LABOR REVIEW NOTES 1997 Atty.

Roberto Gana

I INTRODUCTION What is labor? It may refer to the activity, in which case it is service or work; the exertion of physical or mental effort, or both to the production of goods and services. It may refer to the working class - the sector which derives its livelihood chiefly from rendition of work or services in exchange for compensation. (PF Fernandez) It may also refer to the labor force. The group or portion of the population which is employed or capable of being employed in productive work. You will therefore include not only those already employed but also the unemployed/under-employed. Labor is further capable of being classified as: a) Organized: Those who are members of a trade union b) Unorganized: Those who are not members of any trade union. and a) Formal: Those with a definite employer, there being an employer-employee relationship Those persons engaging in work producing goods or services without any definite employer. There is no employer-employee relationship. Falling here would be the sidewalk vendors, pedicab tricycle drivers, even scavengers (bote-dyaryo).

b) Informal:

- What is the constitutional basis for labor laws? Labor laws are enacted under the police powers of the state. State power to pass laws to promote the general welfare. This may limit existing rights. Likewise, under the social justice provisions, the state shall guarantee its of all workers to self-organization, collective bargaining and negotiation, peaceful conceited activities, and right to strike according to law. They shall be entitled to security of tenure, humane conditions of work and living wage. They shall participate in policy and decision making processes affecting their rights and benefits as may be provided by law. (Art. 13, Sec. 3) It contemplates equitable diffusion of wealth and political power (National Service Corp. v. NLRC, Nov. 29, 1988) But this does not mean every labor dispute should be decided pro labor. Management also has its own rights. Other constitutional basis for labor laws: Principle of shared responsibility

Preferential use of volume modes of settling disputes, inadequate conciliation Right to just share in fruits of production (management/. to reasonable return on investments and to expansion and growth) Right to form unions (Art. 3, Sec. 8) Right to self-organization for government workers (Art. 9-B, Sec. 215) Promotion of full employment (Art. 2, Sec. 9) Affirmation of labor as a primary social economic force (Art. 2, Sec. 18) No invol. servitude (Art. 3, Sec. 18) Preferential use of Filipino labor (Art. 12, Sec. 12) Full protection to labor/full employment (Art. 13, Sec. 3) Protection of working women (Art. 13, Sec. 14) Family living wage and income-a right (Art. 18, Sec. 3)

What kind of economic system do we have, according to SUPREME COURT?

Not really laissez faire. We do not rely purely on market forces (ECOP v. NWPC, 201 SCRA 759). The welfare state is not alien to our constitution. This is affirmed by the social justice clause. The policy is one tipping the scales in favor of labor. Thus, doubts in law rules and regulation interpreted in favor of labor (Art. 4) Doubts in construction of labor contracts are interpreted in favor of safety and decent living of worker (New Civil Code, Art.1702) . But note, there must be doubt. Where the law, for example, provides that special days, if worked, give worker 130% of regular wage, you cannot grant 100% of regular wage where the employee does not work. There is no doubt about whether or not unworked special days are compensable the law is silent. They are not compensable. - Likewise, labor laws, particularly those granting rights and benefits are of a mandatory character and cannot be waived by contract. In one case, the union and management agreed in the CBA to condone implementation of a wage order granting 12 pesos wage increases. The SC said that this was void. Firstly, it is only the wage board which could approve an exemption. Secondly, the parties in a CBA may establish clauses they deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. One cannot apply the rule on compromise agreements to such a provision in the CBA. Compromises are means to end labor disputes and not against public policy. (Manila Fashions vs. NLRC, GR 117878, Nov. 13, 1996) Under the Civil Code, it is stated that labor relations are so impressed with public interest that they are not merely contractual and are subject to special laws on labor (Article 1700). The Civil Code also imposes obligations on labor and management not to treat each other oppressively. As to the public, their obligation is not to inconvenience the same or impair its interest (Article 1701). We will discuss labor laws as follows (more or less) Pre-employment Human Resource Development

Employer-employees relationship/Management Prerogative Working conditions OSHS Labor Relations SSS/ECC/GSIS CARL

Labor laws are further divided into:

Labor standards - minimum requirement prescribed by law, rules and regulations on wages, hours of work, cost of living allowance and other monetary and welfare benefits, including OSHS (Maternity Children's Hospital v. Secretary of Labor, 170 SCRA 632) Labor Relations - means by which terms and conditions above the minimum are fixed (e.g. CBA, Arbitration). They deal with rights of labor as a collective in dealing with rights of employees. Social Welfare Legislation - covers benefits for contingencies over and above what the law requires of, employers, which state provides to worker and/or his family. Labor laws/legislation - refers only to employees Social legislation - all members of society

II PRE-EMPLOYMENT The law on pre-employment is Book I (Art. 12-42) of the Labor Code and RA 8042: the Migrant Workers and Overseas Filipino Workers Act of 1995. The SUPREME COURT did not include RA 8042 in the coverage of the exams for one reason or another, but because of its effect on the Labor Code, we cannot overlook it. First of all, in matters of policy Art. 12 lays down 7 general policies on overseas employment: 1) 2) 3) 4) 5) 6) 7) Promote and maintain state of full employment Protect citizens desiring to work locally or overseas by securing for them best possible terms and conditions Facilitate free choice of available employment Facilitate and regulate movement of workers Regulate employment of aliens (including registration/permit system) Strengthen network of public employment offices and rationalize private sector part'n in recruitment and placement. Insure careful selection of Filipino workers for overseas employment to protect good name of RP

RA 8042 adds: 1) 2) 3) Uphold dignity of citizens, in general, Filipino migrant workers, in particular Full protection to labor State will not promote overseas employment to sustain economic growth but the program shall rest on assurance that dignity and rights of Filipino citizen shall not be compromised or violated.

4) 5) 6)

7) 8) 9)

Equality of women and men. Gender sensitive criteria to be applied in formulation of policies Free access to courts and adequate legal assistance. Right of FILIPINO MIGRANT WORKERs to participate in democratic decisionmaking processes and representation in institutions. relevant to overseas employment. Deployment of only skilled workers NGOs recognized as partners of state in protecting FILIPINO MIGRANT WORKERs. State to cooperate with them. Adm. costs in recruitment/placement - these services shall be rendered free.

What is significant here?

1. State policy is not to encourage overseas employment for entry of foreign exchange.
The program exists to protect rights of FILIPINO MIGRANT WORKERs. The new policy is seen in a number of other provisions: a) Deployment shall be allowed only in countries where the rights of FMWs are protected. How do we know if these rights are protected? These are the cases: i. Existing labor and social laws protecting the rights of migrant workers; ii. It is signatory to multilateral conventions, declarations or resolutions relating to protection of migrant workers; iii. It has concluded a bilateral agreement with the government protecting rights of OFWs; or iv. It is taking positive, concrete measures to protect rights of migrant workers. (This last phrase is the catch-all phrase. There may be no conventions or laws or treaties but if the DOLE finds that there are concrete positive measures taken, then it may allow deployment). v. Another exception is provided in the next provision - The government, in pursuit of national interest or when public welfare so requires, may terminate or impose a ban on deployment. If it wont fall under the fourth case, it may fall under this. This therefore extends also to imposition of a ban. Even if the first foru cases are met, the government may still prohibit deployment. b) The regulatory functions of the government relative to overseas employment shall be phased out gradually within five years from passage of the act. (meaning, by 2000). 2. 3. 4. Legal assistance is seen as important in protecting FMs Participation of FILIPINO MIGRANT WORKERs in decision-making processes and representation in institutions. Only skilled workers shall be deployed. (as far as practicable) Some examples of how state power has been used to protect OFWs:

a) In Philippine Association of Service Exporters, Inc. vs. Drilon, the SC upheld a

department order banning deployment of Filipinas as domestics. PASEI complained that this violated equal protection. Why single out Filipinas? Why was it not applicable to Filipinos? The SC said this rested on a substantial distinction. Reports from overseas and in the press showed that abuses against Filipina domestics was rampant. There were no such reports regarding male domestics. PASEI then says this violates the right to travel, obligations of contracts and their right to participate in policy and decision-making processes affecting their

rights and duties. The SC said the order was in the nature of a police power measure - to protect OFWs from abuses. Those rights are subject to a valid exercise of police power. In JMM Promotion and Management vs. CA, August 15, 1996, the problem concerned a POEA requirement that applicants for jobs as entertainers first had to present proof of academic and artistic skills before their Artist Record Book could be processed. JMM Promotion complained that violated the obligation of their contracts as several of those they had contracted for may not be able to return abroad. The SC said the rule was a valid exercise of police power. We take judicial notice of the fact that most of our women, a large number employed as domestic helpers and entertainers, worked under exploitative conditions marked by physical and personal abuse. Many ended up as prostitutes abroad. The intent was to require that those who wanted to become artists abroad had reasonable artistic and educational skills defore they could be deployed. The welfare of Filipino performing artists, particularly the women, was in mind. This is consistent with the protection to labor clause in the constitution. Protection to labor does not indicate promotion of employment alone. The promotion of full employment cannot take a backseat to the governments constitutional duty to provide mechanisms for protection of our workforce local or overseas. Their assertion of property rights must therefore yield to police power. Under police power, the right to engage in a profession may be subject to reasonable restriction.

What is recruitment and placement?

Any act of contracting, enlisting, canvassing, transporting, utilizing, hiring, procuring. It includes referrals, contract services, promises and advertisements, whether locally or overseas, for profit or not ; provided that any person who, for a fee, promises employment to 2 or more, is deemed engaged in recruitment and placement. People v. Panis. It is not necessary that one promise employment to 2 or more for a fee for there to be recruitment and placement. The proviso is a mere rule of evidence. The law defines recruitment and placement as any act described in the definition. A single act is enough. When you tell other you are recruiting workers for abroad and say you can send them if they give the right amounts, you are engaged in recruitment and placement. It is the settled rule that a person is engaged in recruitment when he gives the impression that he has power to send workers abroad. He manifested that he had ability to send the three complainants abroad. He promised them work for a fee and convinced them to give their money for the purpose of getting an employment overseas. (People vs. Diaz, GR 112175, July 26, 1996) Aquino v. CA. Suppose you advertise while you have a license. The workers are deployed overseas. When the license has expired, then they pay you the fees. Is this collection of fees illegal recruitment, for having been done without a license? No. The concept of recruitment refers to offering of inducements to qualified personnel to enter a job. Payments for overseas employment are necessary consequences of applying for overseas employment, it would be asking too much to require a licensed agency to stop all

transactions on the day its license expires. It must still be able to continue winding up of operations. A church social action center asks parishioners for job openings so its unemployed could have jobs. It sends letters to businessmen on behalf of unemployed parishioners, asking them to hire them. Recruitment and Placement - these are referrals. Referral - the act of passing along or forwarding of an applicant for employment for initial interviews (People v. Goce, Aug. 29, 1995) You do not have to perform all acts: Any single act is enough. In connection with this, what is illegal recruitment? Under the Labor Code, it will have 2 elements: 1) Art. 34; 2) engaging in any act of recruitment and placement or a prohibited act under without a license or authority

However, under RA 8042, it includes the following acts committed by a nonlicensee, non-holder, or even a licensee or holder of authority: 1. Charging or accepting (directly or indirectly) amounts greater than that specified in the schedule of allowable fees; or to make worker pay more than that received by him as loan or advance; 2. Furnish or publish any false notice or information or document in relation to recruitment or employment; 3. Give any false notice, testimony or information, or commit misrepresentation to obtain a license or authority (note that paragraphs 2 & 3 refer to different types of false notice or information. Par. 2 refers to acts done while one is engaging in recruitment and placement. For example, you say you have a job waiting in Saudi Arabia when you dont. Par. 3 refers to acts done while one is applying for a license or authority. For example, you state you employ a dummy to stand in as the operator of the agency, when it is actually you, an operator of a travel agency, who is the owner and operator.) 4. Induce or attempt to induce a worker already employed to quit his employment to offer him another (unless to liberate him from oppressive terms and condition) 5. Influence or attempt to influence any person or entity not to employ a worker who has not applied for employment thru his agency; 6. Engage in recruitment and placement of workers in jobs harmful to public health or morality or to dignity of RP; 7. 8. Obstruct or attempt to obstruct inspection by DOLE; Fail to submit reports as required;

9. Substitute or alter, to prejudice of worker; employment contracts approved and verified by DOLE from signing to expiration without approval of DOLE (Note that paragraph 9 adds the phrase to the prejudice of the worker. In the Labor Code, such phrase is absent, though the SC has held it is implied in the purpose of the provision - to ensure the worker is protected and receives the minimum benefits under the law.); 10. For officer or agent of agency to become member of Board of any corporation engaged in travel agency or to be engaged directly or indirectly in management of a travel agency; 11. Withhold or deny travel documents before departure for monetary or financial considerations other than that authorized; 12. Failure to actually deploy without valid reason (What will be a valid reason for nondeployment? War in the host country, or cancellation of all visas to such country. This failure gives rise to another obligation - reimburse all expenses, otherwise, par. 13 will apply.); 13. Failure to reimburse expenses of worker where deployment does not take place without worker's fault. (Sec. 6, RA 8042) IN SHORT, what Art. 34 of the Labor Code provides, plus Nos. 12 & 13 above. - Does this supersede Arts. 34 and 38 of the Labor Code? Note that Sec. 6 of RA 8042 refers to OFWs. Thus it starts "for purposes of this Act." The law refers to overseas employment. The definition of illegal recruitment limits it to recruitment for employment ABROAD. The Labor Code (Art. 13) refers to recruitment for employment LOCALLY OR ABROAD. Therefore, for overseas employment, RA 8042 will be used. For local employment, Art. 38 is still valid. Meaning, a recruiter, even if with license or authority, may be found guilty of illegal recruitment IF he commits the prohibited acts enumerated, in relation to OVERSEAS EMPLOYMENT. This has been noted by the Supreme Court in the recent case of People vs. Diaz - that the definition of illegal recruitment has been amended by the new law. If he does it for local employment, that's a violation of the Code, but not illegal recruitment. What evidence may prove illegal recruitment? Receipts, vouchers. What if you don't have these? Testimony of the victims. As long as they can show the accused performed any single act of recruitment and placement - that is sufficient evidence. What are the other types of illegal recruitment?

If they ask, A,B & C recruited X for a job in Japan without a license, what crime was committed? Say, it is illegal recruitment by a syndicate. That means carried out by 3 or more conspiring or confederating with one another. It is in large scale if committed versus 3 or more individually or as a group. What if you are a mere employee of an agency? Also liable, whether as principal accomplice or accessory. Who can recruit therefore? Only - private (fee-charging) employment agency - license (under RA 8042 it is only an employment agency) private recruitment entity - authority public employment office manning agency (POEA Rules) service contractor (RA 8042 rules) has services abroad and hires for such services.

What is overseas employment? Employment outside Philippines.

What if you are on a Phil. registered vessel going to Australia? Still overseas employment. Look at the POEA Rules:

Employment outside Phil. including employment on board vessels plying international waters, covered by a valid employment contract. What are the requirements before one can obtain a license? a) b) c) Citizens or 75% (of authorized capital stock ) Filipino corporation. Substantial capitalization. registration fees cash and surety bonds: i. P100,000 cash bond ii. P50,000 surety bond iii. P200,000 in escrow

d)

No direct hiring except for diplomatic corps , international organizations and other employers allowed by DOLE. You must pass through the entities and boards authorized by Sec. of Labor What is the purpose of the bonds?

Capricorn v. CA: The nature of the bond is that it is to answer for liabilities of the agency arising from: violations of the conditions of the grant or use of the license and contract of employment/Labor Code, Rules and Regulations and all liabilities POEA may impose. If a travel agency therefore sues a placement agency for tickets it used in deploying its applicants, it cannot go after the bond if it wins the case. The bond's purposes relate to overseas employment contracts. The contract for sale of airline tickets is not one of the liabilities it is answerable for. The bond is there to ensure recourse to the worker. For what claims is the bonding/surety company liable? If the claims arise before the surety bond took effect, it is not liable. As to claims after, in EASCO v. Sec. of Labor, EASCO was notified after 10 days from cancellation of the bond. The contingency occurred during the life of the bond. Since notice was given (by means of summons from DOLE) before the 10 day notice period expired, the SUPREME COURT said, as the bond provides "Notice to principal is notice to surety." Likewise, the contract of compensated surety is construed liberally in favor of beneficiaries. What if the contract for overseas employment has an automatic renewal clause. After renewal, the injury occurred. The agencies says, our recruitment agreement expired. We are not liable for the contingency occurring after the original contract. (Catan v. NLRC) Supreme Court said its responsibility still existed. Obligations in the recruitment agreement are not coterminous with the term of such agreement such that if they end it the regular contract (agency & principal) their responsibilities subsist until the end of the employment contract. Otherwise, the purpose of the law will be rendered nugatory. (Further, since no notice of termination was given to the worker, under Act 1921, NCC, revocation of agency for purposes of contracting with specified persons shall not prejudice them if no notice was given them.) So liable solidarily are the agency and the principal. Judgment against the recruiter should initially be enforced against the bonds (Del Rosario v. NLRC, 187 SCRA 777, 1990) Further, Sec. 10 of RA 8042 says that if the agency is a juridical being, its corporation officers and directors engaged in recruitment and placement are solidarily liable with agency. These liabilities continue during the duration of the contract of employment and shall not be affected by substitution, amendment or modification of the contract. In connection with this, note the case of Hydro Resources v. NLRC. Hydro (a construction firm ) assigned its liabilities to employees to JADRO, a joint venture if formed. The workers signed their conformity to this. Is Hydro still liable, nevertheless?

YES. Policy Instructions #22 says workers hired by a joint venture are direct employees of the firms making it up. This is designed to protect OCWs - a labor contractor remains the employer despite assignment of contrary. Such assignment is contrary to the protection to labor policy. Can an agency therefore ever be relieved of liability? Yes. 1. Feagle Construction Corporation v. Dorado, 196 SCRA 481, 1991. The worker persuaded the agency to send him abroad even if the agency already refused since his pay and his job were not assured. The Supreme Court said he took a calculated risk by signing the waiver and rendered the agency free from liability. 2. If the agency papers were used to recruit without its consent. (Ilas v. NLRC, Feb. 7, 1991) CONTRACTUAL STIPULATIONS The Labor Code makes it a prohibited act to alter or reduce employment contracts before they terminate without DOLE approval. RA 8042 qualifies this further by making it illegal if it is to the prejudice of the worker. This is only being consistent with the case of Seagull Maritime v. Balatongan. The Supreme Court there said that a supplemental agreement for insurance against accidental death permanent disability is enforceable even if there is no POEA approval. The purpose of requiring POEA approval is to ensure they conform to minimum terms and conditions of employment prescribed by POEA. The law does not prohibit alterations increasing benefits voluntarily. Reason for law: to ensure employee is not placed at a disadvantage and terms of employment are within minimum standards. What about if increases in benefits are brought about not entirely by voluntary act on the part of the employer/shipping company? As for example, by International Transport Federation pressure (threat of interdiction) For example, the seamen cable the shipowners - A 50% increase is the only solution to the ITF problem (threat of interdiction when they reach an ITF-controlled port.) That is valid. There was no force or violence used. To say they cannot petition for higher wages runs counter to principles of labor law. It is natural for seamen to employ some means of pressing their demands. There was no strike or threat. (Even if there were a threat, as held in the case of Wallem Shipping Co., it is natural to employ one to press their demands.) (Vir-jen vs. NLRC, 1983) In First Asian Transport & Shipping Agency v. Ople - The ITF boarded the vessel. The crew stopped working when ITF demanded a wage adjustment. When ITF boarded the vessel, it was voluntary - not due to the seamen's request. ITF acted on its own. No threat or coercion came from the crew.

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Suzara v. Benipayo - ITF boarded vessel. The crew expressed conformity by carrying placards but still did their chores. No threat/violence/coercion was employed. It was in the exercise of free speech. No violent means from ITF - effective pressure was simply used: the threat of interdiction. What is an example of an illegal alteration?

Chavez v. Bonto-Perez (1995) - A side agreement authorizes the employee to deduct the $250 commission of the OCW's manager. This is void as against public policy. Could it possibly have been legal? YES. If there was POEA approval. But POEA would not approve it if it didn't meet Standard Employment Contract standards. Which brings us to the next point. The POEA ensures compliance with minimum standards by means of a Standard Employment Contract (SEC). The overseas employment contract must conform with this. In 1988, DOLE & SSS entered into a MOA requiring SSS coverage for all Filipino seafarers recruited by local manning agencies. The Supreme Court upheld this as valid. It noted that manning agencies, in a series of consultations, agreed to this and it merely gave effect to the constitutional mandate to afford protection to labor local or overseas. (Ben Sta. Rita v. CA, August 21, 1995, GR 119891) In case of Disability/Death Benefits - which law applies? That in the employment contract. If the contract states compensation should be under RP law or the law of the country where the vessel is, which ever is greater, then that must be observed. If it is silent, the amount fixed in contract applies (Norse Management Co. v. NSE, Bagong Fil. Overseas Corp. v. NLRC) - There are cases of contracts providing for compensation in case of death. What kind of death is compensable? The Standard employment contract drafted by POEA provides for such benefits but adds: "No compensation shall be payable in respect of any injury, incapacity, disability or death resulting from a (deliberate or) willful act on his own life by the seaman(,) provided, however, that the employer can prove that such injury, incapacity, disability or death is directly attributable to the seaman." So this seaman, while the ship he is working in is en route to Hongkong, gets off in Thailand, wanders around Bangkok for four days and then, attacks a policeman. The policeman shoots and kills him. Even before this, he is said to have caused trouble on the ship and was even threatened by the other crew members. The shipping company says that it is not liable for a willful act of the employee. Further, Article 172 of the Labor Code provides for a limitation on the liability of the State Insurance Fund when the "disability or death was occasioned by the employee's intoxication, willful intention to injure or kill himself or another, notorious negligence . . ."

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The SC said he was no longer acting sanely when he attacked the Thai policeman. The report of the Philippine Embassy in Thailand dated October 9, 1990 depicting the deceased's strange behavior shortly before he was shot dead, after having wandered around Bangkok for four days, clearly shows that the man was not in full control of his own self. Since Pineda attacked the Thai policeman when he was no longer in complete control of his mental faculties, the aforequoted provision of the Standard Format Contract of Employment exempting the employer from liability should not apply in the instant case. Firstly, the fact that the deceased suffered from mental disorder at the time of his repatriation means that he must have been deprived of the full use of his reason, and that thereby, his will must have been impaired, at the very least. Thus, his attack on the policeman can in no wise characterized as a deliberate, willful or voluntary act on his part. Secondly, and apart from that, we also agree that in light of the deceased's mental condition, petitioners "should have observed some precautionary measures and should not have allowed said seaman to travel home alone", and their failure to do so rendered them liable for the death of Pineda. Indeed, "the obligations and liabilities of the (herein petitioners) do not end upon the expiration of the contracted period as (petitioner are) duty bound to repatriate the seaman to the point of hire to effectively terminate the contract of employment The instant case should be distinguished from the case of Mabuhay, where the deceased, Romulo Sentina, had been in a state of intoxication, then ran amuck and inflicted injury upon another person, so that the latter in his own defense fought back and in the process killed Sentina. Previous to said incident, there was no proof of mental disorder on the part of Sentina. The cause of Sentina's death is categorized as a deliberate and willful act on his own life directly attributable to him. But seaman Pineda was not similarly situated. (INTERORIENT MARITIME ENTERPRISES, INC. vs. NLRC, Sept.15, 1996) The contracts are also subject to some extraneous events. In Bautista v. NSB, the manning contracts said they were subject to an agreement between the Norwegian Shipping Federation & Norwegian Seamen's Union which stated that if there is lack of employment opportunities in Norway, then non-Norwegian crewmen could not be hired or the ship given dispensation to hire them. So, they were accordingly bumped off and sent home when they went to Norway. Who are the persons recruited for overseas employment? We generally refer to them as Overseas Contract Workers. RA 8042 refers to them as Overseas Filipino Workers or Filipino Migrant Workers: A person who is to be engaged, is engaged or has been engaged in a remunerable activity in a state of which he is not a legal resident. "Remunerable activity" means he/she has been promised or assured employment and, acting thereon, sustains injury. (The IRR refer also to Documented and Undocumented Migrant Workers. You are documented if : (1) you have a valid passport, visa/permit and contracts of employment processed by POEA, if required ; and (2) registered with the Migrant Workers and Other Overseas Filipino Resource Center of the Embassy).

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Name hires. These are OFWs who manage to secure work on their own without passing thru any agency. They must still pass through POEA, which will process their papers. The contract must still be POEA approved, otherwise, that would be direct hiring. Dispute Settlement. The principles for local cases apply. Who has jurisdiction? Now, the Labor Arbiter has exclusive and original jurisdiction over: 1) claims arising out of an employer/employee relationship or by virtue of any law of contract involving Filipino workers for overseas employment, including damages (sec. 10, RA 8042) - What about for violation of conditions of the license? POEA has jurisdiction - POEA has exclusive and original jurisdiction over: a) violation of rules & regulations on licensing/ registration of recruitment and placement administrative cases b) discrimination cases & other administrative cases involving employers, principals, contracting partners & FILIPINO MIGRANT WORKERS. (sec. 28, IRR of RA 8042) Proof required: For example. the complaint alleges non-payment of proper wages. No other evidence was presented. This was not rebutted. Is this sufficient proof? Yes, considering difficulty faced by OFWs in getting evidence, especially where the employer is overseas and is a military installation with policies of secrecy as to documents. Workers would have of weak access to evidence. Their claims should be received with sympathy (Cuadra v NLRC) In the case of the seaman who wandered around Bangkok we discussed earlier, the shipping company said there was no direct evidence he was crazy. In short, it suggested that he should have obtained proof of his mental capability by subjecting himself to psychiatric examination in Bangkok. The SC said that he could not reasonably be expected to immediately resort to and avail of psychiatric examination, assuming that he was still capable of submitting himself to such examination at that time, not to mention the fact that when he disembarked in Dubai, he was already discharged and without employment his contract having already run its full term and he had already been put on a plane bound for the Philippines. This explains the lack or absence of direct evidence showing his mental state. (INTERORIENT MARITIME ENTERPRISES, INC. vs. NATIONAL LABOR RELATIONS COMMISSION, G.R. No. 115497. September 15, 1996.) Note: Repatriation expenses under 8042 are now for the account of the agency/principal. If before, the agency could require the OFW to put up a repatriation bond to answer for his/her repatriation in case of termination for cause, now the bond has been abolished. - Other salient features: Government & OFWs 1) Country - Team Approach: All Philippine government officers/personnel abroad shall act as a country team, under the leadership of the Ambassador. The Ambassador can recommend to DFA their recall for acts inimical to national welfare, such as the failure to provide necessary services. 2) Phase-out of POEA's regulatory activities with (5) five years from June, 1995 effectivity of RA 8042.

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3) POEA & OWWA Boards shall have three (3) three members each from women, seabased & land-based sectors. 4) OFWs shall have two (2) representatives in Congress (1 representing women migrant workers) 5) Travel Advisory/Information Dissemination - Embassies/consulates, thru the POEA, must issue travel advisories & information dissemination on: a) labor & employment conditions b) migration realities & other facts c) adherence of countries international standards on human & labor rights PURPOSE: prepare workers to make intelligent decisions on overseas employment. 6) Re-placement & Monitoring Center - For returning OFWs to reintegrate, for their re-employment, and to tap their skills for manpower 7) Migrant & OFW Resource Center This shall be provided by embassy. It shall provide the following services: - counseling - legal services - welfare assistance - information - registration of undocumented workers 8) Migrant Workers loan guarantee fund 9) Shared Government information system 10) Legal assistance 11) Migrant Workers' Day EMPLOYMENT OF ALIENS - Aliens cannot work here without a permit from DOLE. True or False? FALSE. It depends if you are a resident alien or a non-resident alien. Note the General Milling Corporation v Torres case. Timothy Earl Cone's permit to work as coach was canceled since he failed to show that there was no person in the Philippines able & willing to perform such work and it would redound to the national interest. He argued that that is not in the law. The SUPREME COURT says, it is. Even if the law does not specifically/explicitly require it, it is a valid limitation. One of the objectives of the state is to regulate the employment of aliens. Cole says what about Norman Black? He was not subject to the same requirement. SUPREME COURT says, the law applies only to non-resident aliens. Black was a long time resident. So, if an alien wants to work here, he needs: 1) A DOLE permit, and 2) Determination that a) there is no person in the Phil competent, able & willing to perform the services desired; b) if it is in a preferred area of investment, there must be a recommendation by the appropriate government agency. - Other conditions (as specified in the Rules): a) Designation of at least two (2) understudies (the most ranking regular employees in the section or department) b) Assessment by Bureau Director, it will redound to national interest. c) Admissibility as certified by Bureau of Immigration and Deportation. - If an alien works here with a permit, can he be pirated by another employer?

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YES, provided there is prior DOLE approval to the aliens hiring by the new employer. Note: under the rules, the following do not need permits: a) Diplomats, foreign officials b) National representatives c) Missionaries here for only missionary work d) Aliens exempt by special law. Note that employment of aliens is prohibited in a nationalized industry (in Anti-Dummy Law CA 108) - retail trade - mass media - advertising Exception: EPZA enterprises, with permission of the EPZ Authority II HUMAN RESOURCES DEVELOPMENT - For your information, the National Manpower and Youth Council (NMYC) is now passe. Under RA 7796, it has been supplanted by the TESDA, the Technical Education & Skills Development of 1995. NMYC has been absorbed by TESDA. What else is under TESDA? 1) Bureau of Technical & Vocational Education 2) Personnel Functions relating to training / vocational education in DECS 3) Apprenticeship Function of Bureau of Local Employment. - If the Book on Human Resource Development aimed to develop human power capabilities TESDA focuses on that plus technical and educational skills development. The emphasis is now on technical education. Not only on labor skills. Thus, among the goals of the TESDA are: (1) technical education, (2) encouragement of critical & creative thinking by disseminating scientific & technical knowledge base of manpower dev't programs; (3)inculcate desirable values (i.e. work ethic, self-discipline, self-reliance & nationalism). - Among TESDAs functions are: 1) Formulation of a comprehensive development plan for middle-level manpower 2) Administer the apprenticeship program. 3) Establishment of TESDA Committees 4) Establishment & Adv of National Trade Skills Standards 5) Administration of Training Programs Apprenticeship & Learnership Apprentices - Some rules: They must be the following : An apprenticeable trade and occupation (it must be in a highly technical industry) Related theoretical instruction which supplements the on-the-job training An apprenticeship agreement approved by the TESDA (formerly DOLE) The term of the apprenticeship must not exceed 6 months. If the worker is hired after such term, it must be as a regular employee. He cannot be hired as a probationary employee since the apprenticeship is deemed the probationary period.

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Learners - Some rules: Learners may be employed only in non-apprenticeable occupations There is also related theoretical instruction supplementing the on-the-job training The learnership period shall not exceed 3 months. If the learner is terminated after the second month due to no fault of his own, he shall be hired as regular after the third month. Note that in both cases, the employees may be paid below the minimum wage (not lower than 70%). But only in apprenticeship is there a 10% deduction available for training expenses. This is different from Trainees under the Dual Training System Act of 1994. Under such an arrangement, trainees are not employees. They are simply deemed trainees of both the institution which provides the technical training as well as the company where they may be subjected to on-the-job training. The law does not provide for any set term for their traineeship. It is all up to TESDA to set these standards. Likewise, after the traineeship, there is no obligation to hire them. If hired, they may be hired as probationary employees, not having originally been employees anyway.

Handicapped Difference Between Handicapped and Disabled:

Handicapped

Disabled (Differently Abled)

1. Earning capacity is impaired by age, or 1. Refers to all suffering from restriction of

physical or mental deficiency or injury different abilities as a result of mental, physical or sensory impairment to perform an activity in the manner or within range considered normal for a human being. 2. Covers all activities or endeavors. 3. Basis is range of activity which is normal for a human being. of

2. Covers only workers

3. Basis: loss/impairment of earning capacity

4. Loss due to injury or physical or mental 4. Restriction due to impairment defect or AGE mental/physical/ sensory defect 5. If hired, entitled to 75% of minimum wage

5. If qualified, entitled to all terms and conditions as qualified able-bodied person

6. Subject to definite periods of employment 6. Handicapped worker gets all terms &
conditions as qualified able-bodied person 7. Employable only when necessary to prevent 7. No restrictions on employment. Must get curtailment of employment opportunity equal opportunity & no unfair competition

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III EMPLOYER-EMPLOYEE RELATIONSHIP 1. Who is the employer? The term includes any person acting in the interest of an employer, directly or indirectly. It shall not include any labor organization or its officers or agents except when acting as employer. Thus, in A.C. Ransom v. NLRC [1988], the officers acting in the interest of the corp - the general manager and president was held also to be liable for money claims as he was acting in the employer's interest. Likewise, if a corporation is placed under receivership, the employees of the corporation can go after the receiver for satisfaction of their claims since he is an employer - "acting in their interest". 2. Who is an employee? The basic test is the right-to-control test. Meaning who has the right to control the means and methods by which work is to be performed. As distinct from an independent contractor. An employee is defined as "Any person in the employ of an employer. It includes any individual whose work has ceased as a result of a labor or industrial dispute". What is the four-fold test? It is a means of determining who is an employee on the basis of 4 criteria: 1. 2. 3. 4. selection and engagement (hiring) payment of wages (wages) dismissal (firing) right to control - this is the most important

For example, you have a copra plant. Workers carry copra from trucks, store it in the warehouse & deliver it to the bin. They are paid on a pakiao basis, directly by the foreman. Let's try the 4 tests. Hiring? They were selected thru the foreman. The number of workers were limited by the company wages - they were paid pakiao thru the foreman firing - this was not explicitly shown right to control - copra is the basic raw material. The company must have direct control over its handling before being fed into the factory. The company owns the conveyor belt. It determines the load and time of operation. The foreman was told by the company where to store the copra and when to bring it out. There is thus an employer - employee relationship (Philippine Refining Corp. v CA) What about a company lawyer? Hiring - He was chosen by Board of Directors Wages - He was paid monthly compensation (retainer's fee) Dismissal - He had a fixed term of three (3) years for appointment but company reserved power to dismiss for cause. Control - His duties as legal were defined by the company. So even professionals may be employees.(Hydro Resources v Pagalilauan, 1989)

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 The most important is right to control. Even if you don't show the first three (3),
you can establish an employer-employee relation if you can show the right to control. Right to control - This means that the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. It is not the actual exercise of the right, but the mere existence of the right which is enough. As was held in (Dy Keh Beng v ILMUP): the control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. Considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture of basket known as kaing," it is natural to expect that those working under Dy would have to observe, among others, Dy's requirements of size and quality of the kaing. Some control would necessarily be exercised by Dy's specifications. Parenthetically, since the work on the baskets is done at Dy's establishments, it can be inferred that the proprietor Dy could easily exercise control on the men he employed. - Thus where an employee is made to open and close on a daily basis the water supply system of the different phases of the subdivision in accordance with its water rationing scheme, worked for only a maximum period of three hours a day, and made use of his free time by offering plumbing services to the residents of the subdivision the SC said that since the company (subdivision) had the power to exercise supervision over him if it wanted to, even if it never actually did and his work could be performed by another coworker, the elements of an employer-employee relationship existed. (MAM Realty Development Corp. vs NLRC, June 2, 1995) Other examples: Tailoring shops. You must follow the customer's specifications to the letter. (Rosario Brothers v Ople) Musicians follow instructions of Musical Directors of movie studio (LVN Pictures vs LVN Musicians Guild) Drivers of Jeepney on the Boundary System - the owner/operator regularly checks if they follow the route & rules of Public Service Commission. He likewise checks the oil and tire pressure of jeeps when they pass his gas station. (Dinglasan v NLU) - Question: Suppose you and I enter into a contract. The contract is for the construction of a waiting shed. I give you the specifications and the plan for the shed which you must follow. Are you my employee? No I am only controlling the result whether or not you stuck to the plan. It would be different if I watched you every step of the way and commented - "O mali yan, mali yan." That's control. If you draw a graph of it:

- QUESTION: You are a salesman for a cigarette company. One day, the company tells you, why don't we sign this agreement - You sell our cigarettes at a discount. The excess of

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the profit goes to you. We supply the trucks. You follow a prescribed route. You can hire your own workers and you are responsible for their wages. You post a surety bond. Follow company rules when you sell. Are you an employee? NO. You are an independent contractor. You use your own capital. You are left to your discretion in determining how to sell. The route and the rules are standard in all dealership agreements. (La Suerte Cigar and Cigarette Factory case). By agreeing to the contract, you are bound by it. (But in SSS v CA, issued a few years later, where there was not only a truck provided by the company, but the company dictated the price, the brand, who to sell to; it likewise issued circulars, memos and required regular reports; it even paid an allowance. Quality Tobacco was held to be the employer.) Where so-called collection agents got 6% commission, posted a cash bond, had a one (1) year term, had to make monthly payments, they were deemed independent contractors. There was no control over them. They had no office hours, could determine way of collecting, no need to work only for Singer Sewing Machine. Even if required to use forms and submit them once a week - that is not control over the manner and method of performance. The purpose was to prevent commingling of funds - this was control only over the end result. Even if there was a quota for collection, that was a normal requirement (Singer Sewing Machine vs Drilon)

However, mere issuance of memoranda is not automatically an indicator of control. In

Encyclopedia Brittanica Phil., Inc. vs. NLRC (GR 87098, Nov. 4, 1996) the SC held that just because Brittanica issued memoranda to respondent and other division sales managers did not prove that it had actual control over them. They were merely guidelines on company policies which the sales managers follow and impose on their respective agents. It should be noted that in the business of selling encyclopedias, the marketing of the products was done through dealership arrangements. The sales operations were primarily conducted by independent authorized agents who did not receive regular compensation but only commission. These agents hired their own sales representatives, financed their own office expenses and maintained their own staff. There was thus need for Brittanica to issue memoranda so it would be apprised of company policies and procedures. Nevertheless, respondents and other agents were free to conduct and promote their sales operations. The periodic reports to Brittanica were but necessary to update the company of their performance and business income. While Brittanica fixed the prices of the products, the agents still had free rein on their means and methods. They selected their own personnel and only informed Brittanica of the same for purposes of deducting the employees salaries from the commissions. Likewise, respondent was free to engage in other means of livelihood. An employee could not be employed elsewhere and would be required to work full time for the company. (Encyclopedia Brittanica Phil., Inc. vs. NLRC, GR 87098, Nov. 4, 1996) Likewise in Manila Golf and Country Club vs. NLRC, you had a number of golf caddies who were subject to certain regulations of the golf club - They had list themselves to determine who would be next in line for caddying. They had to observe certain rules, such as wearing of proper uniform and conduct during their work. The golfers payment was made to the golf club and not to them directly. But the SC said this does not show control. These were rules issued to ensure that they conducted their work properly. If you wanted to work in the golf club, you had to follow their rules. The fact that they had to list themselves for the order of caddying was simply to ensure order in their work. The club may have collected their salaries but that does not make them employers. They collected hem for later distribution to the caddies. The fact remains that the caddies determined the means and manner by which they would perform their caddying work. They could leave the place of work anytime and

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work elsewhere. They had no fixed schedule for reporting for work. This shows absence of control. - In Tiu vs. NLRC (Feb. 21, 1996), you had dispatchers working for DRough Riders - a Cebu bus company. These dispatchers would help in loading and unloading baggage for the passengers of the bus. DRough Riders claims that they are not its employees. They are just a bunch of bad elements in the locality who scare away passengers and create trouble if the bus company did not let them work as dispatchers. It says they let them do as they please and did not control their work. However, it also admitted that it let them work as dispatchers for the buses and gave them a fixed rate (payment of wages). Likewise, a memorandum to the employee states that he was to be dismissed outright (This was an admission of the power to fire). Likewise, one of them was designated as Chief Dispatcher and signed forms of the company as such.. If a chief dispatcher works with the company, uses and signs official documents as is reflected in Exhibit "D," it follows that his employment as such was in consideration of a chief dispatcher's exercise of his duties to supervise and control subordinate dispatchers (control).

In Subic Bay, there was this association of Aetas, CAPANELA, which organized the
system of employment of Aetas. CAPANELA, through its officers, saw to it that its members reported for work, recorded their attendance, and distributed the workers' salaries paid by the Base at the end of a specific pay period, without gaining any amount from such undertakings. Its president was himself only an employee at the Base. That is not control. (That is simply a manner of policing ones own ranks.) The SC noted that an employee, through the intervention of CAPANELA, was cleared of the charge of larceny of U.S. government property. This only goes to show that CAPANELA had in fact no control over the continued employment of its members working in the U.S. naval base - it could only intervene in behalf of its members facing charges through a recommendatory action and could not exonerate them or have them reinstated on its own. At best CAPANELA was like a labor-only contractor (a special type, though) facilitating the orderly administration of work at the base (scavenging). It recorded attendance of its members and payment of wages was coursed through it. However, control over the means and methods was exercised by the base authorities. CAPANELA was at most, only an administrator of its members at the base. It had no capital or investment. The party liable, therefore, for dismissal of one of its members was the base.(CAPANELA vs. NLRC, February 23, 1995) Related to this therefore, are the concepts of job-contractor and labor - only contractor. - What is Job-contracting? When: a) Contractor carries on an independent business and undertakes contract work on his own account. Under his own responsibility according to his own manner and method, free from control and direction of the principal except as to results; and b) Contractor has substantial capital or investment in form of tools, equipment, machineries, work premises and other materials necessary in the conduct of the business. Take note, however, of Department Order No. 10, s. 1997, issued this May 30, 1997. It defines legitimate contracting or sub-contracting as one where:

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a) The contractor or subcontractor carries on a distinct and independent business

and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof (This is actually just a restatement of the first part of the definition of job-contracting.) b) The contractor or subcontractor has substantial capital or investment (This is the same second element. It further says that substantial capital or investment means that you have adequate resources directly and actually used in performance or completion of the service, such as capital stocks, subscribed capital, tools and equipment, safety devices used in doing the job or even operating costs, administrative costs, training and overhead costs. But it will not include capital and investment not actually and directly used in conduct of the business, or any gratuitous assistance from the principal. This clarifies that the contractors capital or investment must be actually and directly used in the business and must be genuine investment. It cannot be a mere donation from the principal so as to legitimize it.); and c) The agreement between the principal and contractor or subcontractor assures the contractual employee entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social and welfare benefits. (This is new. It does not change the definition of jobcontracting, but it makes it legitimate only if there is such an agreement assuring compliance with labor laws.) Distinguish it from independent- contractorship. It is actually independent- contractorship. Only it relates more to those who carry it on an business. What is labor-only contracting? The person supplying workers to an employer a) does not have substantial capital or investment in the form of tools, equipment, work premises and other materials; and b) the workers recruited and placed are performing activities directly related to the principal business of the employer. Department Order No. 10 redefines it this way: A contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, with the following elements:

a) It does not have substantial capital or investment to actually perform the job,
work or service under its own account and responsibility; and b) The employees it recruits, supplies or places are performing activities directly related to the main business of the principal.

For example: X works in a motorshop. He works as auto painter under the name of VM Automotive Repair Service. He supplies only labor into the company and supervision. All tools, equipment, materials come from the motor shop. He has his own "contract workers". The company controls and directs him. He works 6 days per week; 8 hours per day. The company claims he is an independent contractor with his own employees. This is a clear case of labor - only contracting. He has no tools/capital, equipment of his own and the work done is directly related to the business. (Broadway Motors v NLRC)
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Or take another case, workers load empty bottles to and from trucks of SMC. They work under an OIC who gets orders directly from the company. They are under a contractor called "Guaranteed & Reliable Labor Contractor" which has a small room with a table, cabinet, chair and typewriter in the plant, supplied by the plant. SUPREME COURT said GRLC is a labor only contractor. It has no substantial capital or investments. Its tools and equipment are all supplied by SMC. Fees are paid to GRLC in lump sum. The fees are based on the salaries to be received by each worker. The "contractor" does not receive an amount over this but gets a percentage of the wages. On this score alone, there is an employer-employee relation. The LOC is deemed an agent of the direct employer. - Further, the Supreme Court said, SMC had the right to discipline and recommend their transfers and dismissals thru memos. So, on the control test, there was also an employer-employee relationship. (BLUM v. Zamora) So, a job contractor contracts to provide/do a JOB OR SERVICE. A labor-only contractor contracts to provide manpower or labor. If the contract states therefore, "X will supply 10 janitors" - that is the earmark of labor-only contracting. If the contract says X will supply sanitation services. Then that sounds more like job contracting. - In Philippine Bank of Communications vs. Echiverri, the contract said CESI (an agency) would provide "temporary services of 11 messengers". The SUPREME COURT said that is LOC. The undertaking was not to perform a specific job but to provide a number of messengers. The premises and equipment used was that of PBComm, not CESI. Messengerial work is directly related to the day-to-day operations of the bank. CESI was thus more of a recruitment company than a delivery company. - But then here comes this case of Neri v NLRC. In that case, Building Care Corporation was in charge of housekeeping, security and other special services with various clientele. Neri was a radio/telex operator. BCC had capitalization of P1.5 M. It had no tools, equipment, etc. HELD: It is not necessary that it has tools, equipment, machineries, work premises and other materials as long as it has substantial capital. The conjunction "or" shows alternative requirements. The SUPREME COURT also took judicial notice of the fact that it was a general practice to hire independent contractors to perform special services. While there was a job description for Neri as a radio/telex operator, this sought to control only the results - that her daily incoming and outgoing transfer of funds tally with that of the register. Only BCC had the power to reassign. The SUPREME COURT added, PBComm is different. There the court held the scheme would bar them from permanent status. There, the case was for illegal dismissal here, it was a case for registration. Here, PBComm is an Independent Contractor.

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(Note that D.O. # 10 requires that the assets owned be directly and actually used in the business.) In Magnolia Dairy Products Corp. vs. NLRC (Jan. 29, 1996), there was a contractor, Skillpower, which provided to Magnolia, employees who would be in charge of the defective packages. They would have such duties as removing damaged goods, taking bulgings away from terta packs, and disposing of damaged goods. The SC noted that the workers supplied by the two manpower corporations perform usual, regular and necessary services for petitioner's production of goods. The undertaking of respondents Skillpower and/or Lippercon was to provide respondent Magnolia with a certain number of persons able to carry out the works in the production line. These workers supplied by Skillpower and/or Lippercon in performing their works utilized the premises, tools, equipments and machineries of respondent Magnolia and not those of the former. The work being performed by complainant, such as, to remove "bulgings" (damaged goods) from dilapidated cartoons, (sic) to replace damaged goods and re-paste the cartoon (sic) thereof, to dispose the damaged goods or returned goods from Magnolia's warehouse to avoid bad odors, to clean leftovers of leaking tetra-pak by mopping or washing the contaminated premises, and others, are of course directly related to the day to day operations of respondent Magnolia. Respondent Magnolia failed to negate this evidence that the undertaking assigned to the complainant is not related or necessary to its business operations. (In this case, Skillpower tried to invoke the Neri ruling by showing it had capital of its own. The SC said, you argued it for the first time on appeal - too late!) Whats the meaning, therefore, of the investment necessary to be a job contractor? Philippines Fuji Xerox vs. NLRC (March 5, 1996)

You have a company which manufactures and sells photocopiers. As a promotional scheme, they have a photocopying service in every outlet. They hire copier operators through an agency - Skillpower again. The SC said that that was a labor-only contracting arrangement. The work they performed was directly necessary to the business. While it was not needed for sale and manufactire of photocopiers, still, it was adopted for 7 years to build up company good will. It showed the public the quality of work of the xerox machines. It may not generate income for the company but there are activities which a company may find necessary to engage in because they ultimately redound to its benefit. Operating the company's copiers at its branches advertises the quality of their products and promotes the company's reputation and public image. It also advertises the utility and convenience of having a copier machine. It is noteworthy that while not operated for profit the copying service is not intended either to be "promotional," as, indeed, petitioner charged a fee for the copies made. It is now argued by Fuji Xerox that Skillpower had typewriters and service vehicles for the conduct of its business independently.But the SC said, these have no direct relationship to the job contracted. The fact is that Skillpower, Inc. did not have copying machines of its own. What it did was simply to supply manpower to Fuji Xerox. The phrase "substantial capital and investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business," in the Implementing Rules clearly contemplates tools, equipment, etc., which are directly related to the service it is being contracted to render. One who does not have an independent business for undertaking the job contracted for is just an agent of the employer. Fuji Xerox now points to the Neri case. It says that Skillpower had substantial capitalization: assets exceeding P5 million pesos and at least 20 typewriters, office equipment and service vehicles. It had employees of its own and a pool of 25 clerks

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assigned to clients on a temporary basis. But the SC said, that is different. In the Neri case, that was not all that was looked into. In that case, Building Care Corp. was also performing specific special and technical services (telex operator, janitorial services). BCC exercised control over the employees. In this case, xerox operations are not technical.

Other similar cases: Ecal v NLRC (1991)

The alleged contractor was only a poor laborer when he began the "contracting" business. He could not even treat his daughter for malnutrition. He had no capital and still continued working at the Kiln. This shows he is a mere LOC. Tabas v. CMC (1989)

The nature of one's business is not determined by self-serving claims one attaches to the contract but by the tests under law and cases. Even if Livi Manpower had a separate line of business, this does not show that the activities (merchandising) were not directly related to the manufacturing business. Promotions is an integral part of the business. If it were instead, a promotions firm, then maybe it could hold itself out as a jobcontractor. It was, in essence, a LOC. Under the Labor Code, two elements must exist for a finding of labor-only contracting: (a) the person supplying workers to an employer does not have sufficient tools, equipment, machineries, work premises, among others, and (b) the workers recruited and placed by such persons are performing activities directly related to the principal business of the employer (Neri vs. NLRC, 224 SCRA 717). These 2 elements do not exist in this case. DE LIMA is a going concern with substantial capitalization of P1,600,000, P400,000 of which is actually subscribed. Hence, it cannot be considered as engaged in labor-only contracting, being a highly capitalized venture. Moreover, while janitorial services may be considered directly related to the principal business of FILSYN, which is the manufacture of polyester fiber, they are not necessary in its operation but merely incidental, as opposed to being integral, without which production and company sales will not suffer. We take notice of hiring janitorial services on an independent contractor basis. (FILSYN vs. NLRC, GR 113347, June 14, 1996) The SC has even held that if you allege that an entity is a labor-only contractor, you must prove it. Prove the absence of substantial capital or investment. For example, if he agency has a performance bond in the amount of P100,000.00 to answer for the faithful compliance and performance of its obligation embodied in the contract, this militated against being a labor-only contractor. (RODRIGO BORDEOS vs. NLRC, G.R. Nos. 115314-23. September 26, 1996.) Likewise, the following circumstances were held to show labor-only contracting: 1. the services of the workers were engaged as carpenter and plumber; 2. During the time they were made to appear as employees of the agency, the following circumstances existed: a) they reported directly to PSBA (the employer serviced) b) they received wages directly from PSBA c) They were made to report for work by PSBA on certain days and hours d) PSBA remitted to the agency not a lump sum for services but merely a fixed fee or commission;

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e) the employees were liable to PSBA for losses or damage, PSBA deducting such amounts from their wages; f) PSBA imposed on them disciplinary actions. 3. Further, they were working with PSBA as early as 2 years before coming under the agency. 4. Even if they were allegedly hired under one contractor after another, they were regularly assigned to do carpentry and plumbing work in PSBA under its supervision and control. The fact that none of the contractors had substantial capital or investment and the activities undertaken were necessary and desirable in the business shows that they were merely engaged in labor-only contracting. (PSBA-Manila vs. NLRC, GR 114143, August 28, 1996)

D.O. # 10, however, states that the following types of jobs may be subject of a valid subcontracting agreement:

a) works or services occasionally or temporarily needed to meet abnormal b) c) d)

increase in demand (as long as normal workforce cannot meet the demand); works or services occasionally or temporarily needed for undertakings requiring expert or highly technical personnel to improve management or operations; services temporarily needed for introduction or promotion of new products; works or services not directly related or integrated to main business or operation of principal (including causal work, janitorial, security, landscaping, and messengerial services, and work not related to manufacturing processes in manufacturing establishments); public display of products not involving the act of selling or issuing receipts; specialized works involving particular, unusual or peculiar skills or equipment beyond competence of normal workforce; substitute services for absent regular employees.

e) f) g)

Under D.O. 10, the effect of engaging in prohibited subcontracting is that the principal shall be solidarily liable for the obligations due the workers. These are rules, however, and should not be included in the bar. But the effect of these rules is to define what types of jobs may be subject to job-contracting arrangements. It is as if the DOLE said that those services may not be deemed directly related to the principal business, so as not to place them within the type of service performed by a labor-only contractor. Other tests: EXISTING ECONOMIC CONDITIONS inclusion in payroll shows employment relationship registration with SSS shows employment relationship payment of SSS contributions shows employment relationship the fact that the alleged employer was a well-known socialite and invested in the business shows she is not an employee. An employee won't do that, but an agent would (Sevilla vs. CA). you sell houses for a realty company as a sideline. You receive commission for every house you sell. You have your own methods of selling and your only obligation to the realty firm is to give them the proceeds at the end of the day, from which you receive a commission. You are not an employee -

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there is no control. You are a sales agent. (Sandigan Savings and Loan Bank vs. NLRC, February 26, 1996) the fact that an alleged manager posts a bond and pays rentals to the company for right to manage a massage parlors - that is a lease, not employment as a manager (Paradise Sauna vs. NLRC).

Other relations: You use a launch. You pick your crew for fishing. You split 1/3-1/3-1/3 (1/3 going to the owner of the launches). You are free to determine whether or not to go on a fishing trip on each particular day. That is a joint venture. (Pajarillo v SSS) (But it you are on vessel owned by the company and monitored by radio, where you inform the office of your position, the catch and the weather, and the fishermen on the vessels were, in fact, dismissed by refusing to let them board the vessels - there is control. That is an employment relationship.) - What about if you are a worker at a sugar plantation. Is there an employer-employee relation between a sugar central and plantation workers because the law imposes a social amelioration lien on milled sugar to be distributed by the central to central and plantation workers? NO. As a matter of fact, a sugar central has no privity of any kind with plantation laborers. Sugar/farm workers are the direct responsibility of their respective planters and the central did not deal with the planters workers but only with the planter. RA 809, creating an amelioration bonus for sugar workers, did not create an employer-employee relationship between them. As a matter of fact, it affirmed the old practice of the central dealing only with the planter by directly issuing to it the planters share of the unrefined sugar per their milling contracts. (Victorias Milling Co., Inc. vs. NLRC, GR 116236, Oct. 2, 1996)

Other employer-employee relations created by law or regulation: 1. Any woman permitted or suffered to work, without or with compensation, in any night club, bar or similar establishment, under the effective control or supervision of the employer for a substantial period of time shall be deemed an employee of such establishment for labor and social legislation. (Art. 138, Labor Code) Homeworkers: Their employer is deemed to be the person, natural or artificial, who, for his account or benefit, or on behalf of any person residing outside the country, directly or indirectly or thru any employee, agent, contractor, sub-contractor or any other person. a) delivers, or causes to be delivered, goods, articles or materials to be processed or fabricated in or about a home and thereafter to be returned or disposed of or distributed in accordance with his directions, or sells the goods, articles or materials to be processed or fabricated in or about a home and then rebuys them after such processing or fabrication, himself or thru some other person. (Art. 155, Labor Code)

2.

b)

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3.

Employee includes one whose work has ceased as a result of a current labor dispute or due to ULP who has not obtained any other substantially equivalent and regular employment. (Art 212-f, Labor Code) - You work as a janitor. You are dismissed because you are ugly. You feel so bad you go to the province and plant kamote. Is the dismissal valid? NO. Are you still an employee? NO. There is no current labor dispute. You did not file a case. You must have a present and unabandoned right to employment. - Suppose you filed a case. Now, there is a dispute. Then you work as a nursing aide (full time), so you can wear a mask all the time. Are you an employee? NO. You have found substantially equivalent and regular employment. Note that this falls under the rules on labor relations. This therefore becomes relevant when we talk about who can vote in a certification election. Department Order No. 9, s. 1997 states that any dismissed employee with a pending case at the date of election may vote.

Special cases: a) Students and schools - if the students work for the school in exchange for the privilege to study free, they are not employees PROVIDED they are given a real opportunity (including reasonable and necessary facilities) to finish their chosen courses. (IRR, Bk. 3, Rule 10, Sec. 14) Thus, for damages, if the working scholar, while working for the school, injures someone (e.g. vehicular accident), the school can be held liable as employer. But if he acted outside the scope of his duties (example, a janitor drives the school vehicle and runs over a pedestrian), the school is not liable, since he was not acting within the scope of his duties as employee (Filamer Christian University v. IAC, 1992). b. Resident physicians in training - They are employees of the hospital where being trained UNLESS: 1. 2. The is a training agreement between them; and The training program is accredited appropriate government agency. or approved by the

Example: You work as librarian in Ateneo Law school. They pay you minimum wage. You are also able to obtain a scholarship (tuition). Are you an employee? YES. The free education was not in exchange for your services. You were paid minimum wage. Another example: You work as librarian. In exchange, you get to study 6 units free. You are an employee.

IV MANAGERIAL PREROGATIVES The power of an employer to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, time and work assignments, work

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methods, tools, processes, supervision, work relations, lay-off, discipline, dismissal and recall of workers. The Supreme Court explains the rationale for it this way : An owner of a business enterprise is given considerable leeway in managing his business because it is deemed important to society as a whole that he should succeed. Our law, therefore, recognizes certain rights as inherent in the management of business enterprises. These rights are collectively called management prerogatives or acts by which one directing a business is able to control the variables thereof so as to enhance the chances of making a profit. Together, they may be taken as the freedom to administer the affairs of a business enterprise such that the costs of running it would be below the expected earnings or receipts. In short, the elbow room in the quest for profits. (HOMEOWNERS SAVINGS AND LOAN ASSOCIATION, INC., G.R. No. 97067. September 26, 1996.) - Examples of what are validly within the exercise of managerial prerogatives: - adopt economic policies or make adjustments in the operations to insure profit (e.g. merger or consolidation with another company) The company may thus decide to close down even if it is not losing money. (Catatista vs. NLRC) - scheduling of work BUT not where it is done to make unionization more difficult (as when employees are suddenly transferred from the Tarlac to the Manila factory at the height of activities for the formation of the union, during the schoolyear [the workers being working students] and there was no need for the transfer) - giving of employee benefits BUT NOT where it discriminates without sufficient basis - determining wage rates BUT NOT where it goes below minimum standards (in fact, entering into a CBA which exempts the employer from paying minimum wage is contrary to law and public policy) - promoting someone/transferring someone BUT NOT where the transfer will reduce his pay or rank or is equivalent to a promotion - There are thus limits on this. It is not absolute: 1. 2. 3. 4. In good faith For advancement of the employer's interests Does not defeat or circumvent employee rights under law or agreement Not exercised in a harsh, oppressive, vindictive or wanton manner (out of malice)

BENEFITS: Ex: Profit-sharing payments are given to non-union members. The Union says, :"Why is it not given to union members covered by the CBA?" The company says, Let's follow the CBA (which does not provide for such

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payments to employees it covers), but we can include it if negotiations end before Christmas. Supreme Court said: This was a valid act since those given profit-sharing were not covered by the CBA and not receiving its benefits. There is no discrimination as the 2 groups are not similarly situated. There was also Good Faith - they offered to include it in the CBA if negotiations ended before Christmas. - Neither is it wrong if those of a higher rank get higher benefits. (Wise & Co. v Wise & Co. Employees Union) - Another example: The company adopts a Complimentary Distribution Scheme/System (CDS) where beer is offered directly to wholesalers. The union of salesmen says this will deprive them of commissions. Supreme Court says - it is a valid exercise of managerial prerogative. There is : an offer to compensate the salesmen with back adjustment commission to make up for the loss of commission. The CDS improves efficiency and maximizes profit. It may have disturbed the setup now, but the change was too insignificant to show interference in union affairs. (San Miguel Brewery vs. DLO) TRANSFER Can the company transfer employees? Yes, provided it is: (1) not unreasonable or inconvenient (no grave abuse of discretion); (2) not prejudicial to the employee; or (3) does not involve a demotion or diminution of salaries, benefits or other privileges. Limitations: The transfer cannot contravene law, contract, fair play & justice. It cannot be in bad faith, as when it was used to rid the company of an employee (Pocketbell vs. NLRC, Jan. 26, 1995) - Shell Oil Workers v Shell Corp: Security guards of company fired and agency contracted. Valid? NO. It is against the CBA. The CBA provisions on coverage states that security guards are within the CBAs coverage. So you cannot abolish their posts. - Chu v NLRC: The Head of the Warehousing, Sugar, Shipping & Marine Department transferred to sugar sales. He says this was constructive dismissal. Supreme Court says NO. The employer has the right to move employees around based on their qualifications, aptitudes & competence. Security of tenure does not give one a vested right to a position. Just because you sign a contract to a particular position does not mean the company waives the right to transfer you. The waiver must be so clear as to leave no doubt. The rotation was in good faith. There was no demotion/diminution of benefits. PT & T v Laplana:

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The Cashier of PT & T in Baguio was transferred to Laoag (due to increase sales in Laoag). Her inconvenience is not sufficient to invalidate it. Philjacc v NLRC: Assistant Secretary/Exports Coordinator was promoted as Executive Secretary of EVP & General Manager. Then, he was transferred as Production Secretary for no reason. This was upheld as valid. No demotion/diminution of benefits. Just a lateral transfer. Abbott Laboratories v NLRC: Professional medical representative (salesman) is transferred to Cagayan from Manila. His acceptance of the position as medical representative is tacit acceptance of his transfer since sales representatives are expected to transfer. Example: You are VP for the Orient Region (for an International. Airline) in Manila. You are transferred to the post of Director of International Sales with an increase in pay. This means you have to transfer to Canada. You have a wife & children. All Filipino. Can you refuse? Yes. That is a mere promotion (advancement to another position with more duties, responsibilities and usually, increase in salary and benefits). Transfer is lateral. A promotion, you can refuse since it is a privilege being bestowed. Further, under the circumstances, it would be unwarranted to require you to transfer, due to the sever prejudice you would experience. (Dosch vs. NLRC) But the Supreme Court clarified - just because you are to receive a salary increase together with the change in assignment doesnt mean that that is a promotion. If, for example, you are moved from one branch to another but still hold the same position of Branch Accountant, even if you will get a wage raise, that is not a promotion. A promotion is "the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary." The indispensable element is he "advancement from one position to another" or an upward vertical movement of the employee's rank or position. Any increase in salary should only be considered incidental but never determinative of whether or not a promotion is bestowed upon an employee. (HOMEOWNERS SAVINGS AND LOAN ASSOCIATION, INC. vs. NLRC, G.R. No. 97067. September 26, 1996.) Yuco Chemicals v MOLE: The employees begin forming a union. At the height of union activities, they are transferred from Tarlac to Manila. They have to quit studying since it was made while they were studying. Valid? NO. There is no business urgency. Their work in Manila was the fabrication of aluminum boxes. Anyone else could do it. It was grossly inconvenient for them. They were working students. Ulterior motive is shown by the fact that it was done at the height of union activities. V WORKING CONDITIONS This Book covers 3 titles: 1) Work Conditions & Rest Periods 2) Wages 3) Special Groups of Employees

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Note: That each title has its own coverage. The coverage is also different from that of labor relations. The title on Work Conditions & Rest Periods govern: > hours of work > weekly rest periods > holidays, SIL, service charges Coverage Who are covered by this title? a) Government employees: You include here national and local governments, goverrnment -owned and controlled corporations b) Managerial Employees c) Non-agricultural field personnel d) Members of the Family of employer dependent on him for support e) Domestic helpers f) Persons in the personal service of another g) workers paid by results 1) Government Employees: Malacaang contracts Guaranteed Sanitation Services for janitorial/sanitation work. You are a janitor for GSS. Are you covered? YES. Even if you are assigned to Malacaang, your employer is GSS. Just check if it is an LOC. You work in the Light Rail Transit. Are you covered? YES. That is a government project contracted out to a private firm. What if you work in PAGCOR? NO. It is a GOCC.

2) Managerial Employees - One whose primary duty consists of management of establishment in which they are employed or of a department or subdivision thereof. This includes the managerial staff: Look to the Implementing Rules for a more complete definition: a) Their Primary duty is management of establishment or a department or subdivision thereof; b) They Customarily and regularly direct work of two or more employees therein: c) They have the power to hire or fire or their suggestions/recommendations thereon and as to promotion or change of status is given particular weight. NOTE: Supervisory employees are therefore covered by this - they give effective recommendations. Example: You are Chief Mechanic or In-charge mechanic, but you have no authority to hire or promote or fire. You can recommend, but that is still subject to review and final approval first by the department head and then by the General Manager. Are you covered by the title?

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YES. You are not managerial. Your power must not only be effective but must also be not routinary or clerical. It must require use of independent judgment. Is it effective? NO. It passes through the Department Head, who goes over it. Then it goes to the General Manager and higher executives for their review and final decision. Despite your title, it is the functions that are controlling. The fact that you are designated "chief" only means you are number one (1) in that category if you exercise no managerial functions (Namerco v CIR). What about "supervisors" who assist in planning, organizing, and making decisions? They are all rank and file union members. Are they covered? NO. They are managerial employees. The definition covers managerial work. You are a member of the managerial staff if: a) Your primary duty is performance of work directly related to management policies; b) Customarily and regularly exercise discretion and independent judgment; c) Do one of the ff: i) Regularly and directly assist the proprietor or manager; ii) Execute, under, general supervision, work along specialized or technical lines requiring special training, experience or knowledge; or iii) Execute, under general supervision, special assignments and tasks. d) Do not devote more than 20% of their actual work wide to activities not closely or directly related to 1, 2, & 3. Since the "supervisors" are under direct supervision of department superintendents, are responsible for efficient operation of their departments and assist in planning, organizing, scheduling and implementing company policies, training of subordinates, performance evaluation, coordination with supervisor, supervision of personnel - these qualify them as managerial staff. They are thus exempt. > You should distinguish this from Art 212 (m) under Labor Relations. The provision will then only cover managerial employees and supervisory employees. Managerial staff may be deemed rank-and-file for purposes of labor relations (i.e. they may join the union of rankand-file). [Note, however, that they might fall under the category of confidential employees who are barred from joining unions]. (NASUREFCO vs. NLRC) 3) Non-Agricultural field workers/personnel You work in a hacienda. sugarcane. Are you covered? You are out in the fields the whole day harvesting

Yes. You are an agricultural field personnel. The distinguishing factor is that you are out of the office and there is no way to monitor exactly what your doing or how many hours you spend working. You might watch a movie or go swimming. Who is to tell? Examples:

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You are a taxi driver. You are given a cab 12 hours a day. While in the cab, you can eat merienda. Go to sleep, or do whatever you want. You are non-agricultural field personnel. Salesmen in a company are required to report for roll-call at 7 - 8 am. They have no daily time record. Their sales routes must be completed by 5 pm. Sometimes, they finish earlier and sell some more. They get commissions based on the amount they have sold. They are NOT covered. Salesmen are excluded because: 1) They word individually 2) There are no restrictions on their time of work 3) They do not receive OT pay but just commission 4) They work away from the principal place of work 5) There is no way of checking the number of hours worked (San Miguel Brewery v Democratic Labor Organization) - What if they report at 8:00 a.m. (when they start work) and report back at 4:00 p.m. (after which they go home)? In addition, they receive an incentive bonus. They claim that that bonus based on their sales shows you can determine their hours on the field. NO. The SUPREME COURT says the incentive bonus is there precisely because there is no way to measuring their actual hours of work. You have to read it in conjunction with rules on holiday pay: excluded from its coverage are - field personnel and other employees whose time and performance is unsupervised. (Union of Filipro Employees vs. Vivar) 4) Members of Family - must be dependent for support on the employer. An example would be if you tended the Sari-sari store for your mother in your spare time. You are studying law full time and therefore have no other job. You cannot demand that your mother pay you overtime for the 12 hours that you tend the store. (Art. 82) 5) Domestics - perform services in employer's home which are usually necessary or desirable for maintenance and enjoyment thereof; or minister to the personal comfort, convenience or safety of employer as well as members of his household.

Apex Mining case: A laundrywoman works in the guest house of Apex Mining located at the company compound. She washes laundry for guests who come to stay there at different times of the year. Is she covered by the title? YES. She is not a domestic. That term refers to one who performs 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 or his household. She ministered to whoever stayed in the guest house, not to any particular family. She likewise worked in a building located in the company compound. This shows that she was not a domestic, but an industrial worker. - Once the domestic becomes involved in a commercial endeavor, then he or she must be treated as a commercial worker, with the corresponding benefits. Suppose you moved to the States. You therefore left your house and decided to rent it out to dormers. So five people from the province rent the house while they study for the bar exams. You left your housemaid to tend over the house and the needs of the dormers. She is no longer a domestic since she does not perform services in your home, nor does she minister exclusively to your comfort and convenience. When we say GOCCs are not covered, we make a distinction.

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Is it created under special law - with Charter? If yes, then it is in the public sector and exempt from labor laws. It is, instead, governed by Civil Service Laws. If created under general law - Corporation Code, they are within the private sector. Labor Code applies. Coverage of the Title on Work Conditions.

Workers paid by results: if you are a worker paid by results, you are exempt. Examples: Taxi drivers Jeepney drivers Salesmen Teachers paid on a per unit basis

There is no requirement as to how much time is used up in your work. HOURS OF WORK - What are work hours? 1. The time an employee is required to be on duty or at the workplace or at the premises of the employer; The time he is suffered or permitted to work.

2.

- Your duty hours are 9-5. You are required to be in the office during those hours. Those are your work hours. - Suffered to work: You are required to work from 9 - 5. Suppose there was a rush job. So they required you to work overtime. - You are suffered to work a few extra hours. - Permitted to work: You want to finish your job. It is past 5 p.m. You tell your supervisor you will work until 9. He says "Fill out this form". You fill up the OT form. You are permitted to work. - What if you just go on working until 9:00 p.m. and no one knows about it? That is not compensable hours worked. There was no permission or consent. Likewise, if there is a one-hour brown-out, you have to hang around the company in the event power resumes - that is working time under the rules. This is inactivity due to interruption in work schedule beyond your control. It shall be deemed work hours if the imminence of the resumption requires your presence at the work site or the interval is too brief to be used effectively and gainfully for your own interest. More so if you were given consent by the supervisor. - There is what they call waiting to be engaged and engaged to wait. When you are waiting to be engaged, you are waiting for a job. For example, you are a truck driver. There is a fleet of trucks parked to make deliveries when an order is made. They deliver to all ends of Luzon (from Aparri to Batangas). So you sit and wait near the garage for 4 hours. Then, all of a sudden, the owner of the delivery company says, "We have an order. Deliver this package to Baguio". You take the package and drive the truck.

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While driving the truck, there is no question you are working. You are suffered to work. What about while you were waiting for the orders? Should you be paid for those 4 hours you spent waiting? You did not have to wait. The only consequence to you if you did report for work during those 4 hours was you would not get the job order that day. The company would not discipline you for failing to appear that day. You are not working during those 4 hours. You were not suffered to work. Nor were you required to be in the premises. You were WAITING TO BE ENGAGED. Likewise, say you are a chauffeur. You arrive at 8 a.m., bring your boss to his office, and wait in the parking lot. You listen to the radio, make chismis with the other drivers and eat merienda. At 12 noon, your boss comes out. You drive him to lunch and so on and so forth the whole day. While waiting in the parking lot, are you at work? YES, you are required to be there. What will happen if you suddenly left and watched a movie. The supervisor would come down, discover you are gone. He would reprimand you and maybe even suspend you. You are clearly required to be at a prescribed workplace, even if not actually working. Waiting is an integral part of your work. You are ENGAGED TO WAIT. Another example - a janitor. She arrives at 8 a.m.. Sweeps floors until 10 a.m.. After she is over, she sits and watches the world. At 3-5, she sweeps again. While she watches the world, is she legally working? YES. Waiting is an integral part of her business. She is required to be in the school premises. - Take another variation. You work at a bus company, like BLTB or Philtranco. They tell you to stay in the terminal because it is holiday season and you might be needed for emergency trips. You are required to be at the workplace or within its proximity. You are working while on call. You do not have freedom of movement, nor can you use it profitably to your own advantage. - This was applied analogously to high school teachers. In University of Pangasinan v. University of Pangasinan Faculty Union, the Supreme Court said, these teachers work during semestral break. They make lesson plans, check papers, etc. They cannot use the time effectively for their own purpose. Further, it is inactivity due to an interruption in work beyond their control. It cannot be gainfully used for their own purpose.* - Other cases:

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RADA v. NLRC (205 SCRA 69): This company driver drives a company van. He is allowed to bring the vehicle home & park it there. It so happens that, on his way to and from work, he passes the areas where several co-workers live. So he is told to pick them up & bring them home as well. On his way to and from work, was that work hours? YES. The practice was employed because tardiness of workers caused project delay. The pick-up and drop-off was a practical solution. Whenever Rada was absent, another employee replaced him. This shows the task part of his job, indispensable and mandatory. It was thus a task required by him, not an incidental chore. NOTE: The Supreme Court looked into the circumstances to show that the work of picking up and dropping off of workers was part of this functions. - Arica v NLRC: Every morning at the hacienda, the workers gather from 8 - 8:30 and line up in front of team leaders to show they are willing and able to sign up for the work that day. After the team leader lists their names, they go home, do some chores, eat and, at 8:30 a.m., go to the fields for the day's work. The period 8-8:30 a.m. - is that hours worked? NO. It was done primarily for the workers' benefit. During that half-hour, they could do other things; go home, eat, work in the home. (if they did not arrive at 8-8:30, the consequence would be they would not work that day. It was not required of them in the sense that they would not be subject of disciplinary action if they failed to appear.) You have a boatsman. He works in the dock area, late at night and early in the day. He waits for the boats to arrive and unload their cargo and helps them dock. When there are no boats, he does other work - removing rust from boats and cleaning them. He does that work a total of 14 hours a day. When there are no boats which arrive at the pier, is he working? YES. The cleaning of boats is part of his work. (States Marine Corp. v. Cebu Seaman's Ass.) The work was continuous when there were no boats to unload and to dock. He could not leave and completely rest. What about seafarers? They work on a ship out in the open seas. Their duties are 8 hours. Afterwards they rest in the cabin and walk around the ship. Obviously, they can't leave the work premises, at least not while they're on the open seas. Supreme Court says, that off-duty time is NOT hours worked. The criteria to be used would lie not in whether or not they can leave the work site, but whether or not they actually perform work. Otherwise, they would have 16 hours OT work everyday. In short, if they are not actually working or suffered to work, even if they cant leave the boat, then they are not deemed on working hours. (National Shipyards & Steel Corp. v. CIR, 1961)* What are the normal hours of work? 8 hours a day. 48 hours a week. This is not in the Code or the Rules, but a DOLE Manual treats a work-day like this:

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Your work day starts at 8 a.m. (not mid-night). We do not follow calendar days here. Your work day therefore, being 24 hours, ends 8 a.m. the next day.

What's so important about that? It helps determine what will fall under OT. If you are suddenly called at 12 midnight and made to work until 6 am, should that be compensated as regular hours work or OT? OT, since it is within the work day. Rationale: humans need 16 hours of rest. OT therefore, is any work in one workday in excess of the work period.

Undertime on any day is not offset by OT on any other day. Meaning, if I work only 6 hours today instead of the required 8 hours, then I work l0 hours tomorrow, am I still entitled to premium pay for overtime (2 hours)? Of course. You do not subtract/offset the OT with my undertime. - Suppose my work schedule is 8 - 5. I arrive at 10 am. So I decide to work until 7 (10 7). Am I entitled to OT premium pay? NO. The offsetting rule only applies to separate days. The fact remains that I did not work beyond the required 8 hours.* - In Caltex Regular Employees vs. Caltex (Aug. 15, 1995), the CBA provided that the regular work week would consist of 8 hrs. a day, 7 days a week. During such period, regular rates would be paid and work on the employees one "DAY OF REST" would be a work day. Work in excess of 8 hours a day or 40 hrs a wk would receive OT compensation. (Note the week was made shorter) Everyday, the workers would be allowed to go home half-an-hour earlier so that they would not be caught by the rush hour in coming home. On Saturday, they are only paid regular rates for the first 2 hours. The union claims they should be paid rest day rates for the entire Saturday worked. Even if during Monday to Friday, they work for a total of only 37 hours (7.5 x 5 days), UNDERTIME IS NOT OFFSET BY OVERTIME (OT). So Saturday was all rest day work. Supreme Court said WRONG. Overtime (OT) consists of hours of work on a given day inn excess of the applicable work period (here, 8 hours). To constitute OT, they must be in excess of and in addition to the 8 hours worked during the prescribed daily work period (or, weekly, in excess of the prescribed 40-hr. work period). Just because work is done on a Saturday does not mean it is OT work. Saturday, even under the CBA, is not a rest day. It is only when an employee is required to work beyond the 40 hours in a week shall be deemed on OT.

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The rule against offset therefore will not apply. Note that normally, Saturday is not a rest day. What they did here was agree to shorten the regular work week from 48 hrs. (6 days) to 40 hours (a total of 5 8-hr days) But, since they did not finish 8 hours in one day, and since they agreed to make the regular hours of work/week 40 hrs, the first 2.5 hours on Saturday were not OT or rest day work. The 1/2 hr. per day was not a gift to them. So what does that make of work in excess of the first 2.5 hrs. on Saturday. Is it OT work or rest day work? I would think simply OT work. (Rest day work has higher premium) Under the CBA, Saturday is not a rest day. Just because the employees were allowed half-hour off earlier everyday does not mean the company waived the hour per day work they should render. The practice was done not to evade contractual stipulations, but for their benefit - so they could avoid heavy traffic. - The general rule is, you cannot be forced to work on overtime and on your rest day. When is compulsory OT work allowed?

1. When the country is at war, or when Congress or President declares a national or local emergency. ex. After the last coup attempt, Cory issued an Executive Order declaring a state of national emergency due to the worsening economic condition. She allowed compulsory OT.

2. When necessary to prevent loss of life or property, or imminent danger to public safety due to actual or impending emergency in locality due to serious accident, fire, flood, typhoon, earthquake, epidemic or other disaster or calamities. ex. You are a nurse and there is an epidemic. You are an electrician and a storm blows down electric wires.

This won't apply if there is an earthquake and you are a factory worker. (No connection) 3. Urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the employer, or other causes of similar nature. ex. You are a part of maintenance and machines have to be stored immediately or else they will be destroyed by storm. Work necessary to prevent loss or damage to perishable goods. You have an oversupply of fruits/fish for your company. You have to transfer them to a cold storage plant or else they will rot next day.

4. ex.

5. When completion or continuation of work started before 8th hour is necessary to prevent serious obstruction or prejudice to business or operations. Example: You are part of TV crew covering an important news event. You can't just leave in middle.

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This may apply to a rush job order, provided it is occasional. If it is regular, the solution is to hire more workers, not force OT. 6. When OT work is necessary to avail of favorable weather or environmental conditions where performance or quality of work is dependent thereon. Example: Construction crew - making a road. Malapit na ang rainy season, kaya nagmamadali kayo. Film crew - you want to shoot during summer weather. So hours. This last provision is of doubtful validity. The law exceptions, but they added it anyway. What about rest days, when can they be compulsory? does not authorize additional you maximize crew

1. a) Actual or impending emergency caused by serious fire, flood, typhoon,

earthquake, epidemic, or other disaster or calamity, to prevent loss of life or property; and b) Force majeure or imminent danger to public safety. NOTE: Emergencies declared by Congress or President are not included.

2. Urgent work to be performed on machines, installation or equipment to avoid

serious loss.

3. Abnormal pressure of work due to special circumstances, where the employer

cannot ordinarily be expected to resort to other measures. Example: You have to finish a project which is due on Monday. You have to work over the weekend because it is specially difficult You can ask the other staff to work on Sunday to help you prepare. NOTE: This will not apply in the case of an exporter who has to manufacture on a rush basis every week. This refers only to ABNOR-MAL pressure of work due to EXTRA- ORDINARY circumstances. The exporter can meet the need simply by hiring more workers. 4) To prevent serious loss of perishable goods

5) Work is necessary to avail of favorable weather or environmental conditions

where the performance or quality of work is dependent thereon. Example: You are shooting a film. You need a scene where there is clear weather. The rainy season is coming soon. You can ask that the workers work on Sundays.

6) Nature of the work requires continuous work for 7 days or more (ex: crew
members of vessel)

NOTE: The special rules as to health personnel. If you are in a city or municipality with at least 1 million or in hospitals/clinics with bed capacity of at least 100, your working hours are:

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8 hours/day x 5 days/week (40 hours) But where exigencies require, you can be made to work 6 days or 48 hours. But you get 30% premium pay. You are better-off than regular workers who. for the 41st 48th hours do not get premium pay. For example, there is this arbularyo who has a clinic. If you have a problem, go to clinic in Quezon City and he will give you pito-pito and a cleansing diet. Suppose a janitor works in this clinic. Is he covered by these special rules? Yes. "Health personnel" includes midwives, attendants & all their hospital or clinic personnel. You might ask, is the outfit legally considered a clinic? Well, look to Rule 1-A of Book 3, IRR for that. "Hospitals" and "clinics" are places devoted primarily to the maintenance and operation of facilities for the diagnosis, treatment, disease or injury, or in need of medical/nursing care. I have not been to this clinic but I believe clinics employing natural or traditional medical procedures are covered. HOLIDAYS There are 2 types of holidays: Regular holidays - a.k.a. legal - set by law, regular fall on set days of year Special days - by special proclamation by city/municipal or president. ( storm signal #3 - that is not a holiday.) You commemorate something or there is a special event, conducted, such as an election. - Under EO 203, we have 10 regular holidays: January 1 Maundy Thursday Good Friday Araw ng Kagitingan (April 9) Labor Day Independence Day (June 12) National Heroes' Day (last Sunday of August) Bonifacio Day (Nov. 30) Christmas day (Dec. 25) Rizal day (Dec. 30) Special Days, under EO 203 are: All Saints Day (Nov 1) Last Day of the Year (Dec. 31) What about July 4, 1996? It is a special day - there was a special proclamation in this year, 1996. Note that, by virtue of EO 203, this was reduced from its former status as a regular holiday.

his

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What is the difference, therefore, between a special day and a regular holiday? Regular holiday Special day

1) If worked, regular pay 1) If unworked, no pay 2) If worked - 2x regular pay 2) If worked, + 30% premium 3) Set by law 3) Generally set by proclamation Note that, under the Labor Code, workers in establishments regularly employing less than 10 workers are not also covered by this rule on holiday pay. Also, under the rules, while exempted are workers paid a fixed amount for performing work irrespective of the time consumed in performing the same, explicitly entitled to holiday pay are those workers paid by results or output, such as piece-raters. (You will base his holiday pay on the average daily earnings for the last 7 work days before the regular holiday.) These two rules on exemption also will apply to service incentive leave. What about Maundy Thursday and Good Friday? You wanted a longer week-end. So you decided to absent yourself without pay on the day prior to Thursday. You reported for work on Monday (after Easter Sunday). How much do you get for Thursday and Friday? Nothing. Where there are 2 successive regular holidays you must either be at work or on leave with pay on the last day immediately before the first regular holiday to avail of the benefit. What if you absented yourself on Thursday, but entered on Friday? You get no pay for Maundy Thursday but double pay for Good Friday. What if you reported for work on Thursday, but not Friday? You get double regular pay on Thursday and regular pay on Friday. Are teachers paid by the contract hour entitled to holiday pay?

JRC v NLRC. It depends on what kind of holiday. The principle to be followed is: They should be compensated if they lose expected income. Since they do not contract to work on regular holidays, they lose nothing. That is not contemplated in their contract. But what if there is a special day declared on a class day? The Supreme Court said since they expected to be paid for these, they are entitled to holiday pay. Even if they have make-up classes, that still does not change the fact that they lost expected income. What about monthly paid-employees?

First of all, who are the true monthly-paid employees? They are those who receive a fixed sum per month irrespective of the number of days in the month. So work on February would be compensated the same as work on January. There was a provision in the implementing rules that they were not entitled to holiday pay since they are presumed paid for all days of the year, worked or unworked. But the SC said they still are entitled to holiday pay since they were presumed paid for all days, worked or unworked. Since the law makes no distinction between monthly-paid and daily

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paid, neither should we. (Chartered Bank v Ople). So you add to their monthly salary if a regular holiday occurs in the month. So how do you compute their holiday pay? The company will generally use a divisor to determine it. It may look like this: monthly rate x 12 (months) divisor if the divisor used is 365 days, we know that they are deemed paid everyday of the month. if the divisor used is 314, we know, since there are 51 Sundays in a year, that they are paid for 6 days in a week. if they use 263 as a divisor, they deducted all Saturdays and Sundays.

Of course, the higher the divisor, the less a daily rate the employee gets. Suppose, to compute OT, Night differential and Leave Credits, the company used a divisor of 251. Can they later use a divisor of 261 in computing holiday pay? The Supreme Court said NO. Madaya iyan. You would be diminishing their benefits. Further, the fact that you used 251 as a divisor shows you deducted all Saturdays, Sundays and legal holidays from 365. Therefor, you did not include holiday pay! So you must pay it! (UFE v Vivar, 1992) In Terminal Facilities & Services v. NLRC (199 SCRA 269), you have a wage order providing for COLA saying that monthly-paid employees shall be paid COLA on the basis of 30 days per month: (COLA x 30) + old monthly wage = total monthly wage. Whenever a monthly-paid employee would be absent in one month, the company would determine how much to deduct from his salary by dividing the total monthly wage (with COLA) by 26 (since he does not work Sundays). Correct? NO. In the absence of any provision in the CBA, the presumption that monthly-paid employees are paid on rest days must prevail. The divisor therefore should be 30 instead of 26. In the Wellington case, the company was paying its employees for 314 days (Thats what you get if you deduct from 365 the number of Sundays in a year). This means regular and special holidays were paid as if worked. The Labor Inspection Officer said that they did not account for the regular holidays that fell on a Sunday. He said, when that does happen an extra work day is created. So, Wellington should pay for the 3 holidays which fell on Sundays by paying 351 days wage for those years (not 314). The Supreme Court said the factor of 314 days already accounts for all 365 days. It accounts for all days, excepting only Sundays. If you follow their theory, each year would

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have an extra 3 days (or 368 days). There would then be no definite way of determining the number of days per year for compensation. Every year, he would have to make a new computation. The law does not require employers to take account of all regular holidays falling on Sundays. All the law requires is that the monthly minimum wage not be less than: Statutory minimum x 365 12 and to pay that salary for all days whether or not worked. That is why we set a fixed salary per month, so you don't have to re-compute all the time, as with daily paid workers. NOTE: This case concerns a company which included the regular holidays in determining monthly pay. They used the figure "314". In the cases of Chartered Bank vs. Ople & UFE v Vivar, the figure used was "251"- they excluded the 10 holidays. So, they had to pay them. Applying that rule, this exception will personnel. Teachers are not field personnel. cover only positions similar to field

Service Incentive Leaves - Employees who have worked for at least one year are entitled to five days service incentive leave. The exceptions, aside from the general exceptions under the title on working conditions, are:

a) If they are receiving at least 5 days vacation leave.

(What if they are receiving sick leave with pay? That will not qualify to exempt them. ) b) If the establishment they are employed in regularly employs less than ten people. (What if, you work in a small boutique. Ordinarily, they have 7 workers. During Christmas season, the store hires 5 more workers so that they can meet the demand of greater numbers of buyers. That establishment is not exempt since they do not regularly employ less than ten people.) Who determines when the employee can go on SIL?

Ultimately, it is the employee. Though the company can require that it first be submitted for approval, especially if the employee performs a vital function. In one case, the company denied Sick Leave because the employee was able to work for the past 2 weeks without signs of sickness. SUPREME COURT said, he should be commended for working despite his physical condition. The choice is his if he wants to work even if he is sick. (Jones v NLRC, Dec. 6, 1995) Maternity Leaves: This is not granted by the Labor Code, but by the SSS law. Maternity leaves shall be 60 days for normal deliveries. 78 days for cesarean. The cost shall be advanced by the employer & reimbursable with SSS. The purpose of maternity leaves, (and any leave in general) whether under law or CBA, are to replace income you lost because you had to absent yourself from work for childbirth (or vacation, or illness, etc...) Can you claim both maternity leaves and hospitalization benefits for the same childbirth?

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YES. While leaves pay for lost income, hospitalization benefits pay for cost of hospitalization. There is no incongruity. (Singapore Airlines Local v Ople, 156 SCRA 629) What about the father? Doesn't he get anything? This isn't within the stated coverage of the bar but yes - Under RA 8187: The Paternity Leave Act of 1996, all married male employees in the private & public sectors shall have paternity leave of 7 days with full pay for the first 4 deliveries of his legitimate spouse with whom he is cohabiting. Note those two underlined qualifications. The purpose is to enable him to lend support during the period of recovery and/or nursing. (June 11, 1996 approved) Note that the law applies to all married males in the public and private sector. It will therefore also apply to domestics, non-agricultural field personnel and the like. - Night Differential: If you work from 10 pm - 6 am, you receive an additional premium of 10% of regular salary. That is night differential. Among the purposes are: 1. Night is a time for which the body is less conditioned to work (it's easier to get sick) 2. Its dangerous to work at night (you try walking around at those hours in dark - lit neighborhoods) 3. Night is a time best spent with the family. You abandon part of your social duties with night work. - Service charges: This is different from "tip: "Tip" is what you gave the waiter/waitress after eating if you like their service. It is in addition to what is charged you. Service charge is what the restaurant requires you to pay for the benefit of its employees. It is not a voluntary contribution on the part of the customer. - It should be shared 85% - 15% in favor of the rank-and-file. If abolished, the charges formerly collected shall be paid by the company to the workers as additional basic pay. - May the company agree to give the entire 100% to the rank and file? Of course. If they don't, the 15% shall answer for losses and breakages or distribution to managerial employees. (IRR) - So let's recapitulate. What are the benefits, aside from wage and 13th month pay guaranteed by law? a) overtime pay regular day - 25% premium non-regular - 30% premium b) rest day pay - 30% premium c) special day pay - 30% premium d) reg. holiday pay - worked: 200% unworked - regular days' pay e) night differential - 10% premium (between 10 p.m. - 6 am) f). Service Incentive Leave - 5 days/year Service Charges - but this is optional on the employer. The Employer need not charge it. Likewise, only establishments such as hotels, inns, night clubs, cocktail lounges, bars, casinos, etc. can collect service charge.

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VI WAGES - What is "wage"? Any - remuneration or earnings however designated capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis, or other method of computing the same payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done; or services rendered or to be rendered and includes the fair and reasonable value of board, lodging & other facilities customarily furnished by the employer to the employee. Wage is actually the same as salary. But note the case of Gaa v CA where it held that a building administrator, because his level is of a higher one than a mere laborer, does not earn wages. He earns salary (from Latin "salarium"). Thus, his earnings are not exempt from garnishment. Art. 1708 of NCC operates in favor of the laboring class whose work is rank-and-file. A building administrator of a hotel is managerial supervisory. Her salary is thus not a wage for purposes of the law on exemption from execution. Salary relates to position of office. Wage is compensation. When you get more specific, the case of Gaa v. CA differentiates between work which is more physical or menial in nature and work is more managerial (such as that of a building administrator) for purposes of determining whether or not salary is exempt from execution. The former earns wages. The latter earns salary. That is not exempt.

In Songco v NLRC, The Supreme Court said, they are the same. They both mean reward or recompense for this. So, in deciding whether or not you should include a salesman's commission in determining what his separation pay should be, the Supreme Court said include it. The commission were direct remuneration for the services rendered. Commissions are part of their salary. In fact, some salesmen receive only commissions and no basic salary if commission were not part of salary, then it is as if we said they earned no salary.

But note, when we get to the issue of 13th month pay, which deals with basic salary, the issue is different. Likewise, when we talk of backwages, the rule is get full backwages, meaning all pay and benefits you should have received when out of the company.

- What is the concept of wage? For example, for determining OT premium pay, what do you use? Note, the law refers to a percentage of the regular wage/rate. In PNB v PEMA, the question was, should you include COLA (equity pay) and longevity pay in computing OT? There was this old case: NAWASA v NAWASA Consolidated Unions. It said, when you compute OT, a regular wage will include ALL payments the parties agreed will be received in the work week.

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Under NWSA's doctrine, your therefore include: differential pay for nightwork cost of board and lodging furnished the employee incentive bonus profit sharing premium pay rates

But he Supreme Court said the concept of wage is that it is given by virtue of work done or services rendered. It is distinct from supplements such as Sick Leave/Vacation Leave, COLA and other bonuses. - COLA may sometimes be granted. But that is contingent to meet the exigency (e.g. inflation). It was not regular or permanent, like wages. Its purpose - to help worker make ends meet. - Longevity pay is not given for services but due to loyalty and length of service. The NWSA doctrine therefore applies only to that particular situation - where the issue was do you include Sunday pay in computing the daily wage. It did not actually refer to extra, temporary and contingent compensation unrelated to work done. NWSA is limited to a case of workers working 7 days a week and who got 25% Sunday differential 3 months prior to RA 1880 (or 40-hr week law). The law reduced government work week from 46 hours - 40 hrs/wk but required on diminution of weekly wage. To ensure non-diminution, it was necessary to include the Sunday differential in computing the daily wage rate. - The 2 principles should thus be applied in determining if you will include some benefits in OT computation: 1. 2. Is it for work done or services rendered? Is it permanent and regular in nature? changeable)

(Not temporary, contingent or

- Therefore, you will not also include: a) profit-sharing - that is to give workers a share in profits and as incentive to work harder. It is not tied to particular work done. It is contingent - based on profitability premium pay - that is given to work under special circumstance. It is the fact that you worked OT, on Sunday, or at midnight which makes you entitled to it. (SMC v Inciong) It is also contingent. Monthly gas ration (Asis v MOL) - this is not for services rendered. Sick Leave (Caltex v CIR, 1986) - this compensates you for your salaries while indisposed.

b)

c)

d)

- What other non-wage payments can therefore be made? Gratuity: A gift. Something given voluntarily in return for a favor or services. It is a tip. It is not pay for services rendered. It is like a reward.

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 Emergency Allowance: But receipt of ECOLA is dependent on whether or not you are also entitled to basic if you get no basic pay for that day, you also get no COLA. Representation/Transportation Allowance: This contemplates payment for expenses. Per diem: This is actually allowance for each day that an officer or employee is out of the home. It answers for board, lodging, transportation and other related expenses.

- Facilities:

These are defined (in the IRR) as articles or services for the benefit of the employee or his family but shall not include tools of the trade or articles or services primarily for the benefit of the employer or necessary to the conduct of the business. Examples are: meal subsidy education board and lodging

The deduction on account of facilities should be their fair and reasonable value. The company cannot charge you more that the cost of the facilities. It cannot make a profit from them - "Fair and reasonable value" shall not include any profit to the employer or to any person affiliated with the employer (Art. 97-f). Note also that the rules require that the employee must VOLUNTARILY ACCEPT the facilities before you can charge their costs to the worker. You distinguish facilities from supplements. Facilities are necessary for the worker's and his/her family's existence. Supplements are "extra remuneration or privileges or benefits over and above ordinary earnings or wages". If an item furnished for your benefit is part of your basic wage (deducted therefrom), it is a facility. If it is given over and above it, it is a supplement. Ex. 1. 2. Free meals given to seafarers on board an ocean voyage. These are given over and above regular wages. Food allowance given to bus drivers going outside Cebu City (over and above wages).

FACILITIES - deducted SUPPLEMENTS - given in addition to what are the existing wages. They are given by way of management practice and are demandable as a contractual obligation. - RULES ON PAYMENT OF WAGES - How shall they be paid? By means of legal tender. Exception: Check or money order a) if customary on date of effectivity of Code b) necessary due to special circumstances c) stipulated in CBA - How often? 1) Once every 2 weeks or

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2) 2x per month at intervals not exceeding 16 days Exception: force majeure/circumstances beyond control Where? At or near place of undertaking. Exception: 1) deterioration of peace and order/emergency 2) free transport is provided 3) analogous cases, provide time to collect is hours worked. NEVER at bar, night or day club, drinking place, gambling place except as to its employees.

- To whom? To worker, directly Exception: 1)

2)

Force majeure (then give it to another person with written authority) or other special circumstances as determined by secretary of labor. Death of worker (give it to the heirs without need of intestate proceedings. Claimants only need to execute an affidavit that they are the only heirs)

- Can you deduct from wages? YES. That allowable by law: insurance premiums, with his consent taxes check-off, where authorized SSS, Pag-ibig and other such contributions Examples of illegal deductions: Apodaca v NLRC: Apodaca was employed as General Manager. He was also a stockholder of the company. When he resigned he had unpaid subscription worth P113,000. The he filed a case for unpaid wages. The company said, yes, we owe him P17,000 but we don't have to pay him under the principle of set-off. We set-off his unpaid subscription with his unpaid wages. Supreme Court said that had no basis. First of all, there was no notice or call for the subscription payment. So it was not yet due and demandable. But even if there was a call for payment, you cannot set-off. Deductions from wages are allowed only: 1) 2) 3) Where the worker is insured by employer with his consent - to pay premium Check-off of union dues, where there is individual written authorization Where SEC allows it under its regulations

Commands Security v NLRC (1992): Security guards suffered 25% deduction in salary. That was used to pay the agency's share in getting him a job placement. Supreme Court said that is illegal and iniquitous, it is void ab initio. - Can you deduct from salary for lost/broken items? The law only refers to deposits for loss or damage from which you can deduct.

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Suppose you have taxi drivers. They are required to make a P15 deposit for deficiencies in their boundary payments every day. Valid? NO. Art. 114 allows deposits only when the employer is engaged in such trades, occupations or businesses where the practice is recognized, or necessary or desirable.

Under Art. 114, the deposit must be for damage or loss to tools, materials or equipment of the employer. Not to shortages in remittance of the boundary. - What if the taxi company requires the drivers to wash their cabs after their duty. Or, instead, to deposit P20.00 to be paid to one who cleans the unit? That's OK. The practice was to have them clean the cars - restore it to its condition prior to his use. That was part of their duties. The P20.00 was used to pay the cleaner if they did not do it themselves. That is lawful. (Five-J Taxi vs. NLRC) - Problem: I dismiss you from work. I do not give you your wages until you make a report of all your pending jobs. Valid? NO. Art. 116 - It shall be unlawful to withhold any amount from wages of a workers or induce him to give it up by force, stealth, intimidation or other means without his consent. But if he has outstanding loans to the company, you can set it off. - You work in my company. My company has a small store for its employees. Can I offer you discounts if you buy from the company store? YES, provided there is no compulsion. (Art.112) - Can I require you to buy from store at a discount? NO. No employer shall limit or interfere with the freedom to dispose of wages. You cannot be compelled to purchase from the employer or any person or use their services. (Art. 112) - You work beside a casino. (That is the location of your employer). The company is told by your wife that you are gambling your earnings away. So what it does, it pays 50% of your wages to you in cash and gives your wife 50% by means of a check. Valid? NO. 1. 2. Wages must be paid directly to the worker. This constitutes interference in disposal of wages.

We are aware that some companies have the practice of preparing 2 sets of payrolls. One reflects what they actually give the workers. The other reflects what they show the DOLE. That is what Article 119 is there for. It says it is unlawful to knowingly make report or keep false records as to wages. Liability for Wages: Labor-only contracting is prohibited by law. Job contracting is not. Note that contracting out of labor is prohibited as ULP if it will interfere with the right to self-organization.

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At any rate, a labor-only contractor shall be treated as an agent of the direct employer (the one for whom the employee works). The direct employer shall be responsible for such workers as if he directly employed them. In short, they can unionize under him. They can sue him for back benefits. What about the job contractor, or independent contractor. The employees they assign to the company (the indirect employer) are employees of the contractor. For example, the guards of Jaguar Security, which is contracted by Ateneo Law for security services, are employees NOT of Ateneo, but of Jaguar Security. Is Ateneo liable to them? While they cannot unionize under Ateneo, Ateneo is still liable for their wages and benefits. Act 107 says that the provisions of Art. 106 on responsibility to the employees, shall also apply to the indirect employer. In what capacity is Ateneo liable? Art 109 says it shall have solidary liability. Meaning, you can sue either for the entire amount. But if I were counsel for Ateneo, I would suggest, just to make sure in the event that the employee would sue me, to require the security agency to post a bond for nonpayment of wages Art 110 - We will get back to this after we have discussed all the other wage benefits, since this concerns satisfaction of claims. The same goes for Article III. Wage Determination - Who shall primarily fix wages - The Regional Wage Boards, appealable to the National Tripartite Wages and Productivity Commission. - What are the criteria for fixing of wages? You can use the code: W A L D I N 'S F E E 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Prevailing Wage Levels Wage Adjustment vis--vis the consumer price index Cost of Living and changes or increases therein Demand for living wages Need to spur industries to invest in countryside Needs of workers and their families Improvement in Standards of living Fair return on capital invested and capacity to pay of employers Effects on employment generation and family income Equitable distribution of income and wealth

You can have different wages based on the industry. That is why minimum wages of agricultural labor are different from those of non-agricultural labor. Public hearing should be conducted. A wage order may use two methods in fixing wage rates: a) The floor-wage method : Fixing a determinate amount to the minimum wage b) The salary ceiling (cap) method: a wage adjustment to all employee receiving a certain denominated salary ceiling

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To illustrate, suppose, the present minimum wage in NCR is P185.00 per day. A wage order was granted increasing the minimum wage by P15.00. If your wage rate before the order took effect was P190.00, you would be entitled to receive only an additional P10.00 so that you will meet the new minimum. If you are already receiving the new minimum of P200.00, you get no salary hike (except of course, if there is a wage distortion). This is an example of the floor-wage method - an increase in the minimum wage and nothing else. However, suppose that the wage order states, in addition, that all employee receiving below P210.00 daily will receive an across-the-board wage increase of P20.00. Then, if you are receiving P200.00 per day, you will be entitled to receive such wage hike. Your new salary will therefore be P220.00 per day. On the other hand, if you are receiving P210.00 per day, you are not covered by the wage hike since you fall outside the bracket (P185.00 [minimum wage] until P210.00). This is an example of the salary-ceiling method. In ECOP vs. NWPC, the question was, the Wage Rationalization Act (R.A. 6727) only referred to increases in the minimum wage. Is it therefore valid for the Wage Board to set an increase through the salary-ceiling method? The SC said YES. The reason behind the salary-cap method is to reduce disputes arising from wage distortions. The wage boards can apply this since the law intended to rationalize wages by providing full-time boards to police wages round the clock and by giving them enough powers to achieve this objective. Congress intended that the boards be creative in resolving this issue without having to knock on the door of the legislature every time. If the law limited the boards to setting floor-wages, there would be no need for a board. All we would need would be an accountant to keep track of the latest CPI (consumer price index), or maybe Congress would have fixed wages on its own. Congress may delegate powers to fix wages. The standards set are sufficient. Wage orders shall be issued by Regional Wage Boards. Their orders take effect within 15 days from their publication in a newspaper of general circulation. You can initiate a proceeding for a wage hike by filing a petition with the Wage Board. What if you don't? Does that mean the wages won't increase? NO. The Wage Board can act on its own. As Art. 133 says: Whenever conditions in the region so warrant, the Regional Board shall investigate and study all pertinent facts and determine when a wage order should be issued. Suppose the Wage Board issues a Wage Order. You are an owner of a factory. Can you appeal?

Of course. You do not have to be a federation or what not. "Any aggrieved party" may appeal. You have 10 calendar days to so appeal. You appeal to the NWPC. What happens to the Wage Order pending the appeal? It is not suspended unless you file a bond/surety for payment of employees affected by the order the increase, in the event such order is affirmed. Do you think any employer has attempted to suspend the effects of a wage order in this manner?

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NO. Imagine if he loses, he will have to pay wage differentials to millions of workers affected. Suppose you apply for exemption and the application is denied, you have to pay 1% interest to the workers. (Imagine that. Kung ibinangko mo ang increase, di kumita ka pa!) So the Wage Order is released. Aside from the wage increase, what may we find there?

Sometimes (actually, always), they have provisions on crediting. What does that mean? It is a provision which states that if, within a stated period prior to effectivity of the Wage Order (usually 60 days), the employer granted a wage increase, then you can credit the wage increase under the wage order. For example, the company gave all workers an across-the-board increase of P10. One month later, a Wage Order was passed allowing for crediting of benefits given by the company within the last 2 months. The Wage order provided for a P15 wage increase to all workers. If you will apply the provision on crediting, the only increase you will get in wages after the Wage Order took effect is P5. ex: Original Wage: P170 + 10 Management Increase: 180 + (15 - 10) Wage Order: 185

Is this type of provision valid? In Apex Mining Corp. v NLRC, the Supreme Court said yes. CBAs can also allow for crediting. These are grounded on an important public policy - to encourage employers to grant wage increases higher than the minimum legal rates. But where rules implementing a wage order prohibit such crediting, they would be invalid. The Supreme Court has said these agreements merely create an equivalence between legal and contractual imperatives, rendering both obligations susceptible of performance by compliance with either, subject only to the condition that where the increases given under agreement fall short in amount of those fixed by law, the difference must be made up by the employer. (PT&T vs. NLRC, June 19, 1995, J. Vitug) What would be wrong is if the CBA provided that the company need not pay the minimum wage for a certain period of time. That is invalid for two reasons - it is against law and public policy and only the wage board may grant an exemption from legallymandated wage increases. What happens if there is no such provision on crediting?

It follows that the employer must give the wage increases under the wage order in addition to that under the CBA. In Meycauayan College v. Drilon (1990), the CBA provided for a salary scale (a salary scale provides for the wage rates due the different positions and ranks in the company). During the term of the CBA, several wage increases were ordered by law. All of these were complied with. The company now claims that a wage raise is different from a salary scale. An agreement on a salary scale should not be considered as an addition to the salary increase under the law. The SC said that that was wrong. The terms of a CBA constitute the law between the parties. Their terms are separate from what the law provides. There being nothing in

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either the law or contract that benefits from one encompass the other, the increases under the wage orders and the wage scale should be considered separate from each other. In short, employee benefits derived by law are exclusive of benefits arrived at through agreement, unless otherwise provided. Sometimes, the wage order also states that anniversary wage increases are not included in the crediting. To illustrate: You have a CBA which provides wage increases as follows: WAGE RAISE P 10.00 P 15.00 P 20.00

FIRST YEAR (May 1, 1994) SECOND YEAR (May 1, 1995) THIRD YEAR (May 1, 1996)

A wage order was issued on June 1, 1995, providing for crediting age increases granted by voluntary act of the employer or under a CBA within one month prior to the issuance of such order, except for anniversary increases. May the employer therefore credit the second-year wage hike as compliance with the order? NO, because it is an anniversary wage increase. It occurred on the first anniversary of the CBA. The grant took place one year ago. (Apex Mining vs. NLRC) Likewise, if collective bargaining negotiations started on January 1, 1997. On February 1, 1997, the union and the company reached an agreement with respect to wages. On March 1, 1997, a wage order was issued allowing for crediting provided the wage increase was granted by the company within one month prior to the increase. It was only on April 1, 1997, however, that the company and union finally concluded the CBA. May the company credit the wage increase under the CBA with the wage order? NO. The grant occurred when there was a final agreement on the CBA. Even if there was a preliminary agreement on wages on February 1, this could still be modified while there was no final agreement. Crediting will not therefore be allowed. And then there is the matter of wage distortion. This means : A situation where: an increase in prescribed wage rates results in elimination or severe contraction of intentional qualitative differences in wage or salary rates between or among employee groups in an establishment as to effectively obliterate the distinction embodied in such wage structure based on skills, length of service or other logical bases of differentiation. For example, A, a rank and file worker receives P185 per day. (This is the prevailing minimum wage.) B, a supervisor, receives P200 per day. A wage order is issued, raising the minimum wage by P15.00. A would thus now receive P200.00, while B would not be entitled to receive anything since he still meets the new minimum rate. B will now complain, since he is receiving the same as a rank-and-file employee, who has lower rank and skills. He would be right, for there would now be a wage distortion. This must be remedied. In Metrobank Employees Union vs. NLRC, the bank gave a P900.00 monthly wage hike to supervisory employees. Because of a P25.00 per day wage hike under R.A. 6727, the P900.00 difference was reduced to P150.00 per month. There were two questions: 1. Was there a wage distortion?

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2. If so, how should it be remedied? 1. The NLRC said there was none. While there was a noticeable decrease in the
wage gap, it was not so insignificant to obliterate or result in severe contraction of intentional qualitative differences. The SC said that the NLRC was wrong. The law did not require an elimination or total obliteration of salary differences. A severe contraction is enough. In this case, the contraction went up to 85%. 2. How do you remedy this? The Arbiter ordered the company to pay the affected employees the total amount of the P750.00 reduction. One NLRC Commissioner suggested this formula: minimum wage = Percentage x Prescribed = Disturbance actual salary Increase Adjustment The SC sided with the Commissioner. It said we must approximate an acceptable quantitative difference. The Arbiters formula is not acceptable. Giving them the entire P750.00 will not be conducive to encouraging employers to grant allowance increases above the minimum. It would penalize them for granting more. The Commissioners formula is appropriate and just and equitable. In Metro Transit v NLRC, the ponente of which was Justice Vitug, the company, whenever the rank and file received a statutory wage increase, would also give the supervisory employees a wage increase. Whatever the rank and file got, the supervisory employees also received plus P50. A CBA was then entered with the rank and file. The rank and file were given a wage increase of P500/month. The supervisors, this time, got nothing. They now claim there is a wage distortion. Is there? YES. The granting of corresponding increases to supervisory employees was a practice of the company. It was not a bonus. A bonus is given as a reward for industry and loyalty. It is given in addition to what is ordinarily granted. It is therefore not demandable as a matter of right (unless made part of wages). This P550 the supervisors sought was not an incentive or an inducement. Neither was it contingent on anything. It was based on a company practice of granting a salary increase to supervisors when rank and file got an increase. This was designed to correct or minimize wage distortion. NFL v NLRC laid down some important principles of wage distortion: 1. It assumes an existing group of employees which establishes distinctions on some relevant basis. (You have a group of workers. You differentiate groups within them based on some relevant grounds - ex: age, seniority, rank, skill required) They often result from government decreed wage increases. But they may also increase from other causes such as merger. If there is a wage distortion, you do not have to fix it by giving exactly the same amount. It's enough that you re-establish a substantial gap. You can do so by grievance or collective bargaining.

2.

3.

4.

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To recapitulate, 1. Wage distortion does not require elimination or obliteration of the wage gap. A severe contraction is enough. A government mandated wage increase may result from a merger or CBAnegotiated increase for one group. Bonuses, which are gratuitous in nature, should not be considered in determining whether or not there is a wage distortion (since it is out of generosity, you cannot claim wage distortion, otherwise, you'd be demanding for a gift, which is makapal ang mukha).

2.

3.

How do you remedy a distortion?

a) If there is a CBA: grievance procedure

If not settled, go to voluntary arbitration b) If there is no union or CBA: negotiations If not settled, NCMB may assist. If not settled in 10 days, Labor Arbiter. Note the IBM v NLRC case. You had here workers at San Miguel. Everyday, they would work around 10-12 hours (or 2-4 hours OT). The Supreme Court said they did it because it gave them more income. Then, one day, there was a wage distortion. They decided to boycott OT. The company said, you are violating the no-strike/no-lockout provision. That is illegal. Was it? The Supreme Court said yes. The law provides for a remedy in case of wage distortion (grievance or negotiations and VA). Strike (slowdown) is not allowed. Maybe you are asking, what about OT - is it not a law that you can't force them to work OT? Yes. But the Supreme Court said, in this case, there was a long-standing agreement to render OT work everyday. When they suddenly refused to do so, they therefore conducted a slowdown (a withholding of work which prejudices company operations). 13th Month pay: What is this? It is a bonus required by law. Who are exempt? 1. 2. Government Those paying their employees a 13th month pay or more per calendar year or its equivalent at the time the law was passed. Employees of household helpers and persons in the personal service of another Employers of those paid on PURELY commission, boundary or task basis, those paid a fixed amount for specific work (pakyao) (This refers to those

3.

4.

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paid by result. But note that PIECE-RATERS are not excluded from 13th month pay). Piece-raters are those paid a standard amount per unit of work that is more or less regularly replicated, without regard to the time spent on the same. 5. Note also, managerial employees are exempt. Since it refers only to rank and file employees. But note who are covered by the definition of managerial employees under the Revised Guidelines on PD 851 - it does not include the managerial staff. Another: You worked less than 1 month in a calendar year.

6. >

Let's go through the exceptions. Those paying 13th month pay or its equivalent. What do you mean by "its equivalent"? X'mas bonus mid-year bonus cash bonus other payments amounting to not less than 1/12 of the basic salary

If Christmas bonus is less than the required 13th month pay, pay the difference. What is the purpose behind this particular exemption? In NFSW v Ovejera, the Supreme Court said it was intended to grant additional income to employees not already receiving it and not to penalize the employer for his generosity. The Revised Guidelines provide that those paid a fixed wage + commission are entitled to 13th month pay based on total earnings for the calendar year (both fixed wage + commission). Thus, bonuses are considered equivalents of 13th month pay. What are not equivalents? > > > > > cash and stock dividends COLA other allowances regularly enjoyed by the employee non-monetary benefits X'mas gift given in settlement of a dispute(e.g. share in tuition fee increase claim). this is not an equivalent since the aim of PD 851 was to uniformly provide workers additional income because their wages for 12 months was inadequate.

So, if the additional income is less than what the law requires, the employer need only pay the deficiency. The rule on exemption of those paying "equivalents" aimed to prevent a double burden on the employer. The X'mas gift is part of the claim for P350. It is not a bonus, incentive or additional income. It is not an act of liberality. It was partial payment of an obligation which the union sued for before the Arbiter. A bonus is an act of liberality. (UST v NLRC) > Transportation allowances

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> > > -

Seniority bonus: its purpose is to reward length of service. PD 851 seeks to give additional income Representation allowance/transportation allowance/salary Pork meat subsidy/Free light Free sack of rice (non-monetary benefits)

What is the basis for determining the 13th month pay? TOTAL BASIC PAY FOR YEAR 12 Note, it is not divided by the total number of months worked That is a common mistake The divisor is always 12.

- The amount divided is total BASIC salary What is "basic salary"? The rules say it won't include: 1. 2. allowances monetary benefits not considered or integrated in regular or basic wage (i.e. vacation leave/sick leave, cash equivalents of leaves, OTpay, night differential, holiday pay, COLA) UNLESS they are part of basic under an agreement or policy.

What about commissions?

If you receive only commissions, the rules say, you get no 13th month pay. (Note our discussion on 13th month pay.) What if you receive both a fixed rate and commissions? The rules say, compute 13th month pay on the basis of both payments. In one month, the Supreme Court came out with 2 opposing decisions on this. In the first case, Phil. Duplicators v NLRC, you had salesmen paid largely by commission. But they also received a fixed salary. The Supreme Court said: Do not confuse basic salary with fixed wage. Basic salary is used to distinguish wage from fringe benefits. The commissions are paid of the wage, not allowances or fringe benefits. In fact, they form the bulk of the salaries. Furthermore, the Revised Guidelines say that if you are paid partly by commission and partly by fixed wage, you are entitled to 13th month pay based on both. And then a few days later came Boie-Takeda v De la Serna. This concerned medical representatives who would receive commissions as a share in the productivity bonuses. This time, the Supreme Court said, basic wage means - rate of pay for a standard work period exclusive of additional payments such as bonus or OT. Commissions are given for extra efforts in consummating sales. They are additional pay not part of basic wage. The fixed wage is the basic salary. Salary means direct remuneration for services rendered. To include commissions would be to unduly expand the concept of basic salary. The IRR cannot add to the law. Par 2 of Sec. 5(a) of the Revised Guidelines is thus null and void. So Phil. Duplicators saw this decision. They filed a motion for reconsideration. So finally, the Supreme Court said: There is no conflict. In the first PDI case, the commission

57

was part of the basic compensation for the job. It was part of the selling price. The fixed wage amounted only to 15-30% of total yearly earnings. They were thus part of basic salary. In Boie-Takeda, the commissions were not part of basic. They were paid as productivity bonus. They were thus tied to productivity or capacity for revenue production. they are like profit-sharing; they have no clear, direct or necessary relation to the work done by each employee. A bonus is given out of generosity. It is not demandable or enforceable as an obligation. Another difference. In PDI, you had salesmen. In Boie-Takeda, you had medical representatives. They are different. They promote the products by visiting doctors and telling them of the virtues of their products. Then they leave brochures and samples. The bonuses are like fringe benefits to them since they do not form part of the selling price. What then is the difference between the two? Prod. Bonus (BT case) Sales Commission (PDI case)

1. Tied to productivity or profit generation 1. Directly proportional to employees endeavors 2. Not directly dependent on efforts of the 2. Paid on specific results achieved worker 3. Something extra for which no specific 3. Percentage of sales and operates as additional service are rendered. integral part of basic wage So PDI says, "but you said par. 2 was void". Supreme Court said, "Yes, but what we meant was 13th month pay gives relief only to those not actually paid its equivalent. It was not intended to impose a double burden on employers already granting it or its equivalent. Otherwise, it would penalize the employer for his munificence and liberality. It would discourage giving grants. (If you interpreted it so that it would mean that productivity bonuses should be included in computation of 13th month pay, that would be void. Those purely on commission basis

There is no legal basis to include in the term "commission" profit-sharing payments or bonuses. IF you interpret it this way, then it is void! So to recapitulate, if a worker is paid BOTH fixed wage and commission, when should you also include the fixed wage in computing the 13th month pay? If the commission paid is based on the actual work performed (ex. % of price of goods sold), it is therefore salary and should be included. If it is not so based on actual work (ex. profit/incentive sharing on productivity bonus), it is not included. So it is not the title used: "commission". You will look into the nature of the payments. Another more recent case which affirmed this Phil. Duplicators Ruling was the case of PACIWU v NLRC, Aug. 14, 1995. You had here bus conductors and drivers paid by

58

commission. If the total commission for the day was less than minimum wage, they would get the minimum wage. Supreme Court said while the commissions are given as incentive to work harder, they are direct remuneration for services rendered. You can see this from the fact that they were guaranteed a minimum wage. When shall 13th month pay be paid?

Generally, on or before December 24. But you may opt to receive it in 2 amounts. (One before school starts, the second before Dec. 24). AND he may get it when separated from service. Whats the reason he may collect it upon dismissal? The SC said this is in line with equity - as the employer can require the employee to clear himself of all liabilities and property accountability, so can the employee demand the payment of all benefits due him upon the termination of the relationship. Also, the benefit of 13th month pay is automatically vested in the employee who has at least worked for one month during the calendar year. This such benefit may not be lost or forfeited even in the event of the employee's subsequent dismissal for cause without violating his property rights. (Archilles Mfg. Vs. NLRC, June, 1995) What else should be given?

(Of course there is also the social amelioration lien under RA 6982. This will not be asked in the bar exams anyway.) PAST PRACTICES What else?

We already mentioned, supplements - extra remuneration or privileges, given over and above wages are fixed benefits. In NASUREFCO v NLRC, the Supreme Court discussed the concept of past practices which have ripened into contractual obligations. To fall under this category it must be a benefit: 1. 2. 3. Given over and above what the law requires Over an extended period of time The employer knowing he is not obliged by law to grant it.

For example, if before, you were classified as rank and file. Due to job reevaluation scheme, your position became supervisory and you received some additional benefits. You are not entitled to the OT pay you used to receive. This was given not over and above what the law required. It was given because, as rank and file, you were entitled to it. There is no diminution of benefits - you actually received more benefits to make up for those you lost. It must be knowingly given. If, for example, the company paid 13th month pay for 2 years even if they already were paying X'mas bonus and they did this because of a mistake, they can still withdraw it. BONUS What about bonuses? We said bonuses are acts of liberality. They cannot be forced on the employer. In Trader's Royal Bank v NLRC, the Supreme Court said, TRB can withdraw its bonuses, which were dependent on profits. After 1986, they withdrew it . (TRB being

59

place under sequestration). You cannot say the bonus ripened into a company practice. Because of its fiscal condition, you could not force TRB to distribute bonuses. Likewise, as to 14th month pay, in Kamaya Point Hotel v NLRC, such benefit was withdrawn after the Hotel was converted into a training center for Libyans (scholars). You cannot penalize it for its liberality by requiring it to continue giving bonuses despite losses. Metro Transit Org. v NLRC (July 11, 1995), penned by Justice Vitug, states that a bonus is demandable when it is made part of the wage or salary or compensation. If it is additional compensation the employer promised and gave without any conditions (such as profitability or productivity), then it is part of wage. Otherwise, it cannot be deemed part of wage. For example if it is payable only to employees with good efficiency or productivity rating, it is an enforceable obligation upon meeting the requirements. What if you enter into an employment contract stating, if you have worked for 5 years, you get a bonus, in addition to your salary. Can the company withdraw that, after 4 years? NO. Your service for 5 years is an acceptance of the offer to pay the bonus. Once accepted, it cannot be withdrawn. In short, it is already an agreement between the employer and the employee. (Marcos v NLRC, Sept. 8, 1994) Note, in the Kamaya Point & Traders Royal Bank cases, the Supreme Court allowed the withdrawal of the bonuses due to losses. Since it is essentially gratuitous, you cannot force the company to keep on giving it fit it can no longer do so. But where benefits are given due to agreement (BCA, employment contract, etc....), such as a fixed monthly ELA given under a fixed practice and verbal agreement, that cannot be withdrawn. NON-DIMINUTION OF BENEFITS Note, Art. 100 says: Nothing in this Book shall be construed to eliminate or diminish in any way supplements or other employee benefits being enjoyed at the time of promulgation of this Code". The time referred to is 1978, Nov., that was when the Code was promulgated. Curiously, however, the Supreme Court has applied it to cases of benefits given even after the Code took effect. PRODUCTIVITY IMPROVEMENT PROGRAM This should not be covered by the Bar Exams, but just in case, RA 6971, "The Productivity Incentives Act of 1990" provides for a program called "The Productivity Incentives Program". What is it? It's a formal agreement established by a labor-management committee with a process whereby employees will be given salary bonuses proportionate to increases in productivity for the present year as compared to the last 3 years.

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The intent is to promote employment and increase productivity. The bonuses shall be given at least every 6 months from the start of the program. This agreement shall not supplant any CBA, but only supplement it. If there is still no CBA and, eventually, one is entered into, it shall be integrated into the CBA. PREFERENCE OF WORKER'S CLAIMS. So now we go to Article 110: Preference of Worker's Claims.

Regularly, you have 1 or 2 cases where PNB or DBP goes up to the Supreme Court applying this. And, for the past years, the decisions have always said: > While workers have preference in satisfaction of claims and this is superior to all claims (even those of the government), you cannot read it in isolation of the Civil Code provisions on Concurrence and Preference of credits. First of all, the article starts: "In the event of bankruptcy or liquidation of an employer's business...." The rules use the terms in event of liquidation or bankruptcy. While the provision "declaration of" has been eliminated, the Supreme Court said, you still need that. Why? How else will you know if workers should enjoy first preference, than by finding out if the assets are insufficient to cover the debts? How do you do this? Proceedings for insolvency or bankruptcy. There will be no need to apply preference if assets are greater than liabilities.)

>

So, you can apply Art 110 only if you have such a declaration. > A preference of credit is all Art. 110 gives. It is not a lien. The Civil Code creates a lien over products of a workers labor, for payment of his wages and claiming for workers in construction specially preferred claims. But Art. 110 is only a preference. There is a difference between the two: preference of credit Applies only to claims Does not attach to specific properties lien Attaches to specific property.

Art. 110 does not create a lien. It is a preference - a means of determining which should first be satisfied out of the assets. A lien is superior to this as it attaches to the property. So Art. 110 falls to a mortgage credit. The Supreme Court said also, we ruled on this already so many times. All you could have done was stand on stare decisis. (DBP v NLRC, March 1, 1995) This was reiterated more recently in Phil. Export and Foreign Loan Guarantee Corp. v NLRC, Dec. 12, 1995. Note that the Civil Code creates a worker's lien on the goods manufactured or the work done (Art. 1707). It creates a preference in the following cases:

1. Specific moveables - claims for wages, on goods manufactured; work done 2. Specific immovables - claims of workers in construction/reconstruction/repair
of buildings, canals or other works (on such construction)

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3. Other property (real or personal) - credits for services within 1 year prior to
insolvency proceedings. 4. Pay/indemnity for damages in case of labor accident or illness resulting from employment VII MEDICAL AND DENTAL SERVICES What are the minimum medical and dental services the law requires?

1. First-aid treatment - medicine and equipment as the nature and conditions of work require 2. training of a sufficient number of employees in first-aid treatment Emergency Medical and Dental Facilities

No. of Employees More than 50 until 200 NON-HAZARDOUS More than 50 - 200 HAZARDOUS Over 200 - 300 -

Services Required if no regular nurse available, graduate first-aider full time registered nurse Full time registered nurse Part time physician Part time dentist Emergency clinic Full time physician Full time dentist Full time nurse Dental clinic Infirmary/Emergency hospital with 1 bed per 100 employees

Over 300

/100 emplo IF HAZARDOUS, doctor or dentist must stay in premises for at least 2 hours (if Part-time) 8 hours (if Full-time) IF NON-HAZARDOUS, doctor or dentist may be simply retained No emergency hospital/dental clinic is required if there is a hospital or dental clinic accessible from the establishment and there are arrangements for reservation of beds and dental facilities: (In the Implementing Rules, this means, IN URBAN AREAS, it is within 5 km. IN RURAL AREAS, it can be reached by motor vehicle in 25 minutes (provided the employer has such vehicles available) 3. Assistance to ensure adequate and immediate medical and dental attendance and treatment in case of emergency

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4. employees.

Doctor to implement a comprehensive occupational health program for

Occupational Safety and Health. There are mandatory OSH standards set by the DOLE. The DOLE should conduct studies and research to develop innovative methods to deal with OSH problems; discover latent diseases; develop medical criteria. What else shall DOLE do? Administer and enforce OSH laws/rules and regulations Conduct safety inspections This is one of the least noticed violations. People are more aware of their immediate financial needs rather than their medical needs. VIII ADMINISTRATION AND ENFORCEMENT - If you are not receiving the proper benefits under these provisions of the labor code, what are the remedies? The Labor Code provides for two possible actions:

a) VISITORIAL AND ENFORCEMENT POWER (Art. 128) - This is composed

of the :

i. VISITORIAL POWER: The power of the Secretary of Labor (or his

representative) to inspect and investigate the employers premises and records to determine violations of the law (or any other matter to aid in enforcement of the Code or labor laws). The Labor Inspection Officers may therefore enter the company premises whenever there is work being undertaken and conduct an inspection. They may interview workers and look at your books, payrolls and other documents. This power of inspection cannot be obstructed by the employer (upon pain of criminal prosecution for a violation of the Labor Code). Nor can a TRO or an injunction may be issued or any case be entertained by any court over the case for non-compliance. ii. ENFORCEMENT POWER: If he or she discovers that there are violations, then the enforcement power will come into play. The Regional Office is empowered to issue a compliance order stating the findings and requiring the employer to make good the wage deficiencies, for example or cease and desist from requiring the employees to work overtime for 8 hours everyday. A writ of execution may be issued here. Under this power, an order for stoppage of work may be issued where it is shown that non-compliance with labor laws poses a grave and imminent danger to health and safety of workers in the workplace. A hearing should be conducted within 24 hours to determine if the suspension should be lifted. If the violation was due to the fault of the employer, then it shall be liable for the workers wages during the suspension of operations. This therefore covers inspection of establishments initiated by the DOLE. There is nothing stopping the parties from making a request for an inspection. That would still fall under this power. It would be a different matter if a complaint were filed with the Regional Office

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complaining of non-payment of minimum wage or other labor standard benefit. Then, what would come into play would be the adjudicatory powers. Note, however, that it is required that there still be an employeremployee relationship before this can be exercised (Art. 128[b]). If the company has closed down, obviously, the establishment cant be inspected. If the company closes down after the inspection, the Regional Office cannot issue a compliance order. The case shall have to be referred to the Labor Arbiter.

Likewise, even if the Regional Office has acquired jurisdiction over the case, he may lose it if: 1. The employer contests the findings of the labor enforcement and employment officer; 2. He raises issues thereon supported by documentary proof; 3. Such documentary proofs were not considered in the course of inspection. This provision was amended by R.A. 7730 (June 2, 1994), which changed the requirement that : there is a need to examine evidentiary matters not verifiable in the ordinary course of inspection. Now, the rule has been relaxed somewhat - all that is needed is to support ones contest of the findings with documentary proofs not considered during the inspection. For example, there is a finding that the employer paid less than the minimum wage. You claim that the labor officer did not look at the proper payroll when he made his findings. You present the proper payroll in your contest. This was verifiable in the normal course of inspection and previously should still have been within the Secretarys jurisdiction. But today, it will be removed from the Secretarys jurisdiction because the documents you are now presenting are documentary proofs not considered during the inspection. However, if all you are contesting is the computation of wage differentials, then that does not involve new evidence not covered by the inspection.

b) ADJUDICATORY POWER (Art. 129) - The Regional Director (or a hearing

officer) may entertain a complaint for recovery of wages or other monetary claim or benefit. This is different from the enforcement power stated earlier, which arises from an inspection. This is subject to a number of requisites:

i. The complaint does not include a claim for reinstatement. ii. The aggregate claim of EACH WORKER (complainant) does
not exceed P5,000.00 including legal interest. iii. The claim is presented by an employee or person in domestic or household services. iv. The claim arises from employer-employee relations.

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For example, there are five workers. The company has not paid them the correct amount of 13th month pay for the past 3 years. So each has separate claims:

A B C D E Total:

Differential Due: P 4,500.00 P 5,000.00 P 3,400.00 P 4,000.00 P 5,500.00 P22,400.00

Is this within the jurisdiction of the Regional Director under the adjudicatory power? NO. The aggregate claim of each worker is NOT within the P5,000 limit - E has claims amounting to P5,500.00. This takes the entire case out of the Regional Directors office and into the Labor Arbiters. But what if E did not include his claim? Then the Regional Director would have jurisdiction. The aggregate claim of each worker would not exceed P5,000.00, even if their total claims amounted to over P 5,000.00. The question now is will this P5,000.00 jurisdictional limit also apply in case of the visitorial and enforcement power? The old law was interpreted this way: Considering Art. 128(b) together with Arts. 129 and 217(a)-6 - on the jurisdiction of Labor Arbiters - the same limitation must apply, otherwise, Arts. 129 and 217 would be rendered superfluous. The Arbiter has exclusive jurisdiction over claims above P5,000.00 as affiremd by Article 129. (Servandos Inc. vs. Secretary of Labor, April 26, 1990). However, the law, as amended on June 2, 1994, now intends to take away the limit on jurisdictional amount with respect to the visitorial and enforcement power. This is seen from the inclusion of the phrase: Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary. . . . This means, that irrespective of their jurisdictions, there is now no limit on the amount of the award under the enforcement power. This is beneficial to the workers, as in both cases, all that shall transpire is a summary proceeding. Wherein in the Arbitration Branch of NLRC, a full-dress trial hearing may have to take place.

IX SPECIAL WORKERS MINORS For example, you are a child of 10 years old. Your mother manage the family sarisari store located at the front of your house. When your mother cooks the food for lunch and dinner, she leaves you behind to mind the store. Valid? YES. Your work under the sole responsibility of your parent and only members of your family are employed.

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Supposing your mama hired someone to mind the store. But since it grew, she asks you to help. Valid? No. Others are employed. Suppose you have a family business. You live along the seacoast so your father has a middle-size fishing vessel. You are 12 years old. He makes you come along on fishing voyages, dive down into the water and use muro-ami to scare the fish into the net. Valid? NO. There is danger to your life, health and safety. In the same manner, if your father makes you work in a Disco Pub which the family owns and solely runs, that is illegal since your morals and normal development are put in danger. NOTE. That the parent or guardian must provide you with the prescribed primary or secondary education. So if you work entails you to travel all the time, the question is, is your parent or guardian able to supply this> There is a movie outfit. The company is shooting a movies in which one of the scenes is Vina Morales gives birth to a tiyanak. They need a newly-born baby for this scene. Can they hire your child? Well, it seems his participation is essential in public entertainment. As long as the parents/guardian sign it, and the DOLE approves it, it is all right. Just ensure that the baby's life, health or safety is not endangered. There was an ad for been a few years ago. It was entitle "Hero Worship". A movie star walks into a narrow alley with lots of shady people around. A boy, around 8 years old, follows him around. At the end, we see the star drink beer with the boy looking up to him. Valid? Well, it is possible they needed a child for that ad due to the storyline but, there is an absolute prohibition: IN NO CASE shall he/she be employed in commercials or ads promoting alcoholic beverages, intoxicating drinks, tobacco and its by-products, and violence. Note, this refers only to ads. What about violent movies? Well, it would pose a threat to his morals, especially if he is part of the violent scenes. Suppose you hire, in your shop, a girl of 16 years? Can you say, since you are young, I am helping you out - I am giving you your first job. But since you are young, you cannot perform the work an adult is capable of. I will therefore pay you only P150.00 a day. In NCR, the minimum daily wage now is P185.00. That is void. There is a prohibition of discrimination against a person as to terms and conditions of employment due to age. WOMEN WORKERS The Labor Code grant working women some rights and impose prohibitions or measures of protection: a) PROHIBITIONS/ PROTECTIVE MEASURES NIGHTWORK PROHIBITION

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Women may not be made to work, even with their consent, in the following: 1. Industrial establishment - between 10 p.m. - 6:00 a.m. 2. Commercial/Non-industrial establishment - between 12 midnight - 6:00 a.m. 3. Agricultural establishment - must be given a rest period of 9 consecutive hours EXCEPTIONS:

1. 2. 3. 4. 5. 6.

Emergency, Force Majeure, Imminent danger to public safety Urgent work to be performed on machines, installations and equipment Prevent loss to perishable goods Responsible position of managerial/technical nature Work in health & welfare service Work needs manual skill and dexterity of women which men cannot perform with equal efficiency 7. Family business 8. Analogous cases as determined by Secretary of Labor

b) No discrimination on account of sex

Examples: i. Giving women less pay than men for work of equal value ii. Favoring male as to promotion, training or study opportunity This shall give rise to criminal liability, apart from civil liability.

c) No stipulations against marriage:

Also prohibited: considering woman as resigned upon marriage, or dismissing woman due to marriage.

d) No denial of benefits under Labor Code to women:

Prohibited acts: i. Denial of benefits to women; ii. Dismissing the woman to deny her the benefits.

e) Discrimination due to pregnancy

Prohibited acts: i. Discharging due to pregnancy ii. Discharging while on leave due to pregnancy iii. Discharging or refuse to readmit woman for fear of her becoming pregnant again. ENTITLEMENTS

a) Facilities: There is a decision of the OP on a rule in PAL that flight attendants must be single if not tanggal sila! It was held by the OP that this is illegal. It cannot be a fair and reasonable standard for their own health, safety, protection and welfare. There is no basis for that. (De Castro v. PAL, 1977)

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Examples of violations of this would be a company which dismisses women upon marriage due to lack of facilities for pregnant women. That is why the Code requires that rules be issued on such facilities particular to women. Note the law on sexual harassment. If prohibits (1) making sexual favors a condition in employment, re-employment or continued employment; or (2) granting better terms and conditions or refusing to grant the same or (3) segregate or classify the employee such that she/he would be discriminated against, deprived of employment opportunities or if those would be diminished, or (4) otherwise adversely affect the employee. Unfair rights under labor law/result in an intimidating, hostile or off environment.

It connotes the position of dominance by one over the other. This is what they call quid pro quo sexual harassment. It is not subtle as in leers, dirty jokes or sexy pictures openly displayed. HOMEWORKERS What is a homeworker?

The law refers to them as "industrial homeworkers" which, under the law, is defined as a system of production under which work for an employer/contractor is carried out by a homeworker at his/her home. Materials may be furnished them. Unlike factory production, there is little supervision. The law says, "for purposes of this chapter", their employer is the one supplying work. What is the chapter? The chapter on homeworkers. Applying the right to control test, however, there is a clearly no control except as to the result. DOMESTICS Much earlier, we discussed this as having the following definition: anyone performing services in the employers home which is usually necessary and desirable in the maintenance and enjoyment thereof. This includes ministering to the personal comfort and convenience of the members of the employers household, including services of family drivers. (Art. 141) What are they entitled to: Minimum wage - NOTE that the minimum wage was raised since 1993. Now, the new minimum rates are the following: i. NCR - P800.00 a month ii. Other chartered cities and first-class municipalities - P650.00 a month iii. Other municipalities - P550.00 a month. (NOTE: These are basic cash wage. You cannot deduct from this the cost of lodging, food and medical attendance) b) SSS coverage IF salary is at least P1,000 a month c) Free board, lodging and medical attendance (adequate food and medical attendance) d) Hours of work: No compulsory work over 10 hours a day (Art. 1695 of Civil Code)
a)

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Leave: Four days vacation leave every month with pay (this is actually the equivalent of one rest day a week). If unused, this is commutable to its cash equivalent. (Art. 1695 of Civil Code) f) Funeral expenses if worker dies in service of employer. (Art. 1696 of Civil Code). If domestic has no relative with sufficient means in place where the head of the family lives.
e)

Rights of domestics:
a)

Limited security of tenure: The Labor Code provides that the original contract shall be for a period of not more than 2 years. It may be renewed after that under whatever terms the parties want. The right varies according to whether or not the term is fixed:
i.

If the term of employment is fixed, the domestic may be terminated only for just cause. In case of unjust dismissal, the domestic shall get salaries already earned plus 15 days by way of indemnity (Likewise, if the domestic leaves without cause, he or she shall lose the earned salaries) ii. If the term is not fixed, either party. may end the employment by 5 days notice (for any cause)

In one case, you had a domestic who worked as an OFW. The contract was terminated without just cause. The employer said all she is entitled to is 15 days salary, not the unexpired portion of the contract. The SC said that is wrong - that should be in addition to whatever wages are earned. The 15-day salary is awarded in the form of an indemnity due to unjust dismissal. It is in addition to and not a substitute for the household helpers salary for the unexpired portion of the contract. Such salary is, as a settled rule, awarded due to violation of her security of tenure. Labor laws are deemed incorporated into the parties contracts. NOTE that that is the usual indemnity for violation of OFW contracts. I dont think the same rule should apply for domestic employment. (Philippine Integrated Labor Assistance Corp. vs. NLRC, GR 123354, Nov. 19, 1996) b) Opportunity for education: If the domestic is under 18 years of age, he or she should be given an opportunity for at least an elementary education. The cost of this shall be part of the compensation, unless they agree otherwise. c) Just and humane treatment. No physical violence shall be used upon him or her. d) Certification of employment.

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