCE OF FOREIGN
EXCHANGE EARNINGS

Exceptions (NOT Covered):


(1) Government employees [Art. 82; Art. 76]
(2) Managerial Employees including members
of the managerial staff [Art. 82]
(3) Field Personnel [Art. 82]
(4) Members of the family of the employer who
are dependent on him for support [Art. 82];
(5) Domestic helpers and persons in personal
service of another [Art. 141]
(6) Workers who paid by result as determined by
DOLE regulation [Art. 82]

Labor Standards
COVERAGE

General rule: Shall apply to employees in all


establishments and undertakings whether for
profit or not. [Art. 82, LC]

It shall be mandatory for all Filipino workers


abroad to remit a portion of their foreign
earnings to their families, dependents, and/or
beneficiaries in the country [Art. 22, LC]
Amount required to be remitted [Executive Order
No. 857]
The amount of ones salary required to be
remitted depends on the type or nature of work
performed by the employee.

(1) Government employees


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

The following are the percentages of foreign


exchange remittance required from various
kinds of migrant workers:
(1) Seaman or mariner 80% of their basic
salary
(2) Workers for Filipino contractors and
construction companies 70%
(3) Doctors, engineers, teachers, nurses and
other professional workers whose contract
provide for free board and lodging 70%
(4) All other professional workers whose
employment contracts do not provide for
free board and lodging facilities 50%
(5) Domestic and other service workers 50%
(6) All other workers not falling under the
aforementioned categories 50%
(7) Performing artists 50%

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


Constitution, the test in determining whether a
government owned corporation is subject to the
Labor Code or the Civil Service law is finding out
what created it if its created by a special
charter, then, Civil Service Law applies, if it is
created by the General Corporation Law, then
the Labor Code applies. [PNOC Energy
Development Corp. v. NLRC (1991)]
(2) Managerial employees
Two definitions of managerial employees in the
Labor Code
Article 82: 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. [Art. 82, LC]

Individuals exempted from the mandatory


remittance requirement:
(1) The immediate family members, dependents
or beneficiaries of migrant workers residing with
the latter abroad;
(2) Filipino servicemen working within US
military installations;

Article 212 (m): One who is vested with the


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LABOR STANDARDS

powers or prerogatives to lay down and execute


management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or
discipline employees. Supervisory employees
are those who, in the interest of the employer,
effectively recommend such managerial actions
if the exercise of such authority is not merely
routinary or clerical in nature but requires the
use of independent judgment. All employees
not falling within any of the above definitions
are considered rank-and-file employees for
purposes of this Book

LABOR LAW

policies of their employer;


(2) Customarily and regularly exercise discretion
and independent judgment;
(3) Those who:
(a) Regularly and directly assist a proprietor or a
managerial employee whose primary duty
consists of the management of the
establishment in which he is employed or
subdivision thereof; OR
(b) Execute under general supervision work
along specialized or technical lines
requiring special training, experience, or
knowledge; OR
(c) Execute, under general supervision, special
assignments and tasks;
(4) Who do not devote more than 20 percent of
their hours worked in a work week to
activities which are not directly and closely
related to the performance of the work
described in paragraphs (1), (2) and (3)
above.

The definition in Art. 82 covers more people


than that in Article 212 (m) as Article 82 also
includes managerial staff. In effect, managerial
employees in Article 82 includes supervisors,
but Article 212(m) does not.
It follows that under Book V, supervisors are
allowed to form, join or assist a labor union.
Supervisors are not, however, entitled to the
benefits under Book III Articles 83 through 96,
being part of the exemption of managerial
employees as defined in Article 82. [Azucena]

(3) Field personnel


Non-agricultural employees
(a) who regularly perform their duties away from
the principal place of business or branch
office of the employer AND
(b) whose actual hours of work in the field
cannot be determined with reasonable
certainty. [Art. 82, LC]

Characteristics of managerial employees [Book


3, Rule 1, Sec. 2(b), IRR]
Managerial employees qualify for the exception
if they meet all of the following conditions:
(a) Their primary duty consists of the
management of the establishment in which
they are employed or of a department or
sub-division thereof.
(b) They customarily and regularly direct the
work of two or more employees therein.
(c) They have the authority to hire or fire
employees of lower rank; or their
suggestions and recommendations as to
hiring and firing and as to the promotion or
any other change of status of other
employees, are given particular weight.

Legal Test: Control and Supervision of ER


Although the fishermen perform nonagricultural work away from petitioners
business offices, the fact remains that
throughout the duration of their work they are
under the effective control and supervision of
petitioner through the vessels patron or master.
Hence, the fishermen are not field personnel.
[Mercidar Fishing Corporation v. NLRC (1998)]
In order to determine whether an employee is a
field employee, it is also necessary to ascertain if
actual hours of work in the field can be
determined with reasonable certainty by the
employer. In so doing, an inquiry must be made
as to whether or not the employees time and
performance are constantly supervised by the
employer. [Far East Agricultural Supply v.
Lebatique [2007)]

Managerial Staff also included [Book 3, Rule 1,


Sec. 2(c), IRR]
Officers or members of a managerial staff also
qualify for the exception if they perform the
following duties and responsibilities:
(1) The primary duty consists of the performance
of work directly related to management

(4) Dependent family members


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LABOR STANDARDS

Workers who are family members of the


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

LABOR LAW

official. [Cadiz v. Philippine Sinter Corp,


NLRC Case No. 7-1729, cited by Azucena]
(2) A family cook, who is later assigned to work
as a watcher and cleaner of the employers
business establishment, becomes an
industrial worker entitled to receive the
wages and benefits flowing from such
status. [Villa v. Zaragosa and Associates, OP
Decision No. 0183, cited by Azucena]

(5) Domestic helpers


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

(b) Workers Paid by Result


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

Note: The Kasambahay Law (RA 10361) has


redefined domestic worker or kasambahay:
Domestic worker or Kasambahay refers to any
person engaged in domestic work within an
employment relationship such as, but not
limited to, the following: general househelp,
nursemaid or yaya, cook, gardener, or laundry
person, but shall exclude any person who
performs domestic work only occasionally or
sporadically and not on an occupational basis.
[RA 10361 Art. 1, Sec. 4 (d)]

Workers under piece-rate employment have no


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

(a) Persons in personal service of another


The provisions of this Rule shall not apply to the
following persons if they qualify for exemption
under the conditions set forth herein:
Domestic servants and persons in the personal
service of another if they perform such services
in the employers home which are usually
necessary or desirable for the maintenance and
enjoyment thereof, or minister to the personal
comfort, convenience, or safety of the employer
as well as the members of his employers
household. [Book 3, Rule 1, Sec. 2 (d), IRR]

HOURS OF WORK
COVERAGE/EXCLUSIONS

Please see previous section (Coverage) which


deals with the general rules of coverage and
exclusions for the applicability of the Conditions
of Employment provisions in Book III of the
Labor Code.

Exclusivity of function required


Note that the definition contemplates a
domestic servant who is employed in the
employers home to minister exclusively to the
personal comfort and enjoyment of the
employers family. [Azucena]
Thus, it has been held that the following
personnel are NOT domestic employees:
(1) House personnel hired by a ranking company
official but paid by the company itself to
maintain a staff house provided for the

NORMAL HOURS OF WORK


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

eight hours [Legend Hotel v. Realuyo (2012)]

LABOR LAW

(3) If the work performed was necessary, or it


benefited the employer, or the employee
could not abandon his work at the end of his
normal working hours because he had no
replacement, all time spent for such work
shall be considered as hours worked, if the
work was with the knowledge of his
employer or immediate supervisor.
(4) The time during which an employee is
inactive by reason of interruptions in his
work beyond his control shall be considered
working time either:
(i) if the imminence of the resumption of work
requires the employees presence at the place of
work, or
(ii) if the interval is too brief to be utilized
effectively and gainfully in the employees own
interest.

Exception to the 8-Hour Law: Work Hours of


Health Personnel
Health personnel in
(1) cities and municipalities with a population of
at least one million (1,000,000) OR
(2) hospitals and clinics with a bed capacity of at
least one hundred (100)
shall hold regular office hours for eight (8)
hours a day, for five (5) days a week, exclusive of
time for meals, except where the exigencies of
the service require that such personnel work for
six (6) days or forty-eight (48) hours, in which
case, they shall be entitled to an additional
compensation of at least thirty percent (30%) of
their regular wage for work on the sixth day.
For purposes of this Article, "health personnel"
shall include resident physicians, nurses,
nutritionists, dietitians, pharmacists, social
workers, laboratory technicians, paramedical
technicians,
psychologists,
midwives,
attendants and all other hospital or clinic
personnel. [Art. 38, LC]

Rest period short duration or coffee break


Rest periods of short duration during working
hours shall be counted as hours worked. [Art.
84, par. 2, LC]
Rest periods or coffee breaks running from five
(5) to twenty (20) minutes shall be considered as
compensable working time. [Bk III, Rule 1, Sec. 7,
par. 2, IRR]

Medical secretaries are also considered clinic


personnel. [Azucena]
Compensable Hours of Work [Art. 84, LC]

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

General principles in determining if time is


considered as hours worked [Book III, Rule 1, Sec.
4]
(1) All hours are hours worked which the
employee is required to give his employer,
regardless of whether or not such hours are
spent in productive labor or involve physical
or mental exertion.
(2) An employee need not leave the premises of
the work place in order that his rest period
shall not be counted, it being enough that
he stops working, may rest completely and
may leave his work place to go elsewhere,
whether within or outside the premises of
his work place.

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

Hours worked shall include


(1) All time during which an employee is
required to be on duty or to be at a prescribed
workplace; AND
(2) All time during which an employee is
suffered or permitted to work.

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.
[Book III, Rule 1, Sec. 5(b), IRR]
Inactive due to work interruptions
The time during which an employee is inactive
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LABOR STANDARDS

by reason of interruptions in his work beyond his


control shall be considered working time either
(i) if the imminence of the resumption of work
requires the employee's presence at the place of
work OR
(ii) if the interval is too brief to be utilized
effectively and gainfully in the employee's own
interest. [Book III, Rule 1, Sec. 4(d), IRR]

LABOR LAW

regular working hours;


(b) Attendance is in fact voluntary; and
(c) The employee does not perform any
productive work during such attendance.
[IRR, Book III, Rule 1, Sec. 6]
Note:
(1) Attendance in lectures, meetings, and
training periods sanctioned by the employer
are considered hours worked.
(2) Attendance in CBA negotiations or grievance
meeting is compensable hours worked.
(3) Attendance in hearings in cases filed by the
employee is NOT compensable hours
worked.
(4) Participation in strikes is NOT compensable
working time.

Work interruption due to brownouts


Brownouts of short duration, but not exceeding
20 minutes, shall be treated as hours worked,
whether used productively by the employees or
not.
If they last more than 20 minutes, the time may
not be treated as hours worked if the employees
can leave their workplace or go elsewhere
whether within or without the work premises; or
the employees can use the time effectively for
their own interest. In this case, the employer
may extend the working hours beyond the
regular schedule on that day to compensate for
the loss of productive man-hours without being
liable for overtime pay. [Policy Instruction No. 36,
May 22, 1978]

Idle time
The idle time that an employee may spend for
resting and dining which he may leave the spot
or place of work though not the premises of his
employer, is not counted as working time only
where the work is broken or is not continuous.
[National Development Co. v. CIR (1962)]
A laborer need not leave the premises of the
factory, shop or boat in order that his period of
rest shall not be counted, it being enough that
he "cease to work", may rest completely and
leave or may leave at his will the spot where he
actually stays while working, to go somewhere
else, whether within or outside the premises of
said factory, shop or boat. If these requisites are
complied with, the period of such rest shall not be
counted. [Luzon Stevedoring Co. v. Luzon Marine
Department Union (1957)]

Note: The time during which an employee is


inactive by reason of work interruptions beyond
his control is considered working time, either if
the imminence of the resumption of work
requires the employees presence at the place of
work or if the interval is too brief to be utilized
effectively and gainfully in the employees own
interest. [Book III, Rule 1 Sec. 4-c OR]
Necessary Work After Normal Hours
If the work performed was necessary, or it
benefited the employer, or the employee could
not abandon his work at the end of his normal
working hours because he had no replacement,
all the time spent for such work shall be
considered as hours worked if the work was with
the knowledge of his employer or immediate
supervisor. [IRR, Book III, Rule 1, Sec. 4(c)]

Travel time [Department of Labor Manual]


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

Lectures, meetings, trainings


Attendance at lectures, meetings, training
programs, and other similar activities shall not
be counted as working time if ALL of the
following conditions are met:
(a) Attendance is outside of the employees
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LABOR LAW

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


spent by an employee in travel from jobsite to
jobsite during the workday, must be counted as
hours worked. Where an employee is required to
report at a meeting place to receive instructions
or to perform other work there, the travel from
the designated place to the workplace is part of
the days work.

Hours worked: Burden of Evidence


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

(3) Travel away from home - Travel that keeps


an employee away from home overnight is
travel away from home. Travel away from home
is worktime when it cuts across the employees
workday. The time is hours worked not only on
regular working hours but also during the
corresponding hours on non-working days.

ADVISORY NO. 02, SERIES OF 2004]

COMPRESSED WORK WEEK (CWW) [DOLE


Under the CWW scheme, the normal workday
goes beyond eight hours without the
corresponding overtime premium.
The total hours of work, however, shall not
exceed 12 hours a day or 48 hours a week, or the
employer is obliged to pay the worker the
overtime premium in excess of said work hours.

Semestral Break of Private School Teachers


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

Conditions for CWW


(1) The CWW scheme is undertaken as a result
of an express and voluntary agreement of
majority of the covered employees or their duly
authorized representatives. This agreement may
be expressed through collective bargaining or
other legitimate workplace mechanisms of
participation such as labor management
councils, employee assemblies or referenda.
(2) In firms using substances, chemicals and
processes or operating under conditions where
there are airborne contaminants, human
carcinogens or noise prolonged exposure to
which may pose hazards to employees health
and safety, there must be a certification from an
accredited health and safety organization or
practitioner from the firms safety committee
that work beyond eight hours is within threshold
limits or tolerable levels of exposure, as set in
the OSHS.
(3) The employer shall notify DOLE, through the
Regional Office having jurisdiction over the
workplace, of the adoption of the CWW scheme.
The notice shall be in DOLE CWW Report Form
attached to this Advisory. [DOLE Advisory No.
02-04]

Work Hours of Seamen


Seamen are required to stay on board of their
vessels by the very nature of their duties, and it
is for this reason that, in addition to their regular
compensation, they are given free living
quarters to be on board. It could not have been
the purpose of the law to require their
employers to pay them overtime pay even when
they are not actually working. The correct
criterion in determining whether or not sailors
are entitled to overtime pay is not, therefore,
whether they are on board and cannot leave
ship beyond the regular eight working number
of hours, but whether they actually rendered
service in excess of said number of hours.
[Cagampan, et. al. v. NLR (1991)]
Hours worked: Proof of work
Entitlement to overtime pay must first be
established by proof that said overtime work
was actually performed, before an employee
may avail of said benefit. [Lagatic v. NLRC
(1998)]

Effects of CWW
(1) Unless there is a more favorable practice
existing in the firm, work beyond eight hours
will not be compensable by overtime
premium provided the total number of
hours worked per day shall not exceed
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LABOR STANDARDS

twelve (12) hours. In any case, any work


performed beyond 12 hours a day or 48
hours a week shall be subject to overtime
premium.
(2) Consistent with Art. 85 of the LC, employees
under a CWW scheme are entitled to meal
periods of not less than 60 minutes. There
shall be no impairment of the right of the
employees to rest days as well as to holiday
pay, rest day pay or leaves in accordance
with law or applicable collective bargaining
agreement or company practice.
(3) Adoption of the CWW scheme shall in no
case result in diminution of existing
benefits. Reversion to the normal eighthour workday shall not constitute a
diminution of benefits.

LABOR LAW

MEAL BREAK

General Rule: Subject to such regulations as the


Secretary of Labor may prescribe, it shall be the
duty of every employer to give his employees
not less than sixty (60) minutes time-off for their
regular meals [Art. 85, LC]
Exception:
Employees may be given a meal period of not
less than twenty (20) minutes provided that
such shorter meal period is credited as
compensable hours worked of the employee:
(a) Where the work is non-manual work in
nature or does not involve strenuous physical
exertion;
(b) Where the establishment regularly operates
not less than sixteen (16) hours a day;
(c) In case of actual or impending emergencies
or there is urgent work to be performed on
machineries, equipment or installations to avoid
serious loss which the employer would
otherwise suffer; and
(d) Where the work is necessary to prevent
serious loss of perishable goods [Book 3, Rule 1,
Sec. 7 par 1, IRR]

Rationale
D.O. No. 21 sanctions the waiver of overtime pay
in consideration of the benefits that the
employees will derive from the adoption of a
compressed workweek scheme, thus:
The compressed workweek scheme was
originally conceived for establishments wishing
to save on energy costs, promote greater work
efficiency and lower the rate of employee
absenteeism, among others. Workers favor the
scheme considering that it would mean savings
on the increasing cost of transportation fares for
at least one (1) day a week; savings on meal and
snack expenses; longer weekends, or an
additional 52 off-days a year, that can be
devoted to rest, leisure, family responsibilities,
studies and other personal matters, and that it
will spare them for at least another day in a
week from certain inconveniences that are the
normal incidents of employment, such as
commuting to and from the workplace, travel
time spent, exposure to dust and motor vehicle
fumes, dressing up for work, etc. Thus, under
this scheme, the generally observed workweek
of six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to
Friday without the employer being obliged for
pay overtime premium compensation for work
performed in excess of eight (8) hours on
weekdays, in exchange for the benefits
abovecited that will accrue to the employees.
[Bisig Manggagawa sa Tryco v. NLRC, et al.
(2008)]

Employees are not prohibited from going out of


the premises as long as they return to their
posts on time. Nowhere in the law may it be
inferred that employees must take their meals
within the company premises. [Philippine
Airlines v. NLRC (1999)]
Synthesis of the Rules
General Rule: Meal
compensable.

periods

are

NOT

Exception:
It becomes compensable:
(1) Where the lunch period or meal time is
predominantly spent for the employers
benefit. [Azucena citing 31 Am. Jur. 881;
Duka, Labor Laws and Social Legislation]
(2) Meal periods of 1 hour is deemed
compensable when the employee is on
continuous shift. [National Development Co.
v. CIR, G.R. No. L-15422, Nov. 30, 1962](3)
Shortened meal period of less than 1 hour
(say, 30 minutes) must be compensable.
[Sec. 7, Rule I, Book III, IRR]
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LABOR LAW

that he cannot use the time effectively and


gainfully for his own purpose shall be
considered as working while on call. [Book 3,
Rule 1, Sec. 5, IRR]

Note: To shorten meal time to less than 20


minutes is not allowed. If the so-called meal
time is less than 20 minutes, it becomes only a
REST PERIOD and is considered working time.

Legal test: Whether waiting time constitutes


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

Exception to the Exception: Shortened meal


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

OVERTIME WORK, OVERTIME PAY

Overtime compensation is additional pay for


service or work rendered or performed in excess
of eight hours a day by employees or laborers
covered by the Eight-hour Labor Law. [National
Shipyard and Steel Corp. v. CIR (1961)]
Rationale
There can be no other reason than that he is
made to work longer than what is
commensurate with his agreed compensation
for the statutorily fixed or voluntary agreed
hours of labor he is supposed to do. [PNB v.
PEMA (1982)]
Overtime on ordinary working day
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. [Art. 87, LC]
Overtime work on holiday or rest day
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. [Art. 87, LC]

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

Computation of additional compensation


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

An employee who is required to remain on call


in the employers premises or so close thereto
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LABOR STANDARDS

Base of Computation: Regular wage or means


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

LABOR LAW

Synthesis of Rules
(1) An employer cannot compel an employee to
work overtime
Exception: Emergency overtime work as
provided for in Art. 89

BUT when the overtime work was performed on


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

(2) Additional compensation is demandable


only if the employer had knowledge and
consented to the overtime work rendered by the
employee.
Exception: Express approval by a superior
NOT a requisite to make overtime
compensable:
(a) If the work performed is necessary, or
that it benefited the company; or
(b) That the employee could not abandon
his work at the end of his eight-hour work
because there was no substitute ready to
take his place. [Manila Railroad Co. v. CIR
(1952)]

Emergency overtime [Art. 89, LC]


Any employee may be required by the employer
to perform overtime work in any of the following
cases:
(1) When the country is at war or when any other
national or local emergency has been
declared by the National Assembly or the
Chief Executive;
(2) When it is necessary to prevent loss of life or
property or in case of imminent danger to
public safety due to an actual or impending
emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
(3) When there is urgent work to be performed
on machines, installations, or equipment, in
order to avoid serious loss or damage to the
employer or some other cause of similar
nature;
(4) When the work is necessary to prevent loss
or damage to perishable goods; and
(5) Where the completion or continuation of the
work started before the eighth hour is
necessary to prevent serious obstruction or
prejudice to the business or operations of
the employer.

Note: However, the Court has also ruled


that a claim for overtime pay is NOT
justified in the absence of a written
authority to render overtime after office
hours during Sundays and holidays.
[Global Incorporated v. Atienza (1986)]
(3) Compensation for work rendered in excess of
the eight (8) normal working hours in a day.
(a) For ordinary days, additional 25% of the
basic hourly rate.
(b) For rest day/special day/holiday,
additional 30% of the basic hourly rate.
(4) Not unless a day is a rest day, the given day
is considered an ordinary day.
(5) Undertime does NOT offset overtime

Overtime pay does not preclude night differential


pay
When the tour of duty of a laborer falls at
nighttime [between 10:00pm and 6:00am], the
receipt of overtime pay will not preclude the
right to night differential pay. The latter is
payment for work done during the night while
the other is payment for the excess of the
regular eight-hour work. [Naric v. Naric Workers
Union (1959)]

Undertime work on any particular day shall not


be offset by overtime work on any other day.
Permission given to the employee to go on leave
on some other day of the week shall not exempt
the employer from paying the additional
compensation required in this Chapter. [Art. 88,
LC]
No Waiver of Overtime Pay
The right to overtime pay cannot be waived. The
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LABOR STANDARDS

Labor Code (Art. 87) requires that an employee


be
paid
all
overtime
compensation
notwithstanding any agreement to work for a
lesser wage. Consequently, such an agreement
or "waiver" will not prevent an employee from
recovering the difference between the wages
paid the employee and the overtime
compensation he or she is entitled to receive.
[Cruz v. Yee Sing (1959)]

LABOR LAW

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

Exception: When the waiver of overtime pay is in


consideration of benefits and privileges which
may be more than what will accrue to them in
overtime pay, the waiver MAY be permitted.
[Meralco Workers Union v. MERALCO (1959)]
Composite or Package Pay NOT per se illegal
Composite or package pay or all-inclusive
salary is an arrangement where the employees
salary includes the overtime pay. In other words,
the overtime pay is built-in.

Rest days (night-off)


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

The conditions for validity of the arrangement


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

Work on special days


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

NIGHT WORK, NIGHT SHIFT


DIFFERENTIAL

Night worker Any employed person whose


work requires performance of a substantial
number of hours of night work which exceed a
specified limit. This limit shall be fixed by the
Sec of Labor after consulting the workers
representatives/labor
organizations
and
employers. [Art. 154, RA 10151]

PART-TIME WORK

A single, regular or voluntary form of


employment with hours of work substantially
shorter than those considered as normal in the
establishment.
[International
Labor
Organization]

Night shift differential


The additional compensation of 10% of an
employees regular wage for each hour of work
performed between 10pm and 6am. [Art. 86, LC]

This excludes those forms of employment


which, although referred to as part-time work,
are in particular, irregular, temporary or
intermittent employment, or in cases where
hours of work have been temporarily reduced
for economic, technical or structural reasons.

Coverage [Book 3, Rule 2, Sec. 1, IRR]


All employees, except:
(1) Those of the government and any of its
political
subdivisions,
including
government-owned and/or controlled

The wage and benefits of part-time worker are


in proportion to the number of hours worked.
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LABOR LAW

performing similar functions and responsibilities


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

CONTRACT FOR PIECE OF WORK

A contract for the delivery at a certain price of


an article which the vendor in the ordinary
course of his business manufactures or procures
for the general market, whether the same is on
hand at the time or not, is a contract of sale

Coverage/Exclusions [Art. 98 and Bk 3, Rule VII,


Sec 3, IRR]
The Labor Code Title on wages shall not apply
to the following:
(1) Farm tenancy or leasehold;
(2) Household or domestic helpers, including
family drivers and other persons in the
personal service of another;
(3) Homeworkers engaged in needlework;
(4) Workers in registered cottage industries who
actually work at home;
(5) Workers in registered cooperatives when so
recommended by the Bureau of Cooperative
Development upon approval of the
Secretary of Labor;
(6) Workers in registered barangay micro
business enterprise [RA 9178].

BUT if the goods are to be manufactured


specially for the customer and upon his special
order, and not for the general market, it is a
contract for a piece of work. [Article 1467, CC]

WAGES
Definition
(1) It is the remuneration or earnings, however
designated, capable of being expressed in
terms of money,
(2) whether fixed or ascertained on a time, task,
piece, or commission basis, or other method
of calculating the same,
(3) which is payable by an employer to an
employee
(4) under a written or unwritten contract of
employment for work done or to be done, or
for services rendered or to be rendered and
(5) includes the fair and reasonable value, as
determined by the Secretary of Labor and
Employment, of board, lodging, or other
facilities customarily furnished by the
employer to the employee

WAGE VS. SALARY

Wages and salary are in essence synonymous.


[Songco v. NLRC (1990)]
There are slight differences:
Wage
Salary
Paid for skilled or
Paid to white collar
unskilled manual
workers and denote a
labor
higher grade of
employment
Not subject to
Not exempt from
execution,
execution,
garnishment or
garnishment or
attachment except for
attachment [Gaa vs.
debts related to
CA, 1985]
necessities [Art. 1708]

Fair and reasonable value - shall not include


any profit to the employer, or to any person
affiliated with the employer. [Art. 97(f)]
No work no pay principle
General Rule: the age old rule governing the
relation between labor and capital or
management and employee is that a "fair day's
wage for a fair day's labor." [Sugue v. Triumph
International (2009)]

MINIMUM WAGE

Exception: When the laborer was able, willing and


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

See also: DOLE Bureau of Working Conditions


Handbook on Workers Statutory Monetary
Benefits and Wage Order No. NCR-18 (Effective:
4 October 2013).

Equal Work for Equal Pay Principle


Employees working in the Philippines, if they are

Definition

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LABOR LAW

Statutory minimum wage is the lowest wage


rate fixed by law that an ER can pay his workers.
[IRR, RA 6727, (o)]

Note: Daily minimum wage in NCR applicable


from Oct. 2013 is now P466 [Wage Order
No. NCR-18]

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

Factors/Criteria in determining regional


minimum wages:
(1) Demand for living wages;
(2) Wage adjustment the consumer price index;
(3) Cost of living and changes or increases
therein;
(4) The needs of workers and their families;
(5) The need to induce industries to invest in the
countryside;
(6) Improvements in standards of living;
(7) Prevailing wage levels;
(8) Fair return of the capital invested and
capacity to pay of employers;
(9) Effects in employment generation and family
income; and
(10) Equitable distribution of income and wealth
along the imperatives of economic and
social development. [Art. 124]

Exceptions:
(1) Domestic Helpers/kasambahay are covered
by RA 10361
(2) Workers of registered barangay micro
business enterprise with Certificates of
Authority issued by the Office of the
Municipal or City Treasurer.
Exemptions
Upon application with and as determined by the
Regional Tripartite Wages and Productivity
Board, based on documentation and other
requirements in accordance with applicable
rules and regulations issued by the NWPC, the
following may be exempted from the
applicability of this Order:
(1) Distressed establishments;
(2) Retail/Service establishments regularly
employing not more than 10 workers;
(3) Establishments whose total assets including
those arising from loans but exclusive of the
land on which the particular business
entitys office, plant and equipment are
situated, are not more than P3 Million; and,
(4) Establishments adversely affected by natural
calamities. [Sec. 8, Wage Order No. 18, 2013]

Procedure for Wage Fixing by Regional Board


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

Basis
The basis of the minimum wage rates
prescribed by law shall be the normal working
hours of 8 hours a day. [Sec 7, IRR of RA 6727]
Freedom to bargain
Despite the minimum wage order, employees
are not prevented from bargaining for higher
wages with their employers.

Filing of an appeal DOES NOT STAY order


unless appellant files an undertaking with a
PAGE 30

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LABOR STANDARDS

surety, to guarantee payment of employees if


the wage order is affirmed [as amended by RA
6727]

LABOR LAW

graduation or board examination. [Art. 72,


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

MINIMUM WAGE OF WORKERS PAID


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

COMMISSIONS

Commissions have been defined as the


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

The wage rates of workers who are paid by


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

Commissions as part of minimum wage


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

Request for the conduct of time and motion


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

Likewise, there is no law mandating that


commissions be paid only after the minimum
wage has been paid to the employee. Verily, the
establishment of a minimum wage only sets a
floor below which an employees remuneration
cannot fall, not that commissions are excluded
from wages in determining compliance with the
minimum wage law. [Iran v. NLRC (1998)]

Where the output rates established by the ER


do not conform to the standards set under the
foregoing methods for establishing output
rates, the EE shall be entitled to the difference
between the amount he/she is entitled to
receive and the amount paid by the ER.
Minimum wage of apprentices and learners
Wages of apprentices and learners shall in
no case be less than 75% of the applicable
minimum wage rates. [Art. 61 & 75, LC]
Note: Learners employed in piece or
incentive-rate jobs during the training
period shall be paid in full for the work
done. [Art. 76, LC]
The Secretary of Labor and Employment
may authorize the hiring of apprentices
without compensation whose training on the
job is required by the school or training
program curriculum or as requisite for

DEDUCTIONS FROM WAGES

General Rule: No employer, in his own behalf or


in behalf of any person, shall make any
deduction from the wages of his employees.
[Art. 113]
Exceptions:
(1) In cases where the worker is insured with his
consent by the employer, and the deduction
is to recompense the employer for the
amount paid by him as premium on the
insurance;
(2) For union dues, in cases where the right of
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LABOR STANDARDS

the worker or his union to check-off has


been recognized by the employer or
authorized in writing by the individual
worker concerned; and
(3) In cases where the employer is authorized by
law or regulations issued by the Secretary of
Labor and Employment (Art. 113), such as:
(i) Employee debt to employer is due and
demandable [CC 1706];
(ii) Attachment or execution in cases of
debts incurred for necessities: food,
shelter, clothing, medical attendance
[CC 1708];
(iii) Withholding tax;
(iv) Deductions of a legally established
cooperative;
(v) Payment to 3rd parties upon written
authority by employee;
(vi) Deductions for loss or damage;
(vii) SSS, Medicare, Pag-IBIG premiums;
(viii) Deduction for value meals and other
facilities.

Communication of the Phil., Inc. v. Sec. of


Labor (1989)]

Note: Persons earning minimum wage are


excepted from income tax
That minimum wage earners as defined in
Section 22(HH) of this Code shall be
exempt from the payment of income tax on
their taxable income: Provided, further,
That the holiday pay, overtime pay, night
shift differential pay and hazard pay
received by such minimum wage earners
shall likewise be exempt from income tax.
[RA 9504, Sec. 2 redefining sec. 24(A) of RA
8424]

NON-DIMINUTION OF BENEFITS

General Rule: There is a prohibition against


elimination or diminution of benefits [Art. 100]
No wage order issued by any regional board
shall provide for wage rates lower than the
statutory minimum wage rates prescribed by
Congress. [Art. 127, as amended by Republic Act
No. 6727, June 9, 1989]

It shall be unlawful to make any deduction from


the wages of any employee for the benefit of the
employer as consideration of a promise of
employment or retention in employment. [Art. 117]
or to retaliate against the employee who filed a
complaint. [Art. 118]
With Employees
consent in Writing
(1) SSS Payments
(2)
PHILHEALTH
payments
(3) Contributions to
PAG-IBIG Fund
(4) Value of meals and
other facilities
(5) Payments to third
persons
with
employees consent
(6)
Deduction
of
absences
(7) Union dues, where
check-off
is
not
provided in the CBA.

LABOR LAW

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

Without Employees
consent
(1) Workers insurance
acquired
by
the
employer
(2) Union dues, where
the right to check-off
is recognized by the
employer (provided in
the CBA)
(3) Debts of the
employee to the
employer that have
become due and
demandable

When not applicable: When at least one of the


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

Prohibition seeks to protect the employee


against unwarranted practices that would
diminish his compensation without his
knowledge
and
consent.
[Radio
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LABOR STANDARDS

LABOR LAW

Mere availment is not sufficient to allow


deductions from employees wages. Before the
value of facilities can be deducted from the
employees wages, the following requisites must
all be attendant:
(a) proof must be shown that such facilities are
customarily furnished by the trade;
(b) the provision of deductible facilities must be
voluntarily accepted in writing by the
employee; and
(c) facilities must be charged at reasonable
value. [SLL International Cable Specialists v.
NLRC, 2011]

demandable if those preconditions are


absent.
Benefits initiated through negotiation between
Employee and Employer, e.g. CBA, can only be
eliminated or diminished bilaterally.

FACILITIES VS. SUPPLEMENTS

The distinction between facilities and


supplement is relevant because the former are
wage-deductible while the latter is not. Simply
put, a wage includes facilities. [Art. 97]
The IRR definition (IRR Book III Rule 7-A Sec. 5)
has 2 components:
(1) Facilities are articles or services for the
benefit of the employee or his family. This 1st
part defines facilities.
(2) Facilities shall not include tools of the trade
or articles or service primarily for the benefit
of the employer or necessary to the conduct
of the employers business. This 2nd part is
essentially defines what a supplement.

WAGE DISTORTION/ RECTIFICATION

A situation where an increase in prescribed


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

Criterion: In determining whether a privilege is a


facility, the criterion is not so much its kind but
its PURPOSE (Millares v NLRC & PICOP, 1999)

4 Elements of wage distortion


(a) Existing hierarchy of positions with
corresponding salary rates;
(b) A significant change in the salary rate of a
lower pay class without a concomitant
increase in the salary rate of a higher one;
(c) The elimination of the distinction between
the two levels; and
(d) The existence of the distortion in the same
region of the country. [Prubankers Assn. v.
Prudential Bank and Co. (1999)]

Facilities are items of expense necessary for the


laborers and his familys existence and
subsistence. (States Marine Corp. v. Cebu
Seamen's Assoc., Inc., 1963)
Comparison between Facilities and Supplements
Facilities
Supplements
Articles
or Extra
services/items
remuneration or
of expense
special benefits
What it is
/ articles or
services / tools
of the trade
For the benefit For the benefit
of the employee or convenience
Who
and his family; of the employer
benefits
for
their
existence and
subsistence
YES - Part of NO
Deductible wage so it is Independent of
from wage deductible
the Wage so not
deductible

How to Resolve
Organized Establishment
(1) Employer and the union shall negotiate to
correct the distortions.
(2) Disputes shall be resolved through the
grievance procedure.
(3) If still unresolved, voluntary arbitration.
Grievance Procedure (under the CBA) if
unresolved, VOLUNTARY arbitration
Unorganized Establishment
(1) ERs and Employees shall endeavor to correct
such distortions.
(2) Disputes shall be settled through the
National Conciliation and Mediation Board.

Requirements for deducting value of facilities


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LABOR STANDARDS

LABOR LAW

(3) If still unresolved after 10 calendar days of


conciliation, it shall be referred to the
appropriate branch of the NLRC
compulsory arbitration
Both the employer and employee
cannot use economic weapons.
(4) Employer cannot declare a lock-out;
Employee cannot declare a strike because
the law has provided for a procedure for
settling
(5) The salary or wage differential does not need
to be maintained. [National Federation of
Labor v. NLRC, 1994]

proportionate amount corresponding to the


days when no work was done. The monthly
compensation is evidently intended precisely to
avoid computations and adjustments resulting
from the contingencies just mentioned which
are routinely made in the case of workers paid
on daily basis. [Wellington Investment Inc. v.
Trajano, 1995]

National Conciliation and Mediation Board if


unresolved, COMPULSORY arbitration by the
NLRC

(a) For those who are required to work every day


including Sundays or rest days, special days and
regular holidays:

For daily-paid EEs


Daily-paid employees are those who are paid on
the days actually worked and on unworked
regular holidays.

394.1 days/year

CBA vis--vis Wage Orders CBA creditability


In determining an employees regular wage, the
pertinent stipulations in the CBA are
controlling, provided the result is not less than
the statutory requirement (Philippine National
Bank vs. PEMA, 1982)

Where
296 days ordinary working
394.10 days
days
=
24 days
12 regular holidays
x 200%
67.60 days 52 rest days x 130

%
6.50 days 5 special days x

130%

DIVISOR TO DETERMINE DAILY RATE


Suggested formula for computing the Estimated
Equivalent Monthly Rate (EEMR)

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


considered paid on Sundays or rest days:

EEMR =(Applicable Daily Rate (ADR) x


days/year) 12

313 days/year

For monthly-paid EEs


Monthly-paid employees are those who are paid
every day of the month, including unworked rest
days, special days, and regular holidays.

Where
days =

365 days/year
Where 365 296 days ordinary working
days/year =
days
52 days
rest days
12 days
regular holidays
5 days
special days
Note: This monthly salary shall serve as
compensation "for all days in the month
whether worked or not," and "irrespective of the
number of working days therein." In the event
of the declaration of any special holiday, or any
fortuitous cause precluding work on any
particular day or days the employee is entitled
to the salary for the entire month and the
employer has no right to deduct the

313 296 days

12 days
5 days -

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

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


considered paid on Saturdays and Sundays or
rest days:
278 days/year
Where 278 261 days

PAGE 34

ordinary

working

UP LAW BOC

days =

LABOR STANDARDS

12 days
5 days -

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

LABOR LAW

goods;
(e) Where the nature of the work requires
continuous operations and the stoppage of
work may result in irreparable injury or loss
to the employer; and
(f) Under other circumstances analogous or
similar to the foregoing as determined by
the Secretary of Labor and Employment.
[Art. 92, LC]

[Sec. 6, Rules Implementing RA 6727, 1989]


Note: Under Proclamation No. 459 signed by
Pres. Benigno Aquino on Aug. 16, 2012, there
are 12 regular holidays and 5 special days.

Synthesis of the Rules


(1) Rest day of not less than 24 consecutive
hours after 6 consecutive days of work.
(2) No work, no pay principle applies
(3) If an employee works on his designated rest
day, he is entitled to a premium pay.
(4) Premium pay is additional 30% of the basic
pay.
(5) Employer selects the rest day of his
employees
(6) However, employer must consider the
religious reasons for the choice of a rest day.

REST DAY
WEEKLY REST DAY

It shall be the duty of every employer, whether


operating for profit or not, to provide each of his
employees a rest period of not less than twentyfour (24) consecutive hours after every six (6)
consecutive normal work days. [Art. 91 (a)]

HOLIDAY PAY/PREMIUM PAY

Preference of the employee


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

Holiday pay is a one-day pay given by law to an


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

COVERAGE

EMERGENCY REST DAY WORK

The employer may require his employees to


work on any day:
(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 imminent danger to public
safety;
(b) In cases of urgent work to be performed on
the machinery, equipment, or installation,
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 loss or damage to perishable

General Rule: All employees


Exceptions:
(1) Those of the government and any of the
political subdivision, including governmentowned and controlled corporation;
(2) Those of retail and service establishments
regularly employing less than 10 workers;
(3) Domestic helpers and persons in the
personal service of another;
(4) Managerial employees as defined in Book III
(5) Field personnel and other employees whose
time and performance is unsupervised by
the employer including those who are
engaged on task or contract basis, purely
commission basis, or those who are paid a
fixed amount for performing work
PAGE 35

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LABOR STANDARDS

irrespective of the time consumed in the


performance thereof. [Sec. 1, Rule IV of the
IRR]

LABOR LAW

(2) Mauli-un-Nabi (Birthday of the Prophet


Muhammad) which falls on the twelfth
(12th) day of the third (3rd) lunar month of
Rabi-ul-Awwal;
(3) Lailatul Isra Wal Mi Rai (Nocturnal Journey
and
Ascencion
of
the
Prophet
Muhammand) which falls on the twentyseventh (27th) day of the seventh (7th) lunar
month of Rajab;
(4) Id-ul-Fitr (Hari Raja Pausa) which falls on
the first (1st) day of the tenth (10th) lunar
month of Shawwal commemorating the end
of the fasting season; and
(6) Id-ul-Adha (Hari Raha Haji) which falls on
the tenth (10th) of the twelfth (12th) lunar
month of Dhul-Hijja.

Retail Establishment is one principally engaged


in the sale of goods to end-users for personal or
household use;
Service Establishment is one principally
engaged in the sale of service to individuals for
their own or household use and is generally
recognized as such. [IRR of RA 6727/the Wage
Rationalization Act]
Regular holidays

Proclamation No. 655 signed by President


Aquino on 25 September 2013, provides for the
observance of the regular holidays and special
(non-working) days for the year 2014 on the
following dates:
(1) New years Day - January 1
(2) Maundy Thursday March 28
(3) Good Friday March 29
(4) Araw ng Kagitingan April 9
(5) Labor Day May 1
(6) Independence Day June 12
(7) National Heroes Day August 26
(8) Bonifacio Day November 30
(9) Christmas Day - December 25
(10) Rizal Day - December 30
(11) Eidl Fitr date to be determined later
(12) Eidl Adha date to be determined later

Note:
Id-ul-Fitr (Eidl Fitr) and Id-ul-Adha (Eidl
Adha) have been added to the list of
national legal holidays.
Note: There should be no distinction
between Muslims & non-Muslims as
regards to the payment of benefits for
Muslim holidays. Wages & other
emoluments granted by law to the working
manare determined on the basis of the
criteria laid down by laws &not on workers
faith. Art. 3(3), PD 1083 states that nothing
herein shall be construed to operateto the
prejudice of a non-Muslim. [San Miguel Corp
vs. CA, 2002]

Special (Non-Working Days)


(1) Chinese New Year January 31
(2) Black Saturday March 30
(3) Ninoy Aquino Day - August 21
(4) All Saints Day - November 1
(5) Additional special (Non-working) days
(a) December 24
(b) December 26
(6) Last Day of the Year - December 31

Holiday pay computation (Art. 94 Labor Code, Book


III, Rule IV of IRR, RA 9424 and DOLE Memorandum
Circular 1 Series of 2004)

General Rule: An employer may require an


employee to work on any holiday but such
employee shall be paid a compensation
equivalent to twice his regular rate. [Art. 94(b)]
According to the LC, IRR and Memo:
Work on any regular holiday,
Computation
not exceeding 8 hours
Work on any regular 200% of regular
holiday, if it exceeds 8 daily wage (for the
hours/overtime
1st 8 hours)
+ 30% of hourly
rate on said day

Special Holiday (for all schools)


EDSA Revolution Anniversary February 25
P.D. 1083 (Code of Muslim Personal Laws) SEE:
Arts. 169-173
Specifically for the Muslim Areas, P.D. 1083, in
its Book V, Title, recognizes five (5) Muslim
Holidays, namely:
(1) Amun Jadid (New Year) which falls on the
first (1st) day of the lunar month of
Muharram;
PAGE 36

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LABOR STANDARDS

Work on any regular holiday 200% of regular


which
falls
on
the daily wage + 30%
scheduled rest day, not of such amount
exceeding 8 hours
Work on any regular holiday Regular
holidaywhich falls on scheduled on-rest day rate
rest day, if it exceeds 8 (200% of regular
hours/overtime
daily wage plus
30%
of
such
amount) + 30% of
hourly rate on said
day.
Work on special holiday not Regular daily wage
exceeding 8 hours
+ 30% thereof
Work on special holiday
Regular daily wage
+ 50% thereof

LABOR LAW

(2) He works on first holiday, which entitles


him to pay on second holiday.
Divisors
The divisor assumes an important role in
determining whether or not holiday pay is
already computed.
(1) Monthly paid employees are not entitled to
the holiday pay if their total annual income
is divided by 365 days resulting in a wage
which is beyond the minimum wage per day
because they are considered paid everyday
of the year including holidays, rest days, and
other non-working days. The 365 days are
as follows:
365 days = 296 days ordinary days
52 days rest days
12 days regular holidays
5 days special holidays
(2) As a general rule, for a company with a 6day working schedule, the divisor 313
already means that the legal holidays are
included in the monthly pay of the
employee. The divisor is arrived at by
subtracting all Sundays from the total
number of calendar days in a year.
(3) As a general rule for a company with a 5-day
working schedule, the divisor 287 means
that the holiday pay is already included in
the monthly salary of the employee.

According to DOLE Memo Circular 1-04, a


special holiday/special day includes the
National Special Days, and declared special
days such as Special Non-working Holiday,
Special Public Holiday and Special National
Holiday. Such days are entitled to the rates
prescribed above. These days are not the same
as a special working holiday.
A special working holiday is considered an
ordinary working day, so there is no premium
pay.
Double holiday pay
According to DOLE Explanatory Bulletin on
Workers Entitlement to Holiday Pay on 9 April
1993, if two holidays fall on the same day:
(1) If unworked, 200% of basic wage.
(2) If worked, 300% of basic wage. [Azucena]

Where the employer had a standing practice of


using 286 days as a divisor and following the
correct computation and taking into account
that one of the holidays always falls on a
Sunday, therefore increasing the divisor to
287, but increase would in some instances
prejudice the employees, in violation of the
proscription against non-diminution of benefits
under Sec. 100 of the labor code, the 287
divisor should only be used for computations
which would be advantageous to the employer
(i.e. deduction for absences) and not for
computations which would diminish the existing
benefits of the employees (i.e., overtime pay,
holiday pay and leave conversions). [Trans Asia
Phils. v. NLRC, 1999]

Double Holiday Rule for Monthly-paid


employees
For covered employees whose monthly salaries
are computed based on 365 days and for those
other employees who are paid using factor 314,
or 262, or any other factor which already
considers the payment for the 11 regular
holidays, NO additional payment is due them.
[BWC-WHSD Opinion No. 053, s. 1998]
Successive holiday pay
According to IRR, Rule IV, Sec. 10, an employee
is entitled to holiday pay for both days, IF:
(1) He is present on day immediately
preceding first holiday; or

Sundays
(1) When a holiday falls on a Sunday, the
following Monday will not be considered a
holiday unless a proclamation says so.

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UP LAW BOC

LABOR STANDARDS

(2) Furthermore as stated in the Wellington


case (see below), a legal holiday falling on a
Sunday does not create a legal obligation to
pay extra, aside from the usual holiday pay,
to monthly-paid employees. [Azucena citing
Letter of Instruction No. 1087]

LABOR LAW

regular holiday, he is not entitled to holiday


pay unless he works on such regular
holiday.
In case of temporary cessation of work
(a) In cases of temporary or periodic shutdown
and temporary cessation of work of an
establishment, as when a yearly inventory or
when the repair or cleaning of machineries
and equipment is undertaken, the regular
holidays falling within the periods shall be
compensated in accordance with this Rule.
(b) The regular holiday during the cessation of
operation of an enterprise due to business
reverses as authorized by the Secretary of
Labor may not be paid by the employer.
[IRR, Book III, Rule IV, Sec 7]

No provision of law requires any employer to


make adjustments in the monthly salary rate set
by him to take account of legal holidays falling
on Sundays in a given year, otherwise to reckon
a year at more than 365 days. [Wellington
Investment and Manufacturing Corporation vs.
Trajano (1995)]
Non-working/scheduled rest day
Where the day immediately preceding the
holiday is a non-working day in the
establishment or the scheduled rest day of the
employee, he shall not be deemed to be on
leave of absence on that day, in which case he
shall be entitled to the holiday pay if he worked
on the day immediately preceding the nonworking day or rest day. [IRR, Book III, Rule V,
Sec 6 (c)]

An employee is entitled to holiday pay for the


regular holidays falling within the period in
cases of temporary shutdowns or cessation of
work, when:
(1) an annual inventory; or
(2) repair or cleaning of machineries and
equipment is undertaken.

Example: If a holiday falls on Monday, and


Sunday is a non-working day in the
establishment or is the scheduled rest day of
the employee, the employee shall be entitled to
holiday pay if he worked on Saturday (which is
the day immediately preceding Sunday, the
non-working day or rest day).

The employer may not pay his employees for the


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

TEACHERS, PIECE
SEAFARERS,
WORKERS ETC.

Right to holiday pay

WORKERS,
SEASONAL

(a) Private school teachers, including faculty


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

In case of absences
All covered employees shall be entitled to the
benefit provided herein when they are on leave
of absence with pay.
Employees who are on leave of absence without
pay on the day immediately preceding a regular
holiday may not be paid the required holiday
pay if he has not worked on such regular
holiday. [IRR, Book III, Rule IV, Sec 6(a)]
Note:
(1) If an employee is on leave of absence with
pay on the day immediately preceding a
regular holiday, he is entitled to holiday pay.
(2) If an employee is on leave of absence without
pay on the day immediately preceding a

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LABOR STANDARDS

this Rule. [Book III, Rule IV, Sec. 8 of IRR]

LABOR LAW

hours on non-work days, such as rest days and


special days.

Holiday Pay of Hourly-Paid Faculty Members


(1) They are not entitled to payment of holiday
pay because they are paid only for work
actually done. Since regular holidays are
known to both the school and faculty
members as no class day; certainly the
latter do not expect payment for said
unworked holidays.
(2) They are entitled to their hourly rate on days
declared as special holidays. Be it noted
that when a special public holiday is
declared, the faculty member paid by the
hour is deprived of expected income, and it
does not matter that the school calendar is
extended in view of the days or hours lost,
for their income that could be earned from
other sources is lost during the extended
days.
(3) Similarly, when classes are called off or
shortened on account of typhoons, floods,
rallies, and the like, these faculty members
must likewise be paid, whether or not
extensions are ordered. [Jose Rizal College v.
NLRC, 1987]

Coverage (Book 3, Rule 3, Sec. 7 of the IRR)


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

Piece workers
Philosophy underlying the exclusion of piece
workers from the 8-hour law is that said workers
are paid depending upon the work they do
irrespective of the amount of time employed in
doing said work. [Red v. Coconut Products Ltd.,
v. CIR, 196]

Premium pay rates (DOLE Memorandum


Circular 1, Series of 2004)
WHEN
WORK
PERFORMED
On scheduled rest day
On Sunday ONLY IF
ESTABLISHED rest day
No regular work and
rest days

Seafarers
Any hours of work or duty including hours of
watch-keeping performed by the seafarer on
designated rest days and holidays shall be paid
rest day or holiday pay. [Section 11.C, Standard
Terms
and Conditions
Governing the
Employment of Filipino Seafarers on Board
Ocean-Going Vessels]

PREMIUM PAY
30% of regular wage
30% of regular wage

30% of regular wage


for work performed
on Sundays and
holidays
On
any
special 30% of regular wage
holiday/special day
On any special holiday 50% of regular wage
/special day falling on
scheduled rest day
On any regular holiday 230% of regular
falling on scheduled rest wage
day

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

Premium pay refers to the additional


compensation for work performed within 8
PAGE 39

Where the collective bargaining agreement


or other applicable employment contract
stipulates the payment of a higher premium

UP LAW BOC

LABOR STANDARDS

LABOR LAW

Employer may require employee to work


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

pay than that prescribed under this Article,


the employer shall pay such higher rate.
[Art. 93 (d)]
Nothing in this Rule shall justify an
employer in reducing the compensation of
his employees for the unworked Sundays,
holidays, or other rest days which are
considered paid-off days or holidays by
agreement or practice subsisting upon the
effectivity of the Code. [Book III, Rule III, Sec.
8 of the IRR]
Nothing herein shall prevent the employer
and his employees or their representatives
in entering into any agreement with terms
more favorable to the employees than those
provided herein, or be used to diminish any
benefit granted to the employees under
existing laws, agreements, and voluntary
employer practices. [Book III, Rule II, Sec. 9
of the IRR]

Jurisprudence:
Teachers of private school on contract basis
are entitled to service incentive leave. [Cebu
Institute of Technology v. Ople, 1987]
In the case of Makati Haberdashery v. NLRC
the Court ruled that piece-rate employees
are not entitled to service incentive leave.
[Makati Haberdashery v. NLRC, 1989]
However, in the case of Labor Congress of
the Philippines v. NLRC the Court held that
petitioners are entitled to service incentive
leave. The Court looked at several factors
which led them to conclude that petitioners,
although compensated on a per piece basis,
were regular employees of private
respondents. [Labor Congress of the
Philippines v. NLRC, 1998]

LEAVES
SERVICE INCENTIVE LEAVE PAY

Meaning of 1 year of service


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

Every employee who has rendered at least one


year of service shall be entitled to a yearly
service incentive leave of five days with pay. (Art.
95(a))
Service Incentive Leave DOES NOT apply to the
following employees:
(1) Those of the government and any of its
political subdivisions, including GOCCs;
(2) Domestic helpers and persons in the
personal service of another;
(3) Managerial employees as defined in Book 3
of this Code;
(4) Field personnel and other employees whose
performance is unsupervised by the
employer including those who are engaged
on task or contract basis, purely commission
basis, or those who are paid a fixed amount
for performing work irrespective of the time
consumed in the performance thereof;
(5) Those who are already enjoying the benefit
herein provided;
(6) Those enjoying vacation leave with pay of at
least 5 days;
(7) Those employed in establishments regularly
employing less than 10 employees. [Book 3,
Rule 5, Sec. 1 of the IRR]

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

The maternity benefits provided under the


Social Security Law shall be paid only for the
first four (4) deliveries or miscarriages

separation from employment, his cause of


action to claim the whole amount of his
accumulated service incentive leave shall
arise when the employer fails to pay such
amount at the time of his resignation or
separation from employment. (Auto Bus
Transport vs. NLRC, 2005)

SSS pays for the maternity leave


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

Commutable nature of benefit


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

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

MATERNITY LEAVE [Sec. 14-A of RA


1161 (SOCIAL SECURITY LAW) AS
AMENDED BY RA 7322 AND RA 8282]
Coverage
Every pregnant woman in the private sector,
whether married or unmarried, is entitled to the
maternity leave benefits.
This is applicable to both childbirth and
miscarriage.
Requisites
(a) Employment: A female employee employed
at the time of delivery, miscarriage or
abortion
(b) Contribution: who has paid at least 3
monthly contributions in the 12-month
period immediately preceding the semester
of her childbirth, or miscarriage.
(c) Notice: employee notified employer of her
pregnancy and the probable date of her
childbirth, which notice shall be transmitted
to the SSS in accordance with the rules and
regulations it may provide.

PATERNITY LEAVE
[RA 8187
(PATERNITY LEAVE ACT OF 1996)]
Coverage and purpose
Paternity leave is granted to all married male
employees in the private and public sectors,
regardless of their employment status (e.g.
probationary, regular, contractual, project
basis). The purpose of this benefit is to allow the
husband to lend support to his wife during her
period of recovery and/or in nursing her
newborn child. [Sec. 3, RA 8187]

Benefit received
A daily maternity benefit equivalent to 100% of
her average daily salary credit for:
(1) 60 days for normal delivery
(2) 78 days for caesarean delivery

This benefit shall NOT be included in the


computation of 13th month pay as it is granted
to an employee in lieu of wages which is the
basis for computing 13th month.

Benefit
It shall apply to the first 4 deliveries of the
employees lawful wife with whom he is
cohabiting.

Only 4 maternity leaves available

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LABOR STANDARDS

It shall be for 7 calendar days, with full pay,


consisting of basic salary and mandatory
allowances fixed by the Regional Wage Board, if
any, provided that his pay shall not be less than
the mandated minimum wage. [Sec. 2, RA 8187]

LABOR LAW

(2) If the existing paternity leave benefit is less


than that provided in RA 8187, the ER shall
adjust the existing benefit to cover the
difference.
Where a company policy, contract, or CBA
provides for an emergency or contingency leave
without specific provisions on paternity leave,
the ER shall grant to the employee 7 calendar
days of paternity leave. [Sec. 9, IRR, RA 8187]

Cohabiting means the obligation of the husband


and wife to live together. If the spouses are not
physically living together because of the
workstation or occupation, the male employee is
still entitled to the paternity leave benefit. [Sec.
1, IRR, RA 8187]

PARENTAL LEAVE [RA 8972 (SOLO


PARENTS WELFARE ACT OF 2000)]

Usage of the benefit


Usage of the leave shall be after the delivery,
without prejudice to an employers policy of
allowing the employee to avail of the benefit
before or during the delivery, provided that the
total number of days shall not be more than 7
days for each covered delivery. [Sec. 5, IRR, RA
8187]

Leave benefits granted to a solo parent to


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

Conditions for entitlement [Sec. 3, IRR, RA 8187]


(a) He is married;
(b) He is an employee at the time of the delivery
of his child;
(c) He is cohabiting with his spouse at the time
that she gives birth or suffers a miscarriage;
(d) He has applied for paternity leave with his
ER within a reasonable period of time from
the expected date of delivery by his
pregnant spouse, or within such period as
may be provided by company rules and
regulations, or by CBA; and,
(d) His wife has given birth or suffered a
miscarriage.
Application for paternity leave
See number 4 under conditions for entitlement.
In case of miscarriage, prior application for
paternity leave shall not be required. [Sec. 4,
IRR, RA 8187]
Non-conversion to cash
In the event that the paternity leave is not
availed of, it shall not be convertible to cash and
shall not be cumulative. [Sec. 7, IRR, RA 8187]
Crediting of existing benefits
(1) If the existing paternity leave benefit under
the CBA, contract, or company policy is
greater than 7 calendar days as provided for
in RA 8187, the greater benefit shall prevail.
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LABOR STANDARDS

prolonged absence of the parents or solo


parent for at least one (1) year. [Sec. 3 (a),
RA 8972]

LABOR LAW

VAWC leave is granted to women employees


who are victims of violence, as defined in RA
9262. The leave benefit covers the days that the
women employee has to attend to medical or
legal concerns.

Conditions for entitlement


A solo parent employee shall be entitled to the
parental leave under the following
conditions:
(a) He/she has rendered at least one (1) year of
service, whether continuous or broken;
(b) He/she has notified his/her employer that
he/she will avail himself/herself of it, within
a reasonable period of time; and
(c) He/she has presented to his/her employer a
Solo Parent Identification Card, which may
be obtained from the DSWD office of the
city or municipality where he/she resides.
[Sec 19, Art. V, IRR, RA 8972]

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

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

VAWC includes, but is not limited to, the following


acts:
(1) Physical Violence" refers to acts that include
bodily or physical harm;
(2) "Sexual violence" refers to an act which is
sexual in nature, committed against a
woman or her child. It includes, but is not
limited to:
(a) rape, sexual harassment, acts of
lasciviousness, treating a woman or her
child as a sex object, making
demeaning and sexually suggestive
remarks, physically attacking the sexual
parts of the victim's body, forcing
her/him to watch obscene publications
and indecent shows or forcing the
woman or her child to do indecent acts
and/or make films thereof, forcing the
wife and mistress/lover to live in the
conjugal home or sleep together in the
same room with the abuser;
(b) acts causing or attempting to cause the
victim to engage in any sexual activity
by force, threat of force, physical or
other harm or threat of physical or other
harm or coercion;
(c) Prostituting the woman or child.
(3) "Psychological violence" refers to acts or
omissions causing or likely to cause mental
or emotional suffering of the victim such as
but not limited to intimidation, harassment,
stalking, damage to property, public ridicule

Grant of flexible work schedule


The employer shall provide for a flexible
working schedule for solo parents: Provided,
That the same shall not affect individual and
company productivity: Provided, further, That
any employer may request exemption from the
above requirements from the DOLE on certain
meritorious grounds. [Sec. 6, RA 8972]
Protection against work discrimination
No employer shall discriminate against any solo
parent employee with respect to terms and
conditions of employment on account of his/her
status. [Sec. 7, RA 8972]
Termination of the benefit
A change in the status or circumstance of the
parent claiming the benefit under the law, such
that he/she is no longer left alone with the
responsibility of parenthood, shall terminate
his/her eligibility for these benefits. [Sec. 3 (a),
RA 8972]

LEAVES FOR VICTIMS AND VIOLENCE


AGAINST WOMEN [RA 9262, ANTIVIOLENCE AGAINST WOMEN AND
THEIR CHILDREN ACT OF 2004]
Coverage and purpose
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LABOR STANDARDS

LABOR LAW

Usage of the benefit


The usage of the 10-day leave shall be at the
option of the woman employee. In the event
that the leave benefit is not availed of, it shall
not be convertible into cash and shall not be
cumulative.

or humiliation, repeated verbal abuse and


mental infidelity. It includes causing or
allowing the victim to witness the physical,
sexual or psychological abuse of a member
of the family to which the victim belongs, or
to witness pornography in any form or to
witness abusive injury to pets or to unlawful
or unwanted deprivation of the right to
custody and/or visitation of common
children.
(4) "Economic abuse" refers to acts that make or
attempt to make a woman financially
dependent which includes, but is not limited
to the following:

A victim of VAWC who is employed shall be


entitled to a paid leave of up to ten (10) days in
addition to other paid leaves under the Labor
Code and Civil Service Rules and Regulations
and other existing laws and company policies:
(1) At any time during the application of any
protection order, investigation, prosecution
and/or trial of the criminal case, extendible
when the necessity arises as specified in the
protection order.
(2) Upon the issuance of the Punong
Barangay/kagawad or prosecutor or the
Clerk of Court, as the case may be, of a
certification (at no cost) to the woman that
such an action is pending, and this is all
that is required for the employer to comply
with the 10- day paid leave.
(3) For government employees, in addition to
the aforementioned certification, the
employee concerned must file an
application for leave citing as basis R.A.
9262. [Sec. 42, IRR, RA 8972]

(a) withdrawal of financial support or


preventing the victim from engaging in
any legitimate profession, occupation,
business or activity, except in cases
wherein the other spouse/partner
objects on valid, serious and moral
grounds as defined in Article 73 of the
Family Code;
(b) deprivation or threat of deprivation of
financial resources and the right to the
use and enjoyment of the conjugal,
community or property owned in
common;
(c) destroying household property;
(d) controlling the victims' own money or
properties or solely controlling the
conjugal money or properties. [Sec.3, RA
9262]

SPECIAL LEAVE BENEFITS (SLB) FOR


WOMEN [RA 9710 (THE MAGNA
CARTA OF WOMEN), DOLE DO NO.
112, SERIES OF 2011 AS AMENDED BY
DO NO. 112-A SERIES OF 2012]

Requirement for entitlement


To be entitled to the leave benefit, the only
requirement is for the victim-employee to
present to her employer a certification from the
barangay chairman or barangay councilor or
prosecutor or the Clerk of Court, as the case
may be, that an action relative to the matter is
pending.

Special leave benefit for women a female


employees leave entitlement of two (2) months
with full pay from her employer based on her
gross monthly compensation following surgery
caused by gynecological disorders, provided
that she has rendered continuous aggregate
employment service of at least six (6) months
for the last 12 months.

Benefit
In addition to other paid leaves under existing
labor laws, company policies, and/or CBA, the
qualified victim-employee shall be entitled to a
leave of up to 10 days with full pay, consisting of
basic salary and mandatory allowances fixed by
the Regional Wage Board, if any.

Gynecological disorders disorders that would


require surgical procedures such as, but not
limited to, dilatation and curettage and those
involving female reproductive organs such as
the vagina, cervix, uterus, fallopian tubes,
ovaries, breast, adnexa and pelvic floor, as
certified by a competent physician. It shall also
include hysterectomy, ovariectomy, and
mastectomy.
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LABOR LAW

recuperating period, the female employee shall


immediately file her application using the
prescribed form. (Sec. 3, DO 112)

Gross monthly compensation the monthly


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

Period of entitlement
The 2 months special leave is the maximum
period of leave with pay that a woman
employee may avail of under RA 9710.

At least six months continuous aggregate


employment service for the last 12 months prior
to surgery the woman employee should have
been with the company for 12 months prior to
surgery. An aggregate service of at least six (6)
months within the said 12-month period is
sufficient to entitle her to avail of the special
leave benefit.

For purposes of determining the period of leave


with pay that will be allowed to a female
employee, the certification of a competent
physician as to the required period of
recuperation shall be controlling. [Sec. 4, DO 112,
as amended]

Employment service - includes absences with


pay such as use of other mandated leaves,
company-granted leaves and maternity leaves

Availment
The special leave shall be granted to the
qualified employee after she has undergone
surgery. [Sec. 5, DO 112, as amended]

Competent physician - a medical doctor


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

Frequency of availment
A woman employee can avail of the SLB for
every instance of surgery due to gynecological
disorder for a maximum total period of 2
months per year. [Sec. 6, DO 112, as amended]

Conditions for entitlement of special leave


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

Special leave benefit vis--vis SSS sickness


benefit
The SLB is different from the SSS sickness
benefit. The former is granted by the employer
in accordance with RA 9710.
It is granted to a woman employee who has
undergone surgery due to gynecological
disorder. The SSS sickness benefit, on the other
hand, is administered and given by the SSS in
accordance with RA 1161 as amended by RA
8282. [Sec. 7, DO 112, as amended]

Application for special leave


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

Special leave benefit vis--vis existing statutory


leaves
The SLB cannot be taken from existing statutory
leaves (i.e. 5-day SIL, leave for victims of VAWC,
Parental leave for solo parents). The grant of
SLB under the law is in recognition of the fact
that patients with gynecological disorder
needing surgery require a longer period of
recovery. The benefit is considered an addition
to the leave benefits granted under existing
laws and should be added on top of said
statutory leave entitlements.

Application after surgery


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

If the SLB has already been exhausted, the


company leave and other mandated leave
benefits may be availed of by the woman
employee. [Sec. 8, DO 112, as amended]

LABOR LAW

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

Special leave benefit vis--vis maternity leave


benefit
Where the woman employee had undergone
surgery due to gynecological disorder during
her maternity leave, she is entitled only to the
difference between the SLB and maternity leave
benefit. [Sec. 9, DO 112, as amended]

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

Crediting of existing or similar benefits


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

Exceptions
Managerial employees or one who is vested
with powers or prerogatives to lay down and
execute managerial policies and/or hire,
transfer, suspend, layoff, recall, discharge,
assign or discipline employees or to effectively
recommend such managerial actions. All
employees not falling within this definition shall
be considered rank-and-file employees. [Sec 2,
Rule VI, Book 3, IRR]

In the event the company policy, practice or CBA


provides lesser benefits, the company shall
grant the difference.
More liberal existing or similar benefits cannot
be withdrawn or reduced by reason of the
mandate of RA 9710.
The term similar or equal benefits refers to
leave benefits which are of the same nature and
purpose as that of the SLB. [Sec. 10, DO 112, as
amended]

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

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

The shares shall be distributed to employees


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

Non-commutation of the benefit


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

Note: The P2,000.00 salary ceiling for


entitlement thereto is no longer applicable.
Integration
In case service charge is abolished shares of
covered employees shall be considered
integrated in their wages. [Art 96]

SERVICE CHARGES

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LABOR STANDARDS

The basis of the amount to be integrated shall


be the average monthly share of each employee
for the past twelve (12) months immediately
preceding the abolition of withdrawal of such
charges. [Sec. 5, Rule VI, Book 3, IRR]

LABOR LAW

Government;
(2) Employers already paying their employees a
13th month pay or more in a calendar year
or its equivalent at the time of this issuance;
(3) Employers of household helpers and persons
in the personal service of another relation to
such workers; and
(4) Employers of those who are paid on purely
commission, boundary or task basis and
those who are paid a fixed amount for
performing specific work, irrespective of the
time consumed in the performance thereof
(except those workers who are paid on
piece-rate basis, in which case their
employer shall grant them 13th month pay).

Synthesis of the Rules


(1) Service charges must be pooled;
(2) Where a restaurant or similar establishment
does not collect service charges but has a
practice or policy of monitoring and pooling
tips given voluntarily by its customers to its
employees, the pooled tips should be
monitored, accounted for and distributed in
the same manner as the services charges.
[DOLE Handbook on Workers Statutory
Monetary Benefits, 2014ed.]
(3) The amount collected is divided between the
company (15%) and employees (85%);
(4) It shall be given twice a month with intervals
of not more than 15 days;
(5) If discontinued, removed, or stopped, the
average share of the employees of their
service charge or tips shall be integrated
with their basic wage.

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

THIRTEENTH (13TH) MONTH


PAY AND OTHER
BONUSES (PD
851 (THE 13TH-MONTH PAY LAW)
AND THE REVISED GUIDELINES
ON THE IMPLEMENTATION OF
THE 13TH MONTH PAY LAW)

Workers paid on a piece-rate basis


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

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

Minimum Amount: 1/12 of the total basic salary


earned by an employee within a calendar year
BASE AMOUNT, which is the basic salary shall
include:
(1) cost of living allowances (COLA) integrated
into the basic salary of a covered employee
pursuant to EO 178.
(2) all remunerations or earnings paid by this
employer for services rendered.
(3) But not the allowances and monetary
benefits which are not considered or
integrated as part of the regular or basic
salary, such as the cash equivalent of:
(a) unused vacation and sick leave credits,
(b) overtime,
(c) premium,
(d) night differential,
(e) holiday pay and, and
(f) cost-of-living allowances.

Coverage
General Rule: ALL EMPLOYERS are hereby
required to pay all their rank and file employees
a 13th month pay not later than Dec 24 of every
year, Provided that they have worked for at least
one (1) month during a calendar year.
Exempted Employers:
(1) Government, its political subdivisions,
including GOCCs except those operating
essentially as private subsidiaries of the
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LABOR STANDARDS

Time of payment

LABOR LAW

length of time he worked during the year,


reckoned from the time he started working
during the calendar year up to the time of his
resignation or termination from service.
(Revised Guidelines)
(6) Wage Difference: The difference between the
minimum wage and the actual salary received
by the Employee cannot be deemed as his 13th
month pay as such difference is not equivalent
to or of the same import as the said benefit
contemplated by law. [JPL Marketing
Promotions vs CA, 2005]
(7) Terminated Employees: The payment of the
13th month pay may be demanded by the
employee upon the cessation of employeremployee relationship. [Archilles Manufacturing
Corp. vs NLRC, 1995]

General Rule: paid not later than Dec 24 of each


year.
Exception: ER may give to his employees half
() of the required 13th Month Pay before the
opening of the regular school year and the other
half on or before the 24th of December every
year.
The frequency of payment of this monetary
benefit may be the subject of agreement
between the employer and the recognized CBA
of the employees.
13th Month Pay in Special Cases
(1) Paid by Results: Employees who are paid on
piece work basis are, by law, entitled to the 13th
Month Pay. [Revised Guidelines on the
Implementation of the 13th Month Pay Law]
(2) Fixed or Guaranteed Wage: Employees who
are paid a fixed or guaranteed wage plus
commission are entitled to 13th month pay (not
purely commission); the basis for computation
shall be both their fixed or guaranteed wage
and commission. [Revised Guidelines]
(3) Those with Multiple Employers: Government
Employees working part time in a private
enterprise, including private educational
institutions, as well as Employees working in
two or more private firms, whether on full or
part time bases, are entitled to the required 13th
Month Pay from all their private Employers
regardless of their total earnings from each or
all their employers. [Revised Guidelines]
(4) Private School Teachers: Private school
teachers, including faculty members of
universities and colleges, are entitled to the
required 13th month pay, regardless of the
number of months they teach or are paid within
a year, if they have rendered service for at least
one (1) month within a year. [Revised Guidelines]

Additional Rules:
(1) Commissions: If the commissions may be
properly considered part of the basic salary,
then they should be INCLUDED. If they are
not an integral part of the basic salary, then
they should be EXCLUDED. [Phil.
Duplicators Inc. vs NLRC, 1995]
(2) Substitute Payment not allowed: Benefits in
the form of food or free electricity, assuming
they were given, were not a proper
substitute for the 13th month pay required
by law. Neither may year-end rewards for
loyalty and service be considered in lieu of
13th month pay. [Framanlis Farms, Inc. vs
MOLE, 1989]
(3) 14th Month Pay is not mandated: Employers
already paying their employees a 13th
month pay or its equivalent are not covered
by this Decree. [Kamaya Point Hotel vs
NLRC, 1989]
Commissions vis--vis 13th month pay
The Rule on Productivity Bonuses. The so-called
commissions paid to or received by medical
representatives of Boie-Takada Chemicals or by
the rank-and-file employees of Philippine Fuji
Xerox Co., were excluded from the term basic
salary because these were paid to the medical
representatives and rank-and-file employees as
productivity bonuses. These have no clear
direct or necessary relation to the amount of
work actually done by each individual employee.
More generally, a bonus is an amount granted
and paid ex gratia to an employee. If an
employer cannot be compelled to pay a
productivity bonus to its employees, it should

Overload pay is NOT included in the


computation for 13th month pay; overload is not
overtime as it is additional work done within the
normal shift (Letran Calamba Faculty vs NLRC,
2008)
(5) Resigned or Separated Employee: An
Employee who has resigned or whose services
were terminated at any time before the time for
payment of the 13th month pay is entitled to
this monetary benefit in proportion to the
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LABOR STANDARDS

follow that such productivity bonus, when given,


should not be deemed to fall within the basic
salary of employees when the time comes to
compute their 13th month pay [Boie-Takeda vs de
la Serna, 1993]

LABOR LAW

General rule: The rule embodied in the Labor


Code is that a person dismissed for cause as
defined therein (see Art. 282) is not entitled to
separation pay. [PLDT vs NLRC, 1988]
Exceptions:
Considerations of equity as in the cases of
Filipro, Inc. v. NLRC, Metro Drug Corp. v. NLRC,
Engineering Equipment, Inc. v. NLRC, San
Miguel Corp v. NLRC. [PLDT vs NLRC, 1988]

The decision in Boie-Takeda and the doctrine


enunciated in this case in fact co-exist with the
other. The two cases present quite different
factual situations (although the same word
commissions was used or invoked) the legal
characterizations of which must accordingly
differ.

An employee who voluntarily resigns is not


entitled to separation pay unless stipulated in
the employment contract, or the collective
bargaining agreement, or is sanctioned by
established practice or policy of the employer.
[Phimco Industries vs NLRC, 1997; Hinatuan
Mining Corp vs NLRC, 1997 cited in JPL
Marketing Promotions v. CA, 2005]

In the instant case, there is no question that the


sales commission earned by the salesmen who
make or close a sale of duplicating machines
constitute part of the compensation or
remuneration paid to salesmen for serving as
salesmen, and hence as part of the wage or
salary of petitioners salesmen. It appears that
petitioner pays its salesmen a small fixed or
guaranteed wage; the greater part of the
salesmens wages or salaries being composed
of the sales or incentive commissions earned on
actual sales closed by them.
The sales
commissions were an integral part of the basic
salary structure. They are not overtime
payments, or profit sharing payments or any
other fringe benefit. [Phil. Duplicators vs NLRC,
1995]

Amount
One-Half (1/2) Month Pay per Year of Service
An EE is entitled to receive separation pay
equivalent to month pay for every year of
service, a fraction of at least six (6) months
being considered as one whole year, if his/her
separation from the service is due to any of the
following authorized causes:
(1) Retrenchment to prevent losses (i.e.
reduction of personnel effected by
management to prevent losses)
(2) Closure or cessation of operation of an
establishment not due to serious losses or
financial reverses; and,
(3) When the EE is suffering from a disease not
curable within a period of six (6) months
and his/her continued employment is
prejudicial to his/her health or to the health
of his/her co-employees
In no case will an EE get less than one (1) month
separation pay if the separation is due to the
above stated causes and he/she has served for
at least six (6) months. [DOLE Handbook on
Workers Statutory Monetary Benefits, 2014 ed.]

CBA vis--vis 13th month pay


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

SEPARATION PAY (ART. 283 &


284, LC, DOLE HANDBOOK ON
WORKERS
STATUTORY
MONETARY BENEFITS, 2014)

One-Month Pay per Year of Service


An EE is entitled to separation pay equivalent to
his/her one-month pay for every year of service,
a fraction of at least 6 months being considered
as one whole year, if his/her separation from
service is due to any of the following:
(1) Installation by ER of labor-saving devices;
(2) Redundancy, as when the position of the EE
has been found to be excessive or

Separation pay is defined as the amount that an


employee receives at the time of his severance
from the service and is designed to provide the
employee with the wherewithal during the
period that he is looking for another
employment. [A Prime Security Services vs
NLRC, 1993]
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LABOR STANDARDS

unnecessary in the operation of the


enterprise;
(3) Impossible reinstatement of the EE to
his/her former position or to a substantially
equivalent position for reasons not
attributable to the fault of the ER, as when
the reinstatement ordered by a competent
authority cannot be implemented due to
closure of cessation of operations of the
establishment/ER, or the position to which
he/she is to be reinstated no longer exists
and there is no substantially equivalent
position in the establishment to which
he/she can be assigned. [Gaco vs NLRC,
1994]

LABOR LAW

the statute has taken effect, and that its


benefits can be reckoned not only from the date
of the law's enactment but retroactively to the
time said employment contracts have started.
[Enriquez Security Services, Inc. v. Cabotaje,
2006]
Pursuant thereto, this Court imposed two (2)
essential requisites in order that R.A. 7641 may
be given retroactive effect: (1) the claimant for
retirement benefits was still in the employ of the
employer at the time the statute took effect;
and (2) the claimant had complied with the
requirements for eligibility for such retirement
benefits under the statute. [Universal Robina
Sugar Milling Corp. vs Caballeda, 2008]

Notice of Termination
The ER may terminate the employment of any
EE due to the above-mentioned authorized
causes by serving a written notice on the EE and
the DOLE through its regional office having
jurisdiction over the place of business at least 1
month before the intended date thereof.

ELIGIBILITY

All employees in the private sector, regardless


of their position, designation, or status, and
irrespective of the method by which their wages
are paid [Sec. 1, IRR, RA 7641]
The only exceptions are:
(1) employees covered by the Civil Service Law;
(2) domestic helpers and persons in the
personal service of another, and
(3) employees in retail, service and agricultural
establishments
or
operations
regularly
employing not more than ten employees [Sec. 2,
IRR, RA 7641]

Basis of Separation Pay


The computation of separation pay of an EE
shall be based on his/her latest salary rate.
[DOLE Handbook on Workers Statutory
Monetary Benefits, 2014 ed.]
Inclusion of Regular Allowance in the
Computation
In the computation of separation pay, it would
be error not to integrate the allowance with the
basic salary. The salary base properly used in
computing the separation pay should include
not just the basic salary but also the regular
allowances that an EE has been receiving.
[Planters Products, Inc. vs NLRC, 1989]

Exclusions from coverage


R.A. No. 7641, otherwise known as "The
Retirement Pay Law," only applies in a situation
where
(1) there is no collective bargaining agreement
or other applicable employment contract
providing for retirement benefits for an
employee; OR
(2) there is a collective bargaining agreement or
other applicable employment contract
providing for retirement benefits for an
employee, but it is below the requirements
set for by law.

RETIREMENT PAY (RA 7641 The Retirement Pay Law)


Rationale
RA 7641 is undoubtedly a social legislation. The
law has been enacted as a labor protection
measure and as a curative statute that absent a
retirement plan devised by, an agreement with,
or a voluntary grant from, an employer can
respond, in part at least, to the financial wellbeing of workers during their twilight years soon
following their life of labor. There should be
little doubt about the fact that the law can
apply to labor contracts still existing at the time

The reason for the first situation is to prevent


the absurd situation where an employee, who is
otherwise deserving, is denied retirement
benefits by the nefarious scheme of employers
in not providing for retirement benefits for their
employees. The reason for the second situation
is expressed in the Latin maxim pacta private juri
public derogare non possunt. Private contracts
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LABOR STANDARDS

cannot derogate from the public law. [Oxales vs


Unilab, 2008]

LABOR LAW

Retirement pay under RA 7641 vis--vis


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

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

Retirement Benefits under a CBA or Applicable


Contract
Any EE may retire or be retired by his/her ER
upon reaching the age established in the CBA
or other applicable agreement/contract and
shall receive the retirement benefits granted
therein; provided, however, that such retirement
benefits shall not be less than the retirement
pay required under RA 7641, and provided
further that if such retirement benefits under
the agreement are less, the ER shall pay the
difference.

Compulsory retirement in the absence of a


retirement plan or other applicable agreement
providing for retirement benefits of EEs in an
establishment, an EE shall be retired at the age
of 65 years. [Sec. 4, IRR, RA 7641]

AMOUNT OF RETIREMENT PAY

The minimum retirement pay shall be


equivalent to one-half (1/2) month salary for
every year of service, a fraction of at least six (6)
months being considered as one whole year.

Where both the ER and the EE contribute to a


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

For the purpose of computing retirement pay,


one-half month salary shall include all of the
following:
(1) Fifteen (15) days salary based on the latest
salary rate;
(2) Cash equivalent of five (5) days of service
incentive leave;
(3) One-twelfth (1/12) of the 13th month pay.
(1/12 x 365/12 = .083 x 30.41 = 2.52)

RETIREMENT
BENEFITS
WORKERS WHO ARE PAID
RESULTS

Thus, one-half month salary is equivalent to


22.5 days. [Capitol Wireless, Inc. vs Sec.
Confessor, 1996]

OF
BY

For covered workers who are paid by result and


do not have a fixed monthly salary rate, the
basis for the determination of the salary for 15
days shall be their average daily salary (ADS).
The ADS is derived by dividing the total salary or
earning for the last 12 months reckoned from
the date of retirement by the number of actual
working days in that particular period, provided
that the determination of rates of payment by
results are in accordance with established
regulations

Other benefits may be included in the


computation of the retirement pay upon
agreement of the ER and the EE or if provided in
the CBA.

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LABOR STANDARDS

LABOR LAW

separation shall likewise be exempt as


hereinabove provided.

RETIREMENT BENEFIT OF PARTTIME WORKERS

Part-time workers are also entitled to


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

"Reasonable private benefit plan" means a


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

Applying the foregoing principle, the


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

WOMEN WORKERS

TAXABILITY (SEC. 1, RA 4917)

PROVISIONS
DISCRIMINATION

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

The following are acts of discrimination:


(1) Payment of a lesser compensation,
including wage, salary or other form of
remuneration and fringe benefits, to a
female employees as against a male
employee, for work of equal value; and
(2) Favoring a male employee over a female
employee with respect to promotion,
training
opportunities,
study
and
scholarship grants solely on account of their
sexes. [Art.133]

Any provision of law to the contrary


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

AGAINST

It shall be unlawful for any employer to


discriminate against any woman employee with
respect to terms and conditions of employment
solely on account of her sex.

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

STIPULATION AGAINST MARRIAGE

It shall be unlawful for an employer to:


(1) require as a condition of employment or
continuation of employment that a woman
employee shall not get married, or
(2) stipulate expressly or tacitly that upon
getting married a woman employee shall be
deemed resigned or separated or
(3) actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee
merely by reason of her marriage. (Art. 134)
Bona fide occupational qualification exception

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LABOR STANDARDS

When the employer can prove that the


reasonable demands of the business require a
distinction based on marital status and there is
no better available or acceptable policy which
would better accomplish the business purpose,
an ER may discriminate against an EE based in
the identity of the EEs spouse. [Star Paper Corp.
vs. Simbol, 2006]

LABOR LAW

Expulsion of Women faculty/ female student due


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

The Court sustained the validity of employer


policy prohibiting an employee from having a
personal or marital relationship with an
employee of a competitor. The prohibition was
reasonable under the circumstances because
relationships of such nature might compromise
the interests of the company. [Duncan
Association of Detailmen vs. Glaxo Wellcome,
2004]

ANTI-SEXUAL HARRASSMENT (RA


7877 ANTI-SEXUAL HARRASSMENT
ACTO OF 1995)
Forms of Sexual Harassment
(1) Employment or Work Related
(a) The sexual favor is made as a condition
(i) in the hiring or in the employment,
re-employment
or
continued
employment of said individual or
(II) in granting said individual favorable
compensation, terms, conditions,
promotions, or privileges, or
(iii) in the refusal to grant the sexual
favor results in limiting, segregating
or classifying the EE which in any
way would discriminate, deprive or
diminish employment opportunities
or otherwise adversely affect said
employee;

PROHIBITED ACTS (ART. 135)


Note: Nightwork/ Exception (Art 130-131) No
more nightwork prohibition under R.A. 10151.
Discrimination (Art 133, RA 9710)
See previous section
Stipulation against marriage (Art 134)
See previous section
Discharge to prevent enjoyment of benefits
To deny any woman employee the benefits
provided for in this Chapter or to discharge any
woman employed by him for the purpose of
preventing her from enjoying any of the benefits
provided under this Code. [Art. 135 (1)]

(b) The above acts would either:


(i) impair the employees rights or
privileges under existing labor laws;
or
(ii) result in an intimidating, hostile, or
offensive environment for the
employee.

Discharge on account of pregnancy


To discharge such woman on account of her
pregnancy, while on leave or in confinement due
to her pregnancy. [Art. 135 (2)]

(1) Education or Training environment. In an


education or training environment, sexual
harassment is committed:
a. Against one who is under the care,
custody or supervision of the offender
b. Against one whose education,
training, apprenticeship or tutorship is
entrusted to the offender;
c. When the sexual favor is made a
condition to the giving of a passing
grade, or the granting of honors and
scholarships, or the payment of a
stipend, allowance or other benefits,
privileges, or considerations; or

Discharge on account of testimony


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

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LABOR LAW

As a managerial employee, petitioner is bound


by more exacting work ethics. When such moral
perversity is perpetuated against his
subordinate, he provides a justifiable ground for
his dismissal for lack of trust and confidence. It
is the right, nay the duty of every employer to
protect its employees from oversexed superiors.
[Libres vs NLRC, 1999]

d. When the sexual advances result in an


intimidating, hostile or offensive
environment for the result, trainee or
apprentice.
Persons who may be liable
(1) Any employer, employee, manager,
supervisor, agent of the employer, teacher,
instructor, professor, coach, trainer or any
other person, regardless of whether the
demand, request for requirement for
submission is accepted by the object of said
act having authority, influence or moral
ascendancy over another in a work or
training or education environment, who
demands, requests or otherwise requires any
sexual favor from another,
(2) Any person who directs or induces another to
commit any act of sexual harassment as
herein defined. OR
(3) Any person who cooperates in the
commission by another without which it
would NOT have been committed, shall also
be held liable under this Act [Sec. 3, RA
7877]

The gravamen of the offense in sexual


harassment is not the violation of the
employee's sexuality but the abuse of power by
the employer. Any employee, male or female,
may rightfully cry "foul" provided the claim is
well substantiated. Strictly speaking, there is no
time period within which he or she is expected
to complain through the proper channels. The
time to do so may vary depending upon the
needs, circumstances, and more importantly,
the emotional threshold of the employee.
Not many women are made of the stuff that can
endure the agony and trauma of a public, even
corporate, scandal. If petitioner-corporation had
not issued the third memorandum that
terminated the services of private respondent,
we could only speculate how much longer she
would keep her silence. Perhaps, to private
respondent's mind, for as long as she could
outwit her employer's ploys she would continue
on her job and consider them as mere
occupational hazards. [Phil. Aelous Automotive
United Corp. vs NLRC, 2000]

Role of the employer or Head of Office


The Employer or Head of Office shall have the
duty:
(1) to prevent the commission of such acts and
(2) to lay down the procedure for the resolution,
settlement or prosecution of committed
acts. [Sec. 4, RA 7877]

MINOR WORKERS

He shall be solidarily liable for damages:


(1) if he is informed of such acts by the offended
party and
(2) no immediate action is taken thereon. [Sec.
5, RA 7877]

Relevant Laws: RA 7610 (Special Protection of


Children Against Abuse, Exploitation and
Discrimination Act), RA 9231 (Special Protection
of Children Against Child Abuse, Exploitation
and Discrimination Act), Art. 137(a)

Independent Action for Damages


The victim of work, education or training-related
sexual harassment can institute a separate and
independent action for damages and other
affirmative relief. [Sec. 6, RA 7877]

Constitutional basis: Art II, Sec. 13 of the 1987


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

Sanctions
(1) Criminal: imprisonment of 1 month to mos.
Or fine of P10k to P20k or both
Prescription of such action is in 3 years.
(2) Termination [Sec. 7, RA 7877]

General Rule: Children below 15 shall NOT be


employed
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LABOR STANDARDS

LABOR LAW

The Secretary of Labor shall from time to time


publish a list of hazardous work and activities in
which persons 18 years of age and below cannot
be employed [Sec. 3, Rule XII, Book III, IRR of LC]

Exceptions
(1) Child works directly under the sole
responsibility of his parents or legal guardian
and where only members of the ERs family are
employed, provided:
(a) his employment does NOT endanger his
life, safety, health and morals,
(b) nor impairs his normal development,
and
(c) the parent or legal guardian shall
provide the said minor child with the
prescribed primary and/or secondary
education; [Sec. 12 of RA 7610 as
amended by RA 7658]

The following are HAZARDOUS workplaces:


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

(2) childs employment or participation in public


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

Working Hours of a Child


Quantity
Age Bracket
Below 15 y
15 to below 18

Daily Max
4 hours
8 hours

Night work prohibition


Age Bracket
Below 15 y
15 to below 18

EMPLOYMENT
HOUSEHELPERS

Weekly Max
20 hours
40 hours

Prohibited Hours
8 pm to 6 am (10 hrs)
10 pm to 6 am (8 hrs)

OF

Relevant Law: RA 10361 (Batas Kasambahay or


Domestic Workers Act)
Note: RA 10361 has expressly repealed Chapter
III, Employment of Househelpers, Title III of
Book III of the LC

Employment of Children from 15 to 18


Employment is allowed but restricted to nonhazardous work.

Domestic work
This refers to work performed in or for a
household or households. [Sec 4(C). RA 10361]

Non-hazardous work shall mean any work or


activity in which the EE is not exposed to any
risk which constitutes an imminent danger to
his safety and health. [Sec. 3, Rule XII, Book III,
IRR of LC]

Domestic worker or Kasambahay


Refers to any person engaged in domestic work
within an employment relationship such as, but
not limited to, the following: general househelp,

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LABOR STANDARDS

nursemaid or yaya, cook, gardener, or laundry


person.[Sec 4(D). RA 10361]

LABOR LAW

The employer shall grant the domestic worker


access to outside communication during free
time: Provided, That in case of emergency,
access to communication shall be granted even
during work time. [Sec. 8, RA 10361]

The term domestic worker or kasambahay


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

(f) Education and Training


The employer shall afford the domestic worker
the opportunity to finish basic education and
may allow access to alternative learning
systems and, as far as practicable, higher
education or technical and vocational training.
[Sec. 9, RA 10361]

Rights and Privileges


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

(g) Social and Other Benefits


A domestic worker who has rendered at least
one (1) month of service shall be covered by the
Social Security System (SSS), the Philippine
Health Insurance Corporation (PhilHealth), and
the Home Development Mutual Fund or PagIBIG, and shall be entitled to all the benefits in
accordance with the pertinent provisions
provided by law.
(h) Leave Benefits
A domestic worker who has rendered at least
one (1) year of service shall be entitled to an
annual service incentive leave of five (5) days
with pay [Sec. 29, RA 10361]

(b) Standard of Treatment


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

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

(c) Board, Lodging and Medical Attendance


The employer shall provide for the basic
necessities of the domestic worker to include at
least three (3) adequate meals a day and
humane sleeping arrangements that ensure
safety and shall provide appropriate rest and
assistance to the domestic worker in case of
illnesses and injuries sustained during service
without loss of benefits. [Sec. 6, RA 10361]
(d) Privacy
Respect for the privacy of the domestic worker
shall be guaranteed at all times and shall
extend to all forms of communication and
personal effects [Sec. 7, RA 10361]

However, Section 12(a), (b), (c) and (d) shall be


standard requirements when the employment
of the domestic worker is facilitated through the
PEA.

(e) Access to Outside Communication


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LABOR STANDARDS

The cost of the foregoing shall be borne by the


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

LABOR LAW

(e) Any disease prejudicial to the health of the


domestic worker, the employer, or
member/s of the household; and
(f) Other causes analogous to the foregoing.
[Sec. 33, RA 10361]

Time and Manner of Payment: Payment of


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

(2) Initiated by the employer


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

Right against assignment to non-household


work at a wage rate lower than that mandated
for agricultural or non-agricultural enterprises
depending on the case. [Sec. 22, RA 10361]
Employment Age of Domestic Workers: Unlawful
to employ any person below fifteen (15) years of
age as a domestic worker [Sec. 16, RA 10361]
Persons between 15-18 years old should only be
employed in non-hazardous work. [DO 4-99
Sec. 4]
Daily Rest Period: Aggregate of eight (8) hours
per day. [Sec. 20, RA 10361]
Employment Certification: ER shall give the
househelper a written statement of the nature
and duration of the service and his or her work
performance as househelper upon severance.
[Sec. 35, RA 10361]
Termination
(1) Initiated by the domestic worker
The domestic worker may terminate the
employment relationship at any time before the
expiration of the employment contract for any of
the following causes:
(a) Verbal or emotional abuse of the domestic
worker by the employer or any member of
the household;
(b) Inhuman treatment including physical abuse
of the domestic worker by the employer or
any member of the household;
(c) Commission of a crime or offense against the
domestic worker by the employer or any
member of the household;
(d) Violation by the employer of the terms and
conditions of the employment contract and
other standards set forth under this law;

Unjust dismissal
Neither the domestic worker nor the employer
may terminate the contract before the
expiration of the term except for grounds
provided in Sec. 33 and 34 of RA 10361.
If the domestic worker is unjustly dismissed, the
domestic worker shall be paid the
compensation already earned plus the
equivalent of 15 days work by way of indemnity.
Leaving without justifiable reason by the
domestic worker
(1) any unpaid salary due not exceeding the
equivalent 15 days work shall be forfeited
AND
(2) the employer may recover from the domestic
worker the costs incurred related to the
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LABOR STANDARDS

deployment expenses, if any: Provided, that


the service has been terminated within 6
months from the domestic workers
employment.

Rights and benefits accorded homeworkers


(1) Right to form, join or assist organizations
(Sec 3, Rule XIV, Book III, IRR)
(2) Right to acquire legal personality and the
rights and privileges granted by law to
legitimate labor organizations upon
issuance of the certification of registration
(Sec 4, Rule XIV, Book III, IRR)
(3) Immediate payment upon ERs receipt of
finished goods or articles (Sec 6, Rule XIV,
Book III, IRR)
(4) SSS, MEDICARE and ECC premium
contributions shall be deducted from their
pay and shall be remitted by
ER/contractor/subcontractor to the SSS
[Sec 6, Rule XIV, Book III, IRR]

Notice to end the working relationship


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

EMPLOYMENT
HOMEWORKERS

LABOR LAW

Liability of Employer
(1) ER may require homeworker to redo work
improperly executed without additional pay
[Sec 9a, Rule XIV, Book III, IRR]
(2) ER need not pay homeworker for any work
done on goods or articles not returned due
to homeworkers fault [Sec 9b, Rule XIV,
Book III, IRR]
(3) If subcontractor/contractor fails to pay
homeworker, ER is jointly and severally
liable with the former to the homeworker for
his/her wage [Sec 11, Rule XIV, Book III, IRR]
(4) ER shall assist the homeworkers in the
maintenance of basic safe and healthful
working conditions at the homeworkers
place of work. [Sec 11, Rule XIV, Book III, IRR
of LC]

OF

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


Rule XIV, Book III of the IRR.
Industrial homework
(1) Is a system of production under which work
for an ER or contractor is carried out by a
homeworker at his/her home.
(2) Materials may or may not be furnished by
the ER or contractor.
(3) Decentralized form of production, where
there is ordinarily very little supervision or
regulation of methods of work. [Sec. 2(a),
Rule XIV, Book III, IRR]
Industrial Homeworker means a worker who is
engaged in industrial homework

Regional Office shall provide technical


assistance
to
registered
homeworkers
organizations [Sec 14, Rule XIV, Book III, IRR of
LC]

Employer means any person who


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

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

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


similar to the above.
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LABOR STANDARDS

Conditions for deduction from homeworkers


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

LABOR LAW

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


approved by the Minister of Labor and
Employment. Hence, since the apprenticeship
agreement between petitioner and respondent
has no force and effect, respondent's assertion
that he was hired not as an apprentice but as a
delivery boy deserves credence. [Nitto
Enterprises vs. NLRC, 1995]
Conditions under which children below 15 may
be employed
Children below fifteen (15) years of age shall not
be employed except:
(1) When a child works directly under the sole
responsibility of his parents or legal guardian
and where only members of the employer's
family are employed: Provided, however, That
his employment neither endangers his life,
safety, health and morals, nor impairs his
normal development: Provided, further, That
the parent or legal guardian shall provide the
said minor child with the prescribed primary
and/or secondary education; o
(2) Where a child's employment or participation
in public entertainment or information through
cinema, theater, radio or television is essential:
Provided, The employment contract is
concluded by the child's parents or legal
guardian, with the express agreement of the
child concerned, if possible, and approval of the
Department of Labor and Employment: and
Provided, That the following requirements in all
instances are strictly complied with:
(a) The employer shall ensure the protection,
health, safety, morals and normal
development of the child;
(b) The employer institute measures to prevent
the child's exploitation or discrimination
taking into account the system and level of
remuneration and the duration and
arrangement of working time; and
(c) The employer shall formulate and
implement, subject to the approval and
supervision of competent authorities, a
continuing program for training and skills
acquisition of the child.

A. APPRENTICES AND LEARNERS


Relevant Law: RA 7796 (Technical Education
and Skills Development Act of 1994 or TESDA
Act of 1994)

APPRENTICES
Art 58 has been superseded by Section 4 (j),
(k), (l), (m) of RA 7796 quoted below:
(j)
"Apprenticeship"
training
within
employment with compulsory related
theoretical instruction involving a contract
between an apprentice and an employer on
an approved apprenticeable occupation.
(k)Apprentice" is a person undergoing
training for an approved apprenticeable
occupation
during an
apprenticeship
agreement.
(l)"Apprenticeship Agreement" is a contract
wherein a prospective employer binds himself
to train the apprentice who in turn accepts the
terms of training for a recognized
apprenticeable occupation emphasizing the
rights, duties and responsibilities of each
party.
(m) Apprenticeable Occupation is an
occupation officially endorsed by a tripartite
body and approved to be apprenticeable by
the authority. (Sec. 4, RA 7796)

In the above exceptional cases where any such


child may be employed, the employer shall first
secure, before engaging child, a work permit
from the Department of Labor and Employment

The act of filing the proposed apprenticeship


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

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LABOR STANDARDS

which shall ensure observance of the above


requirements.

LABOR LAW

only in accordance with apprenticeship


programs duly approved by the Secretary of
Labor and Employment. [Art. 61, LC]

The Department of Labor and Employment


shall promulgate rules and regulations
necessary for the effective implementation of
this Section. [RA 7160, Sec. 12 as amended by RA
7658, Sec. 1]

The Secretary of Labor and Employment may


authorize the hiring of apprentices without
compensation whose training on the job is
required by the school or training program
curriculum or as requisite for graduation or
board examination. [Art. 72, LC]

Qualifications of apprentice
(a) Possess vocational aptitude and capacity for
appropriate tests; and
(b) Possess the ability to comprehend and
follow oral and written instructions. [Art. 59, LC]

The wages of apprentices and learners shall in


no case be less than seventy-five percent (75%)
of the applicable minimum wage rates. [Wage
Order No. NCR-17, May 17, 2012]

Integrating both the abovementioned provisions


then the qualifications of an apprentice are as
follows:
(1) At least 15 years of age (as amended by R.A.
7610), provided that if he is below 18 years,
he shall not be eligible for hazardous
occupation;
(2) Possess vocational aptitude and capacity for
appropriate tests;
(3) Possess the ability to comprehend and
follow oral and written instructions. [Art. 59
of the LC, as amended by R.A. 7610]
(4) Physically fit for occupation

Enforcement
No person shall institute any action for the
enforcement of any apprenticeship agreement
or damages for breach of any such agreement,
unless he has exhausted all available
administrative remedies. [Art. 67, LC]
Incentives for employers
An additional deduction from taxable income of
one-half (1/2) of the value of labor training
expenses incurred for developing the
productivity and efficiency of apprentices shall
be granted to the person or enterprise
organizing an apprenticeship program:
Provided, That such program is duly recognized
by the Department of Labor and Employment:
Provided, further, That such deduction shall not
exceed ten (10%) percent of direct labor wage:
and Provided, finally, That the person or
enterprise who wishes to avail himself or itself of
this incentive should pay his apprentices the
minimum wage. [Art. 71, LC]

Allowed employment
SEE: RA 7769, Sec. 4 (m) above
Employment of Apprentices: When applicable:
(1) Only employers in highly technical industries
may employ apprentices; and
(2) Only in apprenticeable occupations
approved by the Secretary of Labor. [Art. 60,
LC]
Terms and conditions
Apprenticeship agreements, including the wage
rates of apprentices, shall conform to the rules
issued by the Secretary of Labor and
Employment.

Requisites of the deduction:


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

The period of apprenticeship shall not exceed


six months.

Summary of Rules:
(1) The apprentice must be paid not less than
75% of the prescribed minimum salary (Art.
61);

Apprenticeship agreements providing for wage


rates below the legal minimum wage, which in
no case shall start below 75 percent of the
applicable minimum wage, may be entered into
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LABOR STANDARDS

HOWEVER, the employer MAY NOT pay any


wage if the apprenticeship training is:
a. part of the school curriculum,
b. a requirement for graduation, or
c. a requirement for board examination
[Art. 72]
(2) The apprenticeship agreement must be
approved by the DOLE Secretary (without
such one shall be deemed a regular
employee) [Nitto Enterprises v. NLRC, G.R.
No. 114337, Sept. 29, 1995];
(3) The employer is not compelled to continue
ones employment upon termination of
apprenticeship;
(4) One-half (1/2) of the value of labor training
expenses incurred for developing the
productivity and efficiency of apprentices of
the training cost is deducted from the
employers income tax but it shall not
exceed 10% of direct labor wage [Art. 71]

LABOR LAW

Terms and conditions of employment


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

Working scholars there is no employeremployee relationship between students on one


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

The learnership agreement shall be subject to


inspection by the Secretary of Labor and
Employment
or
his
duly
authorized
representative. [Art. 75, LC]
Learners employed in piece or incentive-rate
jobs during the training period shall be paid in
full for the work done. [Art. 76, LC]
Summary of Rules
(1) The duration of learnership shall not exceed
3 months [Art. 73, LC];
(2) If the learnership of 3 months is completed,
the employer may be compelled to continue
with the services of the learner as a regular
employee;
(3) There is a commitment from the employer to
employ the learners if they so desire, as
regular employees upon completion of the
learnership;
(4) If the learner is dismissed from service
without just and valid cause and without
due process after 2 months of service, he
will be deemed as regular employee; and
[Art. 75(d)]
(5) The wages or salary rates of the learners
which shall begin at not less than 75% of
the applicable minimum wage. [Art. 75(c)]

LEARNERS

Persons hired as trainees in semi-skilled and


other industrial occupations which are nonapprenticeable. Learnership programs must be
approved by the authority. [Sec. 4, RA 7796]
[Occupations] which may be learned through
practical training on the job in a relatively short
period of time which shall not exceed three (3)
months. [Art. 73(2), LC]
When may learners be hired
(1) No experienced workers are available;
(2) The employment of learners being necessary
to prevent the curtailment of employment
opportunities; and
(3) The employment will neither create unfair
competition in terms of labor costs nor
impair working standards. [Art. 74, LC]
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Distinctions
between
Apprenticeship
Apprenticeship
Highly
technical
industries
Practical
training
supplemented by related
theoretical instruction

Apprenticeable
occupations approved by
the SOLE
Written
apprentice
agreement ratified by the
appropriate committees
More than three months,
shall not exceed six
months
(1) The person is at least
fifteen (15) years of
age, provided those
who are at least
fifteen (15) years of
age but less than
eighteen (18) may be
eligible
for
apprenticeship only in
non-hazardous
occupation;
(2) The
person
is
physically fit for the
occupation in which
he desires to be
trained;
(3) The person possesses
vocational aptitude
and capacity for the
particular occupation
as
established
through appropriate
tests; and
(4) The person is able to
comprehend
and
follow
oral
and
written instructions
Wage rate shall begin at

LABOR STANDARDS

Learnership

not less than 75% of the begin at not less


min wage
than 75% of the
min wage
No compensation if SOLE
authorizes, as OJT is Learners
in
required by the school
piecework shall be
paid in full for the
work done.
A commitment to
employ
the
learners if they so
desire, as regular
employees
upon
completion of the
learnership.

and

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

All learners who


have been allowed
or suffered to work
during the first two
(2) months shall be
deemed
regular
employees
if
training
is
terminated by the
employer
before
the end of the
stipulated period
through no fault of
the learners.

Shall not exceed 3


months
(1) When
no
experienced
workers
are
available;
(2) The
employment of
learners
is
necessary
to
prevent
curtailment of
employment
opportunities;
and
(3) The
employment
does not create
unfair
competition in
terms of labor
costs or impair
or
lower
working
standards.

Wage

rate

LABOR LAW

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

shall
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LABOR STANDARDS

LABOR LAW

HANDICAPPED WORKERS
DIFFERENTLY-ABLED
WORKERS (RA 7277 - MAGNA
CARTA
FOR
DISABLED
PERSONS, AS AMENDED BY RA
9442)

engaged in social development shall be


reserved for disabled persons. [Sec 5 (par. 2), RA
7277]

Disabled Persons are those suffering from


restriction or different abilities, as a result of a
mental, physical or sensory impairment, to
perform an activity in the manner or within the
range considered normal for a human being
[Sec. 4(a), RA 7277]

In the placement of disabled persons in


sheltered employment, it shall accord due
regard to the individual qualities, vocational
goals and inclinations to ensure a good working
atmosphere and efficient production. [Sec 6, RA
7277]

Impairment is any loss, diminution or aberration


of psychological, physiological, or anatomical
structure or function [Sec. 4(b), RA 7277]

(2) Apprenticeship opportunity


Disabled persons shall be eligible as
apprentices or learners: Provided, that their
handicap is NOT as much as to effectively
impede the performance of job operations in the
particular occupation for which they are hired;
provided, further, That after the lapse of the
period of apprenticeship, if found satisfactory in
the job performance, they shall be eligible for
employment. [Sec. 7, RA 7277]

(1) Sheltered employment


If suitable employment for disabled persons
cannot be found through open employment, the
State shall endeavor to provide it by means of
sheltered employment.

Disability shall mean:


(1) physical or mental impairment that
substantially limits one
or more
psychological, physiological or anatomical
function of an individual or activities of such
individual; OR
(2) a record of such an impairment; OR
(3) being regarded as having such an
impairment [Sec 4(c), RA 7277]

(3) Full minimum wage


All qualified handicapped workers shall receive
the full amount of the minimum wage rate
prescribed herein. [Sec 6, Wage Order No. NCR17, May 17, 2012]

Handicap refers to a disadvantage for a given


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

In this light, the Magna Carta for Disabled


Persons mandates that a qualified disabled EE
should be given the same terms and conditions
of employment as a qualified able-bodied
person. Since the Magna Carta accords them
the rights of qualified able-bodied persons, they
are thus covered by Article 280 of the Labor
Code. In the present case, the handicap of
petitioners (deaf-mutes) is NOT a hindrance to
their work. The eloquent proof of this statement
is the repeated renewal of their employment
contracts. [Bernardo v. NLRC, 1999]

Rights of disabled workers


(1) Equal opportunity for employment
No disabled person shall be denied access to
opportunities for suitable employment. A
qualified disabled EE shall be subject to the
same terms and conditions of employment and
the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a
qualified able-bodied person. [Sec. 5 (par. 1), RA
7277]

Discounts and other privileges


Persons with disability shall be entitled to the
following:
(1) At least 20% discount from all
establishments relative to the utilization of

(2) Reserved contractual positions


5% of all casual, emergency and contractual
positions in the DSWD; DOH, DepEd; and other
government agencies, offices or corporations
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all services in hotels and similar lodging


establishments; restaurants and recreation
centers for the exclusive use or enjoyment of
persons with disability;
(2) A minimum of 20% discount on admission
fees charged by theaters, cinema houses,
concert halls, circuses, carnivals and other
places of culture, leisure and amusement
for the exclusive use or enjoyment of
persons with disability;
(3) At least 20% discount for the purchase of
medicines in all drugstores for the exclusive
use or enjoyment of persons with disability;
(4) At least 20% discount on medical and dental
services including diagnostic and laboratory
fees such as, but not limited to, x-rays,
computerized tomography scans and blood
tests, in all government facilities, subject to
guidelines to be issued by the DOH in
coordination with the PHILHEALTH.
(5) At least 20% discount on medical and dental
services including diagnostic and laboratory
fees and professional fees of attending
doctors in all private hospitals and medical
facilities, in accordance with the rules and
regulations to be issued by the DOH, in
coordination with PHILHEALTH;
(6) At least 20% discount on fare for domestic
air and sea travel for the exclusive use or
enjoyment of persons with disability;
(7) At least 20% discount in public railways,
skyways, and bus fare for the exclusive use
and enjoyment of persons with disability.
(8) Educational assistance to persons with
disability, for them to pursue primary,
secondary, tertiary, post tertiary, as well as
vocational or technical education, in both
public and private schools, through the
provision of scholarships, grants, financial
aids, subsidies and other incentives to
qualified persons with disability, including
support for books, learning materials and
uniform allowance to the extent feasible;
Provided, That persons with disability shall
meet minimum admission requirements;
(9) To the extent practicable and feasible, the
continuance of the same benefits and
privileges given by the GSIS, SSS, and PAGIBIG, as the case may be, as are enjoyed by
those in actual service;
(10) To the extent possible, the government may
grant special discounts in special programs

LABOR LAW

for persons with disability on purchase of


basic commodities, subject to guidelines to
be issued for the purpose by the DTI and the
DA; and
(11) Provision of express lanes for persons with
disability in all commercial and government
establishments; in the absence thereof,
priority shall be given to them. [Sec 32, RA
7277, as amended by RA 9442]
Conditions for entitlement
(1) Persons with disability who are Filipino
citizens upon submission of any of the following
as proof of his/her entitlement thereto:
(a) An identification card issued by the city
or municipal mayor or the barangay
captain of the place where the persons
with disability reside;
(b) The passport of the persons with
disability concerned; or
(c) Transportation discount fare ID issued by
the National Council for the Welfare of
Disabled Persons (NCWDP).
(2) The privileges may not be claimed if the
persons with disability claim a higher
discount as may be granted by the
commercial establishment and/or under
other existing laws or in combination with
other discount program/s. [Sec 32, RA 7277,
as amended by RA 9442
Other Provisions Against Discrimination
(a) Discrimination of Employment
No entity, whether public or private shall
discriminate against a qualified disabled person
by reason of disability in regard to job
application procedures, the hiring, promotion,
or discharge of employees compensation, job
training and other terms, conditions and
privileges of employment. The following
constitute acts of discrimination:
(1) Limiting, segregating or classifying a
disabled job applicant in such a manner
that adversely affects his work opportunities
(2) Using qualification standards, employment
tests or other selection criteria that screen
out or tend to screen out a disabled person
unless such standards, tests or other
selection criteria are shown to be related for

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the position in question and are consistent


with business necessity;
(3) Utilizing standards, criteria, or methods of
administration that:
(i) have the effect of discrimination on the
basis of disability; or
(ii) perpetuate the discrimination of others
who are the subject to common
administrative control.
(4) Providing less compensation, such as salary,
wage or other forms of remuneration and
fringe benefits, to qualified disabled
employee, by reason of his disability, than
the amount to which a non-disabled person
performing the same work is entitled;
(5) Favoring a non-disabled employee over a
qualified disabled employee with respect to
promotion, training opportunities, study and
scholarship grants, solely on account of the
latter's disability;
(6) Re-assigning or transferring a disabled
employee to a job or position he cannot
perform by reason of his disability;
(7) Dismissing or terminating the services of a
disabled employee by reason of his
disability unless the employer can prove
that
he
impairs
the
satisfactory
performance of the work involved to the
prejudice of the business entity; Provided,
however, That the employer first sought to
provide reasonable accommodations for the
disabled persons;
(8) Failing to select or administer in the most
effective manner employment tests which
accurately reflect the skills, aptitude or
other factor of the disabled applicant or
employee that such test purports to
measure, rather than the impaired sensory,
manual or speaking skills of such applicant
or employee, if any; and
(9) Excluding disabled persons from
membership in labor unions or similar
organizations. [Sec. 34, RA 7277 as amended
by RA 9442]

LABOR LAW

(b) Information obtained during the medical


condition or history of the applicant is
collected and maintained on separate forms
and in separate medical files and is treated
as a confidential medical record; Provided,
however, That:
(1) supervisors and managers may be
informed
regarding
necessary
restrictions on the work or duties of the
employees
and
necessary
accommodations:
(2) first aid and safety personnel may be
informed, when appropriate, if the
disability might require emergency
treatment;
(3) government
officials investigating
compliance with this Act shall be
provided relevant information on
request; and
(4) the results of such examination are
used only in accordance with this Act.
[Sec. 35, RA 7277 as amended by RA
9442]
(c) Prohibition on Verbal, Non-Verbal Ridicule
and Vilification Against Persons with Disability
(i) No individual, group or community shall
execute any of these acts of ridicule
against persons with disability in any
time and place which could intimidate
or result in loss of self-esteem of the
latter. [Sec. 40, RA 7277, as amended by
RA 9442]
(ii) Any individual, group or community is
hereby prohibited from vilifying any
person with disability which could result
into loss of self-esteem of the latter.
[Sec. 42, RA 7277, as amended by RA
9442]
Public Ridicule - The act of making fun of or
contemptuous imitating or making mockery of
persons with disability whether in writing, or in
words, or in action due to their impairments.
[Sec. 39, RA 7277, as amended by RA 9442]
Vilification includes:
(1) The utterance of slanderous and abusive
statements against a person with disability;
and/or,
(2) An activity in public which incites hatred
towards, serious contempt for, or severe ridicule

(b) Employment Entrance Examination


Upon an offer of employment, a disabled
applicant may be subjected to medical
examinations, on the following occasions:
(a) all entering employees are subjected to such
an examination regardless of disability;
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of persons with disability. [Sec. 41, RA 7277, as


amended by RA 9442]

EMPLOYER-EMPLOYEE
RELATIONSHIP

The existence or absence of ER-EE relationship


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

Tax Incentives for Employers/Establishments


(1) For employment of disabled persons additional deduction, from their gross
income, equivalent to 25% of the total
amount paid as salaries and wages to
disabled persons
(a) Private entities
(b) Employ disabled persons either as
regular EEs, apprentice or learner
(c) Provided such entities present proof as
certified by the DOLE and the DOH [Sec.
8[b], RA 7277]
(2) For construction of disabled-friendly facilities
additional deduction from their net
taxable income, equivalent to 50% of the
direct costs of the improvements or
modifications

The recognition of the existence of ER-EE


relationship is not dependent upon the
agreement of the parties. The characterization
of the law prevails over that in the contract. In
this sense, the existence of an EE-ER
relationship is a matter of law. [Tabas et.al. v.
California Manufacturing Co., et. Al., G.R. No.
80680, January 26, 1989]
The conclusion that an EE-ER relationship
depends upon the facts of each case. In this
sense, it is a question of fact. [SSS v. CA, G.R.
No. 100388, Dec. 14, 2000].

FOUR-FOLD TEST

a. Private entities
b. That improve or modify their physical
facilities in order to provide reasonable
accommodation for disabled persons
c. Does NOT apply to improvements or
modifications or facilities required
under BP 344. [Sec. 8 (c), RA 7277]
(3) For establishments giving discounts may
claim such discounts as tax deductions
based on the net cost of the goods sold or
services rendered

(1) Selection and engagement of the employee;


(2) Payment of wages;
(3) Power of dismissal; and
(4) Employers power to control the employees
conduct with respect to the means and methods
by which the work is to be accomplished.
[Brotherhood Labor Unity Movement of the
Philippines et. al. v. Zamora, G.R. No. 48645,
Jan. 7, 1987].

(a) The cost of the discount shall be


allowed as deduction from gross
income for the same taxable year that
the discount is granted

(b) The total amount of the claimed tax


deduction net of VAT if applicable, shall
be included in their gross sales receipts
for tax purposes and shall be subject to
proper documentation and to the
provisions of the National Internal
Revenue Code, as amended. (Sec. 32,
RA 7277, as amended by RA 9442)

Termination
Employment

LABOR LAW

Power to control is the most important


element. [Sonza v. ABS-CBN Broadcasting
Corp, G.R. No. 138051, June 10, 2004]
The control test calls merely for the
existence of the right to control and not
the actual exercise of the right. [Zanotte
Shoes v. NLRC, G.R. No. 100665, Feb. 13,
1995]

Not every form of control will have the effect of


establishing ER-EE relationship. The line should
be drawn between:
(1) Rules that merely serve as guidelines
towards the achievement of mutually
desired results without dictating the means
or methods to be employed in attaining it.
These aim only to promote the result. In
such case, NO EE-ER relationship exists.
(2) Rules that control or fix the methodology
and bind or restrict the party hired to the

of

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use of such means. These address both the


result and the means used to achieve it and
hence, EE-ER relationship exists. [Insurance
Life v. NLRC, G.R. No. 84484, Nov. 15, 1989]

LABOR LAW

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


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

Economic Dependence Test


Two-tiered approach.
(1) First Tier: Control Test (refer to the Four-Fold
Test)
(2) Second Tier: The underlying economic
realities of the activity or relationship. [Sevilla v.
Court of Appeals]

Probationary employee is one who is on trial by


an employer during which the employer
determines whether or not he is qualified for
permanent employment [International Catholic
Migration Comm. vs. NLRC, 1989]

The benchmark of economic reality in analyzing


possible employment purposes ought to be the
economic dependence of the worker on his
employer.

Termination
Can only be terminated for:
(1) Just causes; or
(2) Failure to qualify as a regular employee in
accordance with reasonable standards made
known by the employer to the employee at the
time of engagement.

The standard of economic dependence is


whether the worker is dependent on the alleged
employer for his continued employment in that
line of business. [Orozco v. CA, GR No. 155207,
13 August 2008].

The probationary employee is entitled to


substantial and procedural due process before
termination.

KINDS OF EMPLOYMENT
PROBATIONARY EMPLOYMENT

Legal basis

Limitations to termination
(1) It must be exercised in accordance with the
specific requirements of the contract
(2) If a particular time is prescribed, the
termination must be within such time and if
formal notice is required, then that form
must be used;
(3) The employers dissatisfaction must be real
and in good faith, not feigned so as to
circumvent the contract or the law;
(4) There must be no unlawful discrimination in
the dismissal. [Manila Hotel Corporation v.
NLRC, G.R. No. 53453, January 22, 1986]

Article 281. Probationary employment shall


not exceed 6 months from the date the
employee started working, unless it is covered
by an apprenticeship agreement stipulating a
longer period. The services of an employee
who has been engaged on a probationary
basis may be terminated for a just cause or
when he fails to qualify as a regular employee
in accordance with reasonable standards
made known by the employer to the employee
at the time of his engagement. An employee
who is allowed to work after a probationary
period shall be considered a regular
employee.

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

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LABOR LAW

day shall be excluded and the last day


included. Thus, the one hundred eighty
(180) days commenced on May 27, 1996,
and ended on November 23, 1996. By the
time Paras received the letter he was
already a regular employee of the petitioner
under Article 281 of the Labor Code
[Mitsubishi Motors vs. Chrysler Union, 2004].

Indeed, the employer has the right or is at


liberty to choose as to who will be hired and
who will be declined. It is within the exercise
of this right to select his employees that the
employer may set or fix a probationary
period within which the latter may test and
observe the conduct of the former before
hiring him permanently. [Grand Motors
Corp. vs. MOLE, 1984]

To reiterate, the rule on duration may be


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

Duration
Generally, the probationary period of
employment is limited to six (6) months.
The exception to this general rule is when
the parties to an employment contract may
agree otherwise, such as when the same is
established by company policy or when the
same is required by the nature of work to be
performed by the employee. In the latter
case, there is recognition of the exercise of
managerial prerogatives in requiring a
longer period of probationary employment,
such as in the present case where the
probationary period was set for eighteen
(18) months, i.e. from May, 1980 to October,
1981 inclusive, especially where the
employee must learn a particular kind of
work such as selling, or when the job
requires certain qualifications, skills,
experience or training. [Busier vs. Leogardo,
1984]
Honasan was accepted for on-the-job
training on April 15, 1991. Assuming that her
probation could be extended beyond that
date, it nevertheless could continue only up
to October 15, 1991, after the end of six
months from the earlier date. Under this
more lenient approach, she had become a
regular employee of Holiday Inn and
acquired full security of tenure as of October
15, 1991. [Holiday Inn Manila vs. NLRC, 1993]
Paras started reporting for work on May 27,
1996. The employers unanimously agreed
that his performance was unsatisfactory. On
November 26, 1996, he received a Notice of
Termination dated November 25, 1996,
Applying Article 13 of the Civil Code, the
probationary period of six (6) months
consists of one hundred eighty (180) days.
As clearly provided for in the last paragraph
of Article 13, in computing a period, the first

Exceptions:
(1) When the parties to an agreement contract
otherwise:
(2) When the same is established by company
policy;
(3) When the same is required by the nature of
the work performed by the employee; and
(4) When it is covered by an apprenticeship
agreement stipulating a longer period
Agreement to extend probationary period
If the extension was ex gratia, an act of liberality
on the part of his employer affording him a
second chance to make good after having
initially failed to prove his worth as an
employee. Such an act cannot now unjustly be
turned against said employers account to
compel it to keep on its payroll one who could
not perform according to its work standards.
[Mariwasa Manufacturing v. Leogardo, G.R. No.
74246, Jan. 26, 1989].
Criteria for regularization must be disclosed
In all cases of probationary employment, the
employer shall make known to the employee
the standards under which he will qualify as a
regular employee at the time of his
engagement. Where no standards are made
known to the employee at that time, he shall be
deemed a regular employee. Conversely, an
employer is deemed to substantially comply
with the rule on notification of standards if he
apprises the employee that he will be subjected
to a performance evaluation on a particular
date after his hiring. [Alcira vs. NLRC, 2004]
Regular Status After Probation
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When the bank renewed the contract after the


lapse of the six-month probationary period, the
employees thereby became regular employees.
No employer is allowed to determine
indefinitely the fitness of its employees.
[Bernardo vs. NLRC, 1999]

LABOR LAW

by the Manual of Regulations for Private


Schools and not the Labor Code. [Paragraph
75of the 1970 Manual; Aklan College vs. Guarino,
2007]
Employer obligation to make standards known
The law is clear that in all cases involving
employees engaged on probationary basis, the
employer shall make known to the employee at
the time he is hired, the standards by which he
will qualify as a regular employee.

Absorbed employees
The private respondents could not be
considered probationary employees because
they were already well-trained in their
respective functions. As stressed by the Solicitor
General, while private respondents were still
with the CCAS they were already clerks.
Respondent Gelig had been a clerk for CCAS for
more than ten (10) years, while respondent
Quijano had slightly less than ten (10) years of
service. They were, therefore, not novices in their
jobs but experienced workers. [Cebu Stevedoring
Co., Inc. vs. Regional Director, 1988]

There is also no evidence on record showing


that the respondent Grulla had been apprised
of his probationary status and the requirements
which he should comply in order to be a regular
employee. In the absence of these requisites,
there is justification in concluding that
respondent Grulla was a regular employee at
the time he was dismissed by petitioner, and as
such cannot be done without just and
authorized cause. [A. M. Oreta and Co., Inc. vs.
NLRC, 1989]

Double probation
There is no basis for subjecting an employee to
a new probationary or temporary employment
where he had already become a regular
employee when he was absorbed by a sister
company. [A Prime Security Services, Inc. vs.
NLRC, 2000]

REGULAR EMPLOYMENT
Regular employment is not synonymous with
permanent employment, because there is no
such thing as a permanent employment. Any
employee may be terminated for just cause.

Termination and salary


A probationary employee enjoys only a
temporary employment status. This means that
he is terminable at any time, permanent
employment not having been attained in the
meantime. The employer could well decide he
no longer needed the probationary employees
services or his performance fell short of
expectations, etc. As long as the termination
was made before the termination of the sixmonth probationary period, the employer was
well within his rights to sever the employeremployee relationship. A contrary interpretation
would defect the clear meaning of the term
probationary. [De la Cruz, Jr. vs. NLRC, 2004]

A regular employee is one who is engaged to


perform activities which are necessary and
desirable in the usual business or trade of the
employer as against those which are
undertaken for a specific project or are seasonal.
There are two separate instances whereby it can
be determined that an employment is regular:
(1) if the particular activity performed by the
employee is necessary or desirable in the
usual business or trade of the employer;
(2) if the employee has been performing the job
for at least a year. [Pangilinan vs. Gen.
Milling Corp., 2004]
Standard of determination (Reasonable
Connection rule)
The primary standard in determining regular
employment is the reasonable connection
between the particular activity performed by the
employee in relation to the usual business or
trade of the employer. The connection can be
determined by considering the nature of the

Private school teachers


The provisions of Article 280 of the Labor Code
are not applicable to the present case especially
with respect to the issue of respondent's
acquisition of security of tenure. It is settled that
questions respecting a private school teachers
entitlement to security of tenure are governed
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work performed and its relation to the scheme


of the particular business or trade in its entirety.
The repeated and continuing need for the
performance of the job has been deemed
sufficient evidence of the necessity, if not
indispensability of the activity to the business.
[Lopez vs. MWSS, 2005]

LABOR LAW

Length of time is not controlling, merely serves


as a badge of regular employment. [Maraguinot
vs. NLRC, 1998]
PROJECT EMPLOYMENT
Employment fixed on a specific project or
undertaking, completion or termination of
which is determined at the time of engagement
of the employee.

Hiring for an extended period


Where the employment of project employees is
extended long after the supposed project has
been finished, the employees are removed from
the scope of project employees and considered
regular employees. [Audion Electric Co., Inc. vs.
NLRC, 1999]

Whether or not the project has a direct relation


to the business of the ER is not important, BUT:
(1) EE must be informed of the nature and
duration of project
(2) project and principal business of ER are two
separate things
(3) no attempt to deny security of tenure to the
worker

Repeated renewal of contract


The petitioner cannot rightfully say that since
the private respondent's employment hinged
from contract to contract, it was "temporary",
depending on the term of each agreement.
Under the Labor Code, an employment may
only be said to be "temporary" "where:
(1) [it] has been fixed for a specific undertaking,
the completion of or termination of which
has been determined at the time of the
engagement of the employee OR
(2) where the work or services to be performed is
seasonal in nature and the employment is
for the duration of the season.

Test of project employment


The principal test for determining whether
employees are properly characterized as
"project employees," as distinguished from
"regular employees," is whether or not the
project employees were assigned to carry out a
"specific project or undertaking," the duration
and scope of which were specified at the time
the employees were engaged for that project.
As defined, project employees are those workers
hired:
(a) for a specific project or undertaking, and
(b) the completion or termination of such
project or undertaking has been determined
at the time of the engagement of the
employee. [PNOC Energy Devt Corp vs.
NLRC, 2007]

Quite to the contrary, the private respondent's


work, that of "typist-clerk" is far from being
"specific" or "seasonal", but rather, one "where
the employee has been engaged to perform
activities which are usually necessary or
desirable in the usual business." And under the
Code, where one performs such activities, he is a
regular employee, "[t]he provisions of written
agreement to the contrary notwithstanding

Indicators of project employment


(1) The duration of the specific/identified
undertaking for which the worker is
engaged is reasonably determinable;
(2) Such duration, as well as the specific
work/service to be performed, is defined in
an employment agreement and is made
clear to the employee at the time of the
hiring;
(3) The work/service to be performed by the
employee is in connection with the particular
project/undertaking for which he is
engaged;

It is true that in Biboso vs Victorias Milling


Company, Inc. we recognized the validity of
contractual stipulations as to the duration of
employment. But we cannot apply it here
because clearly, the contract-to-contract
arrangement given to the private respondent
was but an artifice to prevent her from acquiring
security of tenure and to frustrate constitutional
decrees. [Beta Electric Corp. vs. NLRC, 1990]
Length of time involved
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(4) The employee, while not employed and


awaiting engagement, is free to offer his
services to any other employer;
(5) The termination of his employment in the
particular project/undertaking is reported to
the DOLE Regional Office having jurisdiction
over the workplace following the date of his
separation from work, using the prescribed
form
on
employees
terminations
/dismissals/suspensions;
(6) An undertaking in the employment contract
by the employer to pay completion bonus to
the project employee as practiced by most
construction companies. [Samson v. NLRC,
G.R. No. 11366, Feb. 1, 1996)]

LABOR LAW

A work pool may exist although the workers in


the pool do not receive salaries and are free to
seek other employment during temporary
breaks in the business, provided, that the worker
shall be available when called to report for a
project. Although primarily applicable to regular
seasonal workers, this set-up can likewise be
applied to project workers insofar as the effect
of temporary cessation of work is concerned.
[Maraguinot vs. NLRC, 1998]
Members of a work pool from which a
construction company draws its project
employees, if considered employees of the
construction company while in the work pool,
are non-project employees, or employees for an
indefinite period. If they are employed in a
particular project, the completion of the project
or any phase thereof will not mean severance of
the employer-employee relationship. [Aguilar
Corp. vs. NLRC, 1997]

See also: Policy No. 2 of 1997 and D.O. 19 of


1993
When the present action for regularization was
filed on November 5, 1989 and during the entire
period of petitioner's employment with private
respondent prior to said date, the rule in force
then was Policy Instruction No. 20, which
required the employer company to report to the
nearest Public Employment Office the fact of
termination of a project employee as a result of
the completion of the project or any phase in
which he is employed.

Rationale for project employment


If a project has already been completed, it
would be unjust to require the employer to
maintain them in the payroll while they are
doing absolutely nothing except waiting until
another project is begun, if at all. In effect, these
stand-by workers would be enjoying the status
of privileged retainers, collecting payment for
work not done, to be disbursed by the employer
from profits not earned. [De Ocampo vs. NLRC,
1990]

Furthermore, Department Order No. 19, which


was issued on April 1, 1993, did not totally
dispense with the notice requirement. Instead, it
made provisions and considered it (i.e. the
notice) as one of the "indicators" that a worker is
a project employee. [Samson vs. NLRC (1996)]

Examples of project employment


The corporation does not construct vessels
for sale or otherwise which will demand
continuous production of ships and will
need regular workers. It merely accepts
contracts for ship-building or for repair of
vessels from third parties. It is only on
occasion when it has work contract of this
nature that it hires workers to do the job
which, needless to say, lasts only for less
than a year or longer. Completion of their
work or project automatically terminates
their employment. [Sandoval Shipyards, Inc.
vs. NLRC, 1985
Petitioner was engaged to perform data
encoding and keypunching, and her
employment was fixed for a specific project
or undertaking the completion or

Work pool employee


A project EE or a member of a work pool may
acquire the status of a regular employee when
the following concur:
(a) There is a continuous rehiring of project
employees even after cessation of a project;
and
(b) The tasks performed by the alleged project
employee are vital, necessary, and
indispensable to the usual business or trade
of the employer. However, the length of
time during which the EE was continuously
rehired is not controlling, but merely serves
as a badge of regular employment.

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termination of which had been determined


at the time of her engagement. [This] may
be observed from the series of employment
contracts between petitioner and private
respondent, all of which contained a
designation of the specific job contract and
a specific period of employment. [Imbuido
vs. NLRC, 2000]

LABOR LAW

a project-to-project basis did not confer


upon them regular employment status. The
practice was dictated by the practical
consideration that experienced construction
workers are more preferred. It did not
change their status as project employees.
[C.E. Construction Corp vs. Cioco, 2004]
SEASONAL EMPLOYMENT
Work or services to be performed are seasonal
in nature, employment is for the duration of the
season.

Fixed-period
The Court has upheld the legality of fixedterm employment. It ruled that the decisive
determinant in term employment should
not be the activities that the employee is
called upon to perform but the day certain
agreed upon by the parties for the
commencement and termination of their
employment relationship. But, this Court
went on to say that where from the
circumstances it is apparent that the
periods have been imposed to preclude
acquisition of tenurial security by the
employee, they should be struck down or
disregarded as contrary to public policy and
morals. [Purefoods Corp. vs. NLRC, 1987]

There is no continuing need for the worker.


Regular Seasonal Employees After One
Season
Regular seasonal employees are those
called to work from time to time. The nature
of their relationship with the employer is
such that during off season they are
temporarily laid off but during summer
season they are reemployed, or when their
services may be needed. They are not,
strictly speaking, separated from the service
but are merely considered as on leave of
absence without pay until they are
reemployed. Their employment relationship
is never severed but only suspended. As
such those employees can be considered as
in the regular employment of the employer.
[Manila Hotel Co. v. CIR, G.R. No. L-18875,
Sept. 30, 1963].
For respondents to be excluded from those
classified as regular employees, it is not
enough that they perform work or services
that are seasonal in nature. They must have
been employed only for the duration of one
season. While the records sufficiently show
that the respondents work in the hacienda
was seasonal in nature, there was, however,
no proof that they were hired for the
duration of one season only. In fact, the
payrolls, submitted in evidence by the
petitioners, show that they availed the
services of the respondents since 1991.
Absent any proof to the contrary, the
general rule of regular employment should,
therefore, stand.

Continuous rehiring
Despite the insistence of petitioner that they
were project employees, the facts show that
as masons, carpenters and fine graders in
petitioners various construction projects,
they performed work which was usually
necessary and desirable to petitioners
business which involves construction of
roads and bridges. It is not enough that an
employee is hired for a specific project or
phase of work. There must also be a
determination of, or a clear agreement on,
the completion or termination of the project
at the time the employee was engaged. This
second requirement was not met in this case.
[Chua vs. Court of Appeals, 2004]
The fact that the workers have been
employed with the company for several
years on various projects, the longest being
nine (9) years, did not automatically make
them regular employees considering that
the definition of regular employment in
Article 280 of the Labor Code, makes
specific exception with respect to project
employment. The re-hiring of petitioners on

The disparity in facts between the Mercado


Sr., vs. NLRC case and the instant case is
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LABOR STANDARDS

best exemplified by the fact that the farm


laborers, work only for a definite period for a
farm worker, after which they offer their
services to other farm owners. In Mercado,
although respondent constantly availed
herself of the petitioners services from year
to year, it was clear from the facts therein
that they were not in her regular employ. In
other words, they worked for respondent,
but were nevertheless free to contract their
services with other farm owners. [Hacienda
Bino vs. Cuenca, 2005]

LABOR LAW

FIXED-TERM EMPLOYMENT
Article 280 of the Labor Code does not
proscribe or prohibit an employment
contract with a fixed period provided the
same is entered into by the parties, without
any force, duress or improper pressure
being brought to bear upon the employee
and absent any other circumstance vitiating
consent.
It does not necessarily follow that where the
duties of the employee consist of activities
usually necessary or desirable in the usual
business of the employer, the parties are
forbidden from agreeing on a period of time
for the performance of such activities. There
is thus nothing essentially contradictory
between a definite period of employment
and the nature of the employee's duties.

CASUAL EMPLOYMENT
Casual Employment When not a regular,
project or seasonal employee.
Requirements to become regular employee:
(a) one year service, continuous or broken
(b) with respect to activity employed
(c) employment shall continue while such
activity exists
Nature of work
What determines regularity or casualness is not
the employment contract, written or otherwise,
but the nature of the job. If the job is usually
necessary or desirable to the main business of
the employer, then employment is regular. [A.
M. Oreta and Co., Inc. vs. NLRC, 1989].

One-year service
As held in Philippine Bank of Communications v.
NLRC, a temporary or casual employee, under
Article 281 of the Labor Code, becomes regular
after service of one year, unless he has been
contracted for a specific project.
And we cannot say that merchandising is a
specific project for the obvious reason that it is
an activity related to the day-to-day operations
of California.

It goes without saying that contracts or


employment govern the relationship of the
parties. In this case, private respondent's
contract provided for a fixed term of nine (9)
months, from June 1, 1991 to March 31, 1992.
Such stipulation, not being contrary to law,
morals, good customs, public order and
public policy, is valid, binding and must be
respected. [St. Theresas School vs. NLRC,
1998]
However, the Court upholds the principle
that where from the circumstances it is
apparent that periods have been imposed
to preclude acquisition of tenurial security
by the employee, they should be
disregarded for being contrary to public
policy. [Servidad vs. NLRC, 1999]

Agreement should not violate security of tenure


This arrangement does NOT circumvent
Security of Tenure when:
(1) Knowingly and voluntarily agreed upon by
the parties without any force, duress, or
improper
pressure
or
any
other
circumstances vitiating his consent; OR
(2) The employer and the employee dealt with
each other on more or less equal terms with
no moral dominance exercised by the
former or the latter. [Brent School v.
Zamora, 1990; Romares v. NLRC, 1998;
Medenilla v. Phil. Veterans Bank, 2000]

The records show that the petitioners had been


given an initial six month contract, renewed for
another six months. Accordingly, under Article
281 of the Code, they had become regular
employees of California and had acquired a
secure tenure. Hence, they cannot be separated
without due process of law. [Tabas vs. California
Marketing Co., Inc., 1989]

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(3) If a contract is for a fixed term and the


Employee is dismissed without just cause,
he is entitled to the payment of his salaries
corresponding to the unexpired portion of
the employment contract. [Medenilla v. Phil.
Veterans Bank, 2000].

JOB CONTRACTING

directly related to the principal business of


such employer. In such cases, the person or
intermediary shall be considered merely as an
agent of the employer who shall be
responsible to the workers in the same
manner and extent as if the latter were
directly employed by him.

8.
9.

ARTICLES 106 TO 109 OF THE LABOR CODE


Articles 106 to 109 of the Labor Code
1.

2.
3.

4.
5.

6.
7.

LABOR LAW

Article 106. Contractor or subcontractor.


Whenever an employer enters into a contract
with another person for the performance of
the formers work, the employees of the 10.
contractor and of the latters subcontractor, if 11.
any, shall be paid in accordance with the
provisions of this Code.
In the event that the contractor or
subcontractor fails to pay the wages of his
employees in accordance with this Code, the
employer shall be jointly and severally liable
with his contractor or subcontractor to such 12.
employees to the extent of the work
performed under the contract, in the same
manner and extent that he is liable to
employees directly employed by him.
The Secretary of Labor and Employment may,
by appropriate regulations, restrict or prohibit
the contracting-out of labor to protect the
rights of workers established under this Code.
In so prohibiting or restricting, he may make
appropriate distinctions between labor-only
contracting and job contracting as well as
differentiations within these types of
contracting and determine who among the
parties involved shall be considered the
employer for purposes of this Code, to prevent
any violation or circumvention of any provision
of this Code.

Article 107. Indirect employer. The provisions of


the immediately preceding article shall
likewise apply to any person, partnership,
association or corporation which, not being an
employer, contracts with an independent
contractor for the performance of any work,
task, job or project.
Article 108. Posting of bond. An employer or
indirect employer may require the contractor
or subcontractor to furnish a bond equal to
the cost of labor under contract, on condition
that the bond will answer for the wages due
the employees should the contractor or
subcontractor, as the case may be, fail to pay
the same.
Article 109. Solidary liability. The provisions of
existing laws to the contrary notwithstanding,
every employer or indirect employer shall be
held responsible with his contractor or
subcontractor for any violation of any
provision of this Code. For purposes of
determining the extent of their civil liability
under this Chapter, they shall be considered
as direct employers.
Examples of Labor-Only Contracting
The respondents, as checkers, were employed to
check and inspect cargo, a task which is clearly
necessary for the petitioners business of
forwarding and distributing cargo. Grigio did
not undertake the performance of its service
contract according to its own manner and
method, free from the control and supervision of
its principal.

There is "labor-only" contracting where the


person supplying workers to an employer
does not have substantial capital or
investment in the form of tools, equipment,
machineries, work premises, among others,
and the workers recruited and placed by such
person are performing activities which are

The work activities, shifts, and schedules of the


respondents, including time allowed for "recess"
were set under the Written Contract of Services.
This clearly indicates that these matters, which
consist of the means and methods by which the

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LABOR STANDARDS

work is to be accomplished, were not within the


absolute control of Grigio.

LABOR LAW

The contract also provides that any personnel


found to be inefficient, troublesome,
uncooperative and not observing the rules and
regulations set forth by Burlingame shall be
reported to F. Garil and may be replaced upon
request. Corollary to this circumstance would
be the exercise of control and supervision by
Burlingame over workers supplied by F. Garil in
order to establish the nature of undesirable
personnel. [Lakas vs. Burlingame (2007)]

Petitioners allegation that Grigio retained


control by providing supervisors to monitor the
performance of the respondents cannot be
given much weight. Instead of exercising their
own discretion or referring the matter to the
officers of Grigio, its supervisors were obligated
to refer to petitioners supervisors any
discrepancy in the performance of the
respondents.

DEPARTMENT ORDER NO. 18-A, SERIES OF


2011: RULES IMPLEMENTING ARTICLES 106109 OF THE LC, AS AMENDED (14
NOVEMEBER 2011)

Lastly, the law casts the burden on the


contractor to prove that it has substantial
capital, investment, tools etc. In this case,
neither Grigio nor the petitioner was able to
present any proof that Grigio had substantial
capital. [Aboitiz Haulers vs. Dimapatoi (2006)]

Coverage
This shall apply to:
(1) all parties of contracting and subcontracting
arrangements where ER-EE relationships
exist
(2) cooperatives engaging in contracting or
subcontracting arrangements

No proof was adduced to show F. Garils


capitalization. The work of the promo-girls was
marketing and selling, and thus directly related
to the principal business or operation of
Burlingame.

Contractors and subcontractors referred to in


these rules are prohibited from engaging in
recruitment and placement activities as defined
in Art. 13(b) of the LC whether for local or
overseas employment.

Finally, F. Garil did not undertake the


performance of its service contract according to
its own manner and method, free from the
control and supervision of Burlingame. Based
on the contract, F. Garil was responsible in the
hiring process only with respect to the
screening, testing and pre-selection of the
personnel it provided to Burlingame. Actual
hiring itself was done through the deployment
of personnel to establishments by Burlingame.

Cabo a persons or group of persons or a labor


groups which, in 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.

The contract also stipulated that Burlingame


shall pay F. Garil a certain sum per worker. F.
Garil merely served as conduit in the payment of
wages to the personnel. The interpretation
would have been different if the payment was
for the job, project, or services rendered during
the month and not on a per worker basis.

Contracting or subcontracting an arrangement


whereby a principal agrees to put out or farm
out with a contractor the performance or
completion of a specific job, work or service
within a definite or predetermined period,
regardless of whether such job, work or service
is to be performed or completed within or
outside the premises of the principal.

The Court has taken judicial notice of the


practice of employers who do not issue payslips
directly to employees. Under current practice, a
third person, usually the purported contractor
(service or manpower placement agency),
assumes the act of paying the wage.

Contractor any person or entity, including a


cooperative, engaged in a legitimate
contracting or subcontracting arrangement
providing either services, skilled worker,

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LABOR STANDARDS

LABOR LAW

temporary workers or a combination of services


to a principal under a Service Agreement.

net worth of at least P3,000,000. [Sec 3, D.O.


18-A-11]

Contractors employee includes one employed


by a contractor to perform or complete a job,
work, or service pursuant to a Service
Agreement with a principal.

Service agreement refers to the contract


between the principal and contractor containing
the terms and conditions governing the
performance or completion of a specific job,
work or service being farmed out for a definite or
predetermined period.

It shall also refer to regular EEs of the


contractor whose functions are not dependent
on the performance or completion of a specific
job, work or service within a definite period of
time i.e. administrative staff.

Legitimate contracting or subcontracting


Contracting or subcontracting shall be
legitimate if ALL the following circumstances
occur:
(1) The contractor must be registered in
accordance with these rules and carries a
distinct and independent business
(2) The contractor undertakes to perform the
job, work or service on its own responsibility,
according to its own manner and method,
and free from control and direction of the
principal in all matters connected with the
performance of the work except as to the
results thereof;
(3) The contractor has substantial capital and/or
investment; and
(4) The Service Agreement ensures compliance
with all the rights and benefits under Labor
laws.

In-house agency 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.
Net Financial Contracting Capacity (NFCC)
refers to the formula to determine the financial
capacity of the contractor to carry out the job,
work or services sought to be undertaken under
a Service Agreement.
Formula:
NFCC = (current assets - current liabilities) x (K
value of all outstanding or ongoing projects
including contracts to be started)

Factors to determine existence of independent


contractor relationship
(1) Whether the contractor is carrying on an
independent business
(2) whether the work is part of the employers
general business.
(3) The nature and extent of the work.
(4) The skill required.
(5) The terms and duration of the relationship.
(6) The right to assign the performance of the
work to another.
(7) The control and supervision of the work and
the employers powers with respect to the
hiring, firing and payment of salaries.
(8)The duty to supply premises, tools, and
appliances. [Mafinco vs. Ople, 1976]

K stands for contract duration equivalent to:


(a) 10 for one year or less
(b) 15 for more than 1 year up to 2 years
(c) 20 for more than 2 years
Principal any ER, whether a person or entity,
including government agencies and GOCCs,
who/which puts out or farms out a job, service
or work to a contractor.
Right to control the right reserved to the
person for whom the services of the contractual
workers are performed, to determine not only
the end to be achieved, but also the manner
and means to be used in reaching that end.
Substantial capital refers to paid-up capital
stocks/shares of at least P3,000,000 in the
case of corporations, partnerships and
cooperatives; in case of single proprietorship, a

Prohibition against labor-only contracting


Labor only contracting is prohibited. There is
labor-only contracting where:
(a) The contractor does not have substantial
capital or investments in the form of tools,
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LABOR STANDARDS

equipment, machineries, work premises,


among others, and the employees recruited
and places are performing activities which
are usually necessary or desirable to the
operation of the company, or directly
related to the main business of the principal
within a definite or predetermined period,
regardless of whether such job, work or
service is to be performed or completed
within or outside the premises of the
principal; OR
(b) The contractor does not exercise the right to
control the performance of the work of the
employee.

LABOR LAW

(vi) Contracting out of a job, work or service


being performed by union members when
such will interfere with, restrain or coerce
EEs in the exercise of their rights to selforganization as provided in Art. 248(c) of
the LC, as amended.
(vii) Repeated hiring of EEs under an
employment contract of short duration or
under a Service Agreement of short
duration with the same or different
contractors, which circumvents the LC
provisions on Security of Tenure.
(viii) Requiring EEs under a subcontracting
arrangement to sign a contract fixing the
period of employment to a term shorter
than the term of the Service Agreement,
unless the contract is divisible into phases
for which substantially different skills are
required and this is made known to the EE
at the time of the engagements.
(ix) Refusal to provide a copy of the Service
Agreement and the employment contracts
between the contractor and the EEs
deployed to work in the bargaining unit of
the principals certified bargaining agent to
the sole and exclusive bargaining agents.
(x) Engaging or maintaining by the principal of
subcontracted EEs in excess of those
provided in the applicable CBA or as set by
the Industry Tripartite Council.

Other prohibitions
(1) Contracting out of jobs, works or services
when not done in good faith and not justified by
the exigencies of the business such as the
following:
(i) Contracting out of jobs, works or services
when the same results in the termination or
reduction of regular EEs and reduction of
work hours or reduction or splitting of the
bargaining unit.
(ii) Contracting out of work with a Cabo
(iii) Taking undue advantage of the economic
situation or lack of bargaining strength of
the contractors EEs, or undermining their
security of tenure or basic rights, or
circumventing the provisions of regular
employment in any of the following
instances:
(iv) Requiring them to perform functions which
are currently being performed by the
regular EEs of the principal; and requiring
them to sign, as a precondition to
employment or continued employment, an
antedated resignation letter; a blank
payroll; a waiver of labor standards
including minimum wages and social or
welfare benefits; or a quitclaim releasing
the principal, contractor or from any liability
as to payment of future claims.
(iv) Contracting out of a job, work or service
through an in-house agency.
(v) Contracting out of a job, work or service that
is necessary or desirable or directly related
to the business or operation of the principal
by reason of a strike or lockout whether
actual or imminent.

(b) Contracting out of jobs, works, or services


analogous to the above when not done in good
faith and not justified by the exigencies of the
business.
The court recognizes that contracting out is not
unlimited; rather, it is a prerogative that
management enjoys subject to well-defined
legal limitations. The company can determine in
its best business judgment whether it should
contract out the performance of some of its
work for as long as the employer is motivated by
good faith, and
(a) the contracting out must not have been
resorted to to circumvent the law or
(b) must not have been the result of malicious
or arbitrary action. [Manila Electric Co. v.
Quisumbing, 1999 citing Mafinco vs. Ople
(1976)]

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LABOR STANDARDS

We perceive at the outset the disposition of the


NLRC that janitorial services are necessary and
desirable to the trade or business of petitioner
Coca-Cola. But this is inconsistent with our
pronouncement in Kimberly Independent Labor
Union v. Drilon where the Court took judicial
notice of the practice adopted in several
government and private institutions and
industries of hiring janitorial services on an
independent contractor basis. In this respect,
although janitorial services may be considered
directly related to the principal business of an
employer, as with every business, we deem
them unnecessary in the conduct of the
employers principal business. [Coca-Cola
Bottlers Phil. Inc. vs. NLRC, 1999]

LABOR LAW

Agreement, without prejudice to his/her


entitlement to the completion bonuses or other
emoluments, including retirement benefits
whenever applicable.
Mandatory registration
It shall be mandatory for all persons or entities,
including cooperative, acting as contractors, to
register with the Regional Office of the DOLE
where it principally operates.
Failure to register shall give rise to the
presumption that the contractor is engaged in
labor-only contracting.
Contracting or subcontracting arrangements in
the Construction and other industries
Contracting or subcontracting arrangements in
the Construction Industry, under the licensing
coverage of the Philippine Construction
Accreditation Board (PCAB), shall be covered by
the applicable provisions of these Rules and
shall continue to be governed by Dept Order
No. 19, Series of 1993 [Guidelines Governing the
Employment of Workers in the Construction
Industry) Dept. Order No 13, Series of 1998
(Guidelines Governing the Occupational Safety
and Health in the Construction Industry]; DOLEDPWH-DILG-DTI and PCAB Memorandum of
Agreement-Joint Administrative Order No. 1,
Series of 2011 (on coordination and
harmonization of policies and programs on
occupational safety and health in the
construction industry.

Rights of contractors EEs


All contractors EEs, whether deployed or
assigned ass reliever, seasonal, week-ender,
temporary, or promo jobbers, shall be entitled
to all the rights and privileges as provided for in
the LC, as amended.
Security of tenure of contractors EEs
It is understood that all contractors EEs enjoy
security of tenure regardless of whether the
contract of employment is co-terminus with the
service agreement, or for a specific job, work, or
service, or phase thereof.
Effect of termination of employment
The termination of the contractor EE prior to the
expiration of the Service Agreement shall be
governed by Arts. 282-284 of the LC.

DEPARTMENT CIRCULAR NO. 01, SERIES OF


2012: CLARIFYING THE APPLICABILITY OF
DO NO.18-A, 2011 TO BUSINESS PROCESS
OUTSOURCING
(BPO)/KNOWLEDGE
PROCESS
OUTSOURCING
AND
THE
CONSTRUCTION INDUSTRY

In case the termination is caused by the pretermination of the Service Agreement not due to
authorized causes under Art. 283, the right of
the contractor EE to unpaid wages and other
unpaid benefits including unremitted legal
mandatory contributions, e.g., SSS, Philhealth,
Pag-ibig, ECC, shall be borne by the party at
fault, without prejudice to the solidary liability of
the parties to the Service Agreement.

Applicability to BPO
DO 18-A speaks of a trilateral relationship that
characterizes the covered contracting/subcontracting arrangement. Thus, vendor-vendee
relationship for entire business processes
covered by the applicable provisions of the Civil
Code on Contracts is excluded.

Where the termination result from the


expiration of the Service Agreement, or from the
completion of the phase of the job, work or
service for which the EE is engaged, the latter
may opt for payment of separation benefits as
may be provided by law or the Service

DO 18-A contemplates generic or focused


singular activity in one contract between the
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LABOR STANDARDS

principal and the contractor (for example,


janitorial, security, merchandising, specific
production work) and does not contemplate
information
technology-enabled
services
involving an entire process (for example, BPO,
KPO, legal process outsourcing, hardware
and/or software support, medical transcription,
animation
services,
back
office
operations/support). These companies engaged
in BPOs may hire employees in accordance with
applicable laws, and maintain these EEs based
on business requirements, which may or may
not be for different clients of the BPOs at
different periods of the EEs employment.

LABOR LAW

relationship is defined and prescribed by the


law itself. [Industrial Timber Corporation vs.
NLRC, 1997]
In legitimate job contracting, no employeremployee relation exists between the
principal and the job contractor's
employees. The principal is responsible to
the job contractor's employees only for the
proper payment of wages. But in labor-only
contracting, an employer-employee relation
is created by law between the principal and
the labor-only contractor's employees, such
that the former is responsible to such
employees, as if he or she had directly
employed them. [PAL vs. NLRC, 1998]
The only time the indirect employer may be
made solidarily liable with the contractor is
when the contractor fails to pay his
employees their wages and other benefits
claimed. [Landazares vs. Amethyst Security,
2003]

Applicability to the Construction Industry


Licensing and the exercise of regulatory powers
over the construction industry is lodged with
PCAB which is under the Construction Industry
Authority of the Philippines and not with the
DOLE or any of its regional offices.

Thus, the DOLE, through its regional offices


shall not require contractors licensed by PCAB
in the Construction Industry to register under
DO 18-A. Moreover, findings of violation/s on
labor standards and occupational health and
safety standards shall be coordinated with
PCAB for its appropriate action, including the
possible cancellation/suspension of the
contractors license.

Solidary liability of principal and labor-only


contractor
In the case at bar, it is beyond dispute that the
security guards are the employees of EAGLE
(contractor.) That they were assigned to guard
the premises of PTSI (principal) pursuant to the
latters contract with EAGLE and that neither of
these two entities paid their wage and
allowance increases under the subject wage
orders are also admitted. Thus, the application
of the aforecited provisions of the Labor Code
on joint and several liability of the principal and
contractor is appropriate.

EFFECTS OF FINDING THAT THERE IS


LABOR-ONLY CONTRACTING
A finding by a competent authority of laboronly contracting shall render the principal
jointly and severally liable with the
contractor to the latters EEs, in the same
manner and extent that the principal is
liable to EEs directly hired by him/her.

The solidary liability of PTSI and EAGLE,


however, does not preclude the right of
reimbursement from his co-debtor by the one
who paid [See Article 1217, Civil Code]. It is with
respect to this right of reimbursement that
petitioners can find support in the aforecited
contractual stipulation. [Eparwa Security, Inc. vs
Liceo de Cagayan University (2006)]

A finding of commission of any of the


prohibited activities in Sec. 7 or violation of
either Secs. 8 or 9 hereof, shall render the
principal the direct ER of the EEs of the
contractor or subcontractor. [Sec. 27, DO 18A, 2011]
If found to be labor-only contractor, it is
equivalent to finding that there exists an
employer-employee relationship between
the owner of the project and the employees
of the labor-only contractor since that

TRILATERAL
RELATIONSHIP
IN
CONTRACTING ARRANGEMENT
There are three parties involved:
(1) Principal who decides to farm out a job,
work or service to a contractor;

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LABOR STANDARDS

(2) Contractor who has the capacity to


independently undertake the performance of
the job, work, or service; and
(3) Contractual workers engaged by the
contractor to accomplish the job, work or
service. [Sec. 3 D.O. 18-A-11]

LABOR LAW

constructive dismissal. [Lanzadares vs. Amethyst


Security, 2003]
Coverage
1987 Constitution: all workers (Art. XIII Sec.
3)
Labor Code: regular employees (Art. 279) in
all establishments or undertakings, whether
for profit or not (Art. 278), except
government and its political subdivisions
including government owned or controlled
corporations or GOCCs (IRR Book VI Rule I
Sec. 1)
Security of tenure extends to non-regular
Employees [Kiamco vs. NLRC, 1999]

In legitimate contracting there exists:


(a) An ER-EE relationship between the
contractor and the employees it engaged to
perform the specific job, work or service being
contracted
(b) A contractual relationship between the
principal and the contractor as governed by the
provisions of the CC.
In the event of any violation of any provisions of
the LC (including failure to pay wages) there
exists a solidary liability on the part of the
principal and the contractor for purposes of
enforcing the provisions of the LC and other
social legislation, to the extent of the worked
performed under the employment contract.
[Sec. 5, D.O. 18-A-11]

Contract Employees
Limited extent; secured during the period their
respective contracts of employment remain in
effect. [Labajo vs. Alejandro, 1988]
Probationary Employees
Limited extent; additional limitations on power
of employer to terminate: must be exercised in
accordance with the specific requirements of
the contract; dissatisfaction of the employer
must be real and in good faith, not feigned so as
to circumvent the contract or the law

DISMISSAL FROM
EMPLOYMENT

Art. 279: In case of regular employment, the


employer shall not terminate the services of an
employee except for
(a) just cause (Art. 282)
(b) authorized cause (Art. 283-284)

Project/seasonal Employees
Limited extent; secured for the duration of the
limited period of their employment

Security of Tenure
Right not be removed from ones job without
valid cause and valid procedure. [Kiamco v.
NLRC, 1999]

Managerial Employees
Entitled to security of tenure; They may be
dismissed upon loss of confidence [Maglutac vs.
NLRC, 1990].

Nature
It is a constitutionally protected right (Art. XIII
Sec. 3, 1987 Constitution); it cannot be blotted
out by an employment contract.

An employee cannot be arbitrarily dismissed at


any time, and without cause as reasonably
established in an appropriate investigation.
[Inter Orient Maritime Enterprises, Inc. vs. NLRC,
1994]

It does not give the employee an absolute right


to his position; when a transfer is not
unreasonable, nor inconvenient, nor prejudicial
to an employee; and it does not involve a
demotion in rank or diminution of his pay,
benefits, and other privileges, the employee
may not complain that it amounts to

Fixed-period Employees / Term Employment


This arrangement does NOT circumvent
Security of Tenure when:
(1) knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper
pressure or any other circumstances vitiating his
consent; OR
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LABOR STANDARDS

LABOR LAW

(2) Brent Doctrine: the employer and the


employee dealt with each other on more or less
equal terms with no moral dominance exercised
by the former or the latter. [Brent School v.
Zamora, 1990; Romares v. NLRC, 1998; Medenilla
v. Phil. Veterans Bank, 2000]

family
or
his
duly
authorized
representatives; and
(5) Other causes analogous to the foregoing.
(Art. 282)

If a contract is for a fixed term and the employee


is dismissed without just cause, he is entitled to
the payment of his salaries corresponding to the
unexpired portion of the employment contract.
[Medenilla v. Phil. Veterans Bank, 2000]

Misconduct
(1) improper or wrongful conduct
(2) transgression of some established and
definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and
implies wrongful intent and not mere error
in judgment. [Dept of Labor Manual, Sec.
4343.01; Hayuan Restaurant vs. NLRC,
2006]

Serious misconduct or willful disobedience

Management Prerogatives and Security of


Tenure
Management prerogatives
(1) To Discipline [San Miguel v. NLRC, 1980]
(2) Right to dismiss or otherwise impose
disciplinary sanctions upon an employee for
just and valid cause, pertains in the first
place to the employer, as well as the
authority to determine the existence of said
cause in accordance with the norms of due
process. [Makati Haberdashery, Inc. v. NLRC,
1989]
(3) To Demote [Petrophil vs. NLRC, 1986]
(4) To Dismiss it is a measure of self
protection [Reyes vs. Ministry of Labor, 1989]

Requisites
(a) Serious to be serious, misconduct must be:
(1) of such grave and aggravated character
(2) in connection with the employee's work.
[Lakpue Drug, Inc. vs. Belga, 2005]
(b) Shows that the employee has become unfit
to continue working for the Employer.
[Philippine Aeolus Automotive United Corp.
vs. NLRC]
Willful disobedience
Requisites
(a) The employees assailed conduct has been
willful or intentional, the willfulness being
characterized by a wrongful and perverse
attitude; and
(b) The order violated must have been:
(1) Reasonable and lawful;
(2) Made known to the employee; and
(3) In connection to the duties which he has
been engaged to discharge. [Acesite
Corp. v. NLRC, G.R. No. 152308, January
26, 2005]

Requisites for the validity of management


prerogative affecting security of tenure
(a) Exercised in good faith for the advancement
of the Employer's interest, and
(b) NOT for the purpose of defeating or
circumventing the rights of the Employees
under special laws or under valid
agreements [San Miguel vs. Ople, 1989]
Just Causes
(1) Serious misconduct or willful disobedience by
the employee of the lawful orders of his
employer or representative in connection
with his work;
(2) Gross and habitual neglect by the employee
of his duties;
(3) Fraud or willful breach by the employee of
the trust reposed in him by his employer or
duly authorized representative;
(4) Commission of a crime or offense by the
employee against the person of his
employer or any immediate member of his

Gross and habitual neglect of duties


Gross negligence is want of even slight care,
acting or omitting to act in a situation where
there is a duty to act, not inadvertently but
willfully and intentionally with a conscious
indifference to consequences insofar as
other persons may be affected. [Tres Reyes
v. Maxim's Tea House, 2003]
Habitual neglect implies repeated failure to
perform one's duties for a period of time,

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LABOR STANDARDS

depending upon the circumstances. [Chua


v. NLRC, 2005]

restricted
to
MANAGERIAL
Employees [Computer
Products Corp. v. CA,
2005]
45

Requisites
(a) Neglect of duty must be both gross and
(b) Habitual

LABOR LAW

with
trust
and
confidence [Coca-Cola
vs. NLRC, 1989] e.g.
care and custody of
property

Abandonment of employment
Abandonment is the deliberate and unjustified
refusal of an Employee to resume his
employment. [Nueva Ecija Electric Cooperative v.
NLRC, 2005]

Fraud or willful breach of trust (loss of trust and


confidence)
Requisites
(a) Committed against the Employer or his
representative;willful since fraud implies
wrongful intent;
(b) EE concerned holds a position of trust and
confidence; [Mabeza vs. NLRC, 1997]
(c) Act complained of must be work-related i.e.
it must show the employee concerned to be
unfit to continue working for the employer.

Requisites
(1) Failure to report to work or absence w/o valid
reason;
(2) Clear intent to sever the employer-employee
relationship via overt acts [Floren Hotel v. NLRC,
2005]
Cannot be lightly inferred, much less legally
presumed from certain equivocal acts such as
interim employment [Hacienda Dapdap v.
NLRC, 1998]

Proof beyond reasonable doubt not necessary


(a) It is sufficient that there is some basis for
such loss of confidence such as when the
employer has reasonable ground to believe
that the employee concerned is responsible
for the purported misconduct;
(b) And the nature of his participation therein
renders him unworthy of the trust and
confidence demanded of his position
[Uniwide Sales Warehouse Club v. NLRC,
2008]

Totality of infractions doctrine


The totality of infractions or the number of
violations committed during the period of
employment shall be considered in determining
the penalty to be imposed upon an erring
employee. The offenses committed by petitioner
should not be taken singly and separately.
Fitness for continued employment cannot be
compartmentalized into tight little cubicles of
aspects of character, conduct and ability
separate and independent of each other. While
it may be true that petitioner was penalized for
his previous infractions, this does not and
should not mean that his employment record
would be wiped clean of his infractions. After
all, the record of an employee is a relevant
consideration in determining the penalty that
should be meted out since an employee's past
misconduct and present behavior must be taken
together in determining the proper imposable
penalty. [Merin v. NLRC, 2008]

Loss of confidence: managerial/confidential vs.


rank-and-file employees
Managerial
Rank-and-file
Substantial evidence
reasonable ground to
believe
Employees
guilt; mere existence
of a basis for the belief
[Etcuban vs. Sulpicio
Lines, 2005]

Proof of involvement in
the alleged events in
question required; mere
uncorroborated
assertions and
accusations
are
not
enough
Employment for a [Etcuban vs. Sulpicio
long time is counted Lines, 2005]
against the Employee
[Salvador
v.
Phil.
Mining Service Corp.,
2003]

AUTHORIZED CAUSES
Recognized right of employers
The law recognizes the right of every business
entity to reduce its workforce if the same is

General rule: trust Except: when rank-andand confidence is file position is reposed
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LABOR STANDARDS

made necessary by compelling economic


factors which would endanger its existence or
stability.
The fundamental law itself guarantees, even
during the process of tilting the scales of social
justice towards workers and employees, the
right of enterprises to reasonable returns of
investment and to expansion and growth.
[Uichico v. NLRC, 1997]

LABOR LAW

Employers good faith in implementing a


redundancy program is not necessarily put
in doubt by the availment of services of an
independent contractor. [Asian Alcohol
Corp. v. NLRC, 1999]

Requisites for valid redundancy


(a) Written notice served on both the Employees
and the DOLE at least 1 month prior to the
intended date;
(b) Payment of separation pay equivalent to one
month pay or one month pay for every year of
service, whichever is higher;
(c) Good faith in abolishing the redundant
positions; and
(d) Fair and reasonable criteria in ascertaining
what positions are to be declared redundant
and accordingly abolished. The following are
usually considered in redundancy: position
itself, nature of the services performed by the
employee, and necessity of such position. [Edge
Apparel v. NLRC, 1998]

Art. 283 and 284 are not exhaustive; other


authorized causes are:
(a) total and permanent disability,
(b) disease incurable in 6 mos,
(c) valid application of union security clause,
(d) expiry of term employment period,
(e) completion of project,
(f) failure in probation, etc
Redundancy, retrenchment and closure
Redundancy - exists where the service
capability of the workforce is in excess of
what is reasonably needed to meet the
demands of the business enterprise;
A reasonably redundant position is one
rendered superfluous by any number of
factors, such as overhiring of workers,
decreased volume of business, dropping of
a particular product line previously
manufactured by the company, or phasing
out of service activity previously undertaken
by the business [Dusit School Nikko v.
NUWHRAIN, 2005]
Redundancy does not refer to duplication of
work. That no other person was holding the
same position which the dismissed
employee held prior to the termination of
his services does not show that his position
had not become redundant. [Escareal v.
NLRC, 1992]
Financial loss is not a requisite. [Escareal v.
NLRC, 1992]
Creation of positions with functions related
or similar to those of the abolished
functions does not necessarily invalidate the
declaration of redundancythe old and new
positions were different and the declaration
was not maliciously motivated. [Santos v.
CA, 2001]

Separation pay entitlement


Employee is entitled to separation pay of 1
month pay or 1 month pay per year of service,
whichever is higher
Retrenchment is the termination of
employment effected by management during
periods of business recession, industrial
depressions, seasonal fluctuations, lack of work
or considerable reduction in the volume of the
employers business. [AMA Computer College v.
Ely Garcia, 2008]
General standards for when retrenchment is
preventive rather than curative
(a) Losses expected are substantial and not
merely de minimis in extent;
(b) Apprehended losses are reasonably
imminent, can be perceived objectively and in
good faith;
(c) Retrenchment must be reasonably necessary
to prevent the expected lossesmeasure of last
resort; and
(d) Expected or actual losses must be proved by
sufficient and convincing evidence. [Lopez Sugar
Corp. v. Federation of Free Workers, 1990]

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LABOR STANDARDS

Reduction of work days may be considered


constructive
retrenchment
[International
Hardware v. NLRC, 1989]

LABOR LAW

Must de bona fide or in good faith

Procedural steps required


At least 1 month before the intended date of
termination, Employer is to serve written notice
to:
(a) Affected employees; and
(b) DOLE (Art. 283)

Temporary
retrenchment
or
temporary
cessation or suspension of operations (Art. 286)
A specific period that employees may remain
temporarily laid-off or in floating status. The
temporary lay-off or bona fide suspension of
operations of a business or undertaking wherein
the employees likewise cease to work should
not last longer than 6 months. After 6 months,
the employees should either be recalled to work
or permanently entrenched following the
requirements of the law, and that failing to
comply with this would be tantamount to
dismissing the employees and the employer
would thus be liable for such dismissal.
[International Hardware v. NLRC, 1989]

Criteria in selecting employees for dismissal


Fair and reasonable criteria in ascertaining who
will be affected:
(1) preferred status (e.g. temporary, casual or
regular Employees),
(2) efficiency
(3) physical fitness,
(4) age,
(5) financial hardship, or
(6) seniority. [Asian Alcohol Corp. v. NLRC, 1999]

Requisites for a valid retrenchment


(a) Necessary to prevent or minimize losses and
such losses are proven;
(b) There must be 1 month written notice to the
DOLE and the employee;
(c Separation pay is paid;
(d) Exercised in good faith the prerogative was
exercised for the advancement of the
employers interest and not to defeat or
circumvent the employees right to security
of tenure; and
(e) Fair and reasonable criteria in ascertaining
who will be affected

Standards to be followed
Retrenchment Redundancy
Reduction of
47
personnel
usually due to
poor financial
returns so as to
cut down on
costs
of
operations in
terms
of
salaries
and
wages

The service of
an Employee is
in excess of
what
is
required by an
enterprise

The reversal of
the fortune of
the employer
whereby there
is a complete
cessation
of
business
operations
and/or actual
locking-up of
the doors of
the
establishment,
usually due to
financial losses

Resorted
to To
save
primarily
to production
avoid
or costs
minimize
business losses

Aims
to
prevent further
financial drain
upon
the
Employer

Separation pay entitlement


Employee is entitled to separation pay of 1
month pay or 1/2 month pay per year of service,
whichever is higher
Closure
Employer may close or cease his business
operations or undertaking even if he is not
suffering from serious business losses or
financial reverses, as long as he pays his
employees their termination pay in the
amount corresponding to their length of
service. [Catatista v. NLRC, 1995]
It includes both the complete cessation of
all business operations and the cessation of
only part of a companys business [CocaCola Bottlers, Inc. v. NLRC, 1991]

Closure

Disease or illness
Requisites
(a) Employee has been found to be suffering
from any disease;

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UP LAW BOC

LABOR STANDARDS

(b) His continued employment is prohibited by


law or is prejudicial to his health as well as
to the health of his co-employees;
(c) Payment of separation pay;
(d) A medical certification by a competent
public health authority that the disease
cannot be cured w/in 6 months even with
proper medical treatment (IRR Book VI. Rule
I. Sec. 8)
(i) Medical certification cannot be dispensed
with [Manlyl Express, Inc. v. Payong,
2005]
(ii) It must be issued by a competent public
health authority and not the company
physician [Cebu Royal Plant v. Deputy
Minister of Labor, 1987]

2. Lawful,
3. Sufficiently
known
to
Employee,
4. In connection to
the duties.
Gross and Habitual Neglect must be both
Neglect
gross and habitual.
Fraud or Willful Breach Loss of Confidence
of Trust
1. Committed
against
the
Employer or his
representative
(direct);
2. willful
since
fraud
implies
wrongful intent;
3. EE concerned
holds a position
of trust and
confidence
(Mabeza
vs.
NLRC, 1997);
4. Act complained
of must be
work-related.

Separation pay entitlement


Employee is entitled to separation pay of 1
month pay or month pay per year of service,
whichever is higher
Termination of employment pursuant to a union
security clause
Art. 283 and 284 are not exhaustive; other
authorized causes are:
(1) total and permanent disability,
(2) disease incurable in 6 mos,
(3) application of union security clause,
(4) expiry of term employment period,
(5) completion of project,
(6) failure in probation, etc
Just Cause
Serious Misconduct

Willful Disobedience

Additional Guidelines
1. NOT simulated;
2. NOT used as a
subterfuge;
3. NOT arbitrarily
asserted; and
4. genuine, NOT a
mere
afterthought
(Vitarich
v.
NLRC,
1999;
Coca-Cola
Bottlers, Phils.,
Inc.
v.
Kapisanan ng
Malayang
Manggagawa sa
Coca-Cola,
2005)

Requisites
Serious
(1) Grave
aggravated
character,
(2) In connection
work; and
(3) Shows
Employee is
to
work
Employer.

LABOR LAW

and
with
that
unfit
for

Willful
conduct

wrongful and perverse


attitude; and
Order violated must be:
1. Reasonable,

Commission of a crime Crime against the


or offense against
1. Employer,

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LABOR STANDARDS

Employer

Analogous Causes

2. Immediate
member
of
employers
family, or
3. Employers duly
authorized
representative;
and
4. Conviction
or
prosecution
NOT required.

Alcohol Corp. v.
NLRC, 1999),
such as but not
limited
to:
preferred
status
(e.g.
temporary,
casual
or
regular
Employees)
efficiency, or
seniority.
(Panlilio
v.
NLRC,
1997;
Golden Thread
Knitting
Industries, Inc.
v. NLRC, 1999)

Due to a voluntary
and/or willful act or
omission by Employee
(Nadura vs. Benguet
Consolidated, 1962)
Retrenchment

AUTHORIZED CAUSES REQUISITES


Installation of Labor
Saving Devices

Redundancy

1.

1 month written
notice to DOLE
and Employee
2. separation pay
equivalent to
one month pay
or one month
pay for every
year of service,
whichever
is
higher
1.
2.

3.

4.

LABOR LAW

1 month written
notice to DOLE
and Employee
separation pay
equivalent to
one month pay
or one month
pay for every
year of service,
whichever
is
higher;
Good faith in
abolishing the
redundant
positions; and
Fair
and
reasonable
criteria
in
choosing those
affected (Asian
PAGE 86

(1) Necessary
to
prevent
or
minimize
losses
and such losses are
proven
(2) 1 month written
notice to DOLE and
the Employees
(3) Separation
pay
equivalent to at
least one month
pay or at least 1/2
month pay for every
year of service,
whichever
is
higher;
(4) Exercise is in good
faith; and
(5) Fair and reasonable
criteria
in
ascertaining who
will be affected
(1) preferred
status
(e.g.
temporary,
casual
or
regular
Employees)
(2) efficiency,
(3) physical
fitness,
(4) age,
(5) financial

UP LAW BOC

LABOR STANDARDS

hardship, or
(6) seniority.
(Asian Alcohol
Corp. v. NLRC,
1999)

prohibited by law
or is prejudicial to
his health as well
as as to the health
of
his
coemployees.
(Art.
284)
(3) Separation
pay
equivalent to at
least one month
pay or at least 1/2
month pay for
every
year
of
service, whichever
is higher; and
(4) Medical
certification by a
competent public
health
authority
that the disease
cannot be cured
within 6 mos even
with
proper
medical treatment.
(IRR Book VI Rule I
Sec. 8)

General
Standards:
When retrenchment is
preventive rather than
curative
(1) Losses
expected
are substantial and
not merely de
minimis in extent;
(2) Apprehended
losses
are
reasonably
imminent;
(3) Retrenchment
must
be
reasonably
necessary
to
prevent
the
expected
losses;
and
(4) Expected or actual
losses must be
proved by sufficient
and
convincing
evidence.
(Lopez
Sugar Corp. vs.
Federation of Free
Workers, 1990)

DUE PROCESS
Substantive Due Process

Dismissal for any of the just or authorized


causes under Arts. 282 284

Closure or Cessation of (1) Must be done in


Operations
good faith (bona
fide)
(2) 1 month written
notice to DOLE and
Employee
(3) Separation
pay
equivalent to one
month pay or 1/2
month pay for
every
year
of
service, whichever
is higher.
Disease

LABOR LAW

Right to counsel
A very basic requirement of substantive due
process; it has to be observed. Indeed, the rights
to counsel and to due process of law are two of
the fundamental rights guaranteed by the 1987
Constitution to any person under investigation,
be the proceeding administrative, civil, or
criminal. [Salaw v. NLRC, 1991]
Procedural Due Process

Employee must be given notice with adequate


opportunity to be heard before he/she is
notified of his/her actual dismissal for Cause.
[Fujitsu v. CA, 2005]

(1) Employee
is
suffering from any
disease;
(2) His
continued
employment
is

ER may NOT substitute the required prior notice


& opportunity to be heard with the mere
PAGE 87

UP LAW BOC

LABOR STANDARDS

payment of 30 days' salary. [PNB v. Cabanag,


2005]
TWIN-NOTICE REQUIREMENT
First notice notice specifying the grounds
for which dismissal is sought
Second notice notice of the decision to
dismiss

+ Due Process

*
if
reinstatement
NOT possible =
separation pay

No Just or Dismissal
Authorized
invalid
Cause + No
Due Process

Reinstatement
+
Full
Backwages
*
if
reinstatement
NOT possible =
separation pay

Just
or Dismissal valid
Authorized
Cause + No
Due Process

Liable
for
damages due
to
noncompliance
with
procedural
req'ts
*separation
pay
if
for
authorized
cause

Procedure to be observed in termination cases


Basis for termination

Requirements

Just cause Art. 282

1. Notice specifying the


grounds for which
dismissal is sought
2.
Hearing
or
opportunity to be heard
3. Notice of the
decision to dismiss
(Art. 277(b))

Authorized Cause
Arts. 283 & 284

Notice to:
1. Employee, &
2. DOLE
at least 1 month prior
to the effectivity of the
separation

HEARING; MEANING OF OPPORTUNITY TO


BE HEARD
A formal or trial type hearing is not at all
times and in all instances essential to due
process; it is enough to that the parties are
afforded fair and reasonable opportunity to
explain their side of the controversy.
[Mendoza vs. NLRC, 1991]
Summary proceeding may be conducted;
written explanations, affidavits, position
papers or other pleadings may be used as
well; what is essential is the ample
opportunity to be heard. [Homeowners
Savings and Loan Assoc. Inc. vs. NLRC, 1996]
No formal hearing necessary when the
Employee
already
admitted
his
responsibility for the act he was accused of.
[Magos v. NLRC, 1998]
What the law requires, as held in De Leon v.
NLRC, cited by petitioners, is for the employer to
inform the employee of the specific charges
against him and to hear his side or defenses.
This does not however mean a full adversarial
proceeding. Litigants may be heard thru: (1)
pleadings, written explanations, position
papers, memorandum; (2) oral argument. In
both instances, the employer plays an active

Requisites
(a) Notice not needed when Employee
consented to the retrenchment or
voluntarily applied for one. [International
Hardware Inc. vs. NLRC, 1989]
(b) Notice must be individual, not collective.
[Shoppers Gain Supermart vs. NLRC, 1996];
(c) Voluntary arbitration satisfies notice
requirement for authorized causes [Revidad
vs. NLRC, 1995]
Consequences for non-compliance
Situation

Effect

Liability of ER

Just
or Dismissal valid
Authorized
Cause + Due
Process

No liability
*
separation
pay
if
for
authorized
cause

No Just or Dismissal
Authorized
invalid
Cause

Reinstatement
+
Full
Backwages

LABOR LAW

PAGE 88

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LABOR STANDARDS

role he must provide the employee the


opportunity to present his side and answer the
charges, in substantial compliance with due
process. Actual adversarial proceeding becomes
necessary only for clarification or when there is a
need to propound searching questions to
unclear witnesses. This is a procedural right
which the employee must, however, ask for it is
not an inherent right, and summary proceedings
may be conducted. This is to correct the
common but mistaken perception that
procedural due process entails lengthy oral
arguments.
Hearing
in
administrative
proceedings and before quasi-judicial agencies
are neither oratorical contests nor debating
skirmishes where cross examination skills are
displayed. Non-verbal devices such as written
explanations, affidavits, position papers or other
pleadings can establish just as clearly and
concisely aggrieved parties' predicament or
defense. What is essential is ample opportunity
to be heard, meaning, every kind of assistance
that management must accord the employee to
prepare adequately for his defense. [as cited in
Manggagawa ng Komunikasyon sa Pilipinas v.
NLRC, 1992]

Serrano v. NLRC, 2000 Dismissal is valid.


EE is entitled to the
payment
of
full
backwages
Computed from the
time of dismissal until
the Court finds the
dismissal to be for just
cause.
Current rule: Agabon v. Dismissal is valid (NO
NLRC, 2004
reinstatement
and
backwages)
BUT
Employer
to
indemnify Employee in
the form of nominal
damages
Indemnity is stiffer than
Wenphil Corp. vs.
NLRC to discourage
the practice of dismiss
now, pay later.
Prior to 1989

RELIEFS
DISMISSAL

Burden of Proof
The burden of proof is upon the employer.
Employer must comply with due process
requirements before any termination is
done. [Gothong Lines, Inc. v. NLRC, 1999]
Unsubstantiated suspicions and baseless
conclusions by employers are not legal
justification for dismissing employees.
[Maranaw Hotel and Resort Corp. v. NLRC,
1999]

Wenphil Corp. v. NLRC,


1989
- Belated Due Process
Rule

Illegal dismissal

FOR

ILLEGAL

A finding of illegal dismissal entitles the


Employee to:
(1) reinstatement without loss of seniority rights
and privileges, and
(2) full backwages inclusive of allowances and
to benefits or their monetary equivalent
from the time withheld up to actual
reinstatement [Art. 279]

REINSTATEMENT

Degree of Proof
Substantial evidence; proof beyond reasonable
doubt not required. [Manila Electric Co., Inc. v.
NLRC, 1991]
Agabon doctrine
Prior to 1989

LABOR LAW

Illegal dismissal

Dismissal isvalid (NO


reinstatement
and
backwages)
BUT
Employer
to
indemnify
Employee
for damages
PAGE 89

It is the restoration of an employee who was


unjustly dismissed to the position from
which he was removed, that is, to his status
quo ante dismissal [Santos vs. NLRC, 1987]
Note: An offer by Employer to re-employ the
Employee did not cure the vice of earlier
arbitrary dismissal. [Ranara v. NLRC, 1992]
An order for reinstatement must be
specifically declared and cannot be
presumed; like back wages, it is a separate
and distinct relief given to an illegally
dismissed employee. [Gold City Integrated
Port Service, Inc. v. NLRC, 1995]

UP LAW BOC

LABOR STANDARDS

Alternative to Reinstatement
In lieu of reinstatement, Employee is entitled to
separation pay of 1 month pay per year of
service. [Gaco vs. NLRC, 1994]

reinstatement would only exacerbate the


tension and strained relations between the
parties or where the relationship between
the employer and employee has been
unduly strained by reason of their
irreconcilable differences, particularly where
the illegally dismissed employee held a
managerial or key position in the company,
it would be more prudent to order payment
of separation pay instead of reinstatement
[Quijano v. Mercury Drug Corp.,1998]

General Rule: Reinstatement is a matter of right


to an illegally dismissed Employee.
Exceptions:
(1) Closure of business [Retuya vs. Dumarpa,
2003]
(2) Economic business conditions: The
reinstatement remedy must always be
adapted to economic-business conditions.
[Union of Supervisors, etc. v. Sec. of Labor,
1984]
(3) EEs unsuitability [Divine World High School
vs. NLRC, 1986]
(4) EEs Retirement/Coverage [Espejo vs. NLRC,
1996]

Kinds of separation pay


(1) SP as a statutory requirement for authorized
causes
(2) SP as financial assistance found in the next
section
(3) SP in lieu of reinstatement where
reinstatement is not feasible; and
(4) SP as a benefit in the CBA or company policy

Prescription Period
An action for reinstatement by reason of illegal
dismissal is one based on an injury which may
be brought within 4 years from the time of
dismissal. [Art. 1146 of the Civil Code]

Computation
SP as a statutory requirement is computed
by integrating the basic salary with regular
allowances employee has been receiving
[Planters Products Inc. v. NLRC, 1989);
allowances include transportation and
emergency living allowances [Santos v.
NLRC, 1987]
Commissions may not be included since
they must be earned by actual market
transactions by employee [Soriano v. NLRC,
1989]
A dismissed employee who has accepted
separation pay is not necessarily estopped
from challenging the validity of his or her
dismissal. Neither does it relieve the
employer of legal obligations. [Anino v.
NLRC, 1998]

REINSTATEMENT PENDING APPEAL


Art. 223 is clear that an award for reinstatement
shall be immediately executory even pending
appeal and the posting of a bond by the
employer shall not stay the execution for
reinstatement.
Reinstatement ordered by Labor Arbiter is selfexecutory; reinstatement ordered by NLRC is
not and, though immediately executory, still
requires writ of execution. [Panuncillo vs. CAP
Phil. Inc., 2007]
SEPARATION
PAY
REINSTATEMENT

IN

LIEU

LABOR LAW

OF

BACKWAGES

According to St. Theresas School of Novaliches


Foundation v. NLRC (1998), backwages are
earnings lost by a worker due to his illegal
dismissal; a form of relief that restores the
income lost by reason of such unlawful
dismissal; it is not private compensation or
damages; nor is it a redress of a private right
but, rather, in the nature of a command to the
employer to make a public reparation for
illegally dismissing an employee.

Strained Relation rule


If reinstatement is not feasible, expedient,
or practical, as where there is strained
relations between the parties, particularly
where the illegally dismissed employee held
a managerial or key position [Quijano v.
Mercury Drug Corp. 1998]
Where reinstatement is not feasible,
expedient or practical, as where
PAGE 90

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LABOR STANDARDS

Effect of failure to order backwages


A plain error which may be rectified, even if
employee did not bring an appeal regarding the
matter [Aurora Land v. NLRC, 1997]

COMPUTATION
Without deduction for their earnings elsewhere
during the layoff [Bustamante v. NLRC, 1996]
Awards including salary differentials are not
allowed [Insular Life Assurance Co. v. NLRC,
1987]
The salary base properly used should be the
basic salary rate at the time of dismissal plus
the regular allowances; allowances include:
Emergency cost of living allowances
(ECOLA), transportation allowances, 13th
month pay [Paramount Vinyl Product Corp.
v. NLRC, 1990]
Also included are vacation leaves, service
incentive leaves, and sick leaves
The effects of extraordinary inflation are not
to be applied without an official declaration
thereof by competent authorities [Lantion v.
NLRC, 1990]

appertaining to him prior to his dismissal,


but the award of backwages was limited to
only one year considering the mitigating
circumstance of good faith attributed to the
employer. [San Miguel Corporation v. Javate,
Jr., 1992]
The employee was terminated for her
continuous absence without permission.
Although the Court found that the
employee was indeed guilty of breach of
trust and violation of company rules, it still
declared the employees dismissal illegal as
it was too severe a penalty considering that
she had served the employer company for
21 years, it was her first offense, and her
leave to study the French language would
ultimately benefit the employer who no
longer had to spend for translation services.
The Court awarded the said employee
backwages limited to a period of two years,
given that the employer acted without
malice or bad faith in terminating the
employees services. [Dolores v. NLRC, 1992]

(2) Delay of the EE in filing the case for illegal


dismissal
The employee filed his ULP charge with
reinstatement and back wages about two
years and fifteen days after his separation
on April 10, 1961. The shortest prescriptive
period for the filing of all other actions for
which the statute of limitations does not fix
a period, is four years. The period of delay in
instituting this ULP charge with claim for
reinstatement and back wages, although
within the prescriptive period, should be
deducted from the liability of the employer
to him for back wages. In order that the
employee however should be relieved from
proving his income during the period he was
out of the service and the employer from
submitting counter-proofs, which may delay
the execution of the decision, the employer
was directed to the employee back wages
equivalent to one year, eleven months, and
fifteen
days
without
further
disqualifications. [Mercury Drug Co., Inc. v.
CIR, 1974]

LIMITATED BACKWAGES
General rule
An illegally dismissed employee is entitled to
full backwages.
Exceptions
(1) The Court awarded limited backwages where
the employee was illegally dismissed but the
employer was found to be in good faith.

LABOR LAW

The Court affirmed the consistent findings


and conclusions of the Labor Arbiter,
(NLRC), and CA that the employee was
illegally dismissed since he was still fit to
resume his work; but the employers liability
was mitigated by its evident good faith in
terminating the employees services based
on the terms of its Health, Welfare and
Retirement Plan. Hence, the employee was
ordered reinstated to his former position
without loss of seniority and other privileges

Rationale
Feati University Club vs. Feati University (1974)
adopted a consensus policy of pegging the
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LABOR STANDARDS

LABOR LAW

amount of backwages to their total equivalent


for three years (depending on the circumstances)
without
deduction
or
qualification.
The rationale for the policy was stated in the
following words:

(1) Bona fide suspension of the operation of a


business or undertaking exceeding 6
months [Valdez v. NLRC, 1998]
(2) Floating status of more than 6 months [Agro
Commercial Security Services v. NLRC, 1989]

As has been noted, this formula of awarding


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

An involuntary resignation is resorted to 1) when


continued employment is rendered impossible,
unreasonable, or unlikely; 2) when there is a
demotion in rank and/or a diminution in pay; 3)
or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to
the employee. [Phil. Wireless, Inc. v. NLRC, 1998]
If an employee was forced to remain without
work or assignment for a period exceeding 6
months, then he is in effect constructively
dismissed [Valdez v. NLRC, 1998]

Management Prerogative
This Court held that the employers right to
conduct the affairs of his business, according to
its own discretion and judgment, is wellrecognized. An employer has a free reign and
enjoys wide latitude of discretion to regulate all
aspects of employment. This is a management
prerogative, where the free will of management
to conduct its own affairs to achieve its purpose
takes form. [Torreda vs. Toshiba, 2007]
So long as a companys management
prerogatives are exercised in good faith for the
advancement of the employers interest and not
for the purpose of defeating or circumventing
the rights of the employees under special laws
or under valid agreements, this Court will
uphold themEven as the law is solicitous of
the welfare of the employees, it must also
protect the right of an employer to exercise
what are clearly management prerogatives. The
free will of management to conduct its own
business affairs to achieve its purpose cannot be
denied. [Ernesto G. Ymbong vs. ABS-CBN
Broadcasting Corp., 2012]

PREVENTIVE SUSPENSION

Preventive Suspension is a disciplinary


measure for the protection of the company's
property pending investigation of any
alleged malfeasance or misfeasance
committed by the employee. The employer
may place the worker concerned under
preventive suspension if his continued
employment poses a serious and imminent
threat to the life or property of the employer
or of his co-workers. [PAL v. NLRC, 1998]
Preventive suspension is limited to 30 days;
any more than that amounts to constructive
dismissal. [Pido vs. NLRC, 2007]

DISCIPLINE
The employers right to conduct the affairs of his
business, according to its own discretion and
judgment, includes the prerogative to instill
discipline in its employees and to impose

CONSTRUCTIVE DISMISSAL
The following constitute constructive dismissal:

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LABOR STANDARDS

penalties, including dismissal, upon erring


employees. This is a management prerogative
where the free will of management to conduct
its own affairs to achieve its purpose takes form.
The only criterion to guide the exercise of its
management prerogative is that the policies,
rules and regulations on work-related activities
of the employees must always be fair and
reasonable and the corresponding penalties,
when prescribed, commensurate to the offense
involved and to the degree of the infraction.
[Consolidated Food Corporation vs. NRLC, 1999]
[St. Michaels Institute vs. Santos, 2001]

LABOR LAW

(2) The Employer has the right to transfer or


assign Employees from one area of
operation to another, or one office to
another or in pursuit of its legitimate
business interest,
(3) Provided there is no demotion in rank or
diminution of salary, benefits and other
privileges
and
not
motivated
by
discrimination or made in bad faith, or
effected as a form of punishment or
demotion without sufficient cause. [Westin
Phil. Plaza Hotel v. NLRC, 1999]
This prerogative extends to the managements
right to regulate, according to its own discretion
and judgment, all aspects of employment,
including the freedom to transfer and reassign
employees from one are to another in order to
meet the requirements of the business is,
therefore, not general constitutive of
constructive dismissal. Thus, the consequent
transfer of Trycos personnel, assigned to the
Production Department was well within the
scope of its management prerogative.

Right to dismiss or otherwise impose


disciplinary sanctions upon an employee for just
and valid cause, pertains in the first place to the
employer, as well as the authority to determine
the existence of said cause in accordance with
the norms of due process. [Makati Haberdashery,
Inc. v. NLRC, 1989]
Management has the prerogative to discipline
its employees and to impose appropriate
penalties on erring workers pursuant to
company rules and regulations. [Jose P. Artificio
vs. NLRC, 2010]

When the transfer is not unreasonable, or


inconvenient, or prejudicial to the employee,
and it does not involve a demotion in rank or
diminution of salaries, benefits, and other
privileges, the employee may not complain that
it amounts to a constructive dismissal. [Bisig ng
Manggagawa sa TRYCO v. NLRC, 2008]

It is obvious that the company overstepped the


bounds of its management prerogative in the
dismissal of Mauricio and Camacho. It lost sight
of the principle that management prerogative
must be exercised in good faith and with due
regard to the rights of the workers in the spirit of
fairness and with justice in mind. [Philbag
Industrial Manufacuring Corp. vs. Philbag
Workers
Union-Lakas
at
Gabay
ng
Manggagawang Nagkakaisa, 2012]

It is management prerogative for employers to


transfer employees on just and valid grounds
such as genuine business necessity. [William
Barroga vs. Data Center College of the
Philippines, 2011]

Although we recognize the right of employers to


shape their own work force, this management
prerogative must not curtail the basic right of
employees to security of tenure [Alert Security &
Investigation Agency, Inc. vs. Saidali Pasawilan,
et. al., 2011].

Even though transfers or reassignments per se


are indeed valid and fall within the ambit of
management prerogatives, the exercise of these
rights must remain within the boundaries of
justice and fair play. [Michelle T. Tuason vs. Bank
of Commerce, 2012]

TRANSFER OF EMPLOYEES
(1) An Employees right to security of tenure
does not give him such a vested right in his
position as would deprive the company of
its prerogative to change his assignment or
transfer him where he will be most useful.

PRODUCTIVITY STANDARD
The employer has the right to demote and
transfer an employee who has failed to observe
proper diligence in his work and incurred
habitual tardiness and absences and indolence

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LABOR LAW

in his assigned work. [Petrophil Corporation vs.


NLRC, 1986]

give it. [Kimberly-Clark Philippines, Inc. vs.


Dimayuga, 2009]

In the consolidated cases of Leonardo vs. NLRC


[G. R. No. 125303, June 16, 2000] and Fuerte vs.
Aquino [G. R. No. 126937, June 16, 2000], the
employer claimed that the employee was
demoted pursuant to a company policy
intended to foster competition among its
employees. Under this scheme, its employees
are required to comply with a monthly sales
quota. Should a supervisor such as the
employee fail to meet his quota for several
consecutive months, he will be demoted,
whereupon his supervisors allowance will be
withdrawn and be given to the individual who
takes his place. When the employee concerned
succeeds in meeting the quota again, he is reappointed supervisor and his allowance is
restored. The Supreme Court held that this
arrangement is an allowable exercise of
company rights since an employer is entitled to
impose productivity standards for its workers. In
fact, non-compliance may be visited with a
penalty even more severe than demotion.

CHANGE OF WORKING HOURS


Further, management retains the prerogative,
whenever exigencies of the service so require, to
change the working hours of its employees. So
long as such prerogative is exercised in good
faith for the advancement of the employers
interest and not for the purpose of defeating or
circumventing the rights of the employees
under special laws or under valid agreements,
this Court will uphold such exercise. [Sime
Darby Pilipinas Inc. v. NLRC, 1998]
RULES
ON
MARRIAGE
BETWEEN
EMPLOYEES OF COMPETITOR-EMPLOYERS
In the recent case of Duncan Association of
Detailman-PTGWO and Pedro Tecson v. Glaxo
Wellcome Philippines, Inc., we passed on the
validity of the policy of a pharmaceutical
company prohibiting its employees from
marrying employees of any competitor
company. We held that Glaxo has a right to
guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential
programs and information from competitors.
We considered the prohibition against personal
or marital relationships with employees of
competitor companies upon Glaxos employees
reasonable under the circumstances because
relationships of that nature might compromise
the interests of Glaxo. In laying down the
assailed company policy, we recognized that
Glaxo only aims to protect its interests against
the possibility that a competitor company will
gain access to its secrets and procedures. [Star
Paper Corp. vs. Simbol, 2006]

GRANT OF BONUS
A bonus is a gratuity or act of liberality of the
giver which the recipient has no right to demand
as a matter of right [Aragon vs. Cebu Portland
Cement Co., 61 O.G. 4597]. It is something
given in addition to what is ordinarily received
by or strictly due the recipient. The granting of
a bonus is basically a management prerogative
which cannot be forced upon the employer
who may not be obliged to assume the onerous
burden of granting bonuses or other benefits
aside from the employees basic salaries or
wages xxx [Kamaya Point Hotel vs. National
Labor Relations Commission, Federation of Free
Workers and Nemia Quiambao, G.R. No. 75289,
August 31, 1989]. [Traders Royal Bank vs. NLRC,
1990]

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

With regard to the private respondents claim


for the mid-year bonus, it is settled doctrine that
a grant of a bonus is a prerogative, not an
obligation of the employer. The matter of giving
a bonus over and above the workers lawful
salaries and allowances is entirely dependent
on the financial capability of the employer to

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Social Welfare Legislation

LABOR LAW

(3) Employees (previously under compulsory


coverage)
already
separated
from
employment or those self-employed (also
under compulsory coverage) with no
realized income for a given month, who
chose to continue with contributions to
maintain right to full benefit.

SSS LAW [RA 8282]


COVERAGE
COMPULSORY [Sec. 9 (a); Sec. 9-A]
(1) Employees not over 60 years including
domestic helpers with at least P1,000
monthly pay; and
(2) Self-employed as may be determined by the
Commission, but not limited to:
(a) Self-employed professionals
(b) Partners and single proprietors of
businesses
(c) Actors and actresses, directors,
scriptwriters, and news correspondents
who do not fall within the definition of
the term employee under Section 8 (d)
(d) Professional athletes, coaches, trainers
and jockeys
(e) Individual farmers and fishermen

NOTE
Foreign
governments,
international
organizations or their wholly owned
instrumentality employing workers in the
Philippines may enter into an agreement with
the Philippine government to include their
employees in the SSS except those already
covered by their civil service retirement
system.

EXCLUSIONS FROM COVERAGE [Sec.


8 (j)]

(1) Employment purely casual and not for the


purpose of occupation or business of the
employer;
(2) Service performed on or in connection with
an alien vessel by an employee if he is
employed when such vessel is outside the
Philippines;
(3) Service performed in the employ of the
Philippine Government or instrumentality or
agency thereof;
(4) Service performed in the employ of a foreign
government or international organization,
or their wholly-owned instrumentalities;
and
(5) Services performed by temporary and other
employees which may be excluded by SSS
regulation. Employees of bona fide
independent contractors shall not be
deemed employees of the employer
engaging the services of said contractors.

A domestic worker who has rendered at least


one (1) month of service shall be covered by the
Social Security System (SSS), the Philippine
Health Insurance Corporation (PhilHealth), and
the Home Development Mutual Fund or PagIBIG, and shall be entitled to all the benefits in
accordance with the pertinent provisions
provided by law.
Premium payments or contributions shall be
shouldered by the employer. However, if the
domestic worker is receiving a wage of Five
thousand pesos (P5,000.00) and above per
month, the domestic worker shall pay the
proportionate share in the premium payments
or contributions, as provided by law.

BENEFITS

The domestic worker shall be entitled to all


other benefits under existing laws. [Sec. 30,
Kasambahay Law (RA 1036)]

(1) Monthly pension [Sec. 12]


Computation of monthly pension
The monthly pension shall be the highest of the
following amounts:
(a) P300 + [20% x (ave. monthly credit)] + [2% x
(ave. monthy credit) x (# of cash credited
years of service in excess of 10 years)]; or
(b) 40% x (ave. monthly credit); or

VOLUNTARY [Sec. 9]
(1) Spouses who devote full time to managing
household and family affairs, unless they
are also engaged in other vocation or
employment (which is subject of
compulsory coverage);
(2) OFWs recruited by foreign-based employers;
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SOCIAL WELFARE LEGISLATION

(c) P1,000; provided, that the monthly pension


shall in no case be paid for an aggregate
amount of less than 60 months.
(d) Notwithstanding the abovementioned,
minimum pension is P1,200 for members
with at least 10 years credit service, P2,400
for those with 20 years.

LABOR LAW

difference is that the pension is paid directly to


the member.
In case the permanently disabled member dies,
it would be given the same treatment as a
retiree dying.
For permanent partial disability, the pension is
not lifetime. (e.g. loss of thumb entitles member
to only 10 months of pension, while loss of arm
50 months). It shall be paid in lump sum if the
period is less than 12 months.

(2) Dependents pension [Sec. 12-A]


(a) Paid when member dies, retires or with
permanent total disability;
(b) Paid to each child conceived on or prior to
contingency, but not exceeding 5, beginning
with the youngest and preferring the
legitimate;
(c) Amount is either P250 or 10% of the monthly
pension as computed above, whichever is
higher.

For multiple partial disabilities, they shall be


additive when related or deteriorating the
percentage shall be equal to the number of
months the partial disability is entitled to
divided by 75 months. (e.g. loss of sight in one
eye 25/75; loss of arm 50/75; if both
occur due to same cause, then 25/75 + 50/75 =
100% so treated as if it were permanent total
disability)

(3) Retirement benefits [Sec. 12-B]


ELIGIBILITY REQUIREMENTS
(a) 120 monthly contributions;
(b) Age
(i) 65 years old; or
(ii) A member who has reached 60 years
may also avail if he is already separated
from employ-ment or has ceased to be selfemployed.

(5) Death benefits [Sec. 13]


ELIGIBILITY REQUIREMENT
36 monthly contributions prior to the semester
of death.
BENEFIT
Monthly pension to primary or secondary
beneficiaries.

BENEFIT
Entitlement to monthly pension from retirement
until death.

TO THOSE INELIGIBLE
Lump sum benefit which shall be the higher
between the two:
(1) (monthly pension) x 12; or
(2) (monthly pension) x (# of monthly
contributions)

Lump Sum Alternative Member may opt to


receive his first 18 monthly pensions in lump
sum but such is discounted at a preferential rate
of interest.
Lump Sum Eligible A 60 year old member
with less than 120 monthly contributions who is
no longer employed or self-employed, and who
is not continuing contributions independently,
he is entitled to a lump sum equal to his total
contributions paid.

(Funeral benefits [Sec. 13-B]


P12,000 in cash or in kind, upon death of
member
(6) Loan
Social Security Commission Resolution No. 669.
Moreover, several SSS-issued circulars such as
Circular No. 21-P and No. 52 pertain to the
treatment of salary loans, sometimes providing
for more flexible payment terms or condonation
for delinquent payers; [Santiago v. CA and SSS,
GR # L-39949 (1984)] resolved an issue

(4) Permanent disability benefits [Sec. 13-A]


ELIGIBILITY REQUIREMENT
36 monthly contributions prior to the semester
of disability; same as death benefit; only

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involving the treatment of salary loan


repayments; SSS website also shows loans

SECONDARY
Shall only receive when
beneficiaries are absent
(1) Dependent parents

(7) Sickness benefits [Sec.14]


ELIGIBILITY REQUIREMENTS AND OTHER
CONDITIONS
(1) Inability to work due to sickness or injury
(2) Confined for at least 4 days either in a
hospital or elsewhere with SSS approval;
(3) At least 3 months of contributions in the 12
month period immediately before the
semester of sickness or injury has been paid;
(4) All company sick leaves with pay for the
current year has been used up;
(6) Maximum of 120 days per 1 calendar year (so
maximum permissible for the same sickness
and confinement is 240 days for 2
consecutive years);
(7) The employer has been notified, or, if a
separated, voluntary or self-employed
member, the SSS directly notified within 5
days of confinement;
(8) Notice to employer or SSS not needed when
confinement is in a hospital; notice to
employer not required as well when
Employee became sick or injured while
working or within premises of the employer.

the

primary

OTHERS
Shall only receive when the primary and
secondary beneficiaries are absent
(1) Any other person designated by member as
his/her secondary beneficiary.

GSIS [RA 8291]


COVERAGE
All public sector employees below the
compulsory retirement age of 65, irrespective of
employment status.

EXCLUSIONS FROM COVERAGE

(1) AFP and PNP;


(2) Members of the Judiciary and Constitutional
Commissions who are covered only by life
insurance as they have separate retirement
schemes;
(3) Contractual employees with no employeremployee relationship with the agency they
serve.

BENEFIT
Daily cash allowance paid for the number of
days a member is unable to work due to
sickness or injury equivalent to 90% x (average
daily salary credit)
(1) Maternity leave benefits [Sec. 14-A]
Limited only to first four deliveries
miscarriage

LABOR LAW

BENEFITS
(1) Monthly pension
The amount shall be:
(a) 37.5%
x
(revalued
ave.
monthly
compensation)
(b) Plus 2.5 x (revalued ave. monthly
compensation) x (years in service in excess
of 15 years).

or

NOTE: All of these benefits are tax-exempt.

The monthly pension shall not exceed 90% of


the average monthly compensation.

BENEFICIARIES

It shall not be less than P2,400 for those with


20 years of service and not less than P1,300 for
everyone else.

PRIMARY
Dependent spouse until remarriage [See
above];
(1) Dependent children (legitimate, legitimated,
legally adopted, and illegitimate) [See above];
illegitimate children are entitled only to 50% of
the share of legitimate children unless there are
no legitimate children, in which case, they get
100%.

(2) Retirement benefits


ELIGIBILITY REQUIREMENTS
(a) 15 years service;
(b) 60 years of age; and

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(c) Not receiving pension


permanent total disability.

SOCIAL WELFARE LEGISLATION

benefit

from

LABOR LAW

TO THE INELIGIBLE
If member has rendered at least 3 years of
service, then he shall receive cash payment
equal to 100% of ave. monthly compensation
for each year of service (essentially total amount
of contributions made) or P12,000 whichever is
higher.

NOTE
Retirement is compulsory for employees 65
years of age who have rendered at least 15
years of service; if employee has less than 15
years of service, he may be allowed to
continue in accordance with civil service laws.

PARTIAL DISABILITY
Paid according to GSIS prescribed schedule
(this is similar to the scheme used by SSS; refer
to section II subsection D-3 above); member
availing of permanent partial disability must
satisfy condition E.1.a. above regarding the
disability not being due to his own fault and
either E.1.b.i. or E.1.b.ii. regarding employment
status and services rendered.

BENEFIT
Choice between
(1) 60 x (basic monthly pension) lump sum
payment at the time of retirement plus
basic monthly pension payable monthly for
life after expiry of the 5-year guaranteed
period which is already covered by the lump
sum; or
(2) Cash payment equivalent to 18 x (basic
monthly pension) plus monthly pension for
life immediately but with no 5-year
guarantee

(4) Death Benefits


When member dies, the primary beneficiaries
are entitled to only one of the following:
(1) Survivorship pension
(a) If he was in the service when he died; or
(b) Even if separated from the service, he
has at least 3 years of service and has
paid 36 monthly contributions within
the 5 years immediately preceding
death; or
(c) Even if separated from the service, he
has paid 180 monthly contributions
prior to death.
(1) Survivorship pension plus cash payment of
100% ave. monthly compensation for every
year of service (so essentially, pension plus
total contributions made)
(a) If he was in the service when he died;
and
(b) With 3 years of service.
(2) Cash payment equivalent to 100% ave.
monthly compensation for each year of
service he paid contributions or P12,000
whichever is higher
(a) With 3 years of service; and
(b) He has failed to qualify in the prior 2
schemes.

(3) Permanent disability benefits


ELIGIBILITY
REQUIREMENTS
FOR
PERMANENT TOTAL DISABILITY
(a) Disability not due to employees own grave
misconduct, notorious negligence, habitual
intoxication, or willful intention to kill
himself or another;
(b) Employee is: in service at the time of
disability; or b) even if separated, he has
paid at least 36 monthly contributions
within the 5-year period immediately prior
to disability or has paid a total of at least
180 monthly contributions prior to disability;
and
(c) Member is not enjoying old-age retirement
benefit.
BENEFIT
FOR
PERMANENT
TOTAL
DISABILITY
Monthly income benefit for life equal to basic
monthly pension This is effective from date of
disability;

(5) Funeral benefits


Fixed by GSIS rules and regulations

If member is in service at the time of disability


and he has paid at least 180 monthly
contributions, in addition to the monthly income
benefit, he shall receive an additional cash
payment of 18 times basic monthly pension.

Entitled to this are the following:


(1) Active member;
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SOCIAL WELFARE LEGISLATION

(2) Member separated from service but still


entitled to funeral benefit;
(3) Pensioner;
(4) Retiree who at the time of retirement was of
pensionable age but opted to retire under
RA 1616.

LABOR LAW

essentially, the total amount of all


contributions paid) or P12,000 whichever is
higher.
(2) Below 60 years of age and at least 15 years
of service: cash payment equivalent to 18 x
(monthly pension) at the time of resignation
or separation plus an old-age pension
benefit equal to basic monthly pension.

(6) Loan
GSIS website provides for this

(9) Unemployment benefits [Sec. 11]

(7) Temporary disability benefits (similar to


sickness)

ELIGIBILITY REQUIREMENTS
(a) Employee separated from service due to
abolition of his office or position; and
(b) Employee has been paying integrated
contributions for at least 1 year prior to
separation.

ELIGIBILITY REQUIREMENTS AND OTHER


CONDITIONS
(a) Employee must be
(i) in service at the time of disability; or
(ii) if separated, he has rendered at least 3
years of service and paid at least 6
monthly contributions in the 12 month
period immediately prior to disability;
(b) All sick leave credits including CBA sick
leaves for the current year has been used
up; and
(c) Maximum of 120 days per 1 calendar year
(so maximum permissible for the same
sickness and confinement is 240 days for 2
consecutive years).

BENEFIT
Monthly cash payments of 50% of average
monthly compensation for a duration which is
proportional to years rendered, ranging from 2
months to 6 months.
(10) Survivorship benefits
Beneficiaries are entitled to the following:
(1) Basic survivorship pension which is 50% of
basic monthly pension; and
(2) Dependent
childrens
pension
not
exceeding 50% of the basic monthly
pension.

BENEFIT
75% of the current daily compensation for every
day or fraction thereof of disability or P70
whichever is higher.

(11) Life insurance benefits

(8) Separation benefits

NOTE
Judiciary and Constitutional Commissions are
entitled to life insurance only.

ELIGIBILITY REQUIREMENTS
(1) 60 years of age, or separation from service
with at least 3 years but not over 15 years
served
(2) Below 60 years of age, but at least 15 years
of service rendered.

BENEFICIARIES
PRIMARY
(1) Dependent spouse until remarriage;
(2) Dependent
children
(legitimate,
legitimated,
legally
adopted,
and
illegitimate) but RA 8291 does not
distinguish share of legitimate and
illegitimate children.

BENEFIT
(1) For 60 years of age or separated from
service with 3 to 15 years of service: cash
payment of 100% of ave. monthly
compensation for each year of service (so
SECONDARY
Shall only receive when the primary
beneficiaries are absent

(1) Dependent parents


(2) Legitimate descendants, subject to the
restrictions on dependent children

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SSS

LABOR LAW

GSIS
Enabling law

RA 1161 as amended by RA 8282: Social Security Act RA 8291 amending PD 1146


of 1997
Definition of Terms
Employer any person, natural or juridical,
domestic or foreign, who carries on in the
Philippines any trade business, industry,
undertaking, and uses the services of another
person who is under his orders as regards the
employment, except those considered as employer
under the GSIS. A self-employed person shall be
both employer and employee at the same time.

Employer National government, its political


subdivisions,
branches,
agencies
or
instrumentalities, including government-owned or
controlled corporations and financial institutions
with original charters (GOCCs); constitutional
commissions; and judiciary

Employee any person receiving compensation


while in service of an employer whether by election
Employee any person who performs services for or appointment, irrespective of status of
an employer in which either or both mental and appointment; baranggay officials; and sangguniang
physical efforts are used and who receives officials
compensation for such services, where there is an
employer-employee relationship; also, a self- Note: No counterpart for self-employed.
employed person who is both employee and
employer at the same time
Self-employed any person whose income is not
derived from employment, including, but not
limited to: (a) self-employed professionals; (b)
partners and single proprietors of businesses; (c)
actors, directors, scriptwriters, news correspondents
not considered as employees under the above
definition; (d) athletes, coaches, trainers, jockeys;
and individual farmers and fishers.
Dependents:
Same except that a child here is below 18
(1) Legal spouse entitled by law to receive support;
(2) Child unmarried, not gainfully employed, and
below 21 or
(3) Child over 21 if he or she became permanently
incapacitated and incapable of self-support,
physically or mentally; child may be legitimate,
legitimated, legally adopted, or illegitimate;
Parent who is receiving regular support.
Beneficiaries
Same except that RA 8291 does not distinguish
(1) Primary
share of legitimate and illegitimate children
(a) Dependent spouse until remarriage [See
above];
(b) Dependent children (see above); illegitimate
children are entitled only to 50% of the share of
legitimate children unless there are no
legitimate children, in which case, they get
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LABOR LAW

100%.
(2) Secondary shall only receive when the primary
beneficiaries are absent: Dependent parents
(3) Other any other person designated by the
member as his/her secondary beneficiary.
Compensation all actual remuneration for
employment, including living allowance, as well as
the cash value of any remuneration paid in any
medium other than cash except that portion
already above the max salary credit under Sec. 18 of
the Act.

Compensation basic pay received excluding per


diems, bonuses, overtime, honoraria, allowances
and other emoluments not integrated into the basic
pay under existing laws.

Coverage
Compulsory
Employers as defined above;
Employees not over 60 years including household
helpers with at least P1,000 monthly pay; and
Self-employed.

Public sector employees below the compulsory


retirement age of 65.

Exceptions:
(1) AFP and PNP;
(2) Members of the Judiciary and Constitutional
Commissions who are covered only by life insurance
Voluntary
Spouses who devote full time to managing as they have separate retirement schemes;
Contractual employees with no employee-employer
household and family affairs;
relationship with the agency they serve.
OFWs recruited by foreign-based employers;
Employees already separated from employment
or those self-employed with no realized income
for a given month, who chose to continue with
contributions to maintain right to full benefit.
Note:
Foreign
governments,
international
organizations or their wholly owned instrumentality
employing workers in the Philippines may enter into
an agreement with the Philippine government to
include their employees in the SSS except those
already covered by their civil service retirement
system.
Effective Date of Coverage
st

Employer: 1 day of operation


Employee: 1st day at work
Self-employed: upon registration with SSS
Summary of Benefits
(1)
(2)
(3)
(4)
(5)
(6)
(7)

Monthly pension
Dependents pension
Retirement benefits
Permanent disability benefits
Death benefits
Funeral benefits
Loan Social Security Commission Resolution
No. 669. Moreover, several SSS-issued circulars
such as Circular No. 21-P and No. 52 pertain to

(1)
(2)
(3)
(4)
(5)
(6)
(7)

Monthly pension
Retirement benefits
Permanent disability benefits
Death Benefits
Funeral benefits
Loan GSIS website provides for this
Temporary disability benefits (similar
sickness)
(8) Separation benefits

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the treatment of salary loans, sometimes


providing for more flexible payment terms or
condonation for delinquent payers; [Santiago v.
CA and SSS, GR # L-39949 (1984)] resolved an
issue involving the treatment of salary loan
repayments; SSS website also shows loans
(8) Sickness benefits
(9) Maternity leave benefits

LABOR LAW

(9) Unemployment benefits Sec 11


(10) Survivorship benefits
(11) Life insurance benefits
Note: Judiciary and Constitutional Commissions are
entitled to life insurance only.

Effects of separation from employment


(1) Employers contribution, and
(2) Employees obligation to pay contribution both
cease at the end of the month of separation;
(3) EE shall be credited with all contributions paid
on his behalf and entitled to all benefits set
forth by the law.

Continued membership for the unemployed


member; and entitlement to whatever benefits he
has qualified to in the event of any compensable
contingency.

Dispute Settlement
Social Security Commission CA (Rule 43; GSIS CA [Rule 43] SC [Rule 45]; appeal does
questions of law and fact) SC (Rule 45; questions not stay execution.
of law only)
Prescriptive Period
20 years

4 years

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LABOR LAW

by both Systems. [Sec. 2, IRR of Title II, Book


IV of LC]
(5) Filipinos working abroad in the service of an
employer as defined in Section 3 hereof
shall be covered by the System, and entitled
to the same benefits as are provided for
employees working in the Philippines. [Sec.
5, IRR of Title II, Book IV of LC]

LIMITED PORTABILITY LAW [RA


7699]
COVERAGE

(1) Workers who transfer employment from one


sector to another; or
(2) Those employed in both sectors (public and
private).

EFFECTIVITY

PROCESS

Coverage of employees shall take effect on the


first day of employment. [Sec. 6]

The covered worker shall have his credible


services or contributions in both Systems
credited to his service or contribution record in
each of the Systems and shall be totalized for
purposes of old-age, disability, survivorship and
other benefits in case the covered member does
not qualify for such benefits in either or both
systems without totalization: Provided, however,
That overlapping periods of membership shall
be credited only once for purposes of
totalization [Sec. 3]

WHEN COMPENSABLE
Grounds:
(1) For the injury and the resulting disability or
death to be compensable, the injury must
be the result of accident arising out of and in
the course of the employment.
(2) For the sickness and the resulting disability
or death to be compensable, the sickness
must be the result of an occupational
disease listed under Annex A of these
Rules with the conditions set therein
satisfied, otherwise, proof must be shown
that the risk of contracting the disease is
increased by the working conditions.

Totalization shall refer to the process of


adding up the periods of creditable services or
contributions under each of the Systems, for
purposes of eligibility and computation of
benefits [Sec. 2e].

LIMITATION
No compensation shall be allowed to the
employee or his dependents when the injury,
sickness, disability, or death was occasioned by
any of the following:
(1) His intoxication;
(2) His willful intention to injure or kill himself
or another; or
(3) His notorious negligence
(4) As otherwise provided by law.

Overlapping periods of membership in case of


those employed in both sectors at once are to
be counted only ONCE for purposes of
totalization to be able to satisfy eligibility
requirements of benefits provided for by either
SSS or GSIS.

EMPLOYEES COMPENSATION
COVERAGE
AND
WHEN
COMPENSABLE
COVERAGE
(1) Every employer shall be covered.
(2) Every employee not over sixty (60) years of
age shall be covered.
(3) An employee over sixty (60) years of age
shall be covered if he had been paying
contributions to the System prior to age
sixty (60) and has not been compulsorily
retired.
(4) An employee who is coverable by both the
GSIS and SSS shall be compulsorily covered
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Labor Relations Law

LABOR LAW

mutual aid and protection. Whether employed


for a definite period or not, any employee shall
be considered as such, beginning on his first day
of service, for purposes of membership in a
labor union. [UST Faculty Union v Bitonio]

RIGHT TO SELF-ORGANIZATION
Basis of Right
1987 Constitution
Art. III Sec. 8. The right of the people,
including those employed in the public and
private sectors, to form unions, associations,
or societies for purposes not contrary to law
shall not be abridged.

Infringement of Right to Self-Organization


It shall be unlawful for any person to
restrain, coerce, discriminate against or
unduly interfere with employees and
workers in their exercise of the right to selforganization.xxx [Art. 252]
The BLR correctly observed that the
recognition of the tenets of the [INC] sect
xxx should not infringe on the basic right to
self-organization
granted
by
the
constitution to workers, regardless of
religious affiliation. [Kapatiran sa Meat and
Canning Division v Calleja, 1988]

Art. XIII Sec. 3. The state shall afford full


protection to labor, local and overseas,
organized and unorganized, and promote full
employment opportunities for all. It shall
guarantee the rights of all workers to selforganization, collective bargaining and
negotiations, and peaceful concerted
activities, including the right to strike in
accordance with law.

Scope of Right to Self-Organization


Right to form, join and assist labor
organizations of their own choosing for the
purpose of collective bargaining through
representatives [Art. 252];
Right to engage in lawful concerted
activities for the same purpose or for their
mutual aid and protection [Art. 252];
Subsumed in the right to join, affiliate with,
or assist any union is the right NOT to join,
affiliate with, or assist any union; or to leave
a union and join another one. [Heritage
Hotel Manila v. PIGLAS-Heritage, 2009]
The right of the employees to selforganization is a compelling reason why
their withdrawal from the cooperative must
be allowed. As pointed out by the union, the
resignation of the member-employees is an
expression of their preference for union
membership over that of membership in the
cooperative. [Central Negros Electric
Cooperative v SOLE, 1991]

Labor Code
Art. 249: All persons employed in commercial,
industrial and agricultural enterprises and in
religious, charitable, medical, or educational
institutions, whether operating for profit or not,
shall have the right to self-organization and
to form, join, or assist labor organizations of
their own choosing for purposes of collective
bargaining.
Ambulant, intermittent, and itinerant workers,
self-employed people, rural workers and
those without any definite employers may
form labor organizations for their mutual aid
and protection.
Art. 250. Employees of government
corporations
established
under
the
corporation code shall have the right to
organize and to bargain collectively with their
respective employers.

WHO MAY UNIONIZE FOR PURPOSES


OF COLLECTIVE BARGAINING

Right to Self-Organization: A Fundamental


Right
Self-organization is a fundamental right
guaranteed by the Philippine Constitution and
the Labor Code. Employees have the right to
form, join or assist labor organizations for the
purpose of collective bargaining or for their

(1) All employees (general rule)


(2) Government employees in civil service and of
government corporations under the Corporation
Code
(3) Supervisors
(4) Aliens with valid working permits
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LABOR LAW

(5) Security personnel

(1) ALL Employees


Any employee, whether employed for a
definite period or not, shall, beginning on
his first day of service, be considered as an
employee for purposes of membership in
any labor union. [Art. 283 (c)]
Employees of non-profit organizations are
allowed to join, form and/or assist labor
organizations [FEU-Dr. Nicanor Reyes
Medical Foundation Inc. v Trajano, 1992]

Effect of Mixed Membership

Rationale - Supervisory employees, while in


the performance of supervisory functions,
become the alter ego of the management in
the making and the implementing of key
decisions. It would be difficult to find unity
or mutuality of interests in a bargaining unit
consisting of a mixture of rank-and-file and
supervisory employees. [Toyota Motor Phil.
Corp. v Toyota Motor Phil. Corp. Labor Union,
1997]

Art. 251-A. The inclusion as union members of


employees outside the bargaining unit shall
not be a ground for the cancellation of the
registration of the union. Said employees are
automatically deemed removed from the list
of membership of said union.

(2) Government Corporate Employees


(Corporations created under the Corporation
Code)
The right to self-organization shall not be
denied to government employees. [1987
Constitution, Art. IX-B, Sec. 2 (5)]

Same Federation or National Union


Art. 250. Employees of government
corporations
established
under
the
Corporation Code shall have the right to
organize and to bargain collectively with their
respective employers. All other employees in
the civil service shall have the right to form
associations for purposes not contrary to law.

Art. 251. The rank and file union and the


supervisors union operating the same
establishment may join the same federation
or national union.
(4) Aliens
General rule: All aliens are strictly prohibited
from engaging directly or indirectly in all forms
of trade union activities.

All government employees can form, join, or


assist employees organizations of their own
choosing for the furtherance and protection
of their interests. They can also form, in
conjunction with appropriate government
authorities,
labor-management
committees, work councils and other forms
of workers participation schemes to achieve
the same objectives. [EO 180 Section 2]

Exception: Aliens working in the country with


valid permits issued by the DOLE are
nationals of a country which grants the same or
similar rights to Filipino workers. [Art. 275]
The DFA provides the certification on the
requirement of reciprocity. [Book V, Rule II, Sec.
2, Par. 1, 3rd sentence]

(3) Supervisory Employees

(5) Security Guards


The security guards and other personnel
employed by the security service contractor
shall have the right:
(1) To form, join, or assist in the formation of
a labor organization of their own choosing
for purposes of collective bargaining and
(2) To engage in concerned activities which
are not contrary to law including the right to
strike. [D.O. No. 14 Series of 2001 Guidelines
Governing the Employment and Working
Conditions of Security Guards and Similar

Art. 218 (m). Supervisory employees are those


who, in the interest of the employer,
effectively recommend such managerial
actions if the exercise of such authority is not
merely routinary or clerical in nature but
requires the use of independent judgment.
Art. 251. Supervisory employees shall not be
eligible for membership in a labor
organization of the rank-and-file employees
but may join, assist or form separate labor
organizations of their own.

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Personnel in the Private Security Industry]


In Dec 1986, President Aquino issued EO
No. 111 which eliminated the provision on
the disqualification of security guards and
with that security guards were thus free to
join a rank and file organization. Under the
old rule, security guards were barred from
joining labor organizations of the rank-andfile but under RA 6715, they may now freely
join a labor organization with the rank-andfile or the supervisory union, depending on
their rank. [Manila Electric Co. v. SOLE, 1991]

WHO CANNOT FORM, JOIN OR ASSIST


LABOR ORGANIZATIONS
(1) Managerial employees
(2) Confidential employees
(3) Non-employees
(4) Member-employee of a cooperative
(5) Employees of international organizations
(6) High-level government employees
(7) Members of the AFP, police officers,
policemen, firemen and jail guards

(1) Managerial Employees


Art. 218 (m). Supervisory employees are those
who, in the interest of the employer,
effectively recommend such managerial
actions if the exercise of such authority is not
merely routinary or clerical in nature but
requires the use of independent judgment.
Art. 251. Supervisory employees shall not be
eligible for membership in a labor
organization of the rank-and-file employees
but may join, assist or form separate labor
organizations of their own.

(2) Confidential employees


Those who assist or act in a confidential
capacity persons who formulate, determine
and effectuate management policies in the
field of labor relations (Nature of Access
Test).
The two criteria are cumulative, and both
must be met if an employee is to be
considered a confidential employee that
is,
(a) the confidential relationship must exist
between the employees and his supervisor,
and

LABOR LAW

(b) the supervisor must handle the


prescribed responsibilities relating to labor
relations. [San Miguel Supervisors and
Exempt Union v Laguesma, 1997]
Rationale of Exclusion of Confidential
Employees - By the very nature of their
functions, they assist and act in a
confidential capacity to, or have access to
confidential matters of, persons who
exercise managerial functions in the field of
labor relations. (Thus there is a fiduciary and
confidential relationship between manager
and employer.) It is not far-fetched that in
the course of CB, they might jeopardize that
interest which they are duty bound to
protect. [Metrolab Industries Inc. v. RoldanConfessor, 1996]
The disqualification of managerial and
confidential employees from joining a
bargaining unit for rank and file employees
is already well-entrenched in jurisprudence.
While Article 245 of the Labor Code limits
the ineligibility to join, form and assist any
labor
organization
to
managerial
employees, jurisprudence has extended this
prohibition to confidential employees or
those who by reason of their positions or
nature of work are required to assist or act
in a fiduciary manner to managerial
employees and hence, are likewise privy to
sensitive and highly confidential records.
[Standard Chartered Bank Employees Union
v SCB, 2008]
Function Test: nomenclature is not
controlling - The mere fact that an employee
is designated manager does not ipso facto
make him one. Designation should be
reconciled with the actual job description of
the employee. [Paper Indurstries Corp. of the
Philippines. v. Laguesma, 2000]

(3) Non-Employees
Respondents are found not to be employees
of the Company, they are not entitled to the
constitutional right to join or form a labor
organization for purposes of collective
bargaining. Citing La Suerte Cigar and
Cigarette Factory v. Director of Bureau of
Labor Relations the court here reiterated,
The question of whether employeremployee relationship exists is a primordial

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consideration before extending labor


benefits
under
the
workmen's
compensation, social security, medicare,
termination pay and labor relations law.
Failure to establish this juridical relationship
between the union members and the
employer affects the legality of the union
itself. [Singer Sewing Machine Co. v. Drilon,
1993]
Since the persons involved are not
employees of the company, they are not
entitled to the constitutional right to join or
form a labor organization for purposes of
collective bargaining. [Republic Planters v.
Laguesma, 1996]

LABOR LAW

the organization of rank-and-file government


employees. [E.O. 180 Sec. 3].
(7) Members of the AFP, Policemen, Police
Officers, Firemen and Jailguards
E.O. 180 Guidelines for the exercise of the right
to organize of government employees section 4
excludes them from coverage.

BARGAINING UNIT

Bargaining Unit refers to a group of employees


sharing mutual interests within a given
employer unit, comprised of all or less than all
of the entire body of employees in the employer
unit or any specific occupational or
geographical grouping within such employer
unit. [Book V, Rule 1, Sec. 1(d)]

(4) Employee-Member of Cooperative


Members of cooperatives are not eligible to
form, assist or join a labor org for the
purpose of CB, even though they do not
participate in the actual management of the
cooperative. Irrespective of their degree of
participation, they are still co-owners. Thus
they cannot invoke the right to collective
bargain because an owner cannot bargain
with himself or his co-owners. [Benguet
Electric Cooperative v. Ferrer-Calleja, 1989]
Exception: Employees who withdrew their
membership from the cooperative are
entitled to form or join a labor union for the
negotiations of a CBA. [CENECO v. DOLE,
1991]

A group of employees of a given employer


comprised of all or less than all of the entire
body of employees, which the collective
interests of all the employees indicate to be best
suited to serve reciprocal rights and duties of
the parties consistent with equity to the
employer [Belyca Corp. v. Calleja, 1988]
Functions of an Appropriate Bargaining Unit
(1) An ELECTORAL DISTRICT. It marks the
boundaries of those who may participate in a
certification election.
(2) An ECONOMIC UNIT. They are a group of
employees with community of interests.
(3) A SOVEREIGN BODY. It selects the sole
and exclusive bargaining agent.

(5) Employees of International Organizations


International organizations are endowed
with some degree of international legal
personality. They are granted jurisdictional
immunity.
A certification election cannot be conducted
in an international organization which the
Philippine Government has granted
immunity
from
local
jurisdiction.
[International
Catholic
Migration
Commission v. Calleja, 1990]

Role of a bargaining unit


The labor organization designated or
selected by the majority of the employees in
an appropriate collective bargaining unit
shall be the exclusive representative of the
employees in such a unit for the purpose of
collective bargaining.
Exception: However, an individual employee
or group of employees shall have the right at
any time to present grievances to their
employer. Any provision of law to the
contrary notwithstanding, workers shall
have the right, to participate in the policy
and decision-making processes of the
establishment where they are employed
insofar as said processes will directly affect

(6) High-level or managerial employees


High-level employees whose functions are
normally considered as policy-making or
managerial or whose duties are of a highly
confidential nature shall not be eligible to join

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their rights, benefits and welfare. For this


purpose, workers and employers may form
labor-management councils: Provided, that
the representatives of the workers in such
labor-management councils shall be
elected by at least the majority of all
employees in said establishment. [Art. 261]

LABOR LAW

conglomeration of companies is a positive


proof that a corporation is endowed with a
legal personality DISTINCTLY ITS OWN,
independent and separate from other
corporations.
(3) Separate legitimate purposes militate
against treating one corporation as an
adjunct or alter ego of the other.
(4) The fact that the businesses are related,
that some of the employees are the same
persons working in the other company and
the physical plants, offices and facilities are
in the same compound are NOT sufficient to
justify piercing the corporate veil. In Umali
vs CA, legal corporate entity is disregarded
only if it is sought to hold the officers and
stockholders directly liable for a corporate
debt or obligation. [Indophil Textile Mills
Workers Union v. Calica, 1992; Diatagon
Labor Federation v. Ople, 1980]

CBA Coverage
When there has been a factual determination by
the Labor Arbiter that the petitioners were
regular employees, said employees shall fall
within the coverage of the bargaining unit and
are therefore entitled to CBA benefits as a
matter of law and contract. [Farley Fulache, et a.
v ABS-CBN, 2010]
Effect of Prior Agreement
Prior agreement as to the inclusion or
exclusion of workers in a bargaining unit or
prohibition from forming their own union
agreed upon by the corporation with the
previous bargaining representatives can
never bind subsequent federations. [General
Rubber & Footwear Corp. v BLR, 1987]
Rationale - It is a curtailment of the right to
self-organization. During the freedom
period, the parties may not only renew the
existing collective bargaining agreement
but may also propose and discuss
modifications or amendments thereto.
[DLSU v. DLSUEA, 2000]

Spun-off corporations
The transformation of companies is a
management prerogative and business
judgment which the courts cannot look into
unless it is contrary to law, public policy or
morals. If, considering the spin-offs, the
companies would consequently have their
respective and distinctive concerns in terms of
nature of work, wages, hours of work and other
conditions of employment. The nature of their
products and scales of business may require
different skills, volumes of work, and working
conditions which must necessarily be
commensurate by different compensation
packages. [San Miguel Union v Confesor, 1996]

Corporate Entities
Two companies having separate juridical
personalities shall NOT be treated as a
single bargaining unit.
Exception: Pervasive Unitary Aspect of
Management Doctrine - The cross-linking of
the agencies command, control, and
communication systems indicate their
unitary corporate personality. [Philippine
Scouts Veterans v. Torres]
Principles in determining whether to establish
separate bargaining units
(1) The existence of a bona fide business
relationship between the 2 companies is not
proof of being a single corporate entity,
especially when the services provided by the
other company are merely auxiliary.
(2) The fact that there are as many
bargaining units as there are companies in a

TEST TO DETERMINE THE CONSTITUENCY


OF AN APPROPRIATE BARGAINING UNIT
4 Factors:
(1) Will of the Employees (Globe Doctrine)
(2). Affinity and unity of employees interest
(3) Prior collective bargaining history
(4) Employment status [UP v. Ferrer-Calleja,
1992]
Other factors:
(5) Geography and Location
(6) Policy of avoiding fragmentation of the
bargaining unit
(1) Globe Doctrine: Concept
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LABOR LAW

basic test of an asserted bargaining unit's


acceptability is whether or not it is
fundamentally the combination which will
best assure to all employees the exercise of
their collective bargaining rights. [Belyca
Corp. v. Calleja, 1988]

A practice designated as the "Globe


doctrine," which sanctions the holding of a
series of elections, not for the purpose of
allowing the group receiving an over all
majority of votes to represent all employees,
but for the specific purpose of permitting
the employees in each of the several
categories to select the group which each
chooses as a bargaining unit. [Kapisanan ng
mga Manggagawa sa Manila Road Co. v.
Yard Crew Union, 1960]
Rationale - Highly skilled or specialized
technical workers may choose to form their
own bargaining unit because they may be in
better position to bargain with the employer
considering the market value of their skills.

(5) Geography Location


Geography and location only play a
significant role if:
(a) The separation between the camps and
the different kinds of work in each all
militate in favor of the system of separate
bargaining units;
(b) When the problems and interests of the
workers are peculiar in each camp or
department;
(c) The system of having one collective
bargaining unit in each camp has operated
satisfactorily in the past. [Benguet
Consolidated Inc. and Balatok Mining Co. v.
Bobok Lumberjack Assn.,1958]

(2) Community or Mutuality of Interests


The basic test of an asserted bargaining
units ACCEPTABILITY is whether or not it is
fundamentally the combination which will
best assure to all employees the exercise of
their CB rights. This is related to the policy
of the law in ensuring the right to collective
bargain. [UP-Ferrer-Calleja, 1992]
Rationale There are greater chances of
success for the collective bargaining
process. The bargaining unit is designed to
maintain the mutuality of interest among
the employees in such unit.
Dissolve, change or expand a certain
bargaining unit: When the interest between
groups has changed over time.

(6) Policy of avoiding fragmentation of the


bargaining unit
It bears noting that the goal of the DOLE is
geared towards "a single employer wide
unit which is more to the broader and
greater benefit of the employees working
force." The philosophy is to avoid
fragmentation of the bargaining unit so as
to strengthen the employees bargaining
power with the management. To veer away
from such goal would be contrary, inimical
and repugnant to the objectives of a strong
and dynamic unionism. [Phil. Diamond Hotel
and Resort Inc v Manila Diamond Hotel and
Employees Union, 2006]
Since the confidential employees are very
few in number and are by practice and
tradition identified with the supervisors in
their role as representatives of management
vis--vis the rank and file employees, such
identity of interest has allowed their
inclusion in the bargaining of supervisors for
purposes of collective bargaining in turn as
employees in relation to the company as
their employer. This identity of interest
logically calls for their inclusion in the same
bargaining unit and at the same time fulfills
the laws objective of insuring to them the
full benefit of their right to self-organization

(3) Prior Collective Bargaining History


The existence of a prior collective
bargaining history is neither decisive nor
conclusive in the determination of what
constitutes an appropriate bargaining unit.
[San Miguel Corp. v. Laguesma, 1994]
(4) Employment status
Among the factors to be considered are:
employment status of the employees to be
affected, that is the positions and categories
of work to which they belong, and the unity
of employees' interest such as substantial
similarity of work and duties. In any event,
whether importance is focused on the
employment status or the mutuality of
interest of the employees concerned the

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and to collective bargaining, which could


hardly be accomplished if the respondent
associations membership were to be
broken up into five separate ineffective tiny
units. Creating fragmentary units would not
serve the interest of industrial peace. The
breaking up of bargaining units into tiny
units will greatly impair their organizational
value. [Filoil Refinery Corp. v Filoil
Supervisory and Confidential Employees
Union, 1972]

VOLUNTARY RECOGNITION
Voluntary Recognition refers to the process by
which a legitimate labor union is recognized by
the employer as the exclusive bargaining
representative or agent in a bargaining unit,
reported with the Regional office in accordance
to Rule VII, Sec 2 of these Rules. [Book V, Rule I,
Sec. 1 (bbb)]

LABOR LAW

All accompanying documents of the notice


for voluntary recognition shall be certified
under oath by the employer representative
and president of the recognized labor union.
The employer may voluntarily recognize the
representation status of a union in
unorganized establishments. In this case,
however, the company [SLECC] was not an
unorganized establishment when it
voluntarily recognized SMSLEC as its
exclusive bargaining representative. Prior
to the voluntary recognition, another union
[CLUP-SLECC] has already filed a petition
for certification election.
Thus, the
companys voluntary recognition of SMSLEC
is void. [SLECC v Sec. of Labor, 2009]

CERTIFICATION ELECTION
Certification election is the process of
determining, through secret ballot, the sole
and exclusive bargaining agent of the
employees in an appropriate bargaining
unit, for purposes of collective bargaining.
[Book V Rule I Sec. 1 (x)]
The certification election is the best method
of determining the will of the workers on the
crucial question of who shall represent
them in their negotiations with the
management for a collective bargaining
agreement that will best protect and
promote their interests. It is essential that
there be no collusion against this objective
between an unscrupulous management and
a union covertly supporting it while
professing its loyalty to labor, or at least
that the hopes of labor be not frustrated
because of its representation by a union
that does not enjoy its approval and
support. It is therefore sound policy that any
doubt regarding the real representation of
the workers be resolved in favor of the
holding of the certification election. This is
preferable to the suppression of the voice of
the workers through the prissy observance
of technical rules that will exalt procedure
over substantial justice. [Port Workers Union
of the Philippines v Laguesma, 1992]

Requirements
Substantive Requirements
(1) Unorganized establishment;
(2) Only one union asking for recognition;
(3) The members of the bargaining unit did not
object to the projected recognition of the union.
[Book V, Rule VII, Sec. 2]
Procedural Requirements
The notice of voluntary recognition shall be
accompanied by the original copy and two
(2) duplicate copies of the following
documents:
(1) A joint statement under oath of voluntary
recognition attesting to the fact of
voluntary recognition
(2) Certificate of posting of the joint
statement of voluntary recognition for
fifteen (15) consecutive days in at least
two (2) conspicuous places in the
establishment or bargaining unit where
the union seeks to operate;
(3) The approximate number of employees
in the bargaining unit, accompanied by
the names of those who support the
voluntary recognition comprising at
least a majority of the members of the
bargaining unit; and
(4) A statement that the labor union is the
only legitimate labor organization
operating within the bargaining unit.

Purpose
The purpose of a certification election is
precisely the ascertainment of the wishes of the
majority of the employees in the appropriate
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bargaining unit: to be or not to be represented


by a labor organization, and in the affirmative
case, by which particular labor organization.
[Reyes v Trajano, 1992]
Nature of proceeding
It is not litigation, but a mere investigation
of a non-adversary character. The object of
the proceedings is merely the determination
of proper bargaining units and the
ascertainment of the will and choice of the
employees in respect of the selection of the
bargaining
representative.
The
determination of the proceeding does not
entail the entry of remedial orders or
redress of rights, but culmination solely in
an official designation of bargaining units
and an affirmation of the employees
expressed choice of bargaining agent.
[Young Men Labor Union Stevedores v CIR,
1965]
It is the most democratic and most
efficacious/ effective way of determining the
will of the bargaining unit. [Samahang
Manggagawa sa Permex v Sec. of Labor,
1998]
It is a statutory policy. [Belyca Corp. v. FerrerCalleja, 1998]
Certification Election

labor union that has the support and


confidence of the majority of the workers
and is thus entitled to represent them in
bargaining for the terms and conditions of
their employment. [Port Workers Union v.
DOLE, 1992]
Thus it should not be circumvented. There
should be no obstacle in conducting the
Certification election. [George & Peter Lines,
Inc. v. Associated Labor Union, 1985]

Who may vote


All employees whether union members or not,
as long as they belong to the appropriate
bargaining unit can vote.
Who may file a petition for certification election
(1) Legitimate labor organization (registered w/
DOLE)
(2) Unregistered local chapter with charter
certificate from national union or federation
(3) National union or federation in behalf of its
local/chapter
(4) Employer (when requested to bargain
collectively and no existing CBA)
Legitimate labor organization
Art. 218 (f). "Legitimate labor organization"
means any labor organization duly registered
with the Department of Labor and
Employment, and includes any branch or local
thereof.

Union Election

To
determine
the To elect union officers
Exclusive Bargaining
Agent

Unregistered
certificate

All members of the Only union members


appropriate bargaining may vote.
unit may vote.

LABOR LAW

local/chapter

with

charter

Art 240-A, introduced by RA 9481. A duly


registered federation or national union may
directly create a local chapter by issuing a
charter
certificate
indicating
the
establishment of the local chapter. The
chapter shall acquire legal personality only for
purposes of filing a petition for certification
election from the date it was issued a charter
certificate.

Certification election is the fairest and most


effective way of determining which labor
organization can truly represent the working
force. It is a fundamental postulate that the
will of the majority given expression in an
honest election with freedom on the part of
the voters to make their choice, is
controlling. [PLUM Federation of Industrial
and Agrarian Workers v Noriel, 1978]

National union/federation
Art. 263. In any establishment where there is
no certified bargaining agent, a certification
election shall automatically be conducted by
the Med-Arbiter upon filing of a petition by
any legitimate labor organization, including a

Implications
Technical rules and objections should not
hamper the correct ascertainment of the

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LABOR LAW

national union or federation which has already


issued a charter certificate to its local/chapter
participating in the certification election, or a
local/chapter which has been issued a charter
certificate by the national union or federation.
In cases where the petition was filed by a
national union or federation, it shall not be
required to disclose the names of the local
chapters officers and members.

Certification Election In an Unorganized


Establishment

Employer

Filing of petition is by a legitimate labor


organization
It cannot be an unregistered labor
organization. This is best read in relation to
Art. 242 which enumerates the rights
granted to a legitimate labor organization
and one of those rights is the right to be
chosen as the exclusive bargaining
representative. This is one way the law
encourages union registration.

Procedure
(1) A petition for certification shall be filed by a
legitimate labor organization.
(2) Upon filing of the petition, the Med- Arbiter
shall automatically conduct a certification
election.

Art. 264. When requested to bargain


collectively, an employer may petition the
Bureau for an election.
Bystander rule
The employer shall not be considered a
party in the petition with a concomitant
right to oppose a petition for certification
election. The employers participation shall
be limited to:
(1) being notified or informed of petitions of
such nature
(2) submitting the list of employees during
the pre-election conference should the
Med-arbiter act favorably on the petition
[Art 258-A introduced by RA 9481]
A companys interference in the CE creates
a suspicion that it intends to establish a
company union. [Oriental Tin Can Labor
Union v. Secretary of Labor, 1998]
The employer is not a party to a certification
election, which is the sole or exclusive
concern of the workers. The only instance
when the employer may be involved in that
process is when it is obliged to file a petition
for certification election on its workers
request to bargain collectively pursuant to
Art. 258. [Hercules Industries, Inc. v Sec. of
Labor, 1992]
Employer is a total stranger in the process
of certification election. Employer has no
standing to file a motion to dismiss. [PT&T v
Laguesma, 1993]

Venue
BLR Regional Office which issued the
petitioning unions certificate of registration or
certificate of creation of chartered local.
Certification Election In an Organized
Establishment
Procedure
(1) A verified petition questioning the majority
status shall be filed by a legitimate labor
organization
(2) It must be filed within the 60-day period
before expiration of CBA (freedom period)
(3) Supported by written consent of at least
25% of ALL employees in the bargaining unit
(substantial support)
Substantial support rule
In organized establishments, the incumbent
sole bargaining agent should not be easily
replaced for that would disturb industrial
peace. To justify the disturbance, it must
appear that at least a substantial number
(25% requirement) seeks to have a new
exclusive bargaining unit.
A union that is merely filing a MOTION FOR
INTERVENTION in a CE filed by another
union need NOT present substantial
support. The substantial support is only
needed when filing for a petition for

Venue for filing the petition


BLR Regional Office which issued the
petitioning unions certificate of registration or
certificate of creation of chartered local.

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certification election. [Port Workers Union v.


DOLE, 1992]

LABOR LAW

ground that the rules and regulations or parts


established by the Secretary of Labor for the
conduct of election have been violated.

Validity
Double majority requirement (voters, valid votes)

Organized vs. Unorganized Establishment


Art. 256
Art. 257
Organized
Unorganized

Art. 262. To have a valid election, at least a


majority of all eligible voters in the unit must
have cast their votes. The labor union
receiving the majority of the valid votes cast
shall be certified as the exclusive bargaining
agent of all the workers in the unit.
Discretionary rule
If the petition does not comply with the
substantial support requirement, the BLR may
exercise its discretion in determining whether or
not a certification election must be conducted.
(Scout Albano Memorial College v. Noriel, 1978)

Bargaining
agent

Existing,
one

Petition filed

Has to be a No need to be
VERIFIED
verified
petition

Freedom
Period

No petition for
Certification
election
EXCEPT within
60 days before
the expiration
of the collective
bargaining
agreement
(See Art. 253 &
253-A)

Effect of withdrawal of signatures


The employees withdrawal from a labor
union made before the filing of the petition
for certification election is presumed
voluntary, while withdrawal after the filing
of such petition is considered to be
involuntary and does not affect the petition.
[S.S. Ventures International vs. S.S. Ventures
Labor Union, 2008]
If performed after the filing of the petition,
the withdrawal is presumed to be
involuntary and that it was procured
through duress, coercion, or for a valuable
consideration. [Oriental Tin Can Labor Union
v. Secretary of Labor and Employment, 1998]

has None

Not applicable.
No
freedom
period.
Can
file
petition
anytime.

Take note how


SC interpreted
the
term
WITHIN.

Forced Intervenor
The incumbent bargaining agent shall
automatically be one of the choices in the
certification election as forced intervenor. [Book
V Rule VIII Sec. 7]
69

Substantial support not necessary in intervention


The requisite written consent representing
substantial support of the workers in the
bargaining unit [as required in Art. 256 applies
to petitioners for certification only, and not to
motions for intervention. [PAFLU v Calleja, 1989]

Substantial
support rule

Appeal from order of Med-Arbiter holding


certification election
Art. 265. Appeal to Secretary of Labor on the
PAGE 113

What is the
rationale
of
freedom period
in
Organized
establishments,
why is there
none
in
unorganized
establishments?
It
has
something to
do
with
industrial
peace
Must be duly
supported by
25% of ALL
THE MEMBERS
OF
THE
APPROPRIATE
BARGAINING

NO substantial
support rule.
WHY?
Intention of law
is to bring in
the union, to
implement

71

UP LAW BOC

LABOR RELATIONS

UNIT.
policy behind
Percentage
Art. 211a.
base:
all
members of an
appropriate
bargaining
unit.
What is intent
and purpose of
law for requiring
the substantial
support rule?
Law wants to
know
the
intention of the
employees. If
they
really
want a CE,
since
they
already have a
bargaining
agent.

LABOR LAW

A petition for certification election may be


filed anytime, EXCEPT:
xxx when a bargaining deadlock to which an
incumbent or certified bargaining agent is a
party had been submitted to conciliation or
arbitration or had become the subject of a
valid notice of strike or lockout [Book V, Rule
VIII, Sec. 3 (c)]
A deadlock is defined as the counteraction
of things producing entire stoppage; a state
of inaction or of neutralization caused by
the opposition of persons or of factions (as
in government or voting body); standstill.
[Divine World University v Sec of Labor and
Employment, 1992]

(4) Contract Bar Rule


Art. 238. The Bureau shall not entertain any
petition for certification election or any other
action which may disturb the administration
of duly registered existing collective
bargaining agreements affecting the parties
except under Articles 253, 253-A and 256 of
this code.

Bars to certification election


(1) One year bar rule
(2) Negotiation bar rule
(3) Deadlock bar rule
(4) Contract bar rule

(1) One year bar rule


No certification election may be held within
1 year from the fact that voluntary
recognition has been entered, or a valid
certification, consent or run-off election has
been conducted within the bargaining unit.
If appealed, the reckoning period is the date
when the decision becomes final and
executory. [Book V, Rule VIII, Sec 3 (a)]

(2) Negotiation bar rule


A petition for certification election may be
filed anytime EXCEPT:
(1) When the duly certified union has
commenced and sustained negotiations in
good faith with the employer
(2) In accordance with Art. 250 of the Labor
Code
(3) Within one year after the certification
election. [Book V, Rule VIII, Sec 3 (b)]

The contract bar rule shall not apply:


(1) When the petition is filed during the
freedom period in Articles 253, 253-A, and
256.
(2) When the CBA is incomplete
(3) When the CBA is substandard
(4) When the CBA is prematurely renewed
(5) When the CBA is unregistered
No petition for certification election may be
filed after the lapse of the freedom period.
The old CBA is extended until a new one is
agreed upon by the parties. [Colegio de San
Juan de Letran v. Assoc., 2000]

Freedom Period
The last 60 days in a Collective Bargaining
Agreement (CBA) is referred to as the
freedom period when rival union
representation can be entertained during
the existence of a CBA. It is during this
particular period when the majority status
of the incumbent bargaining agent can be
challenged. [Tanduay Distillery Labor Union
v. NLRC, 1987]
The purpose of the prohibition against the
filing of a petition for certification election

(3) Deadlock bar rule

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outside the so-called freedom period is to


ensure industrial peace between the
employer and its employees during the
existence of the CBA. [Republic Planters
Bank Union v. Laguesma, 1996]
The premature renewal of a CBA cannot bar
the holding of a certification election by
virtue of a bona fide petition filed within the
freedom period if the clear intention was to
frustrate the constitutional right of the
employees to self-organization. [Associated
Labor Union v. Calleja, 1989]
What is prohibited is the filing of the
petition for certification election outside the
60-day freedom period. The signing of the
authorization to file was merely preparatory
to the filing of the PCE, or an exercise of the
right to self-organization. [PICOP Resources
Inc. v. Ricardo Dequita, 2011]

LABOR LAW

that until decided, shall suspend or bar


proceedings for certification election.
If it were a labor organization objecting to
the participation in a certification election of
a company-dominated union, as a result of
which a complaint for an unfair labor
practice case against the employer was
filed, and when the court finds that said
union is employer-dominated in the unfair
labor practice case, the union selected
would be decertified and the whole election
proceedings would be rendered useless and
nugatory.' There would be an impairment of
the integrity of the collective bargaining
process if a company-dominated union
were allowed to participate in a certification
election. [United CMC Textile Workers Union
v. BLR, 1984]

Certification Election; Other Requirements


Posting of Notice
Who: Election Officer shall cause the
posting
What: notice of election
Where: 2 conspicuous places in company
premises
When: at least 10 days before actual
election

Petition for cancellation of union registration


does not bar certification election
Certification election can be conducted despite
pendency of a petition to cancel the union
registration certificate. For the fact is that at the
time the union, whose registration certificate is
sought to be cancelled, filed its petition for
certification, it still had legal personality to
perform such act absent an order directing its
cancellation. [Samahan ng mga Manggagawa v
Laguesma, 1997]

Contents of Notice
(a) Date and Time of election;
(b) Names of all contending unions;
(c) Description of the bargaining unit
(d) List of eligible and challenged Voters.

Suspension of Election: Prejudicial Question


Rule
Formal charge of ULP against the employer
for establishing a company union triggers
suspension. [B.F. Goodrich Phils. Marikina v.
B.F. Goodrich Confidential and Salaried
Employees Union]
Note: The ONLY party who could ask for the
suspension of the CE is the labor union
which filed a complaint for ULP against the
employer.
Rationale - If there is a union dominated by
the company, to which some of the workers
belong, an election among workers and
employees of the company would not
reflect the true sentiment and wishes of the
said workers and employees because the
votes of the members of the dominated
union would not be free. Such charge of
company domination is a prejudicial question

The posting of the notice of election, the


information required to be included therein and
the duration of the posting cannot be waived by
the contending unions or the employer. [Book V
Rule IX Sec 6, IRR]
Voting List and Voters
The basis of determining voters may be agreed
upon by the parties (i.e. the use of payroll).
[Acoje Workers Union v NAMAWU, 1963]
All Employees entitled to vote
All rank-and-file employees in the
appropriate bargaining unit. The Code
makes no distinction as to their
employment status. All they need to be

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eligible to support the petition is to belong


to a bargaining unit. [Airtime Specialists, Inc.
v Director of BLR, 1990]
Employees who have been improperly laid
off but who have a present, unabandoned
right to or expectation of reemployment, are
eligible to vote in certification elections. If
the dismissal is under question, employees
concerned could still qualify to vote in the
elections. [Philippine Fruits v Torres, 1992]

LABOR LAW

Requirements
(1) majority of the bargaining unit voted (first
majority of the double majority rule)
(2) three or more choices (note: no union is a
choice)
(3) not one of the choices receives a majority of
the valid votes cast
(4) total number of votes for all contending
unions is at least 50% of the total number of
votes cast (this means that at least 50% of the
bargaining unit wants to have a union)
(5) the run-off election shall be conducted
between the labor unions receiving the two
highest number of votes

Rationale for Non-Distinction Policy


Collective bargaining covers all aspects of the
employment relation and the resultant CBA
binds all employees in the bargaining unit. All
rank and file employees, probationary or
permanent, have a substantial interest in the
selection of the bargaining representative. [Reyes
v. Trajano, 1992]

Illustration
The CBU has 100 members and eighty of
which voted. Union A= 30; Union B= 15;
Union C=15 and No Union= 20. There
were no invalid votes. Since none got the
majority of the 80 valid votes and the
contending unions obtained 60 votes, which
even exceed one-half (), a run-off election
is proper. The run-off will be between the
labor unions receiving the two highest
number of votes. The rematch is NOT
between two unions but between two
highest votes. Thus the run-off will be
among Union A, B and C. [Azucena]

Effect of Non-participation in previous election


Failure to take part in previous elections is no
bar to the right to participate in future elections.
No law, administrative rule or precedent
prescribes forfeiture of the right to vote by
reason of neglect to exercise the right in past
cases. [Reyes v. Trajano, 1992]
Challenge Voter
An employer has no standing to question a
certification election since this is the sole
concern of the workers but may question the
inclusion of any disqualified employee in the
certification election during the exclusioninclusion proceedings before the representation
officer. [Phil. Telephone & Telegraph Co. v
Laguesma, 1993]

At the expiration of the freedom period, the


employer shall continue to recognize the
majority status of incumbent bargaining
agent where no petition for certification
election is filed.

RE-RUN ELECTION
A motion for the immediate holding of another
certification or consent election can be filed
within six (6) months from the date of the
declaration of failure of election. [Book V, Rule IX
Sec 18]

Voting Day
The election shall be set on a regular business
day. [Book V Rule IX Sec. 2, IRR]
RUN-OFF ELECTION
Run-Off refers to an election between the labor
unions receiving the two (2) higher number of
voters when a certification election which
provides for three (3) or more choices results in
no choice receiving a majority of the valid votes
cast, where the total number of votes for all
contending unions is at least fifty percent (50%)
of the number of votes cast.

CONSENT ELECTION
Consent Election means the election
voluntarily agreed upon by the parties to
determine
the
issue
of
majority
representation of all the workers in the
appropriate collective bargaining unit.
The contending unions may agree to the
holding of an election. In which case, it shall

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be called a consent election. The MedArbiter shall forthwith call for the consent
election reflecting the parties agreement
and the call in the minutes of the
conference. [Book V RVIII Sec 10]

Purpose

Certification
election

Consent
Election

Aimed at
determining
the sole and
exclusive
bargaining
agent of all
employees in
an appropriate
bargaining unit
for the purpose
of collective
bargaining

Merely to
determine the
issue of
majority
representation
of all the
workers in the
appropriate
collective
bargaining unit

LABOR LAW

Independent Union A labor organization


operating at the enterprise level that required
legal
personality
through
independent
registration under Art. 234 of the Labor Code
and Rule III Sec. 2-A of the IRR. [Book V Rule 1
Sec. 1 (w)]
Chartered Local (Local Chapter) - A labor
organization in the private sector operating at
the enterprise level that acquired legal
personality through the issuance of a charter
certificate by a duly registered federation or
national union, and reported to the Regional
Office in accordance with Rule III Sec. 2-E of the
IRR. (Book V Rule 1 Sec. 1 (i)])
National Union or Federation a group of
legitimate labor unions in a private
establishment
organized
for
collective
bargaining or for dealing with employers
concerning
terms
and
conditions
of
employment for their member union or for
participating in the formulation of social and
employment policies, standards and programs,
registered with the BLR in accordance with Rule
III Sec. 2-B of the IRR. [Book V Rule 1 Sec. 1 (kk)]

1st Level of
Choice: Yes
Union or No
Union
2nd Level of
Choice: If Yes
Union wins,
WHICH union.
(UST Faculty
Union v.
Bitonio, 1999)
Ordered by the Voluntarily
DOLE
agreed upon by
the
parties,
with or w/o
intervention
from DOLE

Purpose of affiliation
To foster the free and voluntary
organization of a strong and united labor
movement [Art 211, LC]
The sole essence of affiliation is to increase,
by collective action, the common bargaining
power of local unions for the effective
enhancement and protection of their
interests. Admittedly, there are times when
without succor and support local unions
may find it hard, unaided by other support
groups, to secure justice for themselves.
[Philippine Skylanders v. NLRC, 1992]

AFFILITATION AND DISAFFILIATION OF THE


LOCAL UNION FROM THE MOTHER UNION
Affiliate An affiliate is an independent union
affiliated with a federated, national union or a
chartered local which was subsequently granted
independent registration but did not disaffiliate
from its federation, reported to the Regional
Office and the Bureau in accordance with Rule
III Secs. 6 and 7 of the IRR. [Book V Rule 1 Sec. 1
(a)]

Nature of Relationship (Agency)


The mother union, acting for and in behalf of its
affiliate, had the status of an agent while the
local remained the basic unit of the association,
free to serve the common interest of all its
members, subject only to restraints imposed by
the constitution and by the by-laws of the
association. The same is true even if the local is
not a legitimate labor organization. [Filipino
Pipe and Foundry Corp v. NLRC, 1998]

Conduct

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LABOR LAW

Effect of Affiliation
Locals remain the basic units of association,
free to serve their own and the common
interest of all. Inclusion of FFW in the
registration is merely to stress that they are
its affiliates at the time of registrations. It
does not mean that said local unions cannot
stand on their own. Affiliation does not
mean they lost their own legal personality.
[Adamson v CIR, 1984]
Note: A rank-and-file union and a
supervisory union may be affiliated with the
same federation.

Art. 247 (d). The members shall determine by


secret ballot, after due deliberation, any
question of major policy affecting the entire
membership of the organization, unless the
nature of the organization or force majeure
renders such secret ballot impractical, in
which case, the board of directors of the
organization may make the decision.

Disaffiliation
General rule: Local unions may disaffiliate from
the mother union.

Substitutionary doctrine
The "substitutionary" doctrine provides that
the employees cannot revoke the validly
executed collective bargaining contract with
their employer by the simple expedient of
changing their bargaining agent. And it is in
the light of this that the phrase "said new
agent would have to respect said contract"
must be understood. It only means that the
employees, thru their new bargaining agent,
cannot renege on their collective bargaining
contract, except of course to negotiate with
management for the shortening thereof.
[Benguet Consolidated v. BCI Employees and
Workers Union-PAFLU, 1998]
Conditions:
(a) change of bargaining agent (through
affiliation, disaffiliation, or other means)
(b) existing CBA with the previous
bargaining agent
Effects:
(1) new bargaining agent cannot revoke and
must respect the existing CBA
(2) it may negotiate with management to
shorten the existing CBAs lifetime

Effect of disaffiliation
A registered independent union retains its legal
personality while a chartered local loses its
legal personality unless it registers itself.

Limitations:
Terms of the affiliation agreement (e.g.
agreement may require 2/3 vote to
disaffiliate instead of a majority) [Phil.
Skylanders v. NLRC]
A local union, being a separate and
voluntary association, is free to serve the
interests of all its members. It has the right
to disaffiliate or declare its autonomy from
the federation to which it belongs when
circumstances warrant, in accordance with
the constitutional guarantee of freedom of
association, and such disaffiliation cannot
be considered disloyalty. [Malayang
Samahan ng mga Manggagawa v. Ramos,
2000]
The locals are separate and distinct units
primarily designed to secure and maintain
an equality of bargaining power between
the employer and their employee-members;
and the association of the locals into the
national union was in furtherance of the
same end. These associations are
consensual entities capable of entering into
such legal relations with their member. The
essential purpose was the affiliation of the
local unions into a common enterprise to
increase by collective action the common
bargaining power in respect of the terms
and conditions of labor. [Tropical Hut
Employees Union v. Tropical Hut Food
Market Inc., 1990]
Disaffiliation Must be by a Majority Decision

UNION DUES AND SPECIAL ASSESSMENTS


Union dues are payments to meet the unions
general and current obligations. The payment
must be regular, periodic, and uniform.
[Azucena]

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Art. 247 (h). Every payment of fees, dues or


other contributions by a member shall be
evidenced by a receipt signed by the officer or
agent making the collection and entered into
the record of the organization to be kept and
maintained for the purpose.

LABOR LAW

Art. 228 (b). No attorneys fees, negotiation


fees or similar charges of any kind arising
from any collective bargaining negotiations or
conclusion of the collective agreement shall
be imposed on individual member of
contracting union. Provided, however, that
attorneys fees may be charged against union
funds in an amount to be agreed upon by the
parties. Any contract, agreement or
arrangement of any sort to the contrary shall
be null and void.

Special assessments payments for a special


purpose, especially if required only for a limited
time. [Azucena]
Art. 247 (n). No special assessment or other
extraordinary fees may be levied upon the
members of a labor organization unless
authorized by a written resolution of a
majority of all the members of a general
membership meeting duly called for the
purpose.

General Rule: attorneys fees, negotiation fees,


and similar charges should be charged against
the union funds and not as a special
assessment. However, if a special assessment is
required to pay such fees, then the
requirements above must be satisfied.
Strict compliance for special assessment
There must be strict and full compliance with
the requisites. Substantial compliance is not
enough. [Palacol v. Ferrer-Calleja]

Art. 247 (o). Other than for mandatory


activities under the Code, no special
assessments, attorneys fees, negotiation fees
or any other extraordinary fees may be
checked off from any amount due to an
employee without an individual written
authorization duly signed by the employee.
The authorization should specifically state the
amount, purpose and beneficiary of the
deduction.

Jurisdiction over Check-off disputes


The Bureau of Labor Relations has
jurisdiction to hear, decide and to mete out
punishment any reported violation under
Article 241
Note: Sec of Labor or his duly authorized
representative may inquire into financial
activities of legitimate labor orgs UPON
filing of complaint under oath and
supported by written consent of at least
20% of total membership, Provided, such
inquiry shall not be conducted during (60)day freedom period nor within the thirty (30)
days immediately preceding the date of
election of union officials [Art. 274].

Requirements for validity


(1) Authorization by written resolution of
majority of ALL the members at the general
membership meeting called for that purpose
(2) Secretarys record of the minutes of the
meetings attested to by the president.
(3) Individual written authorization for check-off
duly signed by the employees concerned.
Check-off A process or device whereby the
employer, on agreement with the Union,
recognized as the proper bargaining
representative, or on prior authorization from
the employees, deducts union dues or agency
fees from the latters wages and remits them
directly to the Union. [Marino v Gamilla, 2009]

AGENCY FEES
Agency fee an amount, equivalent to union
dues, which a non-union member pays to the
union because he benefits from the CBA
negotiated by the union. [Azucena]
Rationale for allowing agency fees
Avoiding unjust enrichment on the part of nonunion members who benefit from the union's
efforts without paying any fee therefor, unlike
the members of the bargaining agent.

Attorneys fees, negotiation fees, and similar


charges

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Art. 217 (a). To promote and emphasize the


primacy of free collective bargaining and
negotiations, including voluntary arbitration,
mediation and conciliation, as modes of
setting labor or industrial disputes.

Requisites for assessment


Art. 254 (e). Employees of an appropriate
bargaining unit who are not members of the
recognized collective bargaining agent may
be assessed a reasonable fee equivalent to
the dues and other fees paid by members of
the recognized collective bargaining agent, if
such non-union members accept the benefits
under the collective bargaining agreement:
Provided, that the individual authorization
required under Article 242, paragraph (o) of
this Code shall not apply to the non-members
of the recognized collective bargaining agent.

Book V Rule XVI Sec. 1. It is the policy of the


State to promote and emphasize the primacy
of free and responsible exercise of the right to
self-organization and collective bargaining,
either through single enterprise level
negotiations or through the creation of a
mechanism by which different employers and
recognized certified labor unions in their
establishments bargain collectively.

(1) Non-member of SEBA


(2) Member of Collective Bargaining Unit
(3) Reasonable fee equivalent to the dues and
other fees paid by member

RIGHT
TO
BARGAINING

Definition
Collective bargaining, which is defined as
negotiations
towards
a
collective
agreement, is one of the democratic
frameworks under the New Labor Code,
designed to stabilize the relation between
labor and management and to create a
climate of sound and stable industrial
peace. It is a mutual responsibility of the
employer and the Union and is
characterized as a legal obligation.
So much so that Article 249, par. (g) of the
Labor Code makes it an unfair labor practice
for an employer to refuse "to meet and
convene promptly and expeditiously in good
faith for the purpose of negotiating an
agreement with respect to wages, hours of
work, and all other terms and conditions of
employment. [Kiok Loy v. NLRC, 1986]

COLLECTIVE

DUTY TO BARGAIN COLLECTIVELY


Art. 258. The performance of a mutual
obligation to meet and convene promptly and
expeditiously in good faith for the purpose of
negotiating an agreement with respect to
wages, hours of work and all other terms and
conditions
of
employment
including
proposals for adjusting any grievances or
questions arising under such agreement and
executing a contract incorporating such
agreement if required by either party but such
duty does not compel any party to agree to a
proposal or to make any concession.

LABOR LAW

Nature and Purpose of Collective Bargaining


The institution of collective bargaining is a
prime manifestation of industrial democracy at
work. The two parties to the relationship, labor
and management, make their own rules by
coming to terms to govern themselves in
matters that really count. [United Employees
Union of Gelmart Industries v. Noriel, 1975]

The State shall guarantee the rights of


workers to collective bargaining and
negotiations.
The State shall promote the principle of
shared responsibilities 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. (1987 Constitution, Art. XIII,
Sec. 3)

When employers may be compelled to bargain


collectively
(1) Majority representation by the representative
labor organization (exclusive bargaining agent)
(2) Demand by the labor organization [Art. 250
par(a)]

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An employer asked by a labor organization to


bargain collectively may file a petition for
certification election to ascertain the will of the
bargaining unit or it may voluntarily recognize
the labor organization in proper circumstances.
Waiver of right to collectively bargain
The right to free collective bargaining includes
the right to suspend it. [Rivera v. Espiritu, 2000]

Rights of the parties during bargaining


Art. 248 (c). To be furnished by the employer,
upon written request, with its annual audited
financial statements, including the balance
sheet and the profit and loss statement,
within thirty (30) calendar days from the date
of receipt of the request, after the union has
been duly recognized by the employer or
certified as the sole and exclusive bargaining
representative of the employees in the
bargaining unit, or within sixty (60) calendar
days before the expiration of the existing
collective bargaining agreement, or during
the collective bargaining negotiation.

LABOR LAW

Labor and Employment within the sixty-day


period before the expiration of the collective
bargaining agreement, the Med-Arbiter
shall automatically order an election by
secret ballot when the verified petition is
supported by the written consent of at least
twenty-five percent (25%) of all the
employees in the bargaining unit to
ascertain the will of the employees in the
appropriate bargaining unit.
xxx At the expiration of the freedom period,
the employer shall continue to recognize
the majority status of the incumbent
bargaining agent where no petition for
certification election is filed. [Art. 256]

COLLECTIVE
AGREEMENT)

BARGAINING

Collective bargaining agreement refers to the


negotiated contract between a legitimate labor
organization and the employer concerning
wages, hours of work and all other terms and
conditions of employment in a bargaining unit,
including mandatory provisions for grievances
and arbitration machineries. [Book V Rule I
Section 1(j)]

Book V Rule XVI Sec 2. The parties may agree


to make available such up-to-date financial
information which is normally submitted to
relevant government agencies material and
necessary for meaningful negotiations. They
may also agree to the condition that the
information be kept confidential.

CBA impressed with public policy


A CBA, as a labor contract within the
contemplation of Article 1700 Civil Code
which governs the relations between labor
and capital, is not merely contractual in
nature but impressed with public interest,
thus, it must yield to the common good.
[Davao Integrated Port Stevedoring Services
v. Abarquez, 1993]
The relations between capital and labor are
not merely contractual. They are so
impressed with public interest that labor
contracts must yield to the common good.
Therefore, such contracts are subject to the
special laws on labor unions, collective
bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of
labor and similar subjects. [Art. 1700, Civil
Code]

WHEN THERE IS ABSENCE OF A CBA


Art. 257. In the absence of an agreement or
other voluntary arrangement providing for a
more expeditious manner of collective
bargaining, it shall be the duty of employer
and the representatives of the employees to
bargain collectively in accordance with the
provisions of this Code.
WHEN THERE IS A CBA
The duty to bargain collectively shall also
mean that neither party shall terminate nor
modify such agreement during its lifetime.
Exception: In organized establishments,
when a verified petition questioning the
majority status of the incumbent bargaining
agent is filed before the Department of

Substandard CBA
A CBA that falls below the minimum
standards required by law is prohibited.
Nonetheless,
RA
9481
removed
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substandard CBAs as a ground for the


cancellation of registration of union
registration.
A substandard CBA cannot bar a petition
for certification election under the contractbar rule.

Confidentiality of registered CBA or parts thereof

General rule: CBA is not confidential

Exceptions:
(1) confidentiality authorized by Secretary of
Labor
(2) when it is at issue in any judicial litigation
(3) public interest or national security requires
[Art. 231]

LABOR LAW

A CBA, just like any other contract, is


respected as the law between the
contracting parties and compliance in good
faith is mandated. Similarly, the rules
embodied in the Civil Code [Art. 1700) on
the proper interpretation of contracts can
very well govern.
General Rule: If the terms of the contract
are clear, the literal meaning of the
stipulations shall control.
Exception: If the words appear to be
contrary to the evident intention of the
parties, the latter shall prevail over the
former. [Kimberly Clark Phils. V. Lorredo,
1993]

Bargaining Procedure: (Book V, Rule XVI)

Effect of unregistered CBA


An unregistered CBA is binding upon the parties
but cannot serve as a bar to a petition for
certification election under the contract-bar
rule.

(1) Private Procedure


The parties may provide for their own
procedures in collective bargaining. The law
only requires that these procedures be more
expeditious than the procedure in Art. 250.
[Art 251]
Rationale - It is the policy of the state to
promote the primacy of free collective
bargaining [Art. 211 (a)]

Beneficiaries of the CBA


The CBA benefits all workers in a collective
bargaining unit. When a collective
bargaining contract is entered into by the
union representing the employees and the
employer, even the non-member employees
are entitled to the benefits of the contract.
[New Pacific Timber and Supply v. NLRC,
2000]
To accord its benefits only to members of
the union without any valid reason would
constitute undue discrimination against
non-members.

(2) Labor Code Procedure [Art. 250)


(a) Written notice and statement of proposals.
When a party desires to negotiate an
agreement, it shall serve a written notice upon
the other party with a statement of its
proposals.
(b) Reply. The other party shall make a reply
thereto not later than ten (10) calendar days
from receipt of such notice.
(c) Conference. Should differences arise on the
basis of such notice and reply, either party may
request for a conference which shall begin not
later than ten (10) calendar days from the date
of request.
(d) Board intervention and conciliation. If the
dispute is not settled, the Board shall intervene
upon request of either or both parties or at its
own initiative and immediately call the parties
to conciliation meetings. The Board shall have
the power to issue subpoenas requiring the
attendance of the parties to such meetings. It
shall be the duty of the parties to participate
fully and promptly in the conciliation meetings
the Board may call;

Nature of Contract and Contract Interpretation


The terms and conditions of a collective
bargaining contract constitute the law
between the parties. [Mactan Workers Union
vs. Aboitiz, 1972]
Those who are entitled to its benefits can
invoke its provisions. In the event that an
obligation therein imposed is not fulfilled,
the aggrieved party has the right to go to
court for redress. [Babcock-Hitachi (Phils.) v.
Babcock-Hitachi, 2005]
Contract Interpretation: Interpretation Tools

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(e) Voluntary arbitration. The Board shall exert


all efforts to settle disputes amicably and
encourage the parties to submit their case to a
voluntary arbitrator.
(f) Prohibition against disruptive acts. During the
conciliation proceedings in the Board, the
parties are prohibited from doing any act which
may disrupt or impede the early settlement of
the disputes.

LABOR LAW

Art. 233. Information and statements made at


conciliation proceedings shall be treated as
privileged communication and shall not be
used as evidence in the Commission.
Conciliators and similar officials shall not
testify in any court or body regarding any
matters taken up at conciliation proceedings
conducted by them.

Period to reply; bad faith - The period to


reply is merely procedural, and noncompliance cannot be automatically
deemed to be an act of ULP. [National
Union of Restaurant Workers vs. CIR, 1964]
The companys refusal to make a counterproposal to the unions proposed CBA is an
indication of its bad faith. Where the
employer did not even bother to submit an
answer to the bargaining proposals of the
union, there is a clear evasion of the duty to
bargain collectively. The employers
actuations show a lack of sincere desire to
negotiate, rendering it guilty of unfair labor
practice. [Colegio de San Juan de Letran vs.
Association, 2000]
Failure to reply as indicia of bad faith
GMCs failure to make a timely reply to the
proposal sent by the union is indicative of its
utter lack of interest in bargaining with the
union. Its excuse that it felt the union no
longer represented the workers was mainly
dilatory as it turned out to be utterly
baseless. GMCs refusal to make a counterproposal is an indication of its bad faith.
Where the employer did not even bother to
submit an answer to the bargaining
proposals of the union, there is a clear
evasion of the duty to bargain collectively.
It is guilty of ULP. [General Milling Corp. v.
CA, 2004]

Rationale a person is entitled to buy his or


her peace without danger of being
prejudiced in case his or her efforts fail
offers for compromise are irrelevant
because they are not intended as
admissions by the parties making them
[Pentagon Steel v. CA, 2009]

Mandatory bargainable issues


(1) Wages
(2) Hours of work
(3) All other terms and conditions of
employment including proposals for adjusting
any grievances or questions arising under such
agreement [Art. 252]
Permissive Issues:
Unilateral benefits extended by the
employer [cf., Union of Filipro EmployeesDrug v. Nestle, 2008]
A collective bargaining agreement refers to
the negotiated contract between a
legitimate labor organization and the
employer concerning wages, hours of work
and all other terms and conditions of
employment in a bargaining unit, including
mandatory provisions for grievances and
arbitration machineries. As in all other
contracts, the parties in a CBA may
establish such stipulations, clauses, terms
and conditions as they may deem
convenient provided they are not contrary to
law, morals, good customs, public order or
public policy. [Manila Fashions v. NLRC,
1996]

Conciliation / Preventive Mediation Privileged


communication

Test for Mandatory Bargainable Issues: NEXUS


Between the Nature of Employment and the
Nature of the Demand.
The other terms and conditions of
employment to become a mandatory

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bargainable issue must have a connection


between the proposal and the nature of the
work.
Importance of determining whether an issue
is a mandatory bargaining issue or only a
permissive bargaining issue The question
as to what are mandatory and what are
merely permissive subjects of collective
bargaining is of significance on the right of a
party to insist on his position to the point of
stalemate. A party may refuse to enter into
a collective bargaining contract unless it
includes a desired provision as to a matter
which is a mandatory subject of collective
bargaining. But a refusal to contract unless
the agreement covers a matter which is not
a mandatory subject is in substance a
refusal to bargain about matters which are
mandatory subjects of collective bargaining;
and it is no answer to the charge of refusal
to bargain in good faith that the insistence
on the disputed clause was not the sole
cause of the failure to agree or that
agreement was not reached with respect to
other disputed clauses.
Such refusal will not be deemed as an
unfair labor practice. However, if a party
refuses to contract based on an issue which
is not a mandatory bargainable issue, the
party will be guilty of ULP. [Samahang
Manggagawa sa Top Form v. NLRC, 1998]

LABOR LAW

Grievances arising from the interpretation or


implementation of the CBA are subjects of
the grievance procedure. [Navarro III v.
Damasco, 1995]
It should be remembered that a grievance
procedure is part of the continuous process
of collective bargaining. It is intended to
promote a friendly dialogue between labor
and management as a means of
maintaining industrial peace. [Master Iron
Labor Union v. NLRC, 1993]
No particular setup for a grievance
machinery is required by law. Art. 260 of, as
incorporated by R.A. 6715, only mandates
that the parties to the CBA establish a
machinery to settle problems arising from
"interpretation or implementation of their
collective bargaining agreement and those
arising from the interpretation or
enforcement of company personnel policies.
[Caltex Refinery Employees Association v.
Brillantes, 1997]

Voluntary arbitration
Constitutional basis
The State shall promote the principle of shared
responsibility between workers and employers
and the preferential use of voluntary modes in
settling disputes, including conciliation, and
shall enforce their mutual compliance therewith
to foster industrial peace. [Art. XIII Section 3]

MANDATORY PROVISIONS OF CBA

Automatic referral if grievance machinery fails

Grievance procedure
The parties to a Collective Bargaining
Agreement shall include therein:
(1) Provisions that will ensure the mutual
observance of its terms and conditions.
(2) A machinery for the adjustment and
resolution of grievances arising from:
(a) the interpretation or implementation of
their CBA; and
(b) those arising from the interpretation or
enforcement of company personnel policies.
(3) All grievances submitted to the grievance
machinery which are not settled within 7
calendar days from the date of its submission
shall be automatically referred to voluntary
arbitration prescribed in the CBA. [Art. 260]

Art. 266. All grievances submitted to the


grievance machinery which are not settled
within 7 calendar days from the date of its
submission shall automatically be referred to
voluntary arbitration prescribed in the CBA.
Voluntary arbitration provision in the CBA
(1) Parties to a CBA shall:
(a) Name and designate in advance a
Voluntary Arbitrator or panel of Voluntary
Arbitrators, OR
(b) Include in the agreement a procedure for
the selection of such Voluntary Arbitrator or
panel of Voluntary Arbitrators preferably
from the listing of qualified Voluntary
Arbitrators duly accredited by the Board.

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(2) In case the parties fail to select a Voluntary


Arbitrator or panel of Voluntary Arbitrators, the
Board shall designate the Voluntary Arbitrator
or panel of Voluntary Arbitrators, as may be
necessary, pursuant to the selection Voluntary
Arbitrator or panel of Arbitrators procedure
agreed upon in the CBA, which shall act with
the same force and effect as if the has been
selected by the parties as described above. [Art.
260]

adequate prerogative is aimed at


accomplishing the rationale of the law on
voluntary arbitration speedy labor justice.
[Goya, Inc. vs. Goya, Inc. Employees UnionFFW, 2013]
Powers of the voluntary arbitrators
(1) hold hearings
(2) receive evidence
(3) take whatever action is necessary to resolve
the issue or issues subject of dispute, including
efforts to effect a voluntary settlement between
parties
(4) determine attendance of any third parties
(5) determine exclusion of any witness
(6) issue writ of execution for sheriff of NLRC or
regular courts to execute the final decision,
order, or award [Art 262-A]

Voluntary arbitration as a condition precedent


The stipulation to refer all future disputes to an
arbitrator or to submit an ongoing dispute to
one is valid. Being part of a contract between
the parties, it is binding and enforceable in court
in case one of them neglects, fails or refuses to
arbitrate. Going a step further, in the event that
they declare their intention to refer their
differences to arbitration first before taking
court action, this constitutes a condition
precedent, such that where a suit has been
instituted prematurely, the court shall suspend
the same and the parties shall be directed
forthwith to proceed to arbitration. A court
action may likewise be proper where the
arbitrator has not been selected by the parties.
[Chung Fu Industries v. CA, 1992]

Finality of the final decision, order, or award


Art 268-A. Award or decision of the voluntary
arbitrator shall be final and executory after 10
days from receipt of the copy of the award or
decision by the parties.
No motion for reconsideration
The voluntary arbitrator lost jurisdiction over the
case submitted to him the moment he rendered
his decision. Therefore, he could no longer
entertain a motion for reconsideration of the
decision for its reversal or modification.
(Solidbank v. BLR)

Arbitrable issues
(1) interpretation or implementation of the CBA
[Art. 261)
(2) interpretation or enforcement of company
personnel policies [Art. 261)
(3) gross violations of CBA provision
(flagrant/malicious refusal to comply with the
economic provisions of the CBA [Art. 261)
(4) all other labor disputes including ULP and
bargaining deadlock, if the parties agree [Art.
262]

LABOR LAW

Appeal
While there is an express mode of appeal
from the decision of a labor arbiter,
Republic Act No. 6715 is silent with respect
to an appeal from the decision of a
voluntary arbitrator.
Assuming arguendo that the voluntary
arbitrator or the panel of voluntary
arbitrators may not strictly be considered as
a quasi-judicial agency, board or
commission, still both he and the panel are
comprehended within the concept of a
"quasi-judicial instrumentality." A fortiori,
the decision or award of the voluntary
arbitrator or panel of arbitrators should
likewise be appealable to the Court of

In general, the arbitrator is expected to


decide those questions expressly stated and
limited in the submission agreement.
However, since arbitration is the final resort
for the adjudication of disputes, the
arbitrator can assume that he has the power
to make a final settlement. The VA has
plenary jurisdiction and authority to
interpret the CBA and to determine the
scope of his or her own authority. Subject to
judicial review, this leeway of authority and
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Appeals. [Luzon Development Bank v. Assoc


of Luzon Devt Employees, 1995]

LABOR LAW

DURATION
Art. 259-A. Any Collective Bargaining
Agreement that the parties may enter into
shall, insofar as the representation aspect is
concerned, be for a term of five (5) years. No
petition questioning the majority status of the
incumbent bargaining agent shall be
entertained and no certification election shall
be conducted by the Department of Labor
and Employment outside of the sixty-day
period immediately before the date of expiry
of such five-year term of the Collective
Bargaining Agreement. All other provisions of
the Collective Bargaining Agreement shall be
renegotiated not later than three (3) years
after its execution. Any agreement on such
other provisions of the Collective Bargaining
Agreement entered into within six (6) months
from the date of expiry of the term of such
other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the
day immediately following such date. If any
such agreement is entered into beyond six
months, the parties shall agree on the
duration of retroactivity thereof. In case of a
deadlock in the renegotiation of the Collective
Bargaining Agreement, the parties may
exercise their rights under this Code.

Costs
The parties to a Collective Bargaining
Agreement
shall
provide
therein
a
proportionate sharing scheme on the cost of the
voluntary arbitration including the Voluntary
Arbitrators fee. [Art. 262-B]
Voluntary arbitrator's fee
The fixing of the fee of the Voluntary Arbitrators,
whether shouldered wholly by the parties or
subsidized by the special voluntary arbitration
fund, shall take into account the following
factors:
(1) nature of the case
(2) time consumed in hearing the case
(3) professional standing of the voluntary
arbitrator
(4) capacity to pay of the parties.
No strike-no lockout clause
A "no strike, no lock-out" provision in the CBA is
a valid stipulation although the clause may be
invoked by an employer only when the strike is
economic in nature or one which is conducted to
force wage or other concessions from the
employer that are not mandated to be granted
by the law itself. It would be inapplicable to
prevent a strike which is grounded on unfair
labor practice. [Panay Electric Co. v. NLRC, 1995;
Malayang Samahan ng mga Manggagawa sa
Greenfield v. Ramos, 2000]

For economic provisions


3 years.
For non-economic provisions
5 years for representational or political issues.

Labor management council


Art. 255. Any provision of law to the contrary
notwithstanding, workers shall have the right,
subject to such rules and regulations as the
Secretary of Labor and Employment may
promulgate, to participate in policy and
decision-making
processes
of
the
establishment where they are employed
insofar as said processes will directly affect
their rights, benefits and welfare. For this
purpose, workers and employers may form
labor-management councils: Provided, That
the representatives of the workers in such
labor-management councils shall be elected
by at least the majority of all employees in
said establishment.

Freedom period
No petition questioning the majority status of
the incumbent bargaining agent shall be
entertained and no certification election shall be
conducted by the DOLE outside of the sixty-day
period immediately before the date of the expiry
of such five year term of the Collective
Bargaining Agreement. (Contract-bar rule)
CBA Effectivity
If it is the first ever CBA, the effectivity date
is whatever date the parties agree on.
If it is renegotiated CBA, the effectivity date
depends upon the duration of conclusion.
(i) If it is concluded within 6 months from

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the expiry date, the new CBA will retroact to


the date following the expiry date
(Illustration: expiry date: December 13;
effectivity date: December 14).
(ii) If the renegotiated CBA is concluded
beyond 6 months from the expiry date, the
matter of retroaction and effectivity is left
with the parties.
Art. 253-A serves as the guide in
determining when the CBA at bar is to take
effect. It provides that the representation
aspect of the CBA is to be for a term of 5
years. All other provisions of the CBA shall
be renegotiated not later than 3 years after
its execution. Any agreement on such other
provision of the CBA entered into within 6
months from the date of expiry of the term
of such other provisions as fixed in such
Collective Bargaining Agreement shall
retroact to the day immediately following
such date. If such agreement is entered into
beyond 6 months, the parties shall agree on
the duration of the effectivity thereof. If no
agreement is reached within 6 months from
the expiry date of the 3 years that follow the
CBA execution, the law expressly gives the
parties not anybody else the discretion
to fix the effectivity of the agreement. The
law does not specifically cover the situation
where 6 months have elapsed but no
agreement has been reached with respect
to effectivity. In this eventuality, any
provision of law should then apply. [Manila
Electric Co. v. Quisumbing, 1999]

provision insofar as the need to await the


creation of a new agreement will not apply.
Otherwise, it will create an absurd situation
where the union members will be forced to
maintain membership by virtue of the union
security clause existing under the CBA and,
thereafter, support another union when
filing a petition for certification election. If
we apply it, there will always be an issue of
disloyalty whenever the employees exercise
their right to self-organization. The holding
of a certification election is a statutory policy
that should not be circumvented, or
compromised. [PICOP Resources, Inc. v.
Taneca et al., 2010]
Arbitrated CBA
In the absence of an agreement between
the parties, an arbitrated CBA takes on the
nature of any judicial or quasi-judicial
award. It operates and may be executed
only prospectively unless there are legal
justifications for its retroactive application.
[Manila Electric Company vs. Quisumbing,
1999]
CBA in this case, on the other hand, is part
of an arbitral award. As such, it may be
made retroactive to the date of expiration of
the previous agreement. Therefore, in the
absence of a specific provision of law
prohibiting retroactivity of the effectivity of
arbitral awards issued by the Secretary of
Labor pursuant to Art. 263(g), the latter is
deemed vested with plenary and
discretionary powers to determine the
effectivity thereof. [Manila Central Line Corp.
v. Manila Central Line Free Workers Union,
1998]

Hold Over Principle


Art. 259. In the absence of a new CBA, the
parties must maintain the status quo and
must continue in full force and effect the
terms and conditions of the existing
agreement during the sixty (60) day period
and/or until a new agreement is reached.

LABOR LAW

CBA and 3rd Party Applicability


Labor contracts such as employment
contracts and CBAs are not enforceable
against a transferee of an enterprise, labor
contracts being in personam, is binding only
between the parties. As a general rule, there
is no law requiring a bona fide purchaser of
the assets of an on-going concern to absorb
in its employ the employees of the latter.
However, although the purchaser of the
assets or enterprise is not legally bound to
absorb in its employ the employees of the
seller of such assets or enterprise, the

The last sentence of Article 253, which


provides for automatic renewal pertains
only to the economic provisions of the CBA,
and does not include representational
aspect of the CBA. An existing CBA cannot
constitute a bar to a filing of petition for
certification election. When there is a
representational issue, the status quo

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parties are liable to the employees if the


transaction between the parties is colored
or clothed with bad faith. [Sundowner Devt.
Corp. v Drilon, 1989]
General Rule: An innocent transferee of a
business establishment has no liability to
the employees of the transferor to continue
employing them. Nor is the transferee liable
for past unfair labor practices of the
previous owner.
Exception:
(1) when the liability therefore is assumed by
the new employer under the contract of
sale, or
(2) when liability arises because of the new
owner's participation in thwarting or
defeating the rights of the employees.
The most that the transferee may do, for
reasons of public policy and social justice, is
to give preference to the qualified separated
employees in the filling of vacancies in the
facilities of the purchaser. [Manlimos v.
NLRC, 1995]

Types
(1) Closed shop
(2) Maintenance of membership shop
(3) Union shop
(4) Modified union shop
(5) Agency shop
UNION SECURITY CLAUSES; CLOSED SHOP;
UNION
SHOP;
MAINTENANCE
OF
MEMBERSHIP, ETC.
Closed shop
Defined as an enterprise in which, by
agreement between the employer and his
employees or their representatives, no
person may be employed in any or certain
agreed departments of the enterprise
unless he or she is, becomes, and, for the
duration of the agreement, remains a
member in good standing of a union
entirely comprised of or of which the
employees in interest are a part. [GMC v.
Casio, 2010]
Only union members can be hired by the
company and they must remain as
members to retain employment in the
company. [Azucena]
Due process in termination under closed shop
provision. The requirements laid down by
the law in determining whether or not an
employee was validly terminated must still
be followed even if it is based on a closedshop provision of a CBA, i.e. the substantive
as well as the procedural due process
requirements. [Del Monte v. Saldivar, 2007]
Construction The closed shop provision is
the most prized achievement of unionism.
However it can also be a potent weapon
wielded by the union against the workers
whom the union is supposed to protect in
the first place. Hence, any doubt as to the
existence of a closed shop provision in the
CBA will be resolved in favor of the
nonexistence of the closed shop provision.

UNION SECURITY
Art. 254 (e). Nothing in this Code or in any
other law shall stop the parties from requiring
membership in a recognized collective
bargaining agent as a condition for
employment, except those employees who are
already members of another union at the time
of the signing of the collective bargaining
agreement.

LABOR LAW

Union security is any form of agreement


which imposes upon employees the
obligation to acquire or retain union
membership as a condition affecting
employment. [GMC v. Casio, 2010]

Purpose
To safeguard and ensure the existence of the
union and thus, promote unionism in general as
a state policy.
Limitation

Maintenance of membership shop


There is maintenance of membership shop
when employees, who are union members
as of the effective date of the agreement, or
who thereafter become members, must

Art. 254 (e). Employees who are already


members of another union at the time of the
signing of the collective bargaining
agreement may not be compelled by any
union security clause to join any union.
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maintain union membership as a condition


for continued employment until they are
promoted or transferred out of the
bargaining unit or the agreement is
terminated. [GMC v. Casio, 2010]
No employee is compelled to join the union,
but all present or future must, as a
condition of employment, remain in good
standing in the union. [Azucena]

collectively, making it liable for unfair labor


practice. [GMC v. CA, 2004]
REFUSAL TO BARGAIN
Implied refusal. The school is guilty of unfair
labor practice when it failed to make a timely
reply to the proposals of the union more than
one month after the same were submitted by
the union. In explaining its failure to reply, the
school merely offered a feeble excuse that its
Board of Trustees had not yet convened to
discuss the matter. Clearly, its actuation showed
a lack of sincere desire to negotiate. [Colegio de
San Juan de Letran v. Association, 2000]

Union shop
There is union shop when all new regular
employees are required to join the union
within a certain period as a condition for
their continued employment. [GMC v. Casio,
2010]
Non-members may be hired, but to retain
employment, they must become union
members after a certain period. The
requirement applies to present and future
employees. [Azucena]

INDIVIDUAL BARGAINING
It is an unfair labor practice for an employer
operating under a CBA to negotiate with his
employees individually. That constitutes
interference because the company is still
under obligation to bargain with the union
as the bargaining representative.
Individual bargaining contemplates a
situation where the employer bargains with
the union through the employees instead of
the employees through the union. [The
Insular Life Assurance Co. Ltd., Employees
Assn. v. Insular Life Assurance Co. Ltd, 1971]

Modified union shop Employees who are not


union members at the time of signing the
contract need not join the union, but all hired
workers thereafter must join. [Azucena]
Agency shop An agreement whereby
employees must either join the union or pay to
the union as exclusive bargaining agent a sum
equal to that paid by the members. [Azucena]

UNFAIR LABOR PRACTICE


COLLECTIVE BARGAINING

LABOR LAW

BLUE SKY BARGAINING


Blue-Sky Bargaining is defined as "unrealistic
and unreasonable demands in negotiations by
either or both labor and management, where
neither concedes anything and demands the
impossible." It actually is not collective
bargaining at all. [Harold S. Roberts, Roberts
Dictionary of Industrial Relations (Revised
Edition, 1971, p. 51) footnote in (Standard Bank
Chartered Employees Union v. Confesor, 2004)]

IN

Unfair Labor Practice in collective bargaining


Both employers and labor organizations can
commit acts of unfair labor practices in
collective bargaining. However, the labor
organization must be the representative of the
employees before any act it does may be
considered as a violation of the duty to bargain
collectively. [Art. 248 (g) and Art. 249 (c)]

SURFACE BARGAINING
Surface bargaining is defined as "going through
the motions of negotiating," without any real
intent to reach an agreement. It violates the
Act's requirement that parties negotiate in
"good faith." It is prohibited because, as one
commentator explained: The bargaining status
of a union can be destroyed by going through
the motions of negotiating almost as easily as
by bluntly withholding recognition As long as
there are unions weak enough to be talked to
death, there will be employers who are tempted

BARGAINING IN BAD FAITH


GMCs refusal to make a counter-proposal to
the unions proposal for CBA negotiation on the
excuse that it felt the union no longer
represented the workers is an indication of bad
faith. xxx Failing to comply with the mandatory
obligation to submit a reply to the unions
proposals, GMC violated its duty to bargain
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to engage in the forms of collective bargaining


without the substance. [K-MART Corporation v
NLRB, 1980 626 F.2d 704]

LABOR LAW

Parties not estopped from raising ULP by


eventual signing of the CBA
The eventual signing of the CBA does not
operate to estop the parties from raising unfair
labor practice charges against each other.
[Standard Chartered Bank Union v. Confesor,
2004]

UNFAIR LABOR PRACTICE (ULP)

Unfair labor practice refers to acts that violate


the workers right to organize. The prohibited
acts are related to the workers right to selforganization and to the observance of a CBA.
Without that element, the acts, no matter how
unfair, are not unfair labor practices. The only
exception is Art. 248 (f) [i.e. to dismiss,
discharge or otherwise prejudice or discriminate
against an employee for having given or being
about to give testimony under this Code].
[Philcom Employees Union v. Phil. Global, 2006]

Statutory Construction
The Labor Code does not undertake the
impossible task of specifying in precise and
unmistakable language each incident which
constitutes an unfair labor practice. Rather, it
leaves to the court the work of applying the
law's general prohibitory language in light of
infinite combinations of events which may be
charged as violative of its terms. [HSBC
Employee Union V. NLRC, 1997]

Nature of ULP
(1) inimical to the legitimate interests of both
labor and management, including their right to
bargain collectively and otherwise deal with
each other in an atmosphere of freedom and
mutual respect
(2) disrupt industrial peace
(3) hinder the promotion of healthy and stable
labor-management relations
(4) violations of the civil rights of both labor and
management but are also criminal offenses [Art.
247]

ULP of employers
(1) Interference/ Restraint/ Coercion
The act of ULP must interfere with, restrain or
coerce employees in the exercise of their right to
self-organization.
Interrogation
General rule: employer may interrogate its
employees regarding their union affiliation for
legitimate purposes and with the assurance
that no reprisals would be taken against the
unionists.

Purpose of the policy against ULPs


Protection of right to self-organization and/or
collective bargaining:
(1) The employee is not only protected from the
employer but also from labor organizations.
(2) Employer is also protected from ULP
committed by a labor organization.
(3) The public is also protected because it has
an interest in continuing industrial peace.

Exception: when interrogation interferes with or


restrains employees' right to self-organization.
[Phil. Steam Navigation Co. v. Phil. Marine
Officers Guild, 1965]
Speech
The subjection by the company of union to
vilification and its participation in soliciting
membership for a competing union is also
ULP act. [Phil. Steam Navigation Co. v. Phil.
Marine Officers Guild, 1965]
Employer may not send letters containing
promises or benefits, nor of threats of
obtaining replacements to individual
workers while the employees are on strike
due to a bargaining deadlock. This is
tantamount to interference and is not
protected by the Constitution as free

Employer-employee
relationship
required;
exception
An unfair labor practice may be committed only
within the context of an employer-employee
relationship [American President Lines v. Clave,
1982]
Exception: yellow dog condition: to require as
a condition of employment that a person or an
employee shall not join a labor organization or
shall withdraw from one to which he belongs.
[Art. 248 (b)]
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speech. [Insular Life Assurance Co.


Employees Assn. v. Insular Life Assurance
Co. Ltd, 1971]

LABOR LAW

Example: giving out financial aid to any


union's supporters or organizers.

(5) Discrimination Encourage/Discourage


Unionism
General rule: it is ULP to discriminate in
regard to wages, hours of work and other
terms and conditions of employment in
order to encourage or discourage
membership in any labor organization.
Exception (union security clause): Nothing in
this Code or in any other law shall stop the
parties from requiring membership in a
recognized collective bargaining agent as a
condition for employment.
Exception to exception: Those employees
who are already members of another union
at the time of the signing of the collective
bargaining agreement. [Art. 254 (e)]

Espionage
Espionage and/or surveillance by the employer
of union activities are instances of interference,
restraint or coercion of employees in connection
with their right to organize, form and join unions
as to constitute unfair labor practice. xxx The
information obtained by means of espionage is
invaluable to the employer and can be used in a
variety of cases to break a union. [Insular Life
Assurance Co. Employees Assn. v. Insular Life
Assurance Co. Ltd, 1971]
(2) Yellow dog contracts
Yellow dog contracts require as a condition
of employment that a person or an
employee shall not join a labor organization
or shall withdraw from one to which he
belongs.
Examples
(1) a representation by the employee that he
is not a member of a labor organization
(2) a promise by the employee that he will
not join a union
(3) a promise by the employee that upon
joining a labor organization, he will quit his
employment

(6) Testimony
Art. 254 (f). It is an act of ULP by an employer
to dismiss, discharge or otherwise prejudice or
discriminate against an employee for having
given or being about to give testimony under
this Code.
(7) Violate duty to bargain collectively
Duty to bargain collectively is a continuous
process, non-compliance constitutes ULP.
Collective bargaining does not end with the
execution of an agreement, being a continuous
process, the duty to bargain necessarily
imposing on the parties the obligation to live up
to the terms of such a collective bargaining
agreement if entered into, it is undeniable that
non-compliance therewith constitutes an unfair
labor practice. [Shell Oil Workers Union v Shell
Co., 1971]

(3) Contracting out


General rule: contracting out is not ULP
Exception:
(1) contracted-out services or functions are
performed by union members AND
(2) contracting out will interfere with, restrain, or
coerce employees in the exercise of their right to
self-organization. [Art. 248 (c)]

(8) Payment of negotiation or attorney's fees


Sweetheart contracts
Sweetheart contracts are favorable both to the
union and the employer at the expense of the
employees. The settlement of bargaining issues
must be made by fair bargaining in good faith,
and not through the payment of negotiation or
attorney's fees which will ultimately lead to
sweetheart contracts.

(4) Company union


Company union means any labor
organization whose formation, function or
administration has been assisted by any act
defined as unfair labor practice by this
Code. [Art. 212[i])
The employer commits ULP if it initiates,
dominates, or otherwise interferes with the
formation or administration of any labor
organization.

(9) To violate a collective bargaining agreement

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Flagrant and/or malicious refusal required


Violations of collective bargaining agreements,
except flagrant and/or malicious refusal to
comply with its economic provisions, shall not
be considered unfair labor practice and shall
not be strikeable. [IRR]

Flagrant and/or malicious refusal required


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

RIGHT
TO
PEACEFUL
CONCERTED ACTIVITIES
Art. 269 (b). Workers shall have the right to
engage in concerted activities for purposes of
collective bargaining or for their mutual
benefit and protection. The right of legitimate
labor organizations to strike and picket and of
employers to lockout, consistent with the
national interest, shall continue to be
recognized and respected. However, no labor
union may strike and no employer may
declare a lockout on grounds involving interunion and intra-union disputes.

ULP OF LABOR ORGANIZATIONS


(1) Restraint, or coercion
Interfere is not included in Art. 249 simply
because any act of a labor organization
amounts to interference to the right of selforganization.
(2)
Discrimination
Unionism

LABOR LAW

A concerted activity is one undertaken by two or


more employees to improve their terms and
conditions of work.

Encourage/Discourage

General rule: it is ULP for a labor organization to


cause an employer to discriminate against an
employee

Constitutional basis
The state shall guarantee the rights of all
workers to xxx peaceful concerted activities,
including the right to strike in accordance with
law. [Art. XIII Section 3]

Exception: provisions of a valid union security


clause and other company policies applicable to
all employees.

Right to self-organization includes the right to


engage in lawful concerted activities and may
not be abridged
Art. 252. It shall be unlawful for any person to
restrain, coerce, discriminate against or
unduly interfere with employees and workers
in their exercise of the right to selforganization. Such right shall include the
right to form, join, or assist labor
organizations for the purpose of collective
bargaining through representatives of their
own choosing and to engage in lawful
concerted activities for the same purpose or
for their mutual aid and protection, subject to
the provisions of Article 264 of this Code.

(3) Violate duty to bargain or the CBA


Please refer to part B.4 for some examples.
(4) Exaction (Featherbedding)
Featherbedding or make-work by the union is
the practice of the union asking (exacting) for
money or other things of value from the
employer in return for services which are not
performed or are not to be performed.
(5) Asking or accepting negotiation and other
attorney's fees
See counterpart in ULP by employers (sweetheart
contracts).

Concerted activities must be in accordance with


law

(6) Violate a collective bargaining agreement


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The strike is a powerful weapon of the working


class. Precisely because of this, it must be
handled carefully, like a sensitive explosive, lest
it blow up in the workers own hands. Thus, it
must be declared only after the most thoughtful
consultation among them, conducted in the
only way allowed, that is, peacefully, and in
every case conformably to reasonable
regulation. Any violation of the legal
requirements and strictures will render the
strike illegal, to the detriment of the very
workers it is supposed to protect. [Batangas
Laguna Tayabas Bus Co. v NLRC, G.R. No.
101858, 1992]

LABOR LAW

General rule: Striking employees are not entitled


to the payment of wages for un-worked days
during the period of the strike pursuant to the
no work-no pay principle.
Exception: Agreement to the contrary.
Reinstatement after a lawful strike
When strikers abandon the strike and apply
for reinstatement despite the existence of
valid grounds but the employer either:
(1) refuses to reinstate them or
(2) imposes upon their reinstatement new
conditions
then the employer commits an act of ULP.
The strikers who refuse to accept the new
conditions and are consequently refused
reinstatement are entitled to the losses of
pay they may have suffered by reason of the
employers discriminatory acts from the
time they were refused reinstatement.

Forms of concerted activities


(1) Strike
(2) Picketing
Employer's economic weapon: Lockout
(1) Strike
Art. 218 (o). A strike is any temporary stoppage
of work by the concerted action of employees
as a result of an industrial or labor dispute.

Forms of strikes
As to legality
(1) Legal strike one called for a valid purpose
and conducted through means allowed by law.
(2) Illegal strike one staged for a purpose not
recognized by law, or if for a valid purpose,
conducted through means not sanctioned by
law.

Strikes not limited to work stoppages


The term strike shall comprise not only
concerted work stoppages, but also slowdowns,
mass leaves, sit-downs, attempts to damage,
destroy or sabotage plant equipment and
facilities, and similar activities. (Samahang
Manggagawa v. Sulpicio Lines, 2004)

As to grounds
(1) Economic strike one staged by workers to
force wage or other economic concessions from
the employer which he is not required by law to
grant [Consolidated Labor Association of the
Phil. v. Marsman and Company 1964]

As coercive measure by employees


A strike is a coercive measure resorted to by
laborers to enforce their demands. The idea
behind a strike is that a company engaged in a
profitable business cannot afford to have its
production or activities interrupted, much less,
paralyzed. [Phil. Can Co. v. CIR, 1950]

(2) ULP strike called against a company's


unfair labor practice to force the employer to
desist from committing such practices.

No severance of employer-employee relationship


during lawful strike
Although during a strike the worker renders no
work or service and receives no compensation,
yet his relationship as an employee with his
employer is not severed or dissolved. [Elizalde
Rope Factory, Inc. v. SSS, 1972]

As to how committed
(1) Slowdown strike one by which workers,
without a complete stoppage of work, retard
production or their performance of duties and
functions to compel management to grant their
demands.
A slowdown is inherently illicit and unjustifiable
because while the employees continue to work,
they, at the same time, select what part of their

Payment of wages during lawful strikes

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duties they perform. In essence, they work on


their own terms. [Ilaw at Buklod ng
Manggagawa v. NLRC, 1991]

LABOR LAW

Picketing is the right of workers to peacefully


march to and fro before an establishment
involved in a labor dispute generally
accompanied by the carrying and display of
signs, placards and banners intended to inform
the public about the dispute. [NCMB Manual,
Sec. 1]

(2) Wild-cat strike one declared and staged


without filing the required notice of strike and
without the majority approval of the recognized
bargaining agent.

WHO MAY DECLARE A STRIKE OR


LOCKOUT

(3) Sit-down strike one wherein workers take


over possession of the property of such business
to cease production and to refuse access to
owners.

Who may declare a strike (Book V, Rule XXII, Sec.


6)
(1) certified or duly recognized bargaining
representative
(2) any legitimate labor organization in the
absence of #1, but only on grounds of ULP

(4) Sympathetic strike one in which the striking


workers have no demands of their own, but
strike to make common cause with other strikers
in other establishments.

Who may declare a lockout (Book V, Rule XXII,


Sec. 6)
(1) employer

Conversion from economic to ULP strike


It is possible for a strike to change its character
from an economic to a ULP strike. In the instant
case, initially, the strike staged by the Union was
meant to compel the Company to grant it
certain economic benefits set forth in its
proposal for collective bargaining. However, the
strike changed its character from the time the
Company refused to reinstate complainants
because of their union activities after it had
offered to admit all the strikers and in fact did
readmit the others. It was then converted into
an unfair labor practice strike. [Consolidated
Labor Assoc. of the Phil. v. Marsman and
Company, 1964]

REQUISITES FOR A VALID STRIKE

A valid strike must have a lawful ground and


must conform to the procedural requirements
set by law.
Substantial Requirements/Grounds [Art. 263 [c])
A strike or lockout may be declared in cases of:
(a) Bargaining deadlocks
(b) ULP
When violations of collective bargaining
strikeable as ULP
Violations of collective bargaining agreements
must be flagrant and/or there must be
malicious refusal to comply with its economic
provisions.

Strike cannot be converted to a lockout by a


return to work offer
A strike cannot be converted into a pure and
simple lockout by the mere expedient filing
before the trial court a notice of offer to return
to work during the pendency of the labor
dispute between the union and the employer.
[Rizal Cement Workers Union v. CIR, 1962]

When no lawful strike can be declared


(1) Ground is an inter-union or intra-union
dispute
(2) No notice of strike
(3) No lock-out vote obtained and reported to
the NCMB
(4) After assumption or certification by the
Secretary of Labor

(2) Picketing
Art 269 (b). The right of legitimate labor
organizations to strike and picket and of
employers to lockout, consistent with the
national interest, shall continue to be
recognized and respected.

Procedural requirements
(a) Effort to bargain
(b) Filing and service of notice of strike

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(c) Observance of cooling-off period


(d) Strike vote
(e) Strike vote report
(f) Observance of the waiting period

LABOR LAW

(d) Proof of a request for conference to settle


the differences.
In cases of ULP:
(a) Statement of Acts complained of
(b) Efforts taken to resolve the dispute amicably.

(a) Effort to bargain


Art. 270 (a). No labor organization or
employer shall declare a strike or lockout
without first having bargained collectively in
accordance with Title VII of this Book.

Action on notice [Book V Rule XXII Sec. 9]


Upon receipt of a valid notice of strike or
lockout, the NCMB, through its ConciliatorMediators, shall call the parties to a
conference the soonest possible time in
order to actively assist them to explore all
possibilities for amicable settlement.
The Conciliator-Mediator may suggest/offer
proposals as an alternative avenue for the
resolution of their disagreement/conflict
which may not necessarily bind the parties.
If conciliation/mediation fails, the parties
shall be encouraged to submit their dispute
for voluntary arbitration.

(b) Filing and service of notice of strike


Bargaining deadlocks
Art. 269(c). The duly certified or recognized
bargaining agent may file a notice of strike or
the employer may file a notice of lockout with
the Department at least 30 days before the
intended date thereof.
Unfair labor practice; union busting
Art. 269 (c). In cases of unfair labor practice,
the period to file notice of strike shall be 15
days. However, in cases of union busting
(dismissal of duly elected union officers from
employment), the cooling period shall not
apply.

(c) Observance of cooling-off periods


Cooling off periods
bargaining deadlock 30 days
ULP but not union busting 15 days
ULP and union busting no cooling-off
period

Note: the notice must be served to the


employer. Failure to do so will constitute
noncompliance
with
the
procedural
requirements and will result to an illegal strike.
Rationale: due process. (IRR)

Purpose of cooling-off period


Art. 269 (e). During the cooling-off period, it
shall be the duty of the Ministry to exert all
efforts at mediation and conciliation to effect
a voluntary settlement. Should the dispute
remain unsettled until the lapse of the
requisite number of days from the mandatory
filing of the notice, the labor union may strike
or the employer may declare a lockout.

Contents of notice of strike (Book V Rule XXII


Sec. 8)
(a) Names and addresses of the employer and
the union involved
(b) Nature of the industry to which the employer
belongs
(c) Number of union members and of workers in
the bargaining unit
(d) Such other relevant data as may facilitate
the settlement of the dispute.

The purpose of the cooling-off period is to


provide an opportunity for mediation and
conciliation. [National Federation of Sugar
Workers v. Ovejera, 1982]
(d) Strike vote [Art. 263 (f)]
Requirements for a declaration of a strike in a
strike vote
(a) approval by a majority of the total union
Membership in the ABU
(b) approval is obtained by secret ballot in a
meeting/referendum called for the purpose

Additional Requirements
In cases of bargaining deadlocks:
(a) Statement of Unresolved issues in the
bargaining negotiations
(b) Written Proposals of the union
(c) Counterproposals of the employer

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LABOR LAW

requirement shall be counted from the day


following the expiration of the cooling off
period.
(2) Coexistent periods. The cooling-off period
and the 7-day requirement may coexist. After
all, the purpose of the 7-day requirement is to
give time for the DOLE to verify if the projected
strike is supported by the majority. There is no
reason to add it to the cooling-off period.

Duration of the validity of the strike-vote


The decision shall be valid for the duration of
the dispute based on substantially the same
grounds considered when the strike or lockout
vote was taken.
Department of Labor and Employment
intervention
The Department may, at its own initiative or
upon the request of any affected party,
supervise the conduct of the secret balloting.

REQUISITES FOR A VALID LOCKOUT


Lockout by the employer

(e) Strike Vote Report [Art. 263(f)]


In every case, the union or the employer shall
furnish the Department the results of the voting
at least 7 days before the intended strike or
lockout, subject to the cooling-off period herein
provided.

Art. 218 (p). Lockout is the temporary refusal


of an employer to furnish work as a result of
an industrial or labor dispute.
No lockout based on intra or inter union disputes
Art. 269 (b). No labor union may strike and no
employer may declare a lockout on grounds
involving inter-union and intra-union disputes

(f) Observance of the waiting period


The waiting period, on the other hand, is
intended to provide opportunity for the
members of the union or the management to
take the appropriate remedy in case the strike or
lockout vote report is false or inaccurate.
(National Federation of Sugar Workers v. Ovejera,
1982)

Grounds
Similar to a strike, the proper grounds for a
lockout are
(1) bargaining deadlock
(2) ULP by labor organizations
Requisites
(a) Effort to bargain
(b) Filing and service of notice of lockout
(c) Observance of cooling-off period
(d) Lockout vote
(e) Report of lockout vote
(f) Observance of the waiting period

Compliance with both cooling-off and waiting


periods; rationale
The observance of both periods must be
complied with, although a labor union may take
a strike vote and report the same within the
statutory cooling-off period. The cooling-off and
7-day strike ban provisions of law constitute a
valid exercise of police power of the State.
[National Federation of Sugar Workers v. Ovejera,
1982]

(a) Effort to bargain


Art. 270 (a). No labor organization or
employer shall declare a strike or lockout
without first having bargained collectively in
accordance with Title VII of this Book.

Strike-vote reported within the cooling-off period


When the strike-vote is reported within the
cooling-off period, the phrase at least 7 days
before the intended strike or lockout, subject to
the cooling-off period herein provided. in
Article 263 (f) admits two interpretations:
(1) Mutually exclusive periods (used in the NCMB
Manual). The cooling off period and the 7-day
period are mutually exclusive. Thus, in the case
of Capitol Medical Center v. NLRC, the Court
held that when the strike vote is conducted
within the cooling-off period, the 7-day

(b) Filing and service of notice of lockout


Bargaining deadlock
Art. 269 (c). The notice of lockout may be filed
by the employer at least 30 days before the
intended date thereof.
ULP
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Art. 269 (c). In cases of unfair labor practice,


the period of notice shall be 15 days.

LABOR LAW

Art. 269 (f). A decision to declare a lockout


must be approved by a majority of the board
of directors of the corporation or association
or of the partners in a partnership, obtained
by secret ballot in a meeting called for that
purpose.

Note: the notice must be served to the


employees through the representative union.
Contents of notice
(a) Names and addresses of the employer and
the union involved
(b) Nature of the industry to which the employer
belongs
(c) Number of union members and of workers in
the bargaining unit
(d) Such other relevant data as may facilitate
the settlement of the dispute.

The decision shall be valid for the duration of


the dispute based on substantially the same
grounds considered when the strike or lockout
vote was taken.
(e) Report of lockout vote
Art. 269 (f). In every case, the union or the
employer shall furnish the Ministry the results
of the voting at least seven days before the
intended strike or lockout, subject to the
cooling-off period herein provided.

Additional Requirements
In cases of bargaining deadlocks
(a) Statement of unresolved issues in the
bargaining negotiations
(b) Written proposals of the union
(c) Counterproposals of the employer
(d) Proof of a request for conference to settle
the differences.

(f) Observance of waiting period (7 days)


See notes under strike.
Effect of Illegal Lockout
Art. 270 (a), par. 3, 1st sentence. Any worker
whose employment has been terminated as a
consequence of any unlawful lockout shall be
entitled to reinstatement with full backwages.

In cases of ULP
(a) Statement of acts complained of
(b) Efforts taken to resolve the dispute amicably.

REQUISITES
PICKETING

Action on notice
Upon receipt of a valid notice of strike or
lockout, the NCMB, through its ConciliatorMediators, shall call the parties to a
conference the soonest possible time in
order to actively assist them to explore all
possibilities for amicable settlement.
The Conciliator-Mediator may suggest/offer
proposals as an alternative avenue for the
resolution of their disagreement/conflict
which may not necessarily bind the parties.
If conciliation/mediation fails, the parties
shall be encouraged to submit their dispute
for voluntary arbitration. [Book V Rule XXII
Sec. 9]

FOR

LAWFUL

Prohibited activities in picketing [Art. 264)


(1) By any person. No person shall obstruct,
impede, or interfere with, by force, violence,
coercion, threats or intimidation, any peaceful
picketing by employees during any labor
controversy or in the exercise of the right to selforganization or collective bargaining, or shall
aid or abet such obstruction or interference.
[Art. 264 (b)]
(2) By police force. The police force shall keep
out of the picket lines unless actual violence or
other criminal acts occur therein: Provided, That
nothing herein shall be interpreted to prevent
any public officer from taking any measure
necessary to maintain peace and order, protect
life and property, and/or enforce the law and
legal order. [Art. 264 (d)]
(3) By person engaged in picketing. No person
engaged in picketing shall commit any act of
violence, coercion or intimidation or obstruct the

(c) Observance of cooling-off periods


Lockout cooling-off periods:
based on bargaining deadlock 30 days
based on ULP 15 days
(d) Lockout vote
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free ingress to or egress from the employers


premises for lawful purposes, or obstruct public
thoroughfares. [Art. 264 (e)]

LABOR LAW

ASSUMPTION OF JURISDICTION BY
THE
DOLE
SECRETARY
OR
CERTIFICATION OF THE LABOR
DISOUTE TO THE NLRC FOR
COMPULSORY ARBITRATION

Picketing
as
part
of
freedom
of
speech/expression; limitations
General rule: picketing enjoys constitutional
protection as part of freedom of speech and/or
expression.

Conditions for the assumption/certification


powers
(1) labor dispute in an industry indispensable to
the national interest
(2) such dispute is causing or is likely to cause a
strike or lockout

Exceptions/limitations:
(1) when picketing is coercive rather than
persuasive [Security Bank Employees Union v.
Security Bank]
(2) when picketing is achieved through illegal
means [Mortera v. CIR]
(3)
courts
may
confine
the
communication/demonstration to the parties to
the labor dispute [PCIB v. Philnabank Employees
Association]
(4) Innocent bystander rule - Courts may
insulate establishments or persons with no
industrial connection or having interest totally
foreign to the context of the dispute [PCIB v.
Philnabank Employees Association]

Powers of the Secretary of Labor (alternative)


(1) Assumption of jurisdiction. The Secretary of
Labor will decide the labor dispute
himself/herself.
(2) Certification for compulsory arbitration. The
Secretary of Labor will certify the labor dispute
to the NLRC for compulsory arbitration.
Powers of the President (not precluded by the
powers of the Secretary of Labor)
(1) determine the industries indispensable to the
national interest
(2) assume jurisdiction over any such labor
dispute to settle or terminate such dispute

Innocent bystander rule; test


An "innocent bystander," who seeks to enjoin a
labor strike, must satisfy the court that aside
from the grounds specified in Rule 58 of the
Rules of Court, it is entirely different from,
without any connection whatsoever to, either
party to the dispute and, its interests are totally
foreign to the context thereof. [MSF Tire and
Rubber Inc. v. CA, 1999]

Who determines industries indispensable to the


national interest
Art. 263 (g), last paragraph. It is in the
discretion of the Secretary of Labor to
determine which industries are indispensable
to the national interest. However, the
President may determine such industries
himself:

Picketing and libel


Libel laws are not applied strictly considering
that there is emotional tension in the picket
lines and expected discourteous and impolite
exchanges between the employees and the
employer. [PCIB v. Philnabank Employees
Association, 1981]

The foregoing notwithstanding, the President


of the Philippines shall not be precluded from
determining the industries that, in his opinion,
are indispensable to the national interest, and
from intervening at any time and assuming
jurisdiction over any such labor dispute in
order to settle or terminate the same.

Peaceful picketing is legal even in the absence of


employer-employee relationship
Picketing, peacefully carried out, is not illegal
even in the absence of employer-employee
relationship, for peaceful picketing is a part of
the freedom of speech guaranteed by the
Constitution. [De Leon v. National Labor Union,
1957]

NATURE OF ASSUMPTION OF
ORDER OR CERTIFICATION ORDER
(1) Automatic injunction
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(2) Return-to-work and admission


(3) Immediately executory
(1) Automatic injunction
impending strike or lockout

of

intended

LABOR LAW

maintain an effective skeletal workforce of


medical and other health personnel, whose
movement and services shall be unhampered
and unrestricted, as are necessary to insure
the proper and adequate protection of the life
and health of its patients, most especially
emergency cases, for the duration of the strike
or lockout.

of

Art. 269 (g), 2nd sentence. Such assumption or


certification shall have the effect of
automatically enjoining the intended or
impending strike or lockout as specified in the
assumption or certification order.

In such cases, therefore, the Secretary of


Labor and Employment may immediately
assume, within twenty four (24) hours from
knowledge of the occurrence of such a strike
or lockout, jurisdiction over the same or certify
it to the Commission for compulsory
arbitration.

(2) Return-to-work and readmission if strike or


lockout has already taken place
Art. 269 (g), 3rd sentence. If one has already
taken place at the time of assumption or
certification, all striking or locked out
employees shall immediately return-to-work
and the employer shall immediately resume
operations and readmit all workers under the
same terms and conditions prevailing before
the strike or lockout.

Rationale
Highest respect accorded to the right of
patients to life and health.

EFFECT
OF
DEFIANCE
OF
ASSUMPTION OF ASSUMPTION OR
CERTIFICATION ORDERS

Nature of return-to-work order


It is also important to emphasize that the
return-to-work order not so much confers a
right as it imposes a duty; and while as a right it
may be waived, it must be discharged as a duty
even against the worker's will. Returning to
work in this situation is not a matter of option or
voluntariness but of obligation. The worker
must return to his job together with his coworkers so the operations of the company can
be resumed and it can continue serving the
public and promoting its interest. That is the
real reason such return can be compelled. So
imperative is the order in fact that it is not even
considered violative of the right against
involuntary servitude. [Kaisahan ng Mga
Manggagawa sa Kahoy v. Gotamco Sawmills,
1948]

Art. 270 (a). No strike or lockout shall be


declared after assumption of jurisdiction by
the President or the Minister or after
certification or submission of the dispute to
compulsory or voluntary arbitration or during
the pendency of cases involving the same
grounds for the strike or lockout.
Strike/lockout becomes illegal
A strike undertaken despite the issuance by the
Secretary of Labor of an assumption or
certification order becomes a prohibited activity
and thus, illegal, pursuant to Article 264 (a) of
the Labor Code. [Allied Banking v. NLRC, 1996]
See notes on liabilities of employer, union officers,
and ordinary workers under illegal strike.

Immediately executory
The assumption and certification orders are
executory in character and must be strictly
complied with by the parties. [Allied Banking v.
NLRC, 1996]

Summary of liabilities of participants in an illegal


strike/lockout [Art. 264)
Employer in an illegal lockout workers
terminated due to illegal lockout shall be
entitled to reinstatement plus full
backwages.

Strikes and lockouts in hospitals, clinics and


similar medical institutions
Art. 269 (g). It shall be the duty of the striking
union or locking-out employer to provide and
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Union officers who participated in illegal


strike deemed to have lost their
employment
Union officers who participated in illegal acts
during a lawful strike deemed to have lost
their employment.
Ordinary workers deemed to have lost
their employment only if they participated in
illegal acts.

Stricter penalties for non-compliance with


orders, prohibitions, and/or injunctions issued by
the Secretary of Labor in strikes involving
hospitals, clinics, and similar medical institutions
(1) immediate disciplinary action against both
union and employer
(2) dismissal/loss of employment for members
of the striking union
(3) payment by employer of backwages,
damages, and other affirmative relief
(4) criminal prosecution against either or both
the union and employer

LABOR LAW

vote, strike vote report). [Grand Boulevard


Hotel v. GLOWHRAIN, 2003]
Good faith strike requires rational basis A
mere claim of good faith would not justify
the holding of a strike under the aforesaid
exception as, in addition thereto, the
circumstances must have warranted such
belief. It is, therefore, not enough that the
union believed that the employer
committed acts of ULP when the
circumstances clearly negate even a prima
facie showing to sustain such belief.
(Interwood Employees Assoc. v. Intl
Hardwood, 1956)

(3)
Noncompliance
with
procedural
requirements
See notes under procedural requirements of a
valid strike.
A strike which does not strictly comply with the
procedural requirements set by law and the
rules is an unlawful/illegal strike.

ILLEGAL STRIKE

Good faith strike must still comply with


procedural requirements
Even if the union acted in good faith in the belief
that the company was committing an unfair
labor practice, if no notice of strike and a strike
vote were conducted, the said strike is illegal.
[Grand Boulevard Hotel v. GLOWHRAIN, 2003]

Reasons for being illegal


(1) Prohibited by law
(2) Improper grounds
(3) Noncompliance with procedural
requirements
(4) Unlawful means and methods
(5) Violation of injunction order
(6) No strike/lockout provisions in the CBA

(4) Unlawful means and methods

(1) Prohibited by law


Government employees. While the Constitution
guarantees the right of government employees
to organize, they are otherwise not allowed to
strike.

Purpose and means test


There must be concurrence between the
validity of the purpose of the strike and the
means of conducting it.
A strike is a legitimate weapon in the
universal struggle for existence.
It is
considered as the most effective weapon in
protecting the rights of the employees to
improve the terms and conditions of their
employment. But to be valid, a strike must
be pursued within legal bounds. The right to
strike as a means for the attainment of
social justice is never meant to oppress or
destroy the employer. The law provides limits
for its exercise. Among such limits are the
prohibited activities under Art. 264,
particularly paragraph (e), which states that
no person engaged in picketing shall:

(2) Improper grounds


A legal strike must be based on a
bargaining deadlock and/or a ULP act only.
Intra-union and inter-union disputes are not
proper grounds to strike.
Good faith strike - Good faith may be used
as a defense if the strike is held on the basis
of an act of ULP by the employer even if it
turned out that there was no act of ULP.
However, the mandatory procedural
requirements cannot be dispensed with
(notice of strike, cooling-off period, strike
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(1) commit any act of violence, coercion, or


intimidation or
(2) obstruct the free ingress to or egress
from the employer's premises for lawful
purposes or
(3)
obstruct
public
thoroughfares.
[Association of Independent Unions in the
Philippines (AIUP), et. al. v NLRC, 1999]

LABOR LAW

that individual liability be incurred by those


guilty of such acts of violence that call for loss of
employee status. Such an approach is reflected
in our recent decisions. [Shell Oil Workers Union
v. Shell Co. of the Phils, 1971]
(5) Violation of injunction order
An automatic injunction under Article 263 (g) or
a valid injunction order under the exceptions to
Article 254 must be complied with. Otherwise,
the strike becomes illegal.

A legal strike may turn into an illegal strike


Even if the strike is valid because its objective or
purpose is lawful, the strike may still be
declared invalid where the means employed are
illegal. [Phil. Diamond Hotel and Resort, Inc. v.
Manila Diamond Hotel Employees Union, 2006]

(6) No strike/lockout provisions in the CBA


A no strike, no lock-out is a valid provision in
the CBA. However, it only applies to economic
provisions. It cannot prevent a strike which is
grounded on unfair labor practice. [Malayang
Samahan ng mga Manggagawa sa Greenfield v.
Ramos, 2000]

Examples of unlawful means and methods


(1) Acts of violence and terrorism
(2) Destruction of property

LIABILITY OF UNION OFFICERS

Guidelines and Balancing of Interest


(1) A strike otherwise valid, if violent in character,
may be placed beyond the pale.

(2) Care is to be taken especially where an unfair


labor practice is involved, to avoid stamping it
with illegality just because it is tainted by such
acts. To avoid rendering illusory the recognition
of the right to strike, responsibility in such a
case should be individual and not collective.
(3) A different conclusion would be called for if
the existence of force while the strike lasts is
pervasive and widespread, consistently and
deliberately resorted to as a matter of policy. It
could be reasonably concluded then that even if
justified as to ends, it becomes illegal because
of the means employed'.

Any union officer who knowingly


participates in an illegal strike and any
worker or union officer who knowingly
participates in the commission of illegal
acts during a strike may be declared to have
lost his employment status.
Note: Mere participation in an illegal strike
by a union officer is sufficient ground to
terminate his employment. In case of a
lawful strike, the union officer must commit
illegal acts during a strike for him to be
terminated.

LIABILITY OF ORDINARY WORKERS


General rule: Participation by a worker in a
lawful strike is not ground for termination of his
employment.

(4) This is not by any means to condone the


utilization of force by labor to attain its
objectives. It is only to show awareness that in
labor conflicts, the tension that fills the air as
well as the feeling of frustration and bitterness
could break out in sporadic acts of violence.

Exception: When the worker participated in


illegal acts during the strike.
When the strike is or becomes illegal, the
workers who participate in it are not deemed to
have lost their employment status by express
omission in the second sentence of the third
paragraph of Art. 264. Only the union officers
are deemed to have lost their employment
status.

If there be in this case a weighing of interests in


the balance, the ban the law imposes on unfair
labor practices by management that could
provoke a strike and its requirement that it be
conducted peaceably, it would be, to repeat,
unjustified, considering all the facts disclosed,
to stamp the strike with illegality. It is enough

LIABILITY OF EMPLOYERS

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Any worker whose employment has been


terminated as a consequence of any unlawful
lockout shall be entitled to reinstatement with
full backwages.

LABOR LAW

staged by the respondent and defend the


validity of its termination of the
employment of the members of the
respondent who staged a strike. It must be
underscored that a waiver to be valid and
effective must be couched in clear and
unequivocal terms which leave no doubt as
to the intention of a party to give up a right
or benefit which legally pertains to him.
[Filcon Manufacturing Corp v. Lakas
Manggagawa sa Filcon-Lakas Manggagawa
Labor Center]

WAIVER OF ILLEGALITY OF STRIKE


When defense of illegality of strike is deemed
waived
In this case, the Company alleged that the strike
was illegal as the notice of intention to strike
was not sent directly to it. However, it reinstated
its striking workers who expressed their desire to
return to work. On the illegality of the strike, the
Court declared:
xxx it is claimed that the strike was
illegal. Admitting for the sake of argument that
the strike was illegal for being premature, this
defense was waived by the Bisaya Land
Transportation Company, when it voluntarily
agreed to reinstate the radio operators. [Bisaya
Land Transportation Co., Inc. v. CIR, 1957]

INJUNCTIONS
General rule: injunction prohibited
Art. 260. No temporary or permanent
injunction or restraining order in any case
involving or growing out of labor disputes
shall be issued by any court or other entity,
except as otherwise provided in Articles 218
and 264 of this Code.

When defense of illegality of strike is not deemed


waived
The ruling cited in the Bisaya case that the
employer waives his defense of illegality of
the strike upon reinstatement of strikers is
applicable only to strikers who signified
their intention to return to work and were
accepted back xxx
Truly, it is more logical and reasonable for
condonation to apply only to strikers who
signified their intention to return and did
return to work. The reason is obvious. These
strikers took the initiative in normalizing
relations with their employer and thus
helped promote industrial peace. However,
as regards the strikers who decided to
pursue with the case, as in the case of the
114 strikers herein, the employer could not
be deemed to have condoned their strike,
because they had not shown any willingness
to normalize relations with it. [Philippine
Inter-Fashion, Inc. v. NLRC, 1982]
Considering the terms of the compromise
agreement (the parties merely agreed to
maintain the status quo before the
commencement of the complaints filed by
them without prejudice to the resolution by
the Labor Arbiter), it cannot thereby be
concluded that the petitioner waived its
right to assail the illegality of the strike

REQUISITES FOR LABOR INJUNCTIONS


General Rule: is that injunctions are prohibited
in labor disputes. The exceptions are provided in
Art. 224 (Powers of NLRC) in connection with
Art. 270 (Prohibited Activities) of the Labor
Code.
Requisites for injunction to issue [Art. 224(e)
Powers of the NLRC]
(a) actual or threatened commission of a
prohibited or unlawful act OR requirement of
performance of a particular act in a labor
dispute
(b) if unrestrained or unperformed, the act will
cause grave or irreparable damage to any party
OR render ineffectual any decision in favor of
such party
Prohibited activities [Art. 270)
(a) No labor organization or employer shall
declare a strike or lockout without first having
bargained collectively in accordance with Title
VII of this Book or without first having filed the
notice required in the preceding Article or
without the necessary strike or lockout vote first
having been obtained and reported to the
Ministry.

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No strike or lockout shall be declared after


assumption of jurisdiction by the President or
the Minister or after certification or submission
of the dispute to compulsory or voluntary
arbitration or during the pendency of cases
involving the same grounds for the strike or
lockout.

LABOR LAW

intimidation or obstruct the free ingress to or


egress from the employers premises for lawful
purposes, or obstruct public thoroughfares.
INNOCENT BYSTANDER RULE
An innocent by-stander is entitled to
injunction if it is affected by the activities of
a picketing union where no connection or
interest exists between the union and the
innocent by-stander.
The right [to picket] may be regulated at the
instance of third parties or `innocent
bystanders' if it appears that the inevitable
result of its exercise is to create an
impression that a labor dispute with which
they have no connection or interest exists
between them and the picketing union or
constitute an invasion of their rights.
(Liwayway Publishing v. Permanent Concrete
Worker's Union, 1981)

Any worker whose employment has been


terminated as a consequence of any unlawful
lockout shall be entitled to reinstatement with
full backwages. Any union officer who knowingly
participates in an illegal strike and any worker
or union officer who knowingly participates in
the commission of illegal acts during a strike
may be declared to have lost his employment
status: Provided, That mere participation of a
worker in a lawful strike shall not constitute
sufficient ground for termination of his
employment, even if a replacement had been
hired by the employer during such lawful strike.

Procedure and Jurisdiction

No person shall obstruct, impede, or interfere


with, by force, violence, coercion, threats or
intimidation, any peaceful picketing by
employees during any labor controversy or in
the exercise of the right to self-organization or
collective bargaining, or shall aid or abet such
obstruction or interference.

LABOR ARBITER
JURISDICTION
Except as otherwise provided under the Code
the Labor Arbiters shall original and exclusive
jurisdiction to hear and decide:
(1) Unfair labor practices cases;
(2) Termination disputes;
(3) If accompanied with a claim for
reinstatement, those cases that workers
may file involving wages, rates of pay, hours
of work and other terms and conditions of
employment;
(4) Claims for actual, moral, exemplary and
other forms of damages arising from the
employer-employee relations;
(5) Cases arising from any violation of Art. 264
of this Code, including questions involving
the legality of strikes and lockouts;
(6) Except claims for Employees Compensation,
Social Security, Medicare and maternity
benefits, all other claims, arising from
employer-employee relations, including
those of persons in domestic or household
service, involving an amount exceeding five
thousand pesos (P5,000) regardless of

(b) No employer shall use or employ any strikebreaker, nor shall any person be employed as a
strike-breaker.
(c) No public official or employee, including
officers and personnel of the New Armed Forces
of the Philippines or the Integrated National
Police, or armed person, shall bring in,
introduce or escort in any manner, any
individual who seeks to replace strikers in
entering or leaving the premises of a strike area,
or work in place of the strikers. The police force
shall keep out of the picket lines unless actual
violence or other criminal acts occur therein:
Provided, That nothing herein shall be
interpreted to prevent any public officer from
taking any measure necessary to maintain
peace and order, protect life and property,
and/or enforce the law and legal order.
(d) No person engaged in picketing shall
commit any act of violence, coercion or
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whether accompanied with a claim for


reinstatement. [Art. 217]
(7) Money claims arising out of employeremployee relationship or by virtue of any
law or contract, involving claims for actual,
moral, exemplary an other forms of
damages, as well as employment
termination of OFWs;
(8) Wage distortion disputes in unorganized
establishments not voluntarily settled by
the parties. [Art. 124]
(9) Enforcement of compromise agreements
when there is non-compliance by any of the
parties. [Art. 227]
(10) Other cases as may be provided by law.

Exclusive and Original Jurisdiction subject to


Articles 261 and 262.
A case under Art 217 may be lodged instead
with a voluntary arbitrator. The policy of the law
is to give primacy to voluntary modes of settling
dispute.

VERSUS REGIONAL DIRECTOR


Jurisdiction on Money Claims (Labor Arbiter vs.
Regional Director)
A money claim arising from employeremployee
relations,
except
SSS,
ECC/Medicare claims, is within the
jurisdiction of a labor arbiter if:
(1) The claim, regardless of amount, is
accompanied with a claim of reinstatement;
or
(2) The claim exceeds P5,000, whether or
not there is a claim for reinstatement.
The Regional Director has jurisdiction if:
(1) the money claim is not accompanied by
reinstatement AND
(2) the claim does not exceed P5,000

LABOR LAW

Nature of Proceeding: Non-litigious. The


Labor Arbiter is not bound by the technical
rules of procedure.
The Labor Arbiter shall use every and all
reasonable means to ascertain the facts in
each speedily and objectively. [Art. 221]
Employer-employee relationship is a
jurisdictional requisite, absent of which, the
NLRC has no jurisdiction to hear and decide
the case. (Hawaiian-Philippine Company v.
Gulmatico)
Venue: Regional Arbitration Branch (RAB)
having jurisdiction over the workplace of the
complainant or petitioner.
Workplace place or locality where the
employee is regularly assigned at the time
the cause of action arose.
In the case of field employees, ambulant or
itinerant workers, their workplace is (a)
where they are regularly assigned or (b)
where they are supposed to regularly
receive their salaries and wages or work
instructions from, and report the results of
their assignment to their employers.

Some Rules on Venue


(1) Exclusion. Where 2 or more Regional
Arbitration Branches have jurisdiction over the
workplace of the complainant, that first which
acquired jurisdiction over the case shall exclude
others.
(2) Waiver. When venue is not objected to before
the filing of position papers, such issue shall be
deemed waived.
(3) Transfer. Venue of an action may be
transferred to a different Regional Arbitration
Branch upon written agreement of the parties or
upon order of the LA in meritorious cases and
on motion of the proper party.
(4) OFW Cases. Cases involving overseas Filipino
workers may be filed before the RAB having
jurisdiction over the place where the
complainant resides or where the principal
office of any of the respondents is situated.

Notes:
The money claim must arise from law or
contracts other than CBA.
Money arising from an implementation of
the CBA Voluntary Arbitrator or Panel of
Voluntary Arbitrators have jurisdiction
Money claims which does not arise from EREE relations Regular Courts have
jurisdiction.

REINSTATEMENT PENDING APPEAL

An order for reinstatement entitles an employee


to receive his accrued backwages from the
moment the reinstatement order was issued up
to the date when the same was reversed by a
higher court without fear of refunding what he
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had received. [Garcia v. Philippine Airlines, Inc.,


G.R. No.164856, 2009]

(4) If serious errors in the findings of fact are


raised which, if not corrected, would cause
grave or irreparable injury to the appellant

Requirements to perfect appeal to NLRC


(a) The appeal should be filed within the
reglementary period;
(b) The Memorandum of Appeal should be
under oath;
(c) The appeal fee should be paid;
(d) There should be posting of cash or surety
bond, if judgment involves monetary award; and
(e) There should be proof of service to the
adverse party.

It is clear from the NLRC Rules of Procedure


that appeals must be verified and certified
against forum-shopping by the parties-ininterest themselves. The purpose of verification
is to secure an assurance that the allegations in
the pleading are true and correct and have been
filed in good faith. [Antonio B. Salenga, et al. v.
CA, 2012]

EFFECT OF NLRC REVERSAL OF


LABOR ARBITR DECISION

NATIONAL LABOR RELATIONS


COMMISSION (NLRC)

JURISDICTION
NLRC divisions
(a) Original Jurisdiction: Over petitions for
injunction or temporary restraining order under
Art. 218 (e).
(b) Exclusive Appellate Jurisdiction: over all
cases decided by labor arbiters (Art 217[b]) and
the DOLE regional directors under Art 129.
Period of Appeal (2005 NLRC Rules of
Procedure)
From Labor Arbiter to NLRC: Decisions and
resolutions of the Labor Arbiter shall be
final and executory unless appealed to the
Commission by any or both parties within
(10) calendar days from receipt thereof
From Regional Director to NLRC pursuant to
Art. 129: Decisions and resolutions of the
Regional Director shall be final and
executory unless appealed within 5 days
from receipt thereof.
Note: If the 5th or 10th day falls on a
Saturday, Sunday, or a holiday, the last day
shall be the next working day.
Grounds of Appeal
(1) If there is prima facie evidence of abuse of
discretion on the part of the Labor Arbiter or
Regional Director;
(2) If the decision, resolution or order was
secured through fraud or coercion, including
graft and corruption;
(3) If made purely on questions of law; and/or

LABOR LAW

Even if the order of reinstatement of the


Labor Arbiter is reversed on appeal, it is
obligatory on the part of the employer to
reinstate and pay the wages of the
dismissed employee during the period of
appeal until reversal by the higher court.
On the other hand, if the employee has
been reinstated during the appeal period
and such reinstatement order is reversed
with finality, the employee is not required to
reimburse whatever salary he received for
he is entitled to such, more so if he actually
rendered services during the period. [Garcia
v. Philippine Airlines, Inc., G.R. No.164856,
2009]

REMEDIES

Requisites for Perfection of Appeal to the Court


of Appeals (Rule 43)
(1) The appeal shall be:
Filed within the reglementary period;
Verified by the appellant himself in
accordance with Section 4, Rule 7 of the
Rules of Court;
In the form of a memorandum of appeal
which shall state the grounds relied upon
and the arguments in support thereof, the
relief prayed for, and with a statement of
the date the appellant received the
appealed decision, resolution or order;
In three (3) legibly typewritten or printed
copies; and
Accompanied by (a) proof of payment of
the required appeal fee; (b) posting of a
cash or surety bond as provided in Section
6 of the 2005 NLRC Rules, (c) a certificate
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of non-forum shopping; and (d) proof of


service upon the other parties.
(2) A mere notice of appeal without complying
with the other requisites aforestated shall not
stop the running of the period for perfecting an
appeal.
(3) The appellee may file with the Regional
Arbitration Branch or Regional Office where the
appeal was filed, his answer or reply to
appellants memorandum of appeal, not later
than 10 calendar days from receipt thereof.
Failure on the part of the appellee who was
properly furnished with a copy of the appeal to
file his answer or reply within the said period
may be construed as a waiver on his part to file
the same.
(4) Subject to the provisions of Article 218 of the
Labor Code, once the appeal is perfected in
accordance with these Rules, the Commission
shall limit itself to reviewing and deciding only
the specific issues that were elevated on appeal.

that its action would not only serve the interests


of the parties alone, but would also have
favorable implications to the community and to
the economy as a whole. This is the clear
intention of the legislative body in enacting Art.
263 paragraph (g) of the Labor Code, as
amended by Section 27 of R.A. 6175 [Union of
Filipino Employees v. NLRC, 1990]
Effects of Certification
(1) Upon certification, the intended or
impending strike or lockout is automatically
enjoined, notwithstanding the filing of any
motion for reconsideration of the
certification order nor the non-resolution of
any such motion which may have been duly
submitted to the Office of the Secretary of
Labor and Employment.
(2) If a work stoppage has already taken place
at the time of the certification, all striking or
locked out employees shall immediately
return to work and the employer shall
immediately resume operations and
readmit all workers under the same terms
and conditions prevailing before the strike
or lockout.
(3) All cases between the same parties, except
where the certification order specifies
otherwise the issues submitted for
arbitration which are already filed or may be
filed, and are relevant to or are proper
incidents of the certified case, shall be
considered subsumed or absorbed by the
certified case, and shall be decided by the
appropriate Division of the Commission.
(4) The parties to a certified case, under pain of
contempt, shall inform their counsels and
the Division concerned of all cases pending
with the Regional Arbitration Branches and
the Voluntary Arbitrators relative or incident
to the certified case before it.
(5) When a certified labor dispute involves a
business entity with several workplaces
located in different regions, the Division
having territorial jurisdiction over the
principal office of the company shall acquire
jurisdiction to decide such labor dispute;
unless the certification order provides
otherwise. [Section 3, 2011 NLRC Rules and
Procedures]

CERTIFIED CASES

LABOR LAW

Certified labor disputes are cases certified to


the Commission for compulsory arbitration
under Art. 263 (g) of the Labor Code. [Sec.
2, The 2011 NLRC Rules and Procedures]
When, in his opinion, there exists a labor
dispute causing or likely to cause a strike or
lockout in an industry indispensable to the
national interest, the Secretary of Labor and
Employment may assume jurisdiction over
the dispute and decide it or certify the same
to the Commission for compulsory
arbitration. Such assumption or certification
shall have the effect of automatically
enjoining the intended or impending strike
or lockout as specified in the assumption or
certification order. [Art. 263]

Function of the NLRC


When sitting in a compulsory arbitration
certified to by the Secretary of Labor, the NLRC
is not sitting as a judicial court but as an
administrative body charged with the duty to
implement the order of the Secretary. Its
function only is to formulate the terms and
conditions of the CBA and cannot go beyond
the scope of the order. Moreover, the
Commission is further tasked to act within the
earliest time possible and with the end in view

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LABOR LAW

Effects of Defiance
Non-compliance with the certification order
of the SOLE shall be considered as an
illegal act committed in the course of the
strike or lockout and shall authorize the
Commission to enforce the same under pain
of immediate disciplinary action, including
dismissal or loss of employment status or
payment by the locking-out employer of
backwages, damages and/or other
affirmative relief, even criminal prosecution
against the liable parties.
The Commission may also seek the
assistance of law enforcement agencies to
ensure compliance and enforcement of its
orders and resolutions. [Sec. 4, 2011 NLRC
Rules and Procedures]
The Secretary's assumption and certification
orders being executory in character are to
be strictly complied with by the parties even
during the pendency of a petition
questioning their validity for this
extraordinary authority given by law to the
Secretary of Labor is "aimed at arriving at a
peaceful and speedy solution to labor
disputes, without jeopardizing national
interests." [Union of Filipro Employees v.
NLRC, 1990]

Execution of judgment
Upon issuance of the entry of judgment, the
Commission motu proprio or upon motion by
the proper party, may cause the execution of the
judgment in the certified case. [Sec. 6, 2011
NLRC Rules and Procedures]

Procedure in certified cases


(a) When there is no need to conduct a
clarificatory hearing, the Commission shall
resolve all certified cases within 30 calendar
days from receipt by the assigned
Commissioner of the complete records, which
shall include the position papers of the parties
and the order of the SOLE denying the motion
for reconsideration of the certification order, if
any.
(b) Where a clarificatory hearing is needed, the
Commission shall, within 5 calendar days from
receipt of the records, issue a notice to be
served on the parties through the fastest means
available, requiring them to appear and submit
additional evidence, if any. All certified cases
shall be resolved by the Commission within 60
calendar days from receipt of the complete
records by the assigned Commissioner.
(c) No motion for extension or postponement
shall be entertained. [Sec. 5, 2011 NLRC Rules
and Procedures]

The Bureau shall have fifteen (15) calendar


days to act on labor cases before it, subject to
extension by agreement of the parties.

BUREAU OF LABOR RELATIONS


MED-ARBITERS
JURISDICTION
APPELLATE)

(ORIGINAL

AND

Art. 232. The Bureau of Labor Relations and


the Labor Relations Divisions in the regional
offices of the Department of Labor and
Employment shall have original and exclusive
authority to act, at their own initiative or upon
request of either or both parties, on all interunion and intra-union conflicts, and all
disputes, grievances or problems arising from
or affecting labor-management relations in
all workplaces whether agricultural or nonagricultural, except those arising from the
implementation or interpretation of collective
bargaining agreements which shall be the
subject of grievance procedure and/or
voluntary arbitration.

Appellate Jurisdiction
(1) BLR has the power to review the decision of
the Regional Director
(2) Decisions rendered through its appellate
power are final and executory. Hence, the
remedy of the aggrieved party is to seasonably
avail of the special civil action of certiorari under
Rule 65 of the Rules of Court.

NATIONAL CONCILIATION AND


MEDIATION BOARD
NATURE OF PROCEEDINGS

Conciliation and mediation is non-litigious/nonadversarial, less expensive, and expeditious.


Under this informal set-up, the parties find it
more expedient to fully ventilate their respective

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positions without running around with legal


technicalities and, in the course thereof, afford
them wider latitude of possible approaches to
the problem.

Small money claims


Recovery of wages, simple money claims
and other benefits. Upon complaint of
any interested party, the Regional Director
of the Department of Labor and
Employment or any of the duly authorized
hearing officers of the Department is
empowered, through summary proceeding
and after due notice, to hear and decide any
matter involving the recovery of wages and
other monetary claims and benefits,
including legal interest, owing to an
employee or person employed in domestic
or household service or househelper under
this Code, arising from employer-employee
relations: Provided, That such complaint
does not include a claim for reinstatement:
Provided, further, That the aggregate
money claims of each employee or
househelper do not exceed five thousand
pesos (P5,000).
The Regional Director or hearing officer
shall decide or resolve the complaint within
thirty (30) calendar days from the date of
the filing of the same.
Any sum thus recovered on behalf of any
employee or househelper pursuant to this
Article shall be held in a special deposit
account by, and shall be paid, on order of
the Secretary of Labor and Employment or
the Regional Director directly to the
employee or househelper concerned.
Any such sum not paid to the employee or
househelper, because he cannot be located
after diligent and reasonable effort to locate
him within a period of three (3) years, shall
be held as a special fund of the Department
of Labor and Employment to be used
exclusively for the amelioration and benefit
of workers.
xxx The Secretary of Labor and Employment
or his duly authorized representative may
supervise the payment of unpaid wages and
other monetary claims and benefits,
including legal interest, found owing to any
employee or househelper under this Code.
[Art. 129)

CONCILIATION VS. MEDIATION


Conciliation A mild form of intervention by a
neutral third party, the Conciliator-Mediator,
relying on his persuasive expertise, takes an
active role in assisting parties by trying to keep
disputants talking, facilitating other procedural
niceties, carrying messages back and forth
between the parties, and generally being a good
fellow who tries to keep things calm and
forward-looking in a tense situation.
Mediation A mild intervention by a neutral
third party, the Conciliator-Mediator, wherein
the CM advises the parties or offers solutions or
alternatives to the problems with the end in
view of assisting them towards voluntarily
reaching their own mutually acceptable
settlement of the dispute.
Conciliation

Mediation

C-M
facilitates
disputants to keep
things calm, delivers
messages back and
forth between the
parties.

C-M assists parties to


voluntarily
reach
mutually acceptable
settlement.

LABOR LAW

PREVENTIVE MEDIATION

Preventive mediation case refers to the


potential or brewing labor dispute which is the
subject of a formal or informal request for
conciliation and mediation assistance sought by
either or both parties in order to remedy,
contain or prevent its degeneration into a full
blown dispute through amicable settlement.

DOLE REGIONAL DIRECTORS


JURISDICTION

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representative is hereby empowered to inquire


into the financial activities of legitimate labor
organizations upon the filing of a complaint
under oath and duly supported by the written
consent of at least twenty percent (20%) of
the total membership of the labor
organization concerned and to examine their
books of accounts and other records to
determine compliance or non-compliance
with the law and to prosecute any violations of
the law and the union constitution and bylaws: Provided, That such inquiry or
examination shall not be conducted during
the sixty (60)-day freedom period nor within
the thirty (30) days immediately preceding the
date of election of union officials.

DOLE SECRETARY
VISITORIAL
POWERS

AND

LABOR LAW

ENFORCEMENT

Art. 128. The Secretary of Labor and


Employment or his duly authorized
representatives, including labor regulation
officers, shall have access to employers
records and premises at any time of the day or
night whenever work is being undertaken
therein, and the right to copy therefrom, to
question any employee and investigate any
fact, condition or matter which may be
necessary to determine violations or which
may aid in the enforcement of this Code and
of any labor law, wage order or rules and
regulations issued pursuant thereto.

POWER TO SUSPEND/EFFECTS OF
TERMINATION
Art. 283 (b). The Secretary of the Department
of Labor and Employment may suspend the
effects of the termination pending resolution
of the dispute in the event of a prima facie
finding by the appropriate official of the
Department of Labor and Employment before
whom such dispute is pending that the
termination may cause a serious labor dispute
or is in the implementation of a mass lay-off.

Notwithstanding the provisions of Articles 129


and 217 of this Code to the contrary, and in
cases where the relationship of employeremployee still exists, the Secretary of Labor
and Employment or his duly authorized
representatives shall have the power to issue
compliance orders to give effect to the labor
standards provisions of this Code and other
labor legislation based on the findings of
labor employment and enforcement officers
or industrial safety engineers made in the
course of inspection. The Secretary or his duly
authorized representatives shall issue writs of
execution to the appropriate authority for the
enforcement of their orders, except in cases
where the employer contests the findings of
the labor employment and enforcement
officer and raises issues supported by
documentary proofs which were not
considered in the course of inspection.

ASSUMPTION OF JURISDICTION
Art. 269 (g). When in his opinion, there exist a
labor dispute causing or likely to cause a
strike or lockout in an industry indispensable
to the national interest, the SOLE may
assume jurisdiction over the dispute and
decide it or certify the same to the
Commission for compulsory arbitration.

APPELLATE JURISDICTION

Art. 37. The Secretary of Labor or his duly


authorized representatives may, at any time,
inspect the premises, books of accounts and
records of any person or entity covered by this
Title, require it to submit reports regularly on
prescribed forms, and act on violation of any
provisions of this Title.

Art. 280. The Secretary of Labor and


Employment or his duly authorized

PAGE 149

Orders issued by the duly authorized


representative of the SOLE under Art. 128
may be appealed to the latter.
Denial of application for union registration
or cancellation of union registration
originally rendered by the BLR may be
appealed to the SOLE (if originally rendered
by the Regional Office, appeal should be
made to the BLR)
Decisions of the Med-Arbiter in certification
election cases are appealable to the SOLE

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LABOR RELATIONS

(decisions of med-arbiters in intra-union


disputes are appealable to the BLR) [Art.
259]

LABOR LAW

with the economic provisions of such


agreement.
Art. 267. The Commission, its Regional Offices
and the Regional Directors of the DOLE shall
not entertain disputes, grievances or matters
under the exclusive and original jurisdiction of
the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and
refer the same to the grievance machinery or
Voluntary Arbitration provided in the
Collective Bargaining Agreement.

VOLUNTARY ARBITRATION POWERS


Art. 269 (h). Before or at any stage of the
compulsory arbitration process, the parties
may opt to submit their dispute to voluntary
arbitration.
Art. 269 (i). The Secretary of Labor and
Employment, xxx shall decide or resolve the
dispute xxx.

Other labor disputes


The VA or panel of VAs, upon agreement of
the parties, shall also hear and decide all
other labor disputes including ULP and
bargaining deadlocks. [Art. 268)
Even if the specific issue brought before the
arbitrators merely mentioned the question
of whether an employee was discharged
for just cause, they could reasonably
assume that their powers extended beyond
the determination thereof to include the
power to reinstate the employee or to grant
back wages. In the same vein, if the specific
issue brought before the arbitrators referred
to the date of regularization of the
employee, law and jurisprudence gave them
enough leeway as well as adequate
prerogative to determine the entitlement of
the employees to higher benefits in
accordance
with
the
finding
of
regularization. [Manila Pavilion Hotel, etc. vs.
Henry Delada, 2011]

GRIEVANCE MACHINERY AND


VOLUNTARY ARBITRATION
SUBJECT MATTER OF GRIEVANCE
Grievance is any question by either the ER or the
union regarding the interpretation or
application of the CBA or company personnel
policies or any claim by either party that the
other party is violating any provisions of the CBA
or company personnel policies.
It is a complaint or dissatisfaction arising from
the interpretation or implementation of the CBA
and those arising from interpretation or
enforcement of personnel policies
Grievance machinery It refers to the
mechanism for the adjustment and resolution of
grievances. It is part of the continuing process of
collective bargaining.

PROCEDURE [IRR, BOOK V, RULE XI)


Hearing
All parties to the dispute shall be entitled to
attend the arbitration proceedings. The
attendance of any third party or the exclusion of
any witness from the proceedings shall be
determined by the VA or panel of Vas. Hearing
may be adjourned for cause or upon agreement
by the parites.

VOLUNTARY ARBITRATION
JURISDICTION Jurisdiction
Exclusive and original jurisdiction over
grievances
The VA or panel of VAs shall have original
and exclusive jurisdiction to hear and decide
all unresolved grievances.
Violations of a CBA, except those which are
gross in character, shall no longer be
treated as ULP and shall be resolved as
grievances under the CBA.
Note: Gross violations of CBA shall mean
flagrant and/or malicious refusal to comply

Days to render an award/decision


Unless the parties agree otherwise, it shall be
mandatory for the VA or panel of Vas to render
an award or decision within 20 calendar days

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LABOR LAW

from the date of submission of the dispute to


voluntary arbitration.

such incidental reliefs as law and justice may


require.

Form of award/decision
The award or decision of the VA or panel of Vas
must state in clear, concise and definite terms
the facts, the law and/contract upon which it is
based.

The petition shall be accompanied by a


certified true copy of the judgment, order or
resolution subject thereof, copies of all
pleadings and documents relevant and
pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third
paragraph of section 3, Rule 46. (1a)

Finality
It shall be final and executory after 10 calendar
days from the receipt of the copy of the award or
decision by the parties.

Section 2. Petition for prohibition. When the


proceedings of any tribunal, corporation,
board, officer or person, whether exercising
judicial, quasi-judicial or ministerial functions,
are without or in excess of its or his
jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction,
and there is no appeal or any other plain,
speedy, and adequate remedy in the ordinary
course of law, a person aggrieved thereby may
file a verified petition in the proper court,
alleging the facts with certainty and praying
that judgment be rendered commanding the
respondent to desist from further proceedings
in the action or matter specified therein, or
otherwise granting such incidental reliefs as
law and justice may require.
The petition shall likewise be accompanied by
a certified true copy of the judgment, order or
resolution subject thereof, copies of all
pleadings and documents relevant and
pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third
paragraph of section 3, Rule 46. (2a)

Execution of award/decision
Upon motion of any interested party, the
Voluntary Arbitrator or panel of Voluntary
Arbitrators or the Labor Arbiter in the region
where the movant resides, in case of the
absence or incapacity of the Voluntary
Arbitrator or panel of Voluntary Arbitrators, for
any reason, may issue a writ of execution
requiring either the sheriff of the Commission or
regular courts or any public official whom the
parties may designate in the submission
agreement to execute the final decision, order
or award. [Art, 262-A, LC]
REMEDIES
Rule 43 Sec. 1, Rules of Court
The decision of a Voluntary Arbitrator or panel
of Voluntary Arbitrators is appealable by
ordinary appeal under Rule 43 of the Rules of
Civil Procedure directly to the Court of Appeals.

COURT OF APPEALS

Section 3. Petition for mandamus. When any


tribunal, corporation, board, officer or person
unlawfully neglects the performance of an act
which the law specifically enjoins as a duty
resulting from an office, trust, or station, or
unlawfully excludes another from the use and
enjoyment of a right or office to which such
other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary
course of law, the person aggrieved thereby
may file a verified petition in the proper court,
alleging the facts with certainty and praying
that judgment be rendered commanding the
respondent, immediately or at some other
time to be specified by the court, to do the act

RULE 65, RULES OF COURT


Section 1. Petition for certiorari. When any
tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or
in excess its or his jurisdiction, or with grave
abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal,
or any plain, speedy, and adequate remedy in
the ordinary course of law, a person aggrieved
thereby may file a verified petition in the
proper court, alleging the facts with certainty
and praying that judgment be rendered
annulling or modifying the proceedings of
such tribunal, board or officer, and granting
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PRESCRIPTION OF ACTIONS

required to be done to protect the rights of


the petitioner, and to pay the damages
sustained by the petitioner by reason of the
wrongful acts of the respondent.

No claim for compensation shall be given


due course unless said claim is filed with the
System within three (3) years from the time
the cause of action accrued. [Article 201, as
amended by Section 5, Presidential Decree
No. 1921]

SUPREME COURT

Therefore, all references in the amended


Section 9 of B.P. No. 129 to supposed appeals
from the NLRC to the Supreme Court are
interpreted and hereby declared to mean and
refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should hence
forth be initially filed in the Court of Appeals in
strict observance of the doctrine on the
hierarchy of courts as the appropriate forum for
the relief desired. [St. Martin Funeral Home vs.
NLRC, 1998]

(1) Money claims


Art. 297. Money claims. All money claims
arising from employer-employee relations
accruing during the effectivity of this Code
shall be filed within three (3) years from the
time the cause of action accrued; otherwise
they shall be forever barred.
All money claims accruing prior to the
effectivity of this Code shall be filed with the
appropriate entities established under this
Code within one (1) year from the date of
effectivity, and shall be processed or
determined in accordance with the
implementing rules and regulations of the
Code; otherwise, they shall be forever barred.

RULE 45, RULES OF COURT

LABOR LAW

Section 1. Filing of petition with Supreme


Court. A party desiring to appeal by
certiorari from a judgment or final order or
resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or
other courts whenever authorized by law,
may file with the Supreme Court a verified
petition for review on certiorari. The petition
shall raise only questions of law which must
be distinctly set forth. (1a, 2a)
Appeal from CA to SC should be under Rule
45 (Petition for Review on Certiorari) and
not Rule 65 (Special Civil Action for
Certiorari). [Sea Power Shipping Enterprises,
Inc. vs. CA, G. R. No. 138270, 2001]
Since the Court of Appeals had jurisdiction
over the petition under Rule 65, any alleged
errors committed by it in the exercise of its
jurisdiction would be errors of judgment
which are reviewable by timely appeal and
not by a special civil action of certiorari. If
the aggrieved party fails to do so within the
reglementary period, and the decision
accordingly becomes final and executory, he
cannot avail himself of the writ of certiorari,
his predicament being the effect of his
deliberate inaction. (Tirazona v Phil EDS
Techno-Service Inc, 2009)

Workmen's compensation claims accruing


prior to the effectivity of this Code and during
the period from November 1, 1974 up to
December 31, 1974, shall be filed with the
appropriate regional offices of the
Department of Labor not later than March 31,
1975; otherwise, they shall forever be barred.
The claims shall be processed and
adjudicated in accordance with the law and
rules at the time their causes of action
accrued.

PAGE 152

The Labor Code has no specific provision on


when a monetary claim accrues. Thus, again
the general law on prescription applies.
Article 1150 of the Civil Code provides that:
Article 1150. The time for prescription for all
kinds of actions, when there is no special
provision which ordains otherwise, shall be
counted from the day they may be brought.
The day the action may be brought is the
day a claim started as a legal possibility. In
the present case, the day came when
petitioner learned of Asiakonstrukts
deduction from his salary of the amount of

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LABOR RELATIONS

advances he had received but had, by his


claim, been settled, the same having been
reflected in his payslips, hence, it is
assumed that he learned of it at the time he
received his monthly paychecks. [Anabe v
Asian Const, et al., 2009]

LABOR LAW

interrupted: Provided, however, that the final


judgment in the administrative proceedings
shall not be binding in the criminal case nor
be considered as evidence of guilt but merely
as proof of compliance of the requirements
therein set forth. [As amended by Batas
Pambansa Bilang 70, May 1, 1980 and later
further amended by Section 19, Republic Act
No. 6715, March 21, 1989]

(2) Illegal dismissal


In illegal dismissal cases, the employee
concerned is given a period of four years
from the time of his dismissal within which
to institute a complaint. This is based on
Article 1146 of the New Civil Code which
states that actions based upon an injury to
the rights of the plaintiff must be brought
within four years. [Victory Liner, Inc. v Race,
2007]
Article 1146. The following actions must be
instituted within four years:
(1) Upon an injury to the rights of the
plaintiff;
(2) Upon a quasi-delict;
However, when the action arises from or out
of any act, activity, or conduct of any public
officer involving the exercise of powers or
authority arising from Martial Law including
the arrest, detention and/or trial of the
plaintiff, the same must be brought within
one (1) year. [As amended by PD No. 1755,
Dec. 24, 1980.]

(4) Offenses penalized by the Labor Code and


IRR issued pursuant thereto
Art. 290. Offenses penalized under this Code
and the rules and regulations issued pursuant
thereto shall prescribe in three (3) years.
(5) Prescriptive period of illegal recruitment
cases
Section 7. Prescription. Illegal recruitment cases
under this Rule shall prescribe in five (5) years;
Provided, however, that illegal recruitment
cases involving economic sabotage shall
prescribed in twenty (20) years. [RA 804]

(3) Unfair labor practice


Art. 296. Offenses penalized under this Code
and the rules and regulations issued pursuant
thereto shall prescribe in three (3) years. All
unfair labor practice arising from Book V shall
be filed with the appropriate agency within
one (1) year from accrual of such unfair labor
practice; otherwise, they shall be forever
barred.
Art. 253. Concept of unfair labor practice and
procedure for prosecution thereof. (last par.)
No criminal prosecution under this Title may
be instituted without a final judgment finding
that an unfair labor practice was committed,
having been first obtained in the preceding
paragraph. During the pendency of such
administrative proceeding, the running of the
period of prescription of the criminal offense
herein penalized shall be considered
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