Labor Law Review

What is Labor?
As an act: Exertion by human beings of physical or mental efforts, or both, towards the production
of goods and services.
As a sector of society: That sector or group in a society, which derives its livelihood chiefly from
rendition of work or services in exchange for compensation under managerial direction (Mendoza,
2001).
Refers to workers, whether agricultural or non-agricultural
Constitutional Mandates on Labor
The State shall protect and promote the interests of the Filipino Laborer:
Art. II, Sec. 9. The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living and improved quality of life for all.
Art. II, Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights, of
workers and promote their welfare.
Art. XII, Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and
locally produced goods, and adopt measures that help make them competitive.
Art XIII, Sec. 14. The State shall protect women by providing safe and healthful working conditions,
taking into account their maternal functions, and such facilities and opportunities that will enhance their
welfare and enable them to realize their full potential in the service of the nation.
Art. XV, Sec. 8. The State shall, from time to time, review to upgrade the pensions and other benefits due
to retirees of both the government and the private sectors.
Rights of Workers
Art. Ill, Sec. 8. The right of the people, including those employed in the public and private sectors, to
form unions, associations, or societies for purposes not contrary to law, shall not be abridged. (formation of
labor organizations)
Art. Ill, Sec. 18(2). No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.
Protection to Labor Clause
Art. XIII, Sec. 3 The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to
security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and
decision-making process affecting their rights and benefits as may be provided by law.
Protection to Labor Clause
Art. XIII, Sec. 3 , cont.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their
mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its
just share in the fruits of production' and the right of enterprises to reasonable returns of investments, and
to expansion and growth.
Commit Art. XIII, Sec. 3 to memory!
Defines rights of workers under Labor Standards and Labor Relations:
Under Labor Standards
Security of Tenure;
Living wage;
Share in the fruits of production; and
Humane conditions of work.
Under Labor Relations
Self-Organization
Collective bargaining and negotiations
Peaceful concerted activities, including strike;
Participation in policy and decision-making processes.
Social, Labor and Welfare Legislation
Constitutional provisions on labor are not self-executory, hence the need for Social Legislation,
Labor Legislation and Welfare Legislation
Social Legislation - Laws that provide particular kinds of protection or benefits to society or
segments thereof in furtherance of social justice.
Labor Legislation - Statutes, regulations and jurisprudence governing the relations between capital
and labor. It provides for certain employment standards and a legal framework for negotiating,
adjusting and administering those standards and other incidents of employment.

Welfare Legislation - Provides for the minimum economic security, of the worker and his family in
case, of loss of earnings due to death, old age, disability, dismissal, injury or disease.
Social Legislation and Labor Legislation, Distinguished

Effect to
Employment
Purpose
Coverage
Effect to
Employee
Payor

Labor Legislation

Social Legislation

Directly affects
employment
Designed to meet the
daily needs of workers
Covers employment for
profit or gain
Affects work of
employee
Benefits are paid by
the workers employer

Governs the effects of

employment
Involves long range
benefits
Covers employment for
profit and non-profit
Affects life of employee
Benefits are paid by
government agencies

Social legislation encompasses labor legislation, thus is broader in scope than the latter. All labor laws are
social legislations but not all social legislations are labor laws.
Labor Law, defined.
The law governing the rights and duties of employers and employees with respect to Labor
Standards and Labor Relations.
Labor Standards Law deals with the minimum standards as to wages, hours of work and other terms
and conditions of employment that employers must provide their employees.
Labor Relations Law defines the status, rights and duties as well as the institutional mechanisms that
govern the individual and collective interactions between employers, employees and their representatives
The Philippine Labor Code, and Other Laws
Presidential Decree No. 442
Deals with Labor Standards and Labor Relations
Became effective November 1, 1974
Special Laws:
Laws on Social Security (SSS Law, GSIS Law, Limited Portability Law (RA 7699)
National Health Insurance Act
Paternity Leave Act
Retirement Pay Law
Home Mutual Development Fund Law
Anti-Sexual Harassment Act
Anti-Child Labor Act
13th Month Pay Law
Migrant Workers and Overseas Filipinos Act of 1995 (R.A. No. 8042, as amended by RA
10151)
Expanded Comprehensive Agrarian Reform Law
Magna Carta for Public Health Workers
Labor-related provisions in Other Laws
Civil Code
a. Art. 1700. The relation between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and
similar subjects.
b. Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the
interest or convenience of the public.
c. Art. 1702. In case of doubt, all labor legislations and all labor contracts shall be construed in
favor of the safety and decent living for the laborer.
d. Art. 1703. No contract which practically amounts to involuntary servitude, under any guise
whatsoever, shall be valid.
Labor-related provisions in Other Laws
Revised Penal Code
a. Art. 289. Formation, maintenance and prohibition of combination of capital or labor through
violence or threats. The penalty of arresto mayor and a fine not exceeding 300 pesos shall
be imposed upon any person who, for the purpose of organizing, maintaining or preventing
coalitions of capital or labor, strike of laborers or lock-out of employees, shall employ
violence or threats in such a degree as to compel or force the laborers or employers in the
free and legal exercise of their industry or work, if the act shall not constitute a more serious
offense in accordance with the provisions of this Code.
The Aim and Basis of Labor Laws

Attainment of Social Justice

Balance the interest of labor and capital (eliminate oppression)
Labor is afforded a greater measure of protection
There is greater supply of labor than demand for their services;
Those who have less in life should have more in law;
The need for employment by labor comes from vital, and even desperate necessity
(survival);
Basic Principles
What are the basic principles in the constitution and labor-related laws on protection to labor?
The state shall afford full protection to labor, promote full employment, equal work opportunities
without bias or discrimination, regulate the relations of employers and employees, and assure
workers rights (refer to protection to labor clause Art. XIII, Sec. 3, 1987 Const. & Art. 3, Labor Code);
The relation of capital and labor are impressed with public interest, hence employment contracts
are not ordinary contracts (Art. 1700, NCC);
In case of doubt or ambiguity, labor laws and rules are to be construed in favor of labor (Art. 4,
Labor Code, Art. 1702, Civil Code)
IF THERE IS DOUBT as to the meaning of the legal and contractual provision, the abovementioned applies.
IF THE PROVISION IS CLEAR AND UNAMBIGUOUS, it must be applied in accordance with its
express terms. (Meralco v. NLRC, GR No. 78763, July 12, 1989).
The law also recognizes that management has rights which are also entitled to respect and
enforcement in the interest of fair play (St. Luke's Medical Center Employee's Assoc, v. NLRC,
GR No. 162053, March 7, 2007).
Why the preference for labor over capital?
Comes from acknowledgement that capital wields more power than labor;
(Sanchez v. Harry Lyons Construction Inc., GR No. L-2779, October 18, 1950).
There is greater supply than demand for labor;
Those who have less in life should have more in law; and
The need for employment by labor comes from vital, and even desperate necessity
(survival)
To whom does the Labor Code apply?
General Rule: The Code applies to all workers, whether agricultural or non-agricultural, including
employees in a government corporation incorporated under the corporation code;
Exceptions:
1. Government employees;
2. Employees of government Corporations created by special or original charter;
3. Foreign governments;
4. International Agencies, employees of intergovernmental or international organizations;
5. Corporate officers/Intra-corporate disputes which fall under PD 902-A and now fall under the
jurisdiction of, the Regular Courts pursuant to the Securities Regulation Code; and
6. Local water districts except where NLRC jurisdiction is invoked.
Protection to labor should not come at the expense of oppressing capital!
Law recognizes management rights. The employer has the right to
Conduct business;
Prescribe rules;
Select and hire employees;
Transfer or discharge employees;
Discipline of employees, and
Return of investment and expansion of business.
Management Prerogatives
(Rural Bank of Cantilan . v. Julve, GR No. 169750, February 27, 2007).
Under the doctrine of management prerogative, every employer has the inherent right to
regulate, according to his own discretion and judgment, all aspects of employment, including
hiring, work" assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of
employees
(Mendoza v. Rural Bank of Lucban, GR No. 155421, July 7, 2004).
Management prerogatives, however, are subject to limitations provided by
law,
contract or collective bargaining agreements and
general principles of fair play and justice
Pre-Employment
State Policy on Employment
Article 12, Labor Code

Promote and maintain a state of full employment through improved manpower training,
allocation and utilization;
Protect every citizen by securing for him the best possible terms and condition of
employment;
Facilitate a free choice of available employment by persons seeking work in conformity with
the national interest;
Facilitate and regulate the movement of workers in conformity with the national interest;
Article 12, Labor Code
Regulate the employment of aliens, including the establishment of a registration and/or
permit system;
Strengthen the network of public employment offices and rationalize the participation of the
private sector in the recruitment and placement of workers, locally and overseas to serve
national development objectives; and
Insure careful selection of Filipino workers for overseas employment in order to protect the
good name of the Philippines abroad.

Recruitment
Article 13(b) of the Labor Code, defines recruitment and placement as any act of canvassing,
enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals,
contract services, promising or advertising for employment, locally or abroad, whether for profit or
not; Provided, That any person or entity which, in any manner, offers or promises for a fee
employment to two or more persons shall be deemed engaged in recruitment and placement.
Entities Authorized to Engage in Recruitment
Public employment offices;
POEA;
Private recruitment entities;
Private (fee-charging) employment agencies;
Shipping or manning agents or representatives;
Construction contractors if authorized by the DOLE and the Construction Industry Authority
Members of the diplomatic- corps ("but hiring must also go through POEA);
Other persons or entities as may be authorized by the DOLE Secretary; and
Name hirees.
Direct Hiring for overseas employment is not allowed (Article 18, LC)
Employment Abroad
Overseas Filipino Worker a person who is to be engaged, is engaged or has been engaged in a
remunerated activity in a state of which he or she is not a citizen or on board a vessel navigating
the foreign seas other than a government ship used for military or non-commercial purposes or on
an installation located offshore or on the high seas, to be used interchangeably with migrant
worker. (RA 8042 as amended by RA 10022)
Seaman - any person employed in a vessel engaged in maritime navigation.
Overseas Employment - employment of a worker outside the Philippines covered by a valid
contract. (POEA Rules and Regulations Governing the Recruitment and Employment of Land Based
Overseas Workers, Feb. 4, 2002).
Note: A person to be engaged in a remunerated activity refers to an applicant worker who
has been promised or assured of employment overseas and acting on such promise or
assurance sustains damage and/or injury.
Emigrant any person, worker or otherwise, who emigrates to a foreign country by virtue of an
immigrant visa or resident permit or its equivalent in the country of destination.
The POEA
Philippine Overseas Employment Administration assumes functions of OEDB & NSB
Principal Functions:
Formulation, implementation, and monitoring of overseas employment of Filipino workers;
Protection of worker rights to fair and equitable employment practices
Deployment of Filipino workers through government-to-government hiring.
Salient Regulatory Functions
Regulate private sector participation in the recruitment and overseas placement of workers;
Formulate and implement a system for promoting and monitoring the overseas employment
of Filipino workers, considering worker welfare and the domestic manpower requirements;
Inform migrant workers of their rights as workers and also as human beings;
Instruct and guide the workers how to assert their rights and provide the available
mechanism to redress violation of their rights;
Service the requirements for trained and competent Filipino workers of foreign governments
and their instrumentalities, and such other employers as public interest may require;
Deployment of workers shall be sanctioned by the POEA only Where the Philippines has concluded Bilateral labor agreements or arrangements;

When an accommodating state observes and/or complies with the international laws and
standards for migrant workers;
Where there is a guarantee from the accommodating state to protect the rights of Filipino
migrant workers.
Adjudicatory Functions
Administrative cases involving violations of licensing rules and regulations and registration
of recruitment and employment agencies or entities;
POEA has the power to:
Suspend or cancel license; and
Order the refund or reimbursement of such illegally collected fees (Eastern Assurance
and Surety Corp. v. Sec. of Labor, GR Nos. 79436-50, January 17, 1990)
Disciplinary action cases and other special cases which are administrative in character,
involving employers, principals, contracting partners and Filipino migrant workers.
Other General Provisions
Mandatory Remittance (Article 22)
Exceptions
Filipino servicemen working in U.S. military Installations;
Where the worker's immediate family members, dependents, or beneficiaries are residing
with him abroad; and
Immigrants and
Filipino professionals and employees working with United Nations agencies or specialized
bodies (Resolution No. 1-83, Inter-Agency Committee for Implementation of E.G. 857).
What if an OFW fails/refuses to remit?
Worker shall be suspended or excluded from the list of eligible workers for overseas employment.
Subsequent violations shall warrant his repatriation.
Employers who fail to comply shall be excluded from the overseas employment program.
Private employment agencies or entities shall face cancellation or revocation of their licenses or
authority to recruit, without prejudice to other liabilities under existing laws and regulations
Recruitment and Placement Agencies (private)
Art. 27, LC: Filipino citizens, or Corporations, partnerships or entities at least 75% of the authorized
and voting capital stock of which is owned and controlled by Filipino citizens.
Art. 28, LC:
Private employment agency for local employment
For single proprietorship or partnership minimum net worth of two (2) hundred
thousand pesos.
For corporations a minimum paid up capital of five (5) hundred thousand pesos.
Private recruitment or manning agency for overseas employment
For single proprietorship or partnership minimum capitalization of two (2) million
pesos.
For corporations minimum paid up capital of two (2) million pesos;
increase capitalization or paid-up capital to two (2) million pesos at the rate of
two hundred fifty thousand pesos (P250,000) every year.
Those not otherwise disqualified by law or other government regulations to engage in the
recruitment and placement of workers for overseas employment.
Entities disqualified from participating as a recruitment entity
Officials or employees of the DOLE or other government agencies directly involved in overseas
employment program and their relatives within the 4th degree of consanguinity or affinity;
Travel agencies and sales agencies of airline companies (Art. 26, LC).
Officers or members of the board of any corporation or members in a partnership engaged in the
business of a travel agency;
Corporations and partnerships, when any of its officers, members of the board, or partners, is also
an officer, member of the board, or partner of a corporation or partnership engaged in the business
of a travel agency (interlocking officers);
Persons, partnerships or corporations which have derogatory records
Those whose Licenses have been previously cancelled or revoked (Sec. 2, Rule I, 2002 Rules and
Regulations on the Recruitment and Employment of Land-Based Workers).
License or Authority: Limitations
Used only by the person or entity in whose favor it was issued;
Used only in the Place stated in the license.
Recruitment and placement must be undertaken at their authorized official addresses.
Provincial recruitment and/or job fairs may be allowed only when authorized by POEA in writing.
- ART. 29, Labor Code
Recruitment Agencies, Bond

All applicants for license or authority shall post such cash and surety bonds as determined by the
Secretary of Labor, including escrow deposits.
- ART. 31: BONDS

Purpose of Bond:
To guarantee compliance with prescribed recruitment procedures, rules and regulations, and
terms and conditions of employment;
The surety bond required of recruitment agencies is intended for the protection of our citizens who
are engaged for overseas employment by foreign companies. The purpose is to insure that if the
rights of these overseas workers are violated by their employers, recourse would still be available to
them against the local companies that recruited them for the foreign principal. The foreign principal
is outside the jurisdiction of our courts and would probably have no properties in this country
against which an adverse judgment can be enforced. This difficulty is corrected by the bond, which
can be proceeded against to satisfy that judgment. (STRONGHOLD INSURANCE COMPANY, INC. vs.
CA and ADRIANO URTESUELA, G.R. No. 88050, January 30, 1992)
Exemption from Garnishment
Cash bond filed by applicants for license or authority is not subject to garnishment by a
judgment creditor of the agency.
Should the bond/deposit in escrow or any part thereof be garnished, the same should be
replenished by the agency within 15 days from notice from the POEA. Failure to replenish
the same within the said period shall cause the suspension of the license (Sec. 22, Rule II,
Book II, Rules and Regulations on the Recruitment and Employment of Land-based Workers).
POEA has the power to enforce liability under cash or surety bonds.
Solidary Liability of Recruitment Agencies
The recruitment agency is SOLIDARILY LIABLE with the foreign principal for unpaid salaries of a
worker it recruited. Before recruiting, the agency is required to submit a document containing its
power to sue and be sued jointly and solidarily with the principal or foreign-based employer for any
of the violations of the recruitment agreement, and the contracts of employment (Sec. 10, Rule V,
Book I, Implementing Regulations of LC).
The recruitment agency may still be sued even if agency agreement between recruitment agency
and principal is already severed if no notice of the termination was given to the employee based on
Art. 1921 of the New Civil Code (Catan v. NLRC, GR No. 77297, April 15, 1988).
Exemption: Where the workers themselves insisted for the recruitment agency to send them back
to their foreign employer despite their knowledge of its inability to pay their wages, the Court
absolved the agency from liability (Feagle Construction Corp. v. Gayda, GR No. 82310, June 18,
1990).
Contract by Principal: Even if it was the principal of the manning agency who entered into contract
with the employee, the manning agent in the Philippines is jointly and solidarily liable with the
principal (Seagull Maritime Corp. v. Balatongan, GR Nos. 83635-53, February 28, 1989).
What fees will a worker pay, and when?
ART. 32, LC
Charging of fees only after employment obtained or actual commencement of employment.
All fees paid shall be covered with appropriate receipt.
POEAs authority
Suspend or cancel license; and
Order the refund or reimbursement of such illegally collected fees (Eastern Assurance and
Surety Corp. v. Sec. of Labor, GR Nos. 79436-50, January 17, 1990).
Placement fees cannot be collected from a hired worker until he has signed the employment
contract and shall be covered by receipts clearly showing the amount paid (Sec. 2[a], Rule V, Book
II, Rules and Regulations Governing Overseas Employment).
Manning agencies shall not charge any fee from seafarer-applicants for its recruitment and
placement services.
No other fees or charges including processing fees shall be imposed against any worker.
Recruitment Agencies, Prohibited Acts
1. Charge greater amount than that specified in the schedule of allowable fees;
2. Furnish any false information in relation to recruitment or employment;
3. Give any false notice, testimony etc. or commit any act of misrepresentation to secure a license or
authority;
4. Induce or attempt to induce a worker to quit his job in lieu of another offer unless it is designed to
liberate the worker from oppressive terms of employment;
5. Influence or attempt to influence any person or entity not to employ any worker who has not
applied for employment through his agency;
6. Engage in recruitment or placement of jobs harmful to public health, morality or to the dignity of
the Philippines;
7. Obstruct or attempt to obstruct inspection by the Labor Secretary or his authorized representatives;

8. Fail to file reports, on the status of employment, placement etc. and such other matters as may be
required by the SOLE;
9. Substitute
or alter employment contracts without the approval of the Secretary of Labor;
10. Become an officer or member of the Board of any corporation engaged in the management of a
travel agency;
11. Withhold travel documents from applicant workers before departure for unauthorized monetary
considerations.
Recruitment Agencies, Suspension, Cancellation, Revocation
Suspension or Cancellation
Prohibited acts (Art. 34);
Charging a fee before the worker is employed or in excess of the authorized amount;
Recruitment activities in places outside the authorized area;
Deploying workers without processing through the POEA; and
Advertisements (job announcements) without POEA's prior approval (Sec.4, Rule II, Book IV,
POEA Rules).
Grounds for Revocation of License (IVEE)
Accumulated three counts of suspension by an agency based on final and executory orders
within the validity period of its license;
Violation of the conditions of license;
Engaging in acts of misrepresentation for the purpose of securing a license or renewal
thereof; and
Engaging in the recruitment or placement of workers to jobs harmful to the public health or
morality or to the dignity of the Republic of the Philippines (Sec.3, Rule I, Book VI, Rules and
Regulations Governing Overseas Employment).
Illegal Recruitment
Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and
includes referring, contract services, promising or advertising for employment abroad, whether for
profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the
Philippines. Provided, that any such non-licensee or non-holder who, in any manner, offers or
promises for a fee employment abroad to two or more persons shall be deemed so engaged.
Includes prohibited acts under Article 34, LC, whether committed by any person, whether a nonlicensee, nonholder, licensee or holder of authority.
Other Acts of Illegal Recruitment
Failure to actually deploy without valid reason as determined by DOLE;
Failure to reimburse expenses incurred by the worker in connection with his documentation and
processing for purposes of deployment, in cases where the deployment does not actually take place
without the worker's fault; and
Recruitment and placement activities of agents or representatives appointed by a licensee, whose
appointments were not previously authorized by the POEA.
Illegal Recruitment, Elements
1. The offender is a licensee/non-licensee or holder/non-holder of authority engaged in the recruitment
and placement of workers; and
2. The offender undertakes either any recruitment activities defined under Article 13 (b), or any
prohibited practices enumerated under Art. 34 (People v. Sadiosa, GR No. 107084, May 15, 1998;
Sec. 10, R.A. 8042).
Illegal Recruitment as an Offense Involving Economic Sabotage
Qualifying Circumstances
When illegal recruitment is committed by a SYNDICATE, i.e., if it is carried out by three (3) or
more persons conspiring and/or confederating with one another; or
When illegal recruitment is committed in a LARGE SCALE, i.e., if it is committed against
three (3) or more persons individually or as a group.
Persons convicted will suffer the following sanctions
Automatic revocation of the license or authority (Art. 39[e], LC);
Forfeiture of the cash and surety bonds (Art. 39[e], LC); and
Conviction of the crime of estafa, if found guilty thereof (People v. Calonzo, GR Nos. 11515055, September 27, 1996).
Why distinguish Illegal Recruitment?
Because of distinctions as to:
Prescriptive Period
Penalties

Simple

Economic Sabotage

Pp. vs. Tuguinay

RTC Br. 60, Baguio City
5 Years
20 Years
three elements of illegal recruitment in large
scale
Imprison
Prision
Life imprisonment
a) the offender has no valid license or
ment
mayor
authority required by law to enable
P200,00
him to lawfully engage in recruitment
0Fine
P500,000-P1M
and placement of workers;
P500,00
b) the offender undertakes any of the
0
activities within the meaning of
recruitment and placement under Article 13(b) of the Labor Code, or any of the prohibited
practices enumerated under Article 34 of the said Code (now Section 6 of Republic Act No.
8042); and
c) the offender committed the same against three or more persons, individually or as a
group, are present in this case.
Alien Employment Permit
An Alien Employment Permit is a document issued by the Department of Labor and Employment
which authorizes a foreign national to work in the Philippines.
Permit required for entry of aliens into the country for employment purposes, subject to Nonavailability of any person in the Philippines who is competent, able and willing at the time of
the application to perform the services for which the alien is desired, including:
All foreign nationals seeking admission to the Philippines for the purpose of
employment
All NON-RESIDENT foreign nationals already working in the Philippines. Immigrants
and resident aliens are not required to secure a working permit. Instead, they need
to secure an Alien Employment Registration Certificate (AERC)
Non-resident foreign nationals admitted to the Philippines on non-working visas and
who wish to seek employment, and
Missionaries of religious workers who intend to engage in gainful employment
Foreign professionals who are allowed to practice their profession in the Philippines
under reciprocity and other international agreements and in consultancy services
pursuant to Section 7(j) of the PRC Modernization Act of 2000.
Holders of Special Investors Resident Visa (SIRV), Special Retirees Resident Visa
(SRRV), Treaty Traders Visa (9d) or Special Non-Immigrant Visa (47(a)2) for as long as
they occupy any executive, advisory, supervisory, or technical position in any
establishment.
AEP, Basis for Issuance
Basis for issuance
Compliance by the applicant or employer or the foreign national with the substantive
and documentary requirements.
Determination of the DOLE Secretary that there is no available Filipino national who is
competent, able and willing to do the job for the employer.
Assessment of the DOLE Secretary that the employment of the foreign national will
redound to national benefit.
AEP, When Unnecessary
All members of diplomatic service and foreign government officials accredited by and
with reciprocity arrangement with the Philippine government;
Officers and staff of international organizations of which the Philippines is a
cooperating member, and their legitimate spouses desiring to work in the Philippines;
Foreign nationals elected as members of the Governing Board who do not occupy any
other position, but have only voting rights in the corporation;
All foreign nationals granted exemption by law;
Foreign nationals who come to the Philippines to teach, present and/or conduct
Foreign nationals who come to the Philippines to teach, present and/or conduct
research studies in universities and colleges as visiting, exchange or adjunct
professors under formal agreements between the universities or colleges in the
Philippines and foreign universities or colleges; or between the Philippine government
and foreign government; provided that the exemption is on a reciprocal basis;
Prescripti
ve Period

Owners and representatives of foreign nationals whose companies are accredited by

the POEA who come to the Philippines for a limited period and solely for the purpose
of interviewing Filipino applicants for employment abroad;
Resident foreign nationals and temporary or probationary resident visa holders
employed or seeking employment in the Philippines.

AEP, Validity
One year or
Co-terminus with the duration of employment, consultancy services or other modes of
employment or term of office, which in no case shall exceed five years. Said AEP is valid for
the position/s and company for which it was issued.
In case of assignment in the companys subsidiaries, branch offices and joint ventures and
those assigned in the headquarters with oversight function in any of the branch offices,
operation or projects in the country, one AEP shall be required and valid for all the said
assignments irrespective of their place/s.
Grounds for the denial of AEP
Misrepresentation of facts in the application;
Submission of falsified documents;
Derogatory record of foreign national;
Availability of a Filipino who is competent, able and willing to do the job intended for the foreign
national.
Grounds for suspension of AEP
The continued stay of the foreign national may result in damage to the interest of the industry or
the country;
The employment of the foreign national is suspended by the employer or by order of the Court.
Grounds for revocation/cancellation of AEP
Non-compliance with any of the requirements or conditions for which the AEP was issued;
Misrepresentation of facts in the application;
Submission of falsified or tampered documents;
Meritorious objection or information against the employment of the foreign national as
determined by the Regional Director;
Foreign national has a derogatory record; or
Employer terminated the employment of the foreign national.
Appeal and Penalties
Appeal maybe filed by any aggrieved party with the Secretary of Labor and Employment within 10
days after receipt of the Order of denial/cancellation or revocation.
If a foreign national is found to have worked without or with expired AEP prior to application, a
penalty of Ten Thousand Pesos (P10,000.00) shall be imposed for working without an AEP for one
(1) year or fraction thereof.
Human Resource Development
The TESDA
Read Articles 43-56, Labor Code
The Technical Education and Skills Development Authority (TESDA) was created under R.A 7796 and
replaced the NMYC.
Statement of Goals and Objectives
a. To attain international competitiveness;
b. To meet demands for quality middle-level manpower;
c. To disseminate scientific and technical knowledge base;
d. To recognize and encourage the complementary roles of public and private
institutions; and
e. To inculcate desirable values.
Middle-Level Manpower
refers to those:
Who have acquired practical skills and knowledge through formal or non-formal education
and training equivalent to at least a secondary education but preferably a post-secondary
education with a corresponding degree or diploma;
Skilled workers who have become highly competent in their trade or craft as attested by
industry.
Special Workers
Types of Special Workers
Apprentice
Learner
Handicapped
Objectives for Training and Employment
To help meet the demand of the economy for trained manpower;

 To establish a national apprenticeship program; and

To establish apprenticeship standards for the protection of apprentices.
Key Terms, defined.
Apprenticeship - practical training on the job supplemented by related theoretical instruction, for a
highly skilled or technical occupation for a period of not less than three months but not more than
six months.

Apprentice - a worker who is covered by a written apprenticeship agreement with an individual

employer or any of the entities recognized under this chapter, with an apprenticeship program duly
approved by the DOLE.

Apprenticeable Occupation - any trade, form of employment or occupation which requires more
than 3 months of practical training on the job supplemented by related theoretical instruction.
Apprenticeship Agreement an employment contract wherein the employer binds himself to train
the apprentice and the apprentice in turn accepts the terms of training.
On-the-job-training practical work experience through actual participation in productive activities
given to or acquired by an apprentice.
Highly Technical Industries a trade, business, enterprise, industry or other activity which is
engaged in the application of advanced technology.
Apprentice, qualifications.
At least 15 years of age (as amended by Sec. 12, RA 7610), provided that if below 18 years, he
shall not be eligible for hazardous occupations.
Physically fit for the occupation in which he desires to be trained;
Possess vocational aptitude and capacity for the particular occupation as established through
appropriate tests; and
Possess the ability to comprehend and follow oral and written instructions.
Total physical fitness is not required of an apprentice-applicant unless it is essential to the
expeditious and effective learning of the occupation. Only physical defects which constitute real
impediments to effective performance as determined by the plant apprenticeship^ committee may
disqualify an applicant. (Sec 13, Rule VI, Book II, Rules implementing the Labor Code)
Employment of Apprentices
Employer may employ apprentices when
They are classified as highly technical industries; and
The task to be performed is an apprenticeable occupation as determined by the Secretary of
Labor.

Requisites for a Valid Apprenticeship

Qualified under Article 59;
Apprentice earns not less than 75% of the prescribed minimum salary; (Sec 13, Rule VI,
Book II, Rules Implementing the Labor Code)
Apprenticeship agreement duly executed and signed;
Apprenticeship program must be approved by the Secretary of Labor; otherwise, the
apprentice shall be deemed a regular employee (Nitto Enterprises v. NLRC, GR No. 114337,
September 29, 1995); and
Period of apprenticeship shall not exceed six (6) months (Sec. 19, Rule VI, Book II, Rules
Implementing the Labor Code).
Apprenticeship Agreement
Content
Full name and address of the contracting parties;
Date of birth of the apprentice;
Name of trade, occupation or job in which the apprentice shall be trained and the dates on
which such training will begin and will proximately end;
Approximate number of hours of on-the-job training with compulsory theoretical instructions
which the apprentice shall undergo during his training;
Schedule of the work processes of the trade/ occupation in which the apprentice shall be
trained & the approximate time to be spent on the job in each process;
Graduated scale of wages to be paid to the apprentice;
Probationary period of the apprentice during which either party may summarily terminate
their agreement; and
An Apprenticeship Transfer Clause (Sec. 18, Rule VI, Book II, Rules Implementing the Labor
Code).
Apprenticeship Program, venue
Within the sponsoring firm, establishment or entity; OR
Within a DOLE training center or other public training institutions; OR
Initial training in trade fundamentals in a training center or other institutions with subsequent
actual work participation within the sponsoring firm or entity during the final stage of training.
Violations, Apprenticeship Agreements

Investigation of Violation of Apprenticeship Agreement (Art. 65)

Either party to an agreement may terminate the same after the probationary period only for
a valid cause.
Action may be initiated upon complaint of any interested person or upon DOLE'S own
initiative.
Valid Causes to Terminate Apprenticeship Agreements
By the employer
Habitual absenteeism in on-the-job training and related theoretical instructions;
Willful disobedience of company rules or insubordination to lawful order of a superior:
Poor physical condition, permanent disability or prolonged illness which incapacitates the
apprentice from working;
Theft or malicious destruction of company property and/or equipment;
Poor efficiency or performance on the job or in the classroom for a prolonged period despite
warnings duly given to the apprentice; and
Engaging in violence or other forms of gross misconduct inside the employer's premises.
By the apprentice
Substandard or deleterious working conditions within the employer's premises:
Repeated violations by the employer of the terms of the apprenticeship agreement;
Cruel or inhumane treatment by the employer or his subordinates;
Personal problems which in the opinion of the apprentice shall prevent him from a
satisfactory performance of his job; and
Bad health or continuing illness. (Sec 25, Rule VI, Book II, Rules Implementing the Labor
Code)
Appeal & EAR
Appeal (Art. 66)
The decision of an authorized agency of the Department of Labor may be appealed to the
Secretary of Labor, within 5 days from receipt of the adverse decision.
The decision of the Secretary of Labor shall be final and executory.
Exhaustion of Administrative Remedies (Art. 67)
The exhaustion of administrative remedies is a condition precedent to the institution of
action.
The plant apprenticeship committee shall have initial responsibility for settling differences
arising out of apprenticeship agreements (Sec. 32b, Rule VI, Book II, Rules Implementing the
Labor Code).
Organization of Apprenticeship Programs
ART. 70: The organization of apprenticeship program shall be primarily a voluntary undertaking of
employers, except as provided for in Article 72.
Exceptions: (Art. 72)
When grave national emergencies, particularly those involving the security of the state, arise or
particular requirements of economic development so demand, the Secretary of Labor and
Employment may recommend to the President of the Philippines the compulsory training of
apprentices required in certain trades, occupations, jobs, or employment levels where shortage of
trained manpower is deemed critical.
Where services of foreign technicians are utilized by private companies in apprenticeable trades
said companies are required to set up appropriate apprenticeship programs. (Sec. 41, Rule VI, Book
II, Rules Implementing the Labor Code)
Employer Privileges
An additional deduction from taxable income of 1/2 of the value of labor training expenses incurred
for developing the productivity and efficiency of apprentices are granted to the person or enterprise
organizing an apprenticeship program, provided
Apprenticeship program must be duly recognized by the Department of Labor;
Deduction shall not exceed 10% of direct labor wage, and
Employer must pay his apprentices the minimum wage.
Apprentices without compensation
Required by the school;
Required by the training program Curriculum;
A requisite for graduation; or
A requisite for board examination. (Sec. 40, Rule VI, Book II, Rules Implementing the Labor Code)
Apprentices without compensation
Rules on Working Scholar
There is NO employer-employee relationship where there is agreement between them
The agreement shows that the student/scholar agrees to work for the college/university in
exchange for the privilege to study free of charge,

provided the students are given real opportunities, including such facilities as may be reasonable
and necessary to finish their chosen courses under such agreement
The student/scholar is not considered an employee. But if he causes injury or damage to a third
person, the school may be held liable under Art. 2180 of the Civil Code (Filamer Christian Institute
v. IAC, GR No. 75112, August 17, 1992).
Apprenticeship agreement; validity
Atlanta Industries, Inc. and/or Robert Chan vs. Aprilito R. Sebolino, et al., G.R. No. 187320, Jan.
2011. The apprenticeship agreements did not indicate the trade or occupation in which the
apprentice would be trained; neither was the apprenticeship program approved by the Technical
Education and Skills Development Authority (TESDA). These were defective as they were executed
in violation of the law and the rules. Moreover, with the expiration of the first agreement and the
retention of the employees, the employer, to all intents and purposes, recognized the completion of
their training and their acquisition of a regular employee status. To foist upon them the second
apprenticeship agreement for a second skill which was not even mentioned in the agreement itself,
is a violation of the Labor Codes implementing rules and is an act manifestly unfair to the
employees.
Learners
Learners - persons hired as trainees in semiskilled and other industrial occupations which are nonapprenticeable and which may be learned through practical training on the job in a relatively short
period of time which shall not exceed 3 months.
Learnership Agreement - employment and training contract entered into between the employer and
the learner.
No requirement for theoretical instruction
When Learners May be Hired
No experienced workers are available;
The employment of learners being necessary to prevent curtailment of employment opportunities;
and
The employment will neither create unfair competition in terms of labor costs nor impair working
standards.
Employment of minors as learners
A minor below fifteen (15) years of age shall not be eligible for employment as a learner. Those
below eighteen (18) years of age may only be employed in non-hazardous occupations.
Learnership Agreement
It shall include:
The names and addresses of the employer and the learner;
The occupation to be learned and the duration of the training period which shall not exceed
three (3) months;
The wage of learner which shall be at least 75% of the applicable minimum wage; and
A commitment to employ the learner, if he so desires, as a regular employee upon
completion of training.
A learner who has worked during the first two months shall be deemed a regular employee if
training is terminated by the employer before the end of the stipulated period through no fault of
the learner
Distinctions

Preliminary Discussions
Employees Not Covered by Provisions on Working Conditions:
Government Employees
Managerial Employees
Officers and members of a managerial staff
Domestic Servants and Persons in the Personal Service of Another
Workers Paid by Results
Non-Agri Field Personnel
Members of an employers Family
Definitions
Normal hours of work - Eight hours per work day
Work day 24 consecutive-hour period which commences from the time the employee regularly
starts to work
Work week a week consisting of 168 consecutive hours or 7 consecutive work days beginning at
the same hour and on the same calendar day each calendar week.
Policies regarding hours of work
Reduction of eight-hour working day is not prohibited, provided there is no reduction in workers
pay
Payment of wages of part-time workers should be in proportion only to the hours worked.
Management has the prerogative, whenever exigencies of the service so require, to change the
working hours of its employees.
Workdays may be reduced on account of losses where the losses sought to be prevented are
caused by factors outside of the employers control.
Allowed by the DOLE as it is more humane to keep workers employed rather than cause the
outright termination of their services
Compressed Work Week
Six-day work week may be compressed to five days
Subject to conditions imposed by the DOLE:
Employees voluntarily agree to work extended hours
No diminution in take-home pay and fringe benefits
Value of benefits that will accrue to the employees is more than or at least commensurate
with the overtime pay that is due them
Work does not involve strenuous physical exertion and with rest periods
Temporary arrangement only, as determined by DOLE
Effect of reduction of workdays on wages and allowances
The employer may deduct the wages and living allowances corresponding to the days taken
off from the work week, in the absence of an agreement specifically providing that a
reduction in the number of workdays will not adversely affect the remuneration of the
employees.
Situations Contemplated Within Hours Worked

All time during which an employee is required to be on duty or to be at the employers premises or
to be at a prescribed workplace, and
All time during which an employee is suffered or permitted to work
Coffee breaks and rest periods of short duration
Waiting time, if waiting is integral part of employees work, or he is engaged by employer to wait
Sleeping while on duty, if work allows sleeping without interrupting or prejudicing work, or when
there is an express agreement between employer and employee
Employee is required to remain on call in the employers premises that he cannot use the time
effectively and gainfully for his own purpose.
Traveling
From home to work not compensable
Traveling that is all in a days work compensable
Travel away from home compensable
Seminars, training, meetings, lectures
Must be sanctioned by employer to be compensable
CBA Negotiations or grievance meeting
Meal Period
One hour time off for regular meals
Not compensable, except if employee is required to work while eating (even if employer
pays for meal)
If reduced to less than 20 minutes, considered as a break; compensable
Employee may do anything he wants, and leave premises provided he returns on time
Night Shift Differential and Overtime Work
NSD: 10% of employees regular wage for each hour of work performed between 10:00 PM and 6:00
AM the next day.
OT: Work rendered after normal eight hours of work
Distinctions: When the work of an employee falls at night time, the receipt of overtime pay shall not
preclude the right to receive night differential pay. NSD is for work done at night, OT is for work
done beyond normal hours of work.
OT, Definition of Terms
Premium pay additional compensation required by law for work performed within 8 hours on nonworking days such as rest days and special days
Overtime pay additional compensation for work performed beyond eight hours
Regular wage or basic salary means cash wage only without deduction for facilities provided by
employer
OT, Computation
OT on ordinary day: Plus 25% of Basic Hourly Rate (BHR)
OT on rest day or special day: Plus 30% of (BHRx1.3) (Article 93(a))
OT on rest day and special day: Plus 30% of (BHRx1.5) (Article 93(c))
OT on regular holiday: Plus 30% of (BHRx2) (Article 94(b))
OT on rest day and regular holiday: Plus 30 of (BHR x 2.6)
Offsetting of Undertime by Overtime
If an employee work for only 7 hours on any given day (under time assuming his regular working
period is eight hours daily), he cannot be compelled to make up for his time deficiency by requiring
him to render work for an additional one hour on another day. Article 87 of the Labor Code, reads:
Article 87. Undertime not offset by overtime. Undertime work on any particular day shall not be
offset by overtime work on any other day. x x x
Offsetting under-time against overtime would deprive the employee of the additional compensation
for the overtime work he has rendered. Undertime is covered only by the regular hourly rate
whereas overtime is subject to additional overtime rate. If the two are to be offset, the employee
loses overtime pay to which he is entitled.
Emergency Overtime Work
As a general rule, employees may not be compelled to work in excess of eight hours or to render
overtime work on any given day against his will.
The exception to this rule is found in Article 89 of the Labor Code. Under the said article, employees
may be compelled to perform overtime work.
Emergency Overtime Work
Country is at war or under any national or local emergency;
Necessary to prevent loss of life or property, or in case of imminent danger to public safety;
Urgent work to be performed on machines, etc., in order to avoid serious loss or damage to
the employer;
Work is necessary to prevent loss or damage to perishable goods;
Completion or continuation of work is necessary to prevent serious obstruction or prejudice to the
business; or

 Necessary to avail of favorable weather or environmental conditions.

Managerial Employees not Entitled to Overtime Pay
Article 82: The provisions of the Labor Code on working conditions and rest periods shall not apply
to managerial employees. This includes overtime pay for overtime work.
Supervisory employees are considered as officers or members of the managerial staff (for purposes
of LABOR STANDARDS), and hence are not entitled to overtime, rest day and holiday pay. (Natl
Sugar Refineries Corp. vs. NLRC, G.R. No. 101761. March 24, 1993).
Holidays and Special Days
Republic Act 9492 amended Section 26, Chapter 7, Book I of EO 292, also known as the
Administrative Code of 1987, declaring certain days (specific or movable) as special or regular
holidays;
RA 9849: Eidul Adha shall be celebrated as a national holiday;
Regular Holidays
New Years Day
Maundy Thursday
Good Friday
Araw ng Kagitingan April 9
Labor Day May 1
Independence Day June 12
National Heroes Day Last Monday of August
Bonifacio Day - November 30
Christmas Day December 25
Rizal Day December 30
Eid al Fitr Movable
Eidl Adha Movable
Special (Non-Working) Days
Ninoy Aquino Day - August 21
All Saints Day November 1
Last Day of the Year December 31
Special Day (for all schools)
EDSA Revolution Anniversary February 25
Applicable Rules on Holiday Pay
Every employer covered by the Holiday Pay Rule is entitled to his/her daily wage rate. This means
that the employee is entitled to 100% of the daily wage rate, even if the worker did not report for
work, provided that the worker is present or is on leave with pay on the work day immediately
preceding the holiday.
Covered employees on leave with pay on the day prior to the holiday are entitled to holiday pay.
The same is true for employees whose rest day falls on the day prior the holiday.
Those who are on leave without pay or are absent on the day prior the holiday may not be paid the
holiday pay if he did not work on the regular holiday.
Work performed or rendered on the holiday itself entitles the employee to at least twice the latters
daily rate.
Where the holiday falls on the scheduled rest day of the employee, work performed shall be paid at
an additional 30% of the regular holiday rate, or at least 260%
In cases where there are two successive holidays (usually Maundy Thursday and Good Friday), the
employee who absents himself from work on the day immediately preceding the first holiday is not
entitled to be paid for both holidays, EXCEPT if he works on the first holiday, in which case he is
entitled to his holiday pay on the second holiday.
Premium Pay
Premium Pay Definition. additional compensation required by law to be paid to employees for
work performed on non-working days, such as rest days and special days.
No Work, No Pay Rule.
During rest and special days, the principle of no work, no pay applies. Workers who were
not required or permitted to work on those days are not by law entitled to any
compensation.
This is consistent with the definition above that premium pay is to be paid for
work performed.
Performance of work is necessary for entitlement to premium pay.
Premium Pay for Rest Days
As a general rule, where an employee is made or permitted to work on his scheduled rest day,
whether it is a regular day or a holiday, he shall be paid an additional compensation of at least 30%
of his regular wage for that day. The rule is different for work performed on a rest day which is also
a special day, in which case, 50% of the regular daily rate is added, instead of 30% of the daily rate
for special day.

In sum, the premium pay rates for rest days are as follows:
For work performed on rest days, an additional 30% of the daily rate or a total of 130%;
For work performed on a rest day which is also a special day, an additional of 50% of the
daily rate or a total of 150%; and
For work performed on a regular holiday which is also the employees rest day, an additional
30% of the regular holiday rate of 200% or a total of 260%.

Computations
Work on a Rest Day
Premium pay = 30% of Basic pay
= 30% of P300.00
= 0.3 x P300.00
= P90.00

Rate on Rest day = Basic pay + Premium

pay
= P300.00 + P90.00
= P390.00

Work on a Holiday Falling on a Rest Day

Premium pay = 30% of Daily rate on
holiday
Daily rate on holiday = 200% of Basic pay
Daily rate on holiday =P300.00 x 2
Daily rate on holiday =P600.00
Premium pay = 0.3 x Daily rate on
holiday
= 0.3 x P600.00
= P180.00

Rate on Rest Day falling on a Holiday =

Daily rate on holiday + Premium pay
= P600.00 + P180.00
= P780.00
Or,
Rate = 260% of Basic pay
= 2.6 x P300.00
= P780.00

Work on a Special Day

Premium pay = 30% of Basic pay
= 30% of P300.00
= 0.3 x P300.00
= P90.00

Rate on Special Day = Basic pay +

Premium pay
= P300.00 + P90.00
= P390.00

Work on a Special Day Falling on a Rest Day

Premium pay = 50% of Basic pay
= 50% of P300.00
= 0.5 x P300.00
= P150.00

Rate on Special Day on a Rest day = Basic

pay + Premium pay
= P300.00 + P150.00
= P450.00

Premium Pay, no regular workdays and scheduled rest days

Where the nature of the work of the employee is such that he has no regular workdays and no
regular rest days can be scheduled, he shall be paid an additional compensation of at least 30% of
his regular wage for work performed on Sundays and holidays.
Comparison of Premium Pay and Holiday Pay
Using the definition of premium pay, holiday pay is not a premium pay because it does not require
performance of work by the employee. In case of holiday pay, the employee is entitled payment
even if he does not work. The same cannot be said of premium pay.
Thus, unlike in premium pay, the principle no work, no pay does not similarly apply to holiday pay.
Thirteenth Month Pay
PD 851, Thirteenth Month Pay Law, as amended by Memorandum Order No. 28, requires all
employers to pay their employees a 13th month pay not later than December 24 of every year.
Originally, PD 851required payment of 13th month pay to employees receiving not more than P1,000
a month. MO 28 (1987), removed the salary ceiling, and all rank and file employees became
entitled to a 13th month pay regardless of the amount of their monthly basic salary
Employees Covered by 13th Month Pay Law
All rank-and-file employees, regardless of their designation or employment status, and irrespective
of the method by which their wages are paid, who have worked at least one month during the

calendar year are entitled to 13th month pay. Managerial employees are excluded from the
coverage of the law.
The Labor Code distinguishes a rank-and-file employee from a managerial employee. It provides
that a managerial employee is one who is vested with powers of prerogatives to lay down and
execute management policies and/or to hire, transfer, suspend, lay-off, recall discharge, assign or
discipline employees, or to effectively recommend such managerial actions.
All employees not falling within this definition are considered rank-and-file employees.
13th Month, Amount
Not less than 1/12 of the total basic salary earned by the employee within the calendar year.
Only basic salary is included in the computation of 13th month pay.
Excludes allowances and monetary benefits which are not considered or integrated as part of the
regular or basic salary.
However, salary-related benefits should be included as part of the basic salary in the computation
of the 13th month pay if by individual or collective agreement, company practice or policy, the
same are treated as part of the basic salary of the employees.
Employees excluded from coverage of 13th month pay law
Managerial employees;
Those covered under the civil service law;
Those already receiving 13th month pay or its equivalent. Christmas bonus, mid-year bonus, cash
bonuses and other payments amounting to not less than 1/12 of the basic salary are treated as
equivalent of 13th month pay;
Those paid on purely commission, boundary, or task basis, and those who are paid fixed amount for
performing specific work except those paid on a piece-rate basis.
Employees paid commissions
Not entitled to 13th month pay if purely on commission basis.
Employees paid on partly commission basis, i.e., those guaranteed with a fixed wage aside from the
commission, are entitled to 13th month pay.
Types of commission:
Commission as an incentives or encouragement to ensure productivity, i.e., productivity
bonus does not form part of basic salary, not to be included in computation (Boie Takeka
case, 1993.)
Commission as a direct remuneration for service rendered forms part of basic salary.
(see Philippine Duplicators v. NLRC, 1993.)
13th Month Pay of Employees with Multiple Employers.
Employees with multiple employers are entitled to 13th month pay from all their private employers.
If employee works in two or more private firms, he is entitled to the pay from both or all of them. If
he is a government employee, but works part time in a private enterprise, he is entitled to 13th
month pay from the private enterprise.
13th Month Pay of Private School Teachers.
Private school teachers are entitled to 13th month pay regardless of the numbers of months they
work in a year, provided it is at least one month.
13th Month Pay, resigned or separated employees
Employees who resigned or were separated during the calendar year shall be entitled to 13th
month pay in proportion to the length of time he worked during the year, provided it is at least one
month.
The payment may be demanded by the employee upon the cessation of employment.
Cases
For 2 to 3 years, Sevilla Trading, allegedly by mistake, added the night premium, maternity leave
pay, etc., in the computation 13th month pay. The court ruled that the inclusion may no longer be
withdrawn if it has already ripened into a company practice. Nota bene: There is no specific rule as
to how many years are necessary to constitute company practice. (Sevilla Trading v. AVA Tomas,
GR No. 152456.)
Employees paid according to boundary system are not entitled to 13th mo pay. Boundary system
is where the employees do not receive fixed wages, but retain only those sums in excess of the
boundary or fee they pay to the owners or operators of their vehicles. They are akin to employees
paid on purely commission basis. (R&E Transport v. Latag, G.R. No. 155214.)
Drivers who are paid on commission basis, but with guaranteed minimum wage in case their
commission be less than their basic minimum, are entitled to 13th month pay. (PACIWU v. NLRC, GR
No 107994.)
Service Incentive Leave
Basis

Article 95 (Book Three, Title I) of the Labor Code provides the basis of the grant of Service Incentive
Leave to qualified employees. Its implementation is covered by Section 2, Rule V, Book III of the
Omnibus Rules.
Employees entitled to SIL
Every employee (subject to the exceptions below) who has rendered at least one year of service is
entitled to yearly service incentive leave of five days with pay.
At least one year of service
The term at least one-year service means service for not less than 12 months, whether
continuous or broken.
At least one year of service
The 12-month period shall be reckoned from the date the employee started working, including
authorized absences and paid regular holidays.
The only instance when service shall be deemed as one year even when the employee serves less
than that period is when the operation of the establishment is less than 12 months as a matter of
practice or policy, or is so provided in the employment contract
Employees not covered, SIL
The following employees are excluded from entitlement to SIL under the Labor Code (but they may
be entitled to the same or similar benefits if so provided under other laws, or collective bargaining
agreement or employment contract):
Those of the government and any of its political subdivisions, including government-owned and
controlled corporations;
Domestic helpers and persons in the personal service of another;
Managerial employees as defined in Book Three of the Labor Code;
Field personnel and other employees whose performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely commission basis, or those who are paid a
fixed amount for performing work irrespective of the time consumed in the performance thereof;
Those who are already enjoying the benefit herein provided;
Those enjoying vacation leave with pay of at least five days; and
Those employed in establishments regularly employing less than ten employees. (Omnibus Rules)
Manner of Availment
The service incentive leave may be used for sick and vacation leave purposes. And, at the end of
the year, the unused SIL may be commuted to cash.
Commutability to Cash
Under the Omnibus Rules, the unused service incentive leave is commutable to its money
equivalent at the end of the year. [N.B. Not found in the LC.]
Accumulation of Leave Credits
Instead of using up SIL, the employee may accumulate it and opt for its commutation to cash upon
his resignation or separation from employment.
Computation of SIL
In computing SIL, the basis shall be the salary rate at the date of commutation. The availment and
commutation of this benefit may be on a pro rata basis. (DOLE Handbook)
Illustration
An employee was hired on January 1, 1997, and resigned on March 1, 1998. Assuming he has not
used or commuted any of his SIL credits, he is entitled upon his resignation to the commutation of
his accumulated SIL as follows:
SIL earned as of Dec. 31, 1997 = 5 days
Proportionate SIL for Jan. and Feb. 1998 = (2/12) x 5 days = 0.833 day
Total as of March 1, 1998 = 5.833 days
Part-time workers
Are part-time workers entitled to the full five days SIL, or should the entitlement be on pro-rata
basis? Part-time workers are entitled to full five days SIL. (BWC Advisory Opinion)
The reason is that the Labor Code speaks of number of months worked in a year, not number of
hours worked in a day, as basis for entitlement.
Vacation and Sick Leave
The Labor Code treats vacation leave and sick leave under the same category as Service Incentive
Leave or leave with pay.
Thus, the grant of vacation or sick leave with pay of at least five days may be credited as
compliance with SIL. For example, if a company is giving its employees 15 days vacation leave, five
days of which is with pay, the five-days paid vacation leave may be credited as SIL.
Cases
Petitioner CIT claimed that teachers are not entitled to SIL because they are engaged by the school
on contractual basis. The claim was not sustained. It was held that the phrase those who are
engaged on task or contract basis as mentioned in the Omnibus Rules should be read in relation to
field personnel. Teachers, not being field personnel, are entitled to SIL. (CIT vs. Ople, 1987.)

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we
can conclude that the three (3)-year prescriptive period commences, not at the end of the year
when the employee becomes entitled to the commutation of his service incentive leave, but from
the time when the employer refuses to pay its monetary equivalent after demand of commutation
or upon termination of the employees services, as the case may be. (Auto Bus Transport, Inc. vs.
Bautista, 2005)
Petitioners contention that respondent is not entitled to the grant of service incentive leave just
because he was paid on purely commission basis is misplaced. What must be ascertained in order
to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or
not he is a field personnel. (Auto Bus Transport, Inc. vs. Bautista, 2005)
Exemptions. To claim exemption from payment of service incentive leave pay, it is the employers
duty to prove that it is covered under the exemption. Thus, where the employer claims that the
employee is not entitled to service incentive leave pay inasmuch as establishment employing less
than ten (10) employees are exempted from paying service incentive leave pay, it has the duty to
prove that there were less than ten employees in the company. (C. Planas Commercial, et al. vs.
NLRC, G.R. No. 144619, November 11, 2005.)
Maternity Leave
Basis: Maternity leave benefits are found under the Article 133 of the Labor Code and Section 14-A
of Social Security Act of 1997 (Republic Act No. 8282).
Checklist for Availment of Maternity Benefits under Social Security Act
The pregnant woman employee must have paid at least three monthly contributions within
the 12-month period immediately preceding the semester of her childbirth or miscarriage.
She has given the required notification of her pregnancy through her employer if employed,
or to the SSS if separated, voluntary or self-employed member.
Wages
Definitions (Article 97)
Person An individual, partnership, association or corporation, business trust, legal
representative or any organized groups of persons.
Employer includes any person acting directly or indirectly in the interest of an
employer in relation to an employee and shall include the government and all its
branches, subdivisions and instrumentalities, all government owned and controlled
corporations and institutions as well as non-profit private institutions, or
organizations.
Employee Any individual employed by an employer; one who is suffered or
permitted to work in exchange for payment.
Compensation paid to the employee for work or services rendered. The regular wage of an
employee has the following components: (1) Cash wages, which must be in legal tender, and (2)
facilities provided by the employer.
Wage, Attributes
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 calculating 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 for services rendered or to be rendered
Includes the fair and reasonable value, as determined by the DOLE Secretary of board, lodging, or
other facilities customarily furnished by the employer to the employee.
Fair and Reasonable Value
The phrase shall not include any profit to the employer, or to any person affiliated with the
employer (see discussion on facilities).
Facilities
Articles or services for the benefit of the employee or his family
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 employers business.
Facilities may be deducted from what is reflected as wages to derive cash wages, provided:
They are customarily given, and;
The deduction must be with (a) voluntary acceptance and (b) the written consent of the
employee.
Charged at a fair and reasonable value
This is relevant in determining rates for computing overtime and premium pay.
Value of Facilities
Fair and reasonable value of board, lodging and other facilities customarily furnished by an
employer both in agri and non-agri enterprises
Supplements

Supplements. refer to extra remuneration or special privileges or benefits given to or received

by laborers over and above their ordinary earnings or wages.
Facilities vs. Supplements
Both are not part of the CASH COMPONENT of wages;
A facility is given for the benefit of the employee. If necessary in order to maintain health,
efficiency of workers during work, supplement
The distinction lies not in the type of benefit given (food, accommodations, sick leave, use of
facilities) but its purpose;
Deductibility of Facilities or Supplements from Wages
State Marine Cooperation and Royal Line, Inc. vs. Cebu Seamens Association, L-12444, Feb.
1963:
Facilities may be charged to or deducted from wages. Supplements on the other hand may not be
so charged. Thus, when meals are freely given to crew members of a vessel while they were on the
high seas, not as part of their wages but as a necessary matter in the maintenance of the health
and efficiency of the crew personnel during the voyage, the deductions made therefrom for the
meals should be returned to them, and the operatorshould continue giving the same benefit.
Mayon Hotel & Restaurant vs. Adana (GR No. 157634, May 2005), citing Mabeza
Food or snacks or other convenience provided by the employers are deemed as supplements if they
are granted for the convenience of the employer.
Consideringthat hotel workers are required to work different shifts and are expected to be
available at various odd hours, their ready availability is a necessary matter in the operations of a
small hotelThe deduction of the cost of meals from respondents wages, therefore should be
removed.
Gratuity, Allowances and Bonuses
Gratuity. Is a gift freely given by the employer in appreciation of certain favors or services
rendered. It is not part of wages since it is not intended as compensation for actual work. It is not
demandable as a matter of right.
Allowance, RATA (DBM vs. Olivia Leones, GR No. 169726, March 18, 2010). Statutory law, as
implemented by administrative issuances and interpreted in decisions has consistently treated
RATA as distinct from salary. Unlike salary, which is paid for services rendered, RATA belongs to a
basket of allowances to defray expenses deemed unavoidable in the discharge of office.
Bonus (Lepanto Ceramics, Inc. vs. Lepanto Ceramics Employees Association, GR No.
180866, March 2, 2010). A bonus is a gratuity or act of liberality of the giver. It is something
given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted
and paid to an employee for his industry and loyalty which contributed to the success of the
employers business and made possible the realization of profits. A bonus is also granted by an
enlightened employer to spur the employee to greater efforts for the success of the business and
realization of bigger profits.
In the same case, the Supreme Court ruled that a bonus is not a demandable and enforceable
obligation, except if it was promised by the employer and agreed upon by the parties (as when it is
included in the CBA)
Minimum Wage, Concept
Minimum wage represents the lowest possible wage that an employer can legally pay its
employees.
Aim of establishing minimum wage is
To even out the distribution of income, and;
Effectively increase the standard of living of workers.
Article 99: Minimum wage rates in every region of the country for agricultural and non-agricultural
employees and workers shall be prescribed by the RTWPBs. (Read this in relation to Section 3, RA
6727).
Republic Act No. 6727, also known as the "Wage Rationalization Act" established a new mechanism
for minimum wage determination through the creation of the National Wages and Productivity
Commission ( NWPC) and the Regional Tripartite Wages and Productivity Boards (RTWPBs) in all
regions of the country.
Basis for computing minimum wage. The basis of computation of minimum wage shall be the
normal working hours which shall not be more than eight hours a day.
Wage Orders. The RTWPB promulgates WAGE ORDERS pursuant to its wage-fixing authority.
Whenever conditions in a particular region so warrant, the RTWPB shall investigate and study all
pertinent facts and based on the standards and criteria prescribed by RA 6727.
Criteria for Fixing Minimum Wage
The RTWPB shall consider the following in determining minimum wage:
The demand for living wages
Wage adjustments vis--vis the Consumer Price Index
Cost of living, and changes or increases therein

Needs of workers and their families

Need to induce industries to invest in the countryside
Improvement of standards of living
Prevailing wage levels
Fair return of the capital invested and employers capacity to pay
Effects on employment generation and family income
Equitable distribution of income and wealth along the imperatives of economic and social
development
Wage Distortion
A situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantitative differences in wage or salary rates between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other logical bases of differentiation.
Payment by Results
ARTICLE 101. Payment by results. - (a) The Secretary of Labor and Employment shall regulate the
payment of wages by results, including pakyao, piecework, and other non-time work, in order to
ensure the payment of fair and reasonable wage rates, preferably through time and motion studies
or in consultation with representatives of workers and employers organizations.
Avelino Lambo & Vicente Belocura vs. NLRC & J.C. Tailor/Johnny Co, GR No. 111042, October 26,
1999. - There are two categories of employees paid by results:
Those whose time and performance are supervised by the employer. (Here there is an
element of control and supervision over the manner as to how the work is to be performed.
A piece-rate worker belongs to this category especially if he performs his work in the
company premises.); and
Those whose time and performance are unsupervised (here, the employers control is over
the result of the work. Workers on pakyaw and takay basis belong to this group).
Pakyao
Pakyao. A system where a group of workers (1) define their own work time and methods, (2) share
among themselves the wages (3) commensurate to the results of their work.
The wages earned by an individual in a particular day may not be equal to the wage of a regular
worker. For this reason, the DOLE must ensure that payment of wages by pakyao or piece rate will
be FAIR and REASONABLE, considering the circumstances.
Non-Diminution of Benefits
Prohibition against elimination or diminution of benefits.
Nothing in the Labor Code shall be construed to eliminate or in any way diminish supplements, or
other employee benefits being enjoyed at the time of promulgation of this Code. Article 100, Labor
Code.
Non-Diminution of Benefits, Concept
The principle of non-diminution of benefits states that: any benefit and supplement being enjoyed
by employees cannot be reduced, diminished, discontinued or eliminated by the employer.
The Constitution mandates the state to protect the rights of workers and promote their welfare,
and to afford labor full protection. This is the basis of Article 4 of the Labor Code which states that
all doubts in the implementation and interpretation of this Code, including its implementing rules
and regulations shall be rendered in favor of labor.
Benefits & Supplements, Defined
Employee benefits are compensation given to employees in addition to regular salaries or wages.
They may be required by law such as social security benefits, PhilHealth, retirement benefits,
maternity benefits, service incentive leave, etc., or voluntarily offered by the employer as an
incentive to attract and retain employees as well as increase employee morale and improve job
performance.
Supplements include those benefits or privileges granted to an employee for the convenience of
the employer, e.g., board and lodging within the company premises.
Common Application
In employment setting, the principle of non-diminution of benefits finds application when a change
initiated by the employer to existing company policies, specially matters concerning employee
benefits, results in reduction, diminution or withdrawal of some or all of the benefits already
enjoyed by the employees.
Manifestation of Diminution
TSPIC corporation vs. TSPIC Employees Union (FFW), et al., GR No. 163419, Feb. 13, 2008.
Diminution is manifested when:
The grant or benefit is founded on a policy, or has ripened into a practice over a long
period of time;
The practice is consistent and deliberate;

The practice is not due to error in the construction or application of a doubtful or

difficult question of law, and;
The diminution or discontinuance is done unilaterally by the employer.
Length of Time of Company Practices
With regard to the length of time the company practice should have been exercised to constitute
voluntary employer practice which cannot be unilaterally withdrawn by the employer, the Court has
not laid down any rule requiring a specific minimum number of years.
In the case of Davao Fruits Corporation vs Associated Labor Unions (G.R. No. 85073, August 24,
1993), the company practice lasted for six years.
In Davao Integrated Port Stevedoring Services vs. Abarquez (G.R. No. 102132, March 19, 1993), the
employer, for three years and nine months, approved the commutation to cash of the unenjoyed
portion of the sick leave with pay benefits of its Intermittent workers.
In Tiangco vs Leogardo, Jr. (G.R. No. L-57636, May 16, 1983), the employer carried on the practice
of giving a fixed monthly emergency allowance from November 1976 to February 1980, or three
years and four months.
In the case of Sevilla Trading Company vs Semana, ibid., the employer kept the practice of including
non-basic benefits such as paid leaves for unused sick leave and vacation in the computation of
their 13th-month pay for at least two (2) years.
In all these cases, the grant of benefits has been held to have ripened into company practice or
policy which cannot be peremptorily withdrawn.
Integration of Monetary Benefits to the Basic Pay
Payment of Wages
ARTICLE 102. Forms of payment. - No employer shall pay the wages of an employee by means of
promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender,
even when expressly requested by the employee le or under other special circumstances to be
determined by the Secretary of Labor and Employment in appropriate regulations, in which case,
the worker may be paid through another person under written authority given by the worker for the
purpose; or (b) Where the worker has died, in which case, the employer may pay the wages of the
deceased worker to the heirs of the latter without the necessity of intestate proceedings. The
claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the
deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the
heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next-of-kin.
The affidavit shall be presented to the employer who shall make payment through the Secretary of
Labor and Employment or his representative. The representative of the Secretary of Labor and
Employment shall act as referee in dividing the amount paid among the heirs. The payment of
wages under this Article shall absolve the employer of any further liability with respect to the
amount paid.