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2017 Pre-Bar Lecture

Labor Law (Labor Standards)


Atty. Peter-Joey Usita


In your syllabus, you will not only be applying the Labor Code provisions, you will also be
applying basic and fundamental principles in policies especially under the Constitution, under
the Civil Code and of course the Labor Code. So we go through them one-by-one just to refresh
your memory.

Just to peak your interest, when faced with a problem and you do not have any direct answer to
that problem, you may always use the Constitution, the Civil Code, and the Labor Code as a
basis for your answer. But you cannot do that if we do not refresh your memory.

Constitutional provisions

What are the relevant constitutional provisions to the study of labor or labor law? You have
Article 2 Section 9 which states “The State shall promote a just and dynamic social order that
will ensure the prosperity and independence of the nation and free the people from poverty
through policies that provide adequate social services, promote full employment, a rising
standard of living, and an improved quality of life for all.” Article 2 Section 10 “The State shall
promote social justice in all phases of national development,” Kahit lang eto ma-memorize niyo
ok na because it is very short. Then you have Article 2 Section 11 “The State values the dignity
of every human person and guarantees full respect for human rights” Article 2 Section 18 “The
State affirms labor as a primary social economic force. It shall protect the rights of workers and
promote their welfare,” this is another excellent provision which you can use in answering those
questions. Article 2 Section 20 “The State recognizes the indispensable role of the private
sector, encourages private enterprise, and provides incentives to needed investments.”

Now we go to Article 3, the Bill of Rights. Section 1 “No person shall be deprived of life, liberty,
or property without due process of law, nor shall any person be denied the equal protection of
the laws.” You might be asking, saan natin i-aapply ito? We can apply this in illegal termination
or illegal dismissal cases. Lack of due process for example, you can cite this. Section 4 “No law
shall be passed abridging the freedom of speech, of expression, or of the press, or the right of
the people peaceably to assemble and petition the government for redress of grievances.” You
might find this useful in labor relations. Section 7 “The right of the people to information on
matters of public concern shall be recognized. Access to official records, and to documents and
papers pertaining to official acts, transactions, or decisions, as well as to government research
data used as basis for policy development, shall be afforded the citizen, subject to such
limitations as may be provided by law.” Then you have the next section, “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.” This is very specific, that is the
very basic rule applicable to labor relations. Section 10 “No law impairing the obligation of
contracts shall be passed.” Section 16 “All persons shall have the right to a speedy disposition
of their cases before all judicial, quasi-judicial, or administrative bodies.” Section 18 “(2) No
involuntary servitude in any form shall exist except as a punishment for a crime whereof the
party shall have been duly convicted.”, again this may be applicable to illegal dismissal cases.
Like for example an employee resigns, can you prevent the employee? Can you force him to
render services? You cannot, because that is the basis. You can only ask for damages if the
employee, for example, does not provide the 30-day notice. But you cannot tell him to continue
working because it will be violative of this Constitutional provision.

Article 13 Section 1 “The Congress shall give highest priority to the enactment of measures that
protect and enhance the right of all the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by equitably diffusing wealth and political
power for the common good. To this end, the State shall regulate the acquisition, ownership,
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

use, and disposition of property and its increments.” What comes to your mind when you read
this provision? Agrarian reform ‘di ba? Because agrarian reform is part of labor standards and
social legislation. Section 2 “The promotion of social justice shall include the commitment to
create economic opportunities based on freedom of initiative and self-reliance.” Section 3 “The
State shall afford full protection to labor, local and overseas,” we are now talking about
overseas. “Local and Overseas organized and unorganized, and promote full employment and
equality of employment opportunities for all. It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law. They shall be entitled to security of tenure, humane
conditions of work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.” So ayun lang, very
specific. Collective bargaining and negotiations, peaceful concerted activities including the right
to strike in accordance with law. Who among you have had the opportunity to participate in
collective bargaining and negotiations? So, collective bargaining and negotiation is very
interesting, it is also very challenging because you have to know the strengths and weaknesses,
not only of the management and also the union. You have to have good data, because this will
spell whether you will have an agreement or not. And you know the consequences of dead-lock,
it is not good for business, if you are the owner of the enterprise, it is not good if there is a
collective bargaining dead-lock. Negotiation is also an art. Aside from the provisions of the
Labor Code, you will notice that there are also procedures. But you will also notice that there is
a short provision, as if ang dali dali mag-bargain, mag-negotiate. But in truth, hindi ganun
kabilis. It will take weeks and months before you will come into an agreement. “The State shall
promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace. The State shall regulate the
relations between workers and employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable returns to investments, and to
expansion and growth.”

Now, if you want, you can memorize because that will empress the examiner. You also see,
when you answer the bar exams, can you imagine the bar examiner checking several booklets
in a day? Do you know the secret behind the checking of the booklets? I have been told by
friends, even judges and justices, as to how they check the booklets. If you are an examiner, it’s
tough and it’s confidential. Readily, you will suspect a faculty member if he is an examiner if
suddenly he goes on leave. That’s already a red flag that this faculty member is an examiner
because they are not supposed to tell anybody that they have been chosen as an examiner for
that particular year. And according to them, based on the last bar examination, if there is a
chairman of the bar, all he has to do is usually to ask the bar examiner for his subject to submit
about 50 questions and then it will be up to the bar examiner to choose which of those
questions will be part of the examination. The chairman, in this case, he will have the
prerogative to formulate his own questions and disregard the questions submitted by the
examiners. He is not bound by the questions submitted by the examiners. If there are 3,000 to
5,000 examinees, ang dami nun. The examiners only have half a year to check. If you’re the
examiner, you only have about 170 to 200 days to check 3,000 to 4,000 booklets to check in
one day. You have to check at least 30 to 50 booklets a day. That is why, when you answer the
question, the first sentence should immediately give good impact to the examiner as he might
read from beginning to the end. So make sure, yung unang answer mo palang, convincing na.
Sometimes the examiners will just look for the keywords, whether rightly or wrongly at pag
Nakita na nila yung keyword, baka i-tama na nila.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


Art. 13 Section 13 “The State shall establish a special agency for disabled person for their
rehabilitation, self-development, and self-reliance, and their integration into the mainstream of
society.” Section 14 “The State shall protect working women by providing safe and healthful
working conditions, taking into account their maternal functions, and such facilities and
opportunities that will enhance their welfare and enable them to realize their full potential in the
service of the nation.” Those of you who have been to Japan might wonder, in the Philippines
we have the maternity leave. Normally you have 45 days of maternity leave. In Japan, they have
about 2 years of maternity leave. Can you imagine that? Because they have to give birth, look
after their baby for about 1 year. And this is with pay ah.

Civil Code Provisions

Article 19 “Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.”

Article 1700 “The relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good. Therefore,
such contracts are subject to the special laws on labor unions, collective bargaining, strikes and
lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.”

Article 1702 “In case of doubt, all labor legislation and all labor contracts shall be construed in
favor of the safety and decent living for the laborer.” This is of course enhanced by the Labor
Code provisions. In case of doubt, you construe in favor of the working man.

Labor Code Provisions

Article 3 “The State shall afford protection to labor, promote full employment, ensure equal work
opportunities regardless of sex, race or creed and regulate the relations between workers and
employers. The State shall assure the rights of workers to self-organization, collective
bargaining, security of tenure, and just and humane conditions of work.”

Article 4 “All doubts in the implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved in favor of labor.” Now, you
better memorize Article 4. Because if you are not sure of the jurisprudence, this will be the basis
of your answer why you support the working man. Your answer must have something to support
itself either a law or jurisprudence.

Article 166 “The State shall promote and develop a tax-exempt employees’ compensation
program whereby employees and their dependents, in the event of work-connected disability or
death, may promptly secure adequate income benefit and medical related benefits.”

Article 211 “It is the policy of the State: To promote and emphasize the primacy of free collective
bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as
modes of settling labor or industrial disputes; To promote free trade unionism as an instrument
for the enhancement of democracy and the promotion of social justice and development; To
foster the free and voluntary organization of a strong and united labor movement; To promote
the enlightenment of workers concerning their rights and obligations as union members and as
employees; To provide an adequate administrative machinery for the expeditious settlement of
labor or industrial disputes; To ensure a stable but dynamic and just industrial peace; and To
ensure the participation of workers in decision and policy-making processes affecting their
rights, duties and welfare. To encourage a truly democratic method of regulating the relations
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

between the employers and employees by means of agreements freely entered into through
collective bargaining, no court or administrative agency or official shall have the power to set or
fix wages, rates of pay, hours of work or other terms and conditions of employment, except as
otherwise provided under this Code. (As amended by Section 3, Republic Act No. 6715, March
21, 1989)”

Recruitment and Placement

What is recruitment and placement? It is any act of canvassing, enlisting, transporting,


contracting, hiring, utilizing and procuring workers including contract services, referrals,
advertising and promising. Any person or entity who promises for a fee employment to 2 or
more persons shall be deemed engaged in recruitment and placement. That is a legal
presumption on Labor Law as well as the Law on Evidence. Pag may in-offeran ka and 2 or
more persons, you are presumed to be engaged in recruitment activities. How about if you offer
or you did those activities to only 1 person, does that exempt you from recruitment or illegal
recruitment activities? It depends. If you engage in illegal recruitment activities and the subject
of your act is only 1 person, you will still be held liable. Because 2 or more is not an element
because it is merely a legal presumption that you are engaged in recruitment activities. It does
not mean to say that if you are guilty of illegal recruitment against only 1 person you are
exonerated, no, you will still be liable. Purpose is employment locally or abroad whether or not
for profit. Persons or entities in any manner, offers or promises for a fee, employment to two or
more persons shall be deemed engaged in recruitment and placement. Article 13B did not
intend to impose a condition or an exemption to the basic rule, it merely creates a presumption.
The number of persons is not an essential ingredient as it is not an element. Any of the acts
constituting the act of recruitment even if it is only 1 person that is being recruited. The proviso
lays down the rule of evidence on that presumption.

Illegal Recruitment

What is illegal recruitment? As defined in Article 38 of the Labor Code, “”. RA 8042 (the Migrant
Workers Act) considers as illegal recruiter even a licensee holder or authority who commits any
of the acts thereof mentioned in Section 6. The general rule before was that you can only be
charged with illegal recruitment if you do not have the license or the authority and you engage in
recruitment activities. With the advent of the Migrant Workers Act, that is not true anymore, even
if you’re a licensee or holder of authority, you can still be charged with illegal recruitment.

Let us distinguish. We said before licensee or holder of authority. What are the distinctions
between a license and the authority? License is a document issued by the Department of Labor
authorizing a person or entity to operate a private employment agency. That is Article 13 of the
Labor Code. Whereas an authority means a document issued by the Department of Labor
authorizing a person or association to engage in recruitment and placement activities as a
private recruitment entity. It is a document issued by DOLE authorizing the officers, personnel,
agents or representatives of a licensed recruitment manning agency to conduct recruitment or
placement activities in the place stated or in the specified place. As to the charging of fees, this
is the distinction. A private employment entity charges fee directly or indirectly from the workers
or employers or both. While a private recruitment entity does not charge any fee either directly
or indirectly from the workers or employers to which they will be employed. So one it charges
fees directly or indirectly, the other does not charge. As to the persons who they are allowed to
recruit, private employment agency is only for overseas employment or placement while a
private recruitment entity is both local and overseas employment. As to the source of authority,

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


a private employment agency - license, private recruitment entity - authority. The long and short
of it, whether you’re a licensee or holder of authority, you are authorized by the government.

As to the essential elements of illegal recruitment. The offender is a licensee, non-licensee or


holder or non-holder of authority engaged in the recruitment or placement of workers and the
offender undertakes any of the activities defined under Article 13B or any prohibited practices
enumerated under Article 34 of the Labor Code.

What are the prohibited practices under the Labor Code? To charge or accept, directly or
indirectly, any amount greater than that specified in the schedule of allowable fees prescribed
by the Secretary of Labor or to make an worker pay any amount greater than that actually
received by him as a loan or advance. You will notice that there is a schedule of fees prescribed
normally by the POEA. So if you are a recruiter, holder or licensee, you should comply with the
schedule of fees. If you collect more, then that is considered as illegal recruitment. To furnish or
publish any false notice or information or document in relation to recruitment or employment.
Now, this is the most common form of illegal recruitment. They promise the victims employment
abroad, yun pala wala. To give any false notice, testimony, information, document or commit
any misrepresentative for the purpose of securing a license or authority under this Code. To
induce or attempt to induce a worker already employed to quit his employment in order to offer
him to anther unless the transfer is designed to liberate him from oppressive terms and
conditions of employment. This last item, you will notice to induce or attempt to induce, so the
act or offense is not consummated. So even if there is only an attempt, it is already punishable
as illegal recruitment. To attempt, to induce a foreigner already employed to quit his
employment. But note the exception, unless the transfer is designed to liberate the worker from
oppressive terms and conditions of employment. So that can be your defense to justify why you
induced or attempted to induce the worker to transfer. To influence or attempt to influence any
person or entity not to employ any worker who has not applied for employment through his
agency. To engage in the recruitment or placement of workers in harmful public health or
morality or to the dignity of the Republic of the PH. I think this provision is more on the breach
rather than on the observance. Because what used to be jobs considered as harmful to the
dignity of the Republic of the PH are no longer considered as harmful to the dignity of the PH.
Why? Because we need the remittances. That’s the only justification. Otherwise, if we were to
be strict about it, there will be so many OFWs disqualified from working abroad on the ground
that the job they are performing is harmful to the dignity of the Republic of the PH. To obstruct
or attempt to obstruct inspection by the Sec. of Labor or his duly authorized representatives.
There are 3 instances when you commit illegal recruitment even if you only attempt and not
actually consummate the act. To fail to file reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such
other matters or information as may be required by the Secretary of Labor. So this pertains to
the reportorial requirements. So can you imagine you might be guilty of illegal recruitment
because you failed to file a report? You can go to jail for failure to file a report. You are
committing a criminal offense based on inaction. Another, to substitute or alter employment
contracts approved and verified by the Department of Labor from the time of actual signing
thereof by the parties up to and including the periods of expiration of the same without the
approval of the Secretary of Labor. To become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged directly or indirectly in the management
of a travel agency. This has be asked in the Bar exams 2 or 3 times already. Yung mga officers
ng travel agencies engaging in recruitment activities, they are not allowed. In fact, they are
committing illegal recruitment. To withhold or deny travel documents from applicant workers
before departure for monetary or financial considerations other than those authorized under this
Code and its implementing rules and regulations. Does Article 34 of the Labor Code provide an
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

exclusive list? No, because under Article 6 of RA 8042, as amended 10022 (migrant workers
act), it is not in the exclusive list. It shall likewise include the following acts - so after Article 34 is
not excusive because you have under the migrant workers act other modes or acts considered
as illegal recruitment. Failure to actually deploy a contracted worker without valid reason as
determined by the DOLE, failure to reimburse expenses incurred by the worker in connection
with his document and Failure to reimburse expenses incurred by the workers 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.

Who are subjects covered by Article 34? Any individual, entity, licensee, holder of authority.
Previously, to be held liable for illegal recruitment, you must be a holder of authority or license.
But now, even a licensee or holder of authority can engage in and be liable for illegal
recruitment.

What acts of furnishing and publishing are considered to be prohibited practices under Art. 34B?
Act of publishing false notice or information in relation to recruitment or employment. Question.
Is the falsity of the notice or information published material in prosecution of illegal recruitment
for unauthorized advertisement? No. Art. 38 provides that any recruitment activities, including
the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-
licensees or non-holders of authority, shall be deemed illegal and punishable. Why? because
they are non-licensee and non-holder of authority. That fact alone makes it illegal.

Should be the prohibited acts be consummated to be punishable for illegal recruitment? Not all.
Attempt to induce, attempt to influence, attempt to obstruct the secretary of labor. Mere attempt
is punishable.

What is the difference between the scope of prohibition Art. 34 J and Art. 26? Art. 26, the
prohibition is against the recruitment of travel agencies and sales agencies of airline companies.
While in Art. 34J the prohibition is against any officer or member of the board of any corporation
engaged in travel agency or to be engaged directly or indirectly in the management of travel
agency. So, have you ever wondered why travel agencies and airline companies are prohibited
from engaging in recruitment activities? Because if you allow them to engage in recruitment
activities then it might be easier for them to violate the law. Because they can send someone
else, they can deploy workers more easily than other business because they are travel agencies
and airline companies. That is what is being avoided by the law. They might go scot-free. It
might be more difficult to monitor them.

What are the elements of illegal recruitment to be proved in courts? First, you have to prove the
absence of valid license or authority required by the law to enable one to lawfully engage in
recruitment and placement of workers and undertaking of any activity within the meaning pf
recruitment and placement. You have to note class, that the first one, valid license and authority
is not always necessary because even if you have a license or authority if you commit any of the
prohibited acts you are still liable for illegal recruitment. I have one case on this illegal
recruitment. Luckily we were able to get the information filed in Antipolo. And the charge was
large scale illegal recruitment and so there was no bail recommended. Diba pagka largescale
illegal recruitment or syndicated estafa no bail is recommended because the penalty is life
imprisonment. So nagtago ng nagtago yung recruiter, so when were able to catch up with her,
these victims readily forgave the recruiter basta daw maibalik yung pera nila even without
interest. That’s how gullible this people were. So nakalabas yung recruiter.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


Simple vs. Large-scale or Syndicate Illegal recruitment

So what is simple illegal recruitment. So basically class, there are 2 types of illegal recruitment –
the simple and the large-scale illegal recruitment. So here, we are talking about simple illegal
recruitment, it is committed where a person undertakes any recruitment activity defined under
Art. 13B or any prohibited practice enumerated in Art. 34 as expanded by Art. 6 RA 8042. Why
expanded? There are some other acts added to Art. 34 and Art 38 of the Labor. And it does not
have a license or authority to engage in the recruitment and placement of workers. Before I
forget, if you recall your lessons in labor-only contracting and job contracting. Labor-only
contracting as compared to job contracting is not allowed, it is prohibited by law. Labor-only
contracting is when a person or entity provides workers to another and he does not exercise the
right of control or supervision over the employee. What is the basis of that law? Why does the
law prohibit labor-only contracting arrangements? One of the reasons why labor-only
contracting is prohibited by law, is that these entities are merely recruiters of workers and since
they do not have the license or authority they are actually engaged in illegal recruitment.
Because they do not have the license or authority to recruit for employment in another
establishment. So that’s how you will relate class the topic on illegal recruitment to the topic on
labor-only contracting as well as legitimate job-contracting or independent contracting. Yan ang
correlation nilang dalawa.

What is large-scale and syndicated? Illegal recruitment is large-scale is deemed committed in


large-scale if committed against 3 or more persons, individually or as a group. Does that make
sense? Individually or as a group. Meaning to say for example. If I commit any illegal
recruitment activity inside this room, convincing and persuading you to work for me or work for
another but I don’t have any license or authority and considering your number, I might be held
liable for large-scale. So how about individually? So maybe I go to one town and recruit one
then I go to another town and recruit another and so on. Collectively it will amount to 3 or more
victims, so this will still be considered as large-scale.

What is illegal recruitment committed by a syndicate? It is deemed a committed by a syndicate if


carried out by a group of 3 or more persons conspiring or confederating with one another. So
baliktad lang. a while ago sa large scale the number of the victims is material. Now in a
syndicate it is not the number of victims but the number of perpetrators. When is illegal
recruitment considered as economic sabotage? The qualifying circumstances of large scale and
syndicate make such illegal recruitment and offense involving economic sabotage. So if you
familiar with this class, it will be easy for you to answer the question when is there illegal
recruitment is large scale or when is there a syndicated recruitment or when is illegal
recruitment considered economic sabotage. It will be very easy for you to say that illegal
recruitment is considered economic sabotage when it is committed by 3 or more persons
confederating with one another which is considered syndicate or when it is committed by one
against 3 or more victims either individually or as a group.

Will conviction under the Labor Code preclude conviction for estafa or other crimes under other
laws? No, there are persons who have been convicted with illegal recruitment and at the same
time estafa. There is no double jeopardy. Illegal recruitment is penalized under the Labor Code
which is a special law and not under the Revised Penal Code. It bears emphasis that not all acts
which constitute the felony of estafa under the Revised Penal Code necessarily establish the
crime of illegal recruitment under the Labor Code. Estafa is wider in scope and covers deceits
whether related or not related to recruitment activities.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

So who are liable and to what extent? Local recruitment agency and foreign employment. Now
this is another concept which is important, joint and several liability. You have to remember this
concept as this might be asked in the bar exams. In relation to illegal recruitment for example, in
relation to migrant workers act. the joint and several liability, the liability of the principal
employer and the recruitment/placement agency for any and all claims under this section shall
be joint and several. You know what is joint and several under the Civil Code, right? Any of the
devtors may be required to pay in full or in part of the obligation. This provision shall be
incorporated in the contract for overseas employment and shall be a condition precedent to its
approval. The performance bond to be filed by the recruitment/placement agency as prvided by
law shall be answerable for all money claims or damages awarded to the worker. If the
recruitment/placement agency is a juridical being, the corporate officers and directors and
partners as the case may be shall themselves be jointly and solidarily liable with the corporation
or partnership for the aforesaid claims and damages. Class, this is especially important in so far
as OFWs are concerned because in a normal relationship, an OFW is recruited by an agent in
the PH, a private employment agency for employment abroad. That person or entity abroad
where the Filipino worker will be working with is the principal employer. The recruitment agency
here is merely an agent, it is not the principal employer. now this joint and solidary liability
governs the relationship between the local agent and the foreign employer. meaning to say that
if there is a breach of contract committed by the employer abroad, then this local agent will be
solidarily liable with the employer. So if you are an OFW and pumunta ka sa Dubai or kahit
saan, and then there is a breach of your contract, you know that you cannot sue your foreign
employer. Why? because of lack of jurisdiction, you learn that in your remedial law, how can you
serve summons. It is very difficult and impossible considering the financial constraints. That is
why if you are an OFW, your immediate recourse will be against the local agent. And the local
agent cannot claim that it is not liable because it is not the one breached your contract, that is
not a valid defense. Because under the law, this agent and the foreign principal employer are
jointly and solidarily liable to the OFW. Otherwise, it would be very difficult or next to impossible
for our OFWs who come to the PH and file a case against anybody because that foreign
employer will be out of reach by our legal process. As a matter of fact, in the employment
contract of OFWs, this is an indispensable provision. It should be a part of the contract, the joint
and solidary liability. So you might simply be asked by the examiner explain the joint and
solidary liability of the agent and the principal in the application of the migrant workers act or to
anything to that effect. If the recruitment or manning-placing is a juridical being, the corporate
officers or partner, as the case may be, shall themselves be jointly and solidarily liable for the
aforesaid claims and liabilities. Such liabilities shall continue during the entire period or duration
employment contract and shall not be affected by any substitution, amendment or modification
made locally or foreign country of the said contract. If you want, you can expand your answer by
adding these reasons.

Administrative and criminal liabilities

Is the administrative liability of licensee or holder of authority separate and distinct from criminal
liability for illegal recruitment? Yes, the institution of the criminal action is without prejudice to
any administrative action against the licensee or hider of authority cognizable by the PH
Overseas Employment Administration which could proceed independently of the criminal action.
Administrative, criminal and civil liabilities are distinct and separate from one another. You could
be held liable simultaneously if evidence so warrants.

Imputed Knowledge
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


This is still in connection with the joint and several liability of the recruitment and principal
employer. What is the theory of imputed knowledge? That any information material to the
transaction, either possessed by the agent at the time of transaction or acquired by him before
its completion is deemed to be the knowledge of the principal. At least in so far as the
transaction is concerned even though the knowledge is in fact not communicated. So it is a
presumption. So what is meant by imputed knowledge? It means that knowledge attributed to a
party because of his position or his relationship with or his responsibility for another party. Such
knowledge is attributed for the reason that the facts and issue were open to discovery and it
was that person’s duty to appraise him of such fact. So let’s give an example, applying this to
OFWs, let us say Mr. X signs an employment contract for 2 years with the private recruitment
agency duly approved by the employer abroad, and then while working abroad, months prior to
the expiration of the contract it was renewed with the employer abroad for 2 more years. Pero
hindi siya bumalik ng Pilipinas, habang nasa Saudi siya, sinabi ng employer na bibigyan kita ng
another 2 years. So they executed another contract, however after 1 year bigla siyang pinauwi
ng employer. So the OFW now comes back to the PH and consulted the lawyer and the lawyer
told him that there was a breach of contract since may natititra pa siyang 1 more year and they
will file a case. So the OFW asks him kung sino ang kakasuhan natin, then the lawyer answers
na silang dalawa since under the law there is a joint and solidary liability on the part of the
employer abroad and the recruiter in the PH. Let us say nagfile nga sila ng case against the
agent and the principal, will that case prosper? Can the agent say na hindi ko alam ang
pinagusapan niyong dalawa, hindi ako aware diyan? The lawyer will then say that meron tayong
theory of imputed knowledge, you had all the means to find out. In this case, applying the theory
of imputed knowledge, it was held by the Supreme Court that it will not apply in this situation.
Why? Because the imputed knowledge, the knowledge is imputed to the principal and not to the
agent. So kung binaliktad natin yung situation, it was the OFW and the local agent who entered
into an extension agreement, that will be binding to the principal, and the principal cannot evade
any responsibility by saying na hindi ko alam yung extension niyo. Because of the theory of
imputed knowledge, the principal is supposed to know what was made known to the agent. But
in the case, the one that I told you, because the agent did not have actual knowledge neither
could the knowledge of the principal be imputed to the agent. In other words, this theory is one
way. It is applicable only to the agent, having actually received the information or the knowledge
which will now be imputed to his principal. It does not apply to any information or knowledge
received by the principal, you cannot impute that to the agent if indeed the agent was not there.
Unless evidence will show that the agent alam din niya – but it will no longer be imputed
knowledge but actual knowledge. This was not yet asked in the bar, dahil ang alam kong
tinanong lang is discussion lang of what is imputed knowledge and then magbibigay lang ng
hypothetical question and then there will be defenses raised by the agent and the employer.
there is still no bar question na binaliktad.

Pre-termination of contract of migrant workers

The syllabus uses the term “pre-termination” in describing the termination of contract of OFWs.
This is understandable in the light of the prevailing rule that the OFW’s employment contract is
for a fixed term and thus he can never acquire regularity of employment. Unlike in our usual
setup, after working for 6 months you now become a regular employee. But in so far as OFWs
are concerned, you do not apply that principle, because when OFWs go abroad, they always
have a fix term because that is required under the POEA rules and under the Migrant Workers
Act. Being fixed term, any termination prior to his expiration is more approximately considered
and denominated as pre-termination and not simply as termination of employment.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

So what are the various forms of pre-termination? The OFW has requested for an early
termination of employment, the OFW and his employer mutually agreed to an early termination
of his employment, the OFW has been discharged for just cause or disciplinary cause or
authorized cause, the OFW suffered injury or illness, or the OFW has died.

So remember this, just to emphasize, OFWs cannot acquire regular employment. The prevailing
rule is that OFWs are contractual not regular employees even if they’ve been going to
repeatedly abroad. So if your relatives are seafarers, diba pabalik balik sila, pagka hindi na sila
pinabalik, they cannot complain of illegal recruitment. Because their contract is always for a
fixed term. Hindi sila pwede pumunta sa POEA or NLRC to complain that they were illegally
dismissed. In fact, they can never attain regularity of employment, the reason for this is the fact
that their employment is governed by the contract they sign every time they are re-hired and
their employment is terminated when their contract expires. Their employment is contractually is
fixed for a certain period of time.

Dismissal due to authorized cause(s) but with due process.

You take a look at Agabon(?) v. NLRC and Jaka Food Processing vs. Pacot. You have the
doctrine of awarding indemnity in the form of nominal damages in cases of valid termination for
just or authorized cause but without procedural due process also applies to termination of
OFWs. We will discuss ano itong Anderson and Jaka Food Processing. They are interesting
cases since they have enriched our jurisprudence.

You are aware that in termination of employees, there are certain requirements to be observed
because of due process. so of course, let us say in just causes, you will recall what you learn in
labor laws that generally there are 2 grounds for termination one is just-causes and the other is
the so-called authorized causes. So in just-cause termination, there must be due process
observed. Assuming that the employee is guilty of insubordination, for example, gross and
habitual neglect of duties, etc., you recall the enumeration for just-causes. Like he commits theft
against company properties, you must still afford him due process, meaning to say that twin
notices must be given to him: first, he must notified in writing telling him what his violations are
and then asking him to explain his side otherwise he will be dealt with accordingly; after ample
opportunity, after 5 days (as that is the latest jurisprudence), and then whether he explains or
not, you will now give him the second notice, notice telling him as to the action of the company
whether ok lang, suspended ka, or worst case scenario dismissed kana, wag ka nang
magpapakita dito. So that is a basic procedural requirement, in addition to the actual
commission of the just cause for termination of employment. So what happens now if for
example you dismiss an employee without affording him due process, what is the effect? But
even without affording him due process, you are able to prove the existence of just cause, say
for example, abandonment, so that is habitual neglect of duties. So you were able to prove that
he really abandoned his work but at the same you were not able to prove that you have
observes due process, what is now the effect on the termination? Now according to the Agabon
doctrine involved an employee who complained of illegal termination and he asked that he be
retained. According to the employer there was just cause because according to the employer,
this employee Agabon abandoned his work. It turns out, there was ample proof that the
employee indeed abandoned his work, however it was established that the employee did not
afford him due process. What did the SC say? If there is a just cause for the dismissal of an
employee, such dismissal is considered legal. However, if due process was not observed, then
there is a violation of the statutory right of the employee thus the employer must pay nominal
damages. How much? It was stated in that case P30,000. That P30,000 was meant as a

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


penalty to the employer who violated the statutory rights of the employee. Nominal damages of
P30,000 but still the dismissal was legal.

Now let’s go to the Jaka Food Corporation. They are almost the same except that for the Jaka
case it is not just cause we are talking about, it was an authorized cause which was held to be
legal. What was that authorized cause? Retrenchment. So based on evidence, there was a valid
retrenchment program, and the complainant was validly retrenched, thus he cannot complain of
illegal dismissal. However, there was no compliance of procedural due process – the notices.
So if there is an authorized cause, you must notify the employee at least 30 days before actual
dismissal or separation. You must also inform the DOLE of such action. Neither of these were
undertaken by the employer, and there was again violation of due process. Thus, in Jaka, the
SC held that in authorized cause dismissal, if it is established that indeed there was an
authorized cause, then the dismissal is considered legal. However, if there is no observance of
due process, like the notices mentioned, then again there is a violation of the statutory right of
the employee, hence the employer must be held liable for nominal damages. How much?
P50,000. Now what was the reason of the Court in awarding more in the Jaka case? The Court
said that in just causes of termination, normally there is a fault on the part of the employee. But
in authorized cause, there is no fault on the part of the employee, he did not initiate any act that
would lead to his termination of employment. Walang contributory factor coming from the
employee. Therefore, it is the fault alone of the employer in not observing procedural due
process. It is a fault in the exercise of its management prerogative to dismiss the employee
based on authorized cause. So that is a very interesting point of law and jurisprudence. Who
knows, it might be asked in the bar. So you remember these cases, Agabon and Jaka Food
Processing.

Award of monetary claims to OFWs

Monetary claim arising out of employer-employee relationship, actual moral, exemplary and
other forms of damages only applies to cases of illegal dismissal. Art. 279 does not apply to
OFWs. Why? because they are not regular employees but rather contractual employees or
employees with a fixed term.

This is another landmark case, Serrano v. Gallant Maritime. Are illegally dismissed OFWs
entitled to all the salaries for the entire unexpired portion of their employment contract? An
illegally dismissed OFW is now entitled to all the salaries for the entire unexpired portion of their
employment contract irrespective of the stipulated term or duration thereof. The Serrano ruling
stated the qualifications, this is included in the law – Migrant Workers Act, which in the case of
Serrano was declared to be unconstitutional. Three (3) months for every year of the unexpired
term whichever is less, that is in Par. 5 Section 10 of RA 8042, now unconstitutional for being
discriminatory and violative of the equal protection of the law clause. For example meron kang 2
years contract OFW, let us say after working for 6 months biglang prineterminate ng employer
mo, so may 18 months ka pa na unexpired na natitira. If you were to file a case against your
employer, what will you have? Ang manyayari sayo dyan, 3 months for every year of the
unexpired term, so 6 months lang – 3 months sa first year and 3 months sa second year, that’s
the total amount that you will be able to recover for breach of contract of your employer if we
were to apply Par. 5 Section 10 of RA 8042. But with the Serrano v. Gallant Maritime, hindi
nayan pwede. So how much will you get? 18 months, the whole unexpired portion of your
contract. So kung 1 month ka lang pinagtrabaho and pinauwi ka without any valid reason and
you have 24 months, macocollect mo pa yung 23 months. I hope you remember the
ratiocination by the Court. The Court concluded that the subject clause contains a suspect
classification that in the computation of the monetary benefits of fixed-term employees who are
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

illegally discharged, it imposes a 3-months cap on the claim of OFWs with then unexpired
portion of 1-year or more in their contract, but not on the claims of other OFWs or local workers
with a fixed-term employment. The subject clause singles out one classification of OFW and
burdens it with a peculiar disadvantage. Consequent of the Serrano ruling, an illegally dismissed
OFW is now entitled to all the salaries for the entire unexpired portion of their employment
contract irrespective of the stipulated term or duration thereof. Resultantly, all past decisions
subjecting the monetary reward to the aforementioned qualifying clause no longer applies.

Claims for disability and death benefits

The labor arbiter has jurisdiction over claims for disability, death and other benefits of the OFW.
They have jurisdiction to hear and decide the claims. They have jurisdiction even if filed by the
heirs of the deceased OFW. The heirs of the deceased OFW have the personality to file the
claim for just compensation, reimbursement of medical expenses, damages, and attorney’s fees
before the labor arbiter of the NLRC. It is not the POEA, but the NLRC specifically the labor
arbiter.

If there is any dispute arising out of the employer-employee relationship between the OFW and
the principal employer, then that dispute without in the jurisdiction of the labor arbiter and not
the POEA. Previously, these cases were cognizable by the POEA, now no more. It is the labor
arbiters.

Death benefits for seafarers, the employer shall pay his beneficiaries $50,000 with an additional
amount of $7,000 for each child under age of 21 but not exceeding 4 children, and it shall be
paid in Philippine currency at the exchange rate prevailing at the time of payment, not the
exchange rate at the time of the incident or death. Benefits above are separate and distinct from
and will be in addition to whatever the seafarer is entitled under the PH laws.

Entities authorized to engage in placement of overseas

Public employment offices, POEA, PRE, PEA, shipping or manning agencies or representatives,
such other persons as may be authorized by the DOLE secretary, construction contractors.

Who are qualified? Only those who possess the following may be permitted: Only Filipino
citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the
authorized and voting capital stock of which is owned and controlled by Filipino citizens; single
proprietorship or partnership with minimum capitalization of P2 million and corporation with
minimum paid-up capitalization of P2 million provided that those with existing licenses shall
within 4 years from effectivity increase their capitalization or paid-up capital as the case may be
to P2 million with a rate of P250,000 every year.

Disqualifications. Sales agencies of airline companies, officers or members of the board of a


corporation or members in a partnership engaged in the business of travel agency. Keywords
are airline companies, travel agencies.

Direct Hiring

It is the process of directly hiring by employers for overseas employment. Is it allowed?


Generally, no. because under Article 18… except through the boards or entities authorized by
the DOLE. So the general rule is that direct hiring is not allowed. Exceptions: those authorized
by the DOLE secretary and those processed by the POEA including hired by members of the
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


diplomatic or hired by the national organizations (upon submission of the following documents:
employment contract, valid passport, employment visa or employment permit or equivalent
document, certificate of medical fitness, etc.)

Does the act of an entity in interviewing applicants for employment prior to accreditation amount
illegal recruitment and direct hiring? Yes. Direct hiring by employers of Filipino worker for
overseas employment is banned. They can only do so through among others licensed private
agencies or shopping manning agencies. Prior to approval of transfer of accreditation, no
recruitment or employment may be made by the principal by itself or by the would be transferee
manning agency or by the latter as this would constitute illegal recruitment by a non-holder of
authority. Non-holder because it is prior to accreditation. What if the accreditation will not be
granted? So there is no accreditation during. The conduct of preparatory interview is a
recruitment activity, this is in the case of CF Sharp Crew Management v. Secretary. The fact
that CF Sharp did not receive any payment during the interview is of no moment, from the
language of Art. 13B the act of recruitment may be for profit or not. Notably it is the lack of
license or authority and not the fact of payment that renders the recruitment activity of LCL
unlawful.

Suspension and cancellation of license or authority

Who has jurisdiction? Which agency has the power to suspend and cancel? It’s the POEA
administrator or the Secretary of Labor. The DOLE secretary and the POEA administrator have
concurrent jurisdiction to suspend or cancel a license or authority. That is based on Eastern
Assurance and Surety Corp. v. Secretary of Labor. What’s the legal basis? Art. 35 of the Labor
Code “The Secretary of Labor shall have the power to suspend or cancel any license or
authority to recruit employees for overseas employment for violation of rules and regulations
issued by the DOLE, the POEA, or for violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions. Under Art. 36 it is provided that the Secretary
of Labor, aside from the express authority of jurisdiction under Art. 35 has the power to
promulgate rules and regulations to carry out the objectives and implement the provisions
governing recruitment and placement activities. Pursuant to this rule-making power the
implementing rules pertaining to overseas employment was promulgated by the DOLE thus the
POEA was given by the DOLE under Sec.1 Rule 2 Book 6, the authority … is initiative or upon
complaint to conduct necessary proceedings for the suspension or cancellation of the license or
authority of recruitment and placement entities, still on Eastern.

What is the jurisdiction of POEA over recruitment violations and related cases? The POEA has
original and exclusive jurisdiction to hear and decide all cases which are administrative in
character involving or arising out of violation of rules and regulations relating to licensing and
registration of recruitment and employment agencies including fees collected from workers and
violation of the condition for the issuance of license to recruit workers. Another, disciplinary
action cases and other special cases which are administrative in character involving employers,
principals, contracting partners and Filipino migrant workers.

What are the classes of cases not falling within the jurisdiction of the POEA? This is important
and take note of this one as you might be given a hypothetical case and be asked where will
you file the case. Money claims cases of OFWs arising out of employer-employee relationship,
quasi-delict or tort cases, enforcement of foreign judgment, local employment. Money claims of
OFWs arising from employer-employee should be filed with the labor arbiter. Quasi-delict cases,
civil courts where you might be asking for damages. Enforcement of foreign judgment, also civil
courts and local employment.
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

So we have a question, X, a seaman who has been sent home prematurely according to his
employment contract by his employer files with POEA a complaint for recovery of his unrealized
salary under the terms of his contract. Should the POEA take cognizance of the complaint by X?
No. the jurisdiction over X’s money claim arising from employer-employee relationship does not
lie with the POEA. He should have filed the complaint with the labor arbiter, in accordance with
Sec. 10 of RA 8042 as amended. So, that is also in relation to the case of Serrano v. Gallant
Maritime. Another question, Y an OFW has engaged the services of ABC recruitment agency, in
view thereof, Y paid ABC P25,000 as placement fee. ABC failed to deploy Y in accordance with
the terms of the contract. Y then files with the POEA a complaint for recovery of the amount he
paid with damages. Should the POEA take cognizance of the money claim? Yes, because it has
jurisdiction over the money claim by Y since the same did not arise from employer-employee
relationship. The money claim pertains to the recruitment activity by ABC.

Regulatory and visitorial powers of the Sec. of Labor (pertaining to the employment and
placement of workers for local and overseas employment)

Question, what is the basis of the DOLE Secretary’s exercise of regulatory power with the
regard the recruitment and placement of workers whether it be local or overseas employment.
Art. 36 of the Labor Code. The Secretary of Labor shall have the power to restrict and regulate
the recruitment and placement activities of all agencies within the coverage of this Title and is
hereby authorized to issue orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of this Title.

What is the legal basis of the DOLE Secretary’s visitorial power with regard to the recruitment or
placement of workers whether it be local or overseas employment? Art. 37: The Secretary of
Labor or his duly authorized representatives may, at any time, inspect the premises, books of
accounts and records of any person or entity covered by this Title, require it to submit reports
regularly on prescribed forms, and act on violation of any provisions of this Title. So we are
talking about the powers of the Secretary of Labor. You know that the visitorial power of the
Secretary of Labor is so encompassing but there are 3 provisions of the Labor Code specifically
govern each type of visitorial power being exercised by the Secretary of Labor, so you must be
aware of it. So you have Art. 37, Art. 128, Art. 274. These all pertain to the visitorial power of the
Secretary. Now, we will distinguish one from the other. The vistiroial power of DOLE under Art.
37 is with respect to recruitment and placement of worker whether local or overseas. So the
keyword is recruitment and placement of worker. While in Art. 128, the visitorial of the DOLE
Secretary is with respect to the determination of any labor standard violation, wage orders, rules
and regulations. This was enunciated in the case People Broadcasting System v. Sec. of Labor.
Then under Art. 274, it dwells on the visitorial power of the DOLE Secretary to inquire into the
financial activities of legitimate labor organization. Keywords are visitorial power, financial
activities and legitimate labor organizations.

Now, we backtrack a little bit. This case of People’s Broadcasting v. Sec of Labor. Previously, if
you were taught by your labor law professor that if there is a money claim filed by the employee
against the employer he should file before the regional director of the DOLE if the amount
P5,000. But beyond P5,000 it will be before the labor arbiter. Now I want you to read on your
own this case of People’s Broadcasting as this concept is not applicable anymore. Wherein you
have to distinguish between the jurisdiction of the regional director and labor arbiter with respect
to money claims of the employees. Because generally before, if the employee files a collection
suit for money claims arising from employee-employer relationship against the employer and
such amount is up to P5,000 lang, he has to go the regional director. It is only when the amount
tis beyond P5,000 he has to go to the labor arbiter. Now, no more in accordance with the case
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


of People’s Broadcasting. Whether it be less or equal to or more than P5,000, it will be filed with
it depends if there is still an existing employer-employee relationship. So even if it’s beyond
P5,000 but there is still an existing employer-employee relationship that is cognizable by the
regional director because that regional director is an agent and authorized representative of the
DOLE secretary. Under Art. 128, the DOLE secretary has visitorial power. In fact, there is a law
which expanded and strengthened the visitorial power of the DOLE secretary. it is only when
there is no employer-employee relationship when the case will be cognizable by the labor
arbiter. When do we say that there is no longer an employer-employee relationship? Well, when
the employee has already resigned or he was already fired by the employer, so no longer
existing. Now, if you want to be more informed about this, you read the case of People’s
Broadcasting v. Secretary of Labor. So you have those 3 laws, Art. 37, 128 and 274 when you
are asked to discuss the visitorial power of the Sec. of Labor.

Remittance of foreign exchange earnings

It is mandatory. We are talking about OFWs. Mandatory remittance of foreign exchange


earnings for all Filipino workers abroad to remit a portion of their foreign exchange earnings to
their family, dependents and all beneficiaries in the county in accordance to rules and
regulations prescribed by the Sec. of Labor.

Effects of non-remittance. The effects on the employer are: non-issuance of accreditation, to be


excluded from the overseas employment program. Effects on the recruitment agency: non-
issuance of license or authority, disapproval and denial of renewal of contracts of employments
and service agreements, and it serves as a ground for cancellation of authority. It is mandatory,
why? because we badly need those foreign remittances. Effects upon the OFW: suspension or
exclusion form the list of eligible workers and in case if subsequent exclusion, repatriation at his
own expense or at the expense of the employer. the DFA shall refuse to issue or renew the
OFW’s passport. Who are exempted: Filipino servicemen working in US military installations,
worker’s immediate family member, beneficiaries or dependents are residing with him abroad,
immigrants or Filipino professionals working with the UN agencies or specialized bodies.

Conditions of Employment

Who are covered? Employees in all establishments whether operated for profit or not are
covered by the law on labor standards. Meaning to say, if you recall what you have learned on
your labor standards classes, these are all minimum standards set by law, to be more accurate,
minimum labor standards. The employer could give more that is beneficial to the employee. The
employer is not prohibited from giving more and better labor standards to benefit the
employees. So what is being governed and regulated by law is merely the minimum
requirements so that the employee will not be put in a prejudicial and disadvantageous position.

Who are excluded from the coverage? You have to memorize this. Government employees,
managerial employees or staff, outside or field personnel, members of the family of the
employer, domestic servants, persons in the personal service of another, workers paid by result.
Why is it important to memorize? Because if you are not one these, you are covered by the
provisions, especially book 3. You have to memorize because there might be a hypothetical
question like is the employee entitled to such benefits?

What’s the normal work hours paid per day? 8 hours. The total number of working hours per day
shall not exceed 8 hours. Are there exceptions? Reduction of 8-hour working day by employer,
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

the employer in the lawful exercise of his prerogative is not prohibited from reducing such 8-
hour period provided that there will be no corresponding reduction on the employee’s wage or
salary equivalent to the 8-hour work day. Broken hours, as may be required by peculiar
circumstances of employment, 4-hour work in the morning and 4-hour work in the evening, in
the latter it is still not considered as overtime since the 8-hour is not yet been exceeded.
Another exception, standard working time. Standard working time in the executive department in
relation to the other branches of the government and the other private sectors of Metro Manila
during Christmas season. Work in different shifts in establishments where work hours is in
different shifts. Reduction of work days on account of losses, when the reduction on the number
of regular working days is resorted to by the employer to prevent serious losses due to causes
beyond his control. You also note, RA 8972, flexible working schedule. The employer shall
provide for a flexible working schedule for solo parents provided that the same shall not affect
individual and company productivity, provided further that any employer may request for
exemption from the above requirements from the DOLE on certain meritorious grounds. You
see this is one benefit given to a solo parent under RA 8972, flexible working time.

Compressed work week

This refers to a situation when the work week is reduced to less than 6 days but the total work
hours of 48 hours per week remains. The normal work day is increased to more than 8 hours
but not to 12 hours without overtime premium. Generally, the maximum number of working
hours per day is 8 hours, because beyond that you are entitled to overtime pay. So how many
days per week does the Labor Code provide as specific number of working days per week?
Explicitly no, but impliedly yes. Why? because if there are 7 days in 1 week, a laborer should be
given a rest day consisting of 24 consecutive hour per week. So if you are given 24 hours
consecutive rest day, it means to say that you are only allowed to work 6 days a week. 8 hours
times 6 days is 48 hours. That is why in a compressed work week, it will be 12 hours per day
times 5 to make it 48 hours. But instead of working for 6 days, you are only working for 5 days.

So what are the conditions for compressed work week? You have to comply with these
requisites. So if you are not allowed to apply the compressed work week, you must resort to
what is provided under the Code which is 8 hours a day, 6 days a week. Conditions: it is a result
of an expressed or voluntary agreement of the covered employees or their duly authorized
representatives. So either majority or a collective bargaining agreement. In firms using
substances or operating under conditions where there are airborne contaminants which might
pose hazards to the employees’ safety, there must be a certification that work beyond 8 hours is
within the threshold of limits as stated in the occupational health and safety standards. Another
requirement, employer must inform DOLE through the regional office having jurisdiction over the
workplace, of the adoption of the compressed work week scheme. So you note those requisites.

Effects. Work beyond 8 hours will not be compensable with overtime pay, provided that the
number of working hours per day shall not exceed 12, if it exceeds then there must be overtime
pay. So overtime pay will be available after the 12th hour. Employees under CWW are entitled to
break period not less than 60 minutes. Such adoption shall not result to diminution of existing
benefits. Reversion to the normal 8 hour per day shall not result to diminution of benefits.
Please note this as this is important as this might relate to a problem regarding diminution of
benefits. For example, they have agreed on a CWW and after 3 years they go back to normal
working schedule, and then the employees will now claim that there was a diminution of
benefits. Now according to this, reversion should not constitute a diminution on benefits. If
there’s any problem with respect to CWW, it might be related to non-diminution on benefits. Just
read the case of Bisig Mangagawa sa Tryco v. NLRC because this gives the justification and
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


rationale for CWW. Workers favor this scheme considering that it would mean savings or
decreasing costs of transportation fares for at least one day. Longer weekends, and an
additional 52 off days a year which can be devoted to rest, leisure, studies, family responsibility
and other personal matters. And that it will spare them for at least another day in a week from
certain inconveniences that are the normal incidences of working.

Hours worked

So what does hours worked include? Under the Code, all the time during which the employee is
required to be on duty or at a prescribed work place. All the time which the employee is suffered
or permitted to work. Rest period, periods of short duration shall be counted as work. Aside from
understanding, you better memorize so that if there’s a problem then this will be your barometer.
Ang tanong dyan, is it compensable? So how do you answer that? By recalling what are hours
worked. There will be a problem given and you will have to apply this knowledge to this
particular problem. And you cannot answer these problems without memorizing these situations.

Meal period

Every employer is required to give his employee not less than 60 minutes for his meal time. So
as I have said in the beginning, this standards are minimum. If you are the employer and you
want to give your employees at least 3 hours meal period, you can do so.

Are there exceptions? Yes. The shortening of meal time to not less than 20 minutes when
compensable. Now these are now based on the implementing rules and regulations. Where
work is not manual work in nature or does not involve strenuous physical exertion, for the
establishment which regularly operates not less than 16 hours a day, cases of actual or
impending emergencies when there is actual work to be performed on machineries, equipment
or installations to prevent serious losses which the employer might suffer, where the work is
necessary to prevent the losses of perishable goods. So you note, these are the exceptions to
the 60-minute meal period provided that it is not less than 20 minutes.

Another exception. Shortening of meal time to 20 minutes when not compensable. the
employees agree in writing to a shortened meal period of 30 minutes and are willing to waive
overtime pay for such shortened meal period. There must be no diminution of benefits of the
employees which they received prior to the shortening of meal period. The work of the
employee must not involve strenuous physical exertion and they are provided with adequate
coffee breaks in the morning and afternoon. The body (?) of the benefits derived by the
employees from the proposed work arrangement is equal or commensurate to the
compensation due them for the shortened meal period as well as the overtime pay for 30
minutes as determined by the employee’s concern. The overtime pay of the employee shall be
due and demandable whenever they are permitted or made to work beyond 4:30 PM and the
effectivity of the proposed working time arrangement shall be for temporary duration as
determined by the DOLE Secretary.

So what is prohibited by law? It is prohibited that the meal time be shortened to less than 20
minutes. So if you will recall, it is always not less than 20 minutes. It is less than 60 minutes but
not less than 20 minutes because if it is shortened to less than 20 minutes, the same shall be no
longer be considered as meal time but as rest period or coffee break and becomes
compensable.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

So the general rule is meal time which does not exceed 60 minutes and is not less than 20
minutes is not compensable. if you are the employer, you do not need to pay your employees
during this period. However, if you shorten it to less than 20 minutes, then that 20 minutes is
compensable because it is considered as merely a coffee break or rest period.

Waiting time

We are still talking about hours worked or compensable time. Is waiting time compensable or
not? Again, you might a hypothetical problem and then given facts, circumstances the driver
from this time to this time plays cards, you have to remember this concept. It is compensable if it
is primarily for the benefit of the employer and his business. Conversely, if the time is spent
primarily for the benefit of the employee, the time is not compensable. the question is, primary
benefit. Who benefits primarily from that waiting time? Is it the employer or the employee? So
whatever your answer to that is, you can already base your reasoning.

In determining whether waiting time constitutes hours worked, the amount of control over the
employer during the waiting time and whether the employee can effectively use that time for his
own purposes is also material. I have noticed some questions in the previous bar exams
wherein these factors were included in one problem. So for example waiting time nung driver
then whole waiting he has a cellphone where the employer will text him anytime for instructions.
Doon papasok ang amount of control over the employee. When you answer the question, it is
merely how you analyze the problem and how you apply the principles you have learned,
whether wrongly or rightly.

Is waiting time on duty compensable? yes, especially when it is unpredictable or when it is of


such duration where the employee cannot use effectively the time for their own benefit. In those
instances, the employee must be compensated whether their work is on or off the employer’s
premises. Even if the employees spend the time engaging in such amusements as playing
cards, watching tv, reading, facebooking or whatever. So you remember this principle so that
you will have some basis for your answer.

Is waiting time off duty compensable? No. based on US jurisprudence, periods in which the
employee is purely relieved from his duty and which are long enough to enable him to use the
time effectively for his own purposes are not hours worked. Whether the time is off duty is
enough to enable him to use the time is a factual issue dependent upon the circumstances. Now
you see, dependent upon the circumstances is very vague. That is why in the bar exams, when
it comes to these types of hypothetical questions, there is no right or wrong answer. What
matters is do you know the relevant law? Do you know what is the relevant concept? Are you
able to apply them correctly or not. Your answer must be responsive to the question. It may not
be correctly applied, so long as it is responsive to the question, you will be given points for your
answer.

Travel time

General rule, travel from home to work, of course No. otherwise, with this kind of traffic that we
have, we will be enjoying our commute/travel from home to our workplace. Travel from home to
work is nit compensable, an employee who travels from home to his work and returns to his
home after the work day is engaged in ordinary home-to-work travel which is a normal
consequence of employment. This is true whether he works at a fix location or at different job
sites.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


Exception. Yes, if an employee receives an emergency call. So that’s the keyword, emergency.
Outside his regular working hours and he is required to travel to his regular working place or
business, all of the time spent in such travel is considered as working time.

Travel all in a day’s work. Is it compensable? yes, the time spent by an employee in travel as
part of his principal activity therefore it is work-related and is compensable, such as travel from
job site to job site is compensable. when the employee is required to report at the meeting place
to receive instructions or to perform other work there or to pickup tools, the travel to the
designated workplace is part of the day’s work and must be counted as hours regardless of
contract, custom or practice. So if you have a driver when he as to report to a car park 3
kilometers away from the workplace, so that he will have to get the car from that car park and
bring it to the workplace, that is compensable. the time spent by the driver is compensable. it is
all in a day’s work

Travel away from home. Yes, it is clearly working time when it cuts across the employee’s work
day. Travel which keeps the employee away from home overnight is travel away from home.
The employee is simply substituting travel for other duties. The time is not only regular working
hour or normal working hour but also the corresponding hours on non-working days. If an
employee regularly works from 9 to 5, Mondays to Fridays, the travel time during these hours is
working time, not including meal periods. As an enforcement policy, the DOLE does not
consider as working hour spent in travel away from home outside of regular working hours as a
passenger of an airplane, train, boat, bus or automobile.

Night shift differential

Every employee shall be paid a night shift differential of not less than ten percent (10%) of his
regular wage for each hour of work performed between ten o’clock in the evening and six
o’clock in the morning. So yung oras is crucial. You are entitled to night shift differential if you
work between 10 and 6 in the morning. So if you work at night, at 9 in the evening, you are not
entitled to night shift differential.

Who are covered? The general rule is that all employees are covered by the NSD. Exceptions.
Balik tayo sa Article 82, those excluded from Article 82. Employees of retail establishments
regularly employing not more than 5 workers. You memorize this as this is an additional
requirement. So in a given problem, you work at SM mall are you entitled to NSD if you work
from 10 to 6? Yes, because is SM mall there are definitely more than 5 workers.

Overtime work

It is work rendered beyond 8 hours a day. What is the basis for computation of OT pay? The
regular basic wage (without any deduction on account of the facilities provided by the
employer). note that there is a technical meaning for the word facilities under the Labor Code.
Facilities and supplements, may meaning yan, may distinctions yan. So without any
deduction(s) on account of facilities provided by the employer. Facilities, we do not talk about
the bathroom, comfort rooms, hindi yun ang facilities under the labor code.

Is overtime work compensable? yes, work performed beyond 8 hours on a regular work day.
Additional compensation equivalent to his regular wage plus at least 25% thereof. Now if it is
beyond 8 hours om a holiday or a rest day, additional compensation equivalent to the first 8
hours on a holiday or rest day plus 30% thereof.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

But based on my assessment of the previous bar exams, it is not so much on the computation
but more on the principles involved.

What are the conditions to be entitled to OT pay? Entitlement to OT pay must first be
established with sufficient proof and that OT was actually performed. The 8-hour labor law
prescribes the minimum and not the maximum. Therefore, part time work of less than 8 hours is
not prohibited.

Those paid by result are not covered by working conditions. They are paid by results and not on
the basis of hours rendered, so there is no OT pay. The basis is on the task itself. Payment is
not in terms of numbers of unit produced because one task might take hours or even days to
finish. But in terms of completion of work. General rule, contract for piece of work are not
covered. Exception, control test, determine if there is an employee-employer relationship. If it is
established that the employer exercises control over piece-rate, pakyaw workers, they become
regular employees of the employer thus making them entitled to OT pay.

Wages

What is wage? It is the 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, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or
for services rendered or to be rendered and includes the fair and reasonable value, as
determined by the Secretary of Labor and Employment, of board, lodging, or other facilities
customarily furnished by the employer to the employee.

What is the no work no pay principle? It is the rule governing between labor and capital or
between management and employee. The general rule, if the worker does not work he is not
entitled to any wage or pay. Exception. He is entitled to pay even if he does not work when it
was the employer who unduly prevented him from working despite his ableness, willingness and
readiness to work; or when he is immediately locked-out or suspended or illegally dismissed or
otherwise prevented form working.

Salary and wage. Differences. There is really no distinction as so far as I am concerned. But
according to some authors, these are the differences: it is used to characterized the
compensation paid to man for manual skill or unskilled labor, salary is used to describe the
compensation for higher or superior level of employment; wage - it indicates the paying for a
lower or less responsible character of employment, salary- suggestive of a larger or more
permanent or fixed kind of compensation for more important services, it implies a position of
office. In other words, ang wag low class at ang salary naman high class.

Statutory minimum wage rate. It refers to the lowest basic wage rate fixed by law that an
employer can pay his workers. What is now the minimum wage rate in Manila? It is now P491.
So what is the minimum wage by workers paid by result? All workers paid by results including
those who are paid for piece work, pakyaw or task basis shall receive not less than the
prescribed wage rate for 8 hours a day or a proportion thereof for working less than 8 hours. It
might be asked anywhere, any manner. Minimum wage for apprentice, not less than 75% of
applicable minimum wage except if training is required by the school, requisite for graduation or
for board examination. You might be asked when an employer may be allowed to pay less than
minimum wage. Answer is when the employee is an apprentice. The same is true with learners,

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


not less than 75% of applicable minimum wage, except for learners in piece-work where salary
shall be paid in accordance with the minimum wage in tow.

Can there be deductions from wages? Of course, as you have learned on your law proper, the
general rule is that an employer by himself or a representative is prohibited from making any
deductions from the wages of their employees. So prohibited from making any deductions. The
employer is not allowed to make unnecessary deductions without the knowledge or
authorization of the employees. Exceptions: you look at Art. 113, wage deduction, no employer,
in his own behalf or in behalf of any person, shall make any deduction from the wages of his
employees. Not only the employer in his own behalf but also any other persons. So even if a
creditor, for example, gives a SPA to the employer to deduct, such is not possible because in
behalf of the employer himself or in behalf on any other person, that is not allowed to make
deductions. Except in cases when One concept is when the worker in ensured of his concept if
the employer and the deduction is for the cases mentioned with this concept by the employer-
employee relationship and the deduction is because on behalf of recompense When the
deduction is to recompense, the employer by the amount paid by hm. That is beneficial to the
employee, but of course the assurance is with the insurance. Union dues. But then again there
is a qualification. Check-off has been recognized. In cases when they employer has been
allowed by law or regulations sued by the Sec. of Labor and employment.

Non-diminution of benefits, again, this is an important concept that you should be familiar with
as examinees. The general rule, nothing in the Labor Code shall be construed to eliminate or in
any way diminish supplements or other employee benefits being enjoyed by the time of the
promulgation of the Labor Code. So, what is this principle non-diminution of benefits. If there are
benefits being enjoyed by the employees, they have a vested over those benefits. The employer
cannot unilaterally diminish or take away those benefits. That is the meaning of non-diminution
of benefits. They cannot take away without the consent of employee. Those of you who are
employees in the private or public sector. If you have been enjoying 2 cavans of rice every
December and here comes the employer withdrawing those benefits, sasabihin ni employer
mahirap ang business kaya wala muna yung rice. That is diminution of benefits. That is not
allowed without your consent provided it has become a practice and it amounts to company
policy.

What are the exceptions? If it is a correction of error. If kunwari yung pagbigay niya ng bigas ay
error pala dahil dapat sa iba, biglsng tinanggap mo naman. Negotiated benefits based on their
compliance, benefits on reimbursement basis, contingent benefits of conditional bonus,
productivity incentive. But normally when there is a question on non-diminution, you will not read
this word on the problem. If you will not recall this principle, you will not be able to answer the
question. You will need to carefully analyze the situation and from there you will be able to
recognize na nababawasan yung benefits niya without his consent, then you will arrive that it is
violative of the principle of non-diminution. Unless of course, the situation falls within the
exceptions.

Normally, this will refer not to cash wages or payments, kung hindi sa supplements. That is why
you have to distinguish between facilities and supplements.

What are the facilities. As defined under the Labor Code, facilities as to nature, these are items
of expense necessary for the laborers and his family for existence and subsistence. While
supplements are extra remuneration or special privileges or benefits given to or received by the
laborers over and above their ordinary earning and wages. As to deductibility, in facilities they
are part of the wage, therefore they are deductible; as to supplements, they are independent of
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

the wage therefore not wage deductible. So, yung supplements will most normally be asked
related to non diminution of benefits because it is independent of the rate and will consist extra
remunerations. And facilities, being part of the wage, are deductible. So you cannot complaint if
you are being deducted for facilities as it is part of the wage. It will be up to you to look at the
problem and recognize that the examiner is talking about facility and supplement.

Wage Distortion

I am not surprised if some of you encountered this word today because I know there are some
professors who will not discuss this in the classroom. So I advise, if you were asked “What is
wage distortion?” do you recall what I told you yesterday? Memorize, because if you memorize
this one it will be easy for you to understand what wage distortion is.

It is a situation where an increase in prescribed wage rates results in the elimination or severe
contraction of intentional quantity in differences in wage or salary rate between and among
employee groups in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on the skills, lengths of service or other logical bases of
differentiation

How do we illustrate this? Let us say Rank 1 employees receive 481Php per day and then
Rank 2 employees receive 513Php. So Rank 1 and Rank 2. Why is there a ranking. It’s because
of the lengths of their services, skills or other logical bases of differentiate. That is why it is an
intentional quantitative difference. So if you have Rank 2 and feeling mo mas mataas ka dun sa
Rank 1 employees and there is also a difference in your salary. If there is an elimination of that
difference in your salary or severe contraction, let us say yung mga Rank 1 biglang nagkaroon
ng increase na 20Php, so magiging 501Php na sila, dikit na sila as 513Php. What is instead of
20Php it becomes 100Php, then it will the increase is only applicable to a particular group so
Rank 2, walang increase sa kanila. So there is now wage distortion. Because there is a sever
contraction or total elimination of that distinction. How does that happen? There is only 1
reason for wag distortion and that is the issuance of a Wage Order. there can be no other
reason. But based on law, it can inly come about from a wage order. and as you know wage
order normally affected the minimum wage earners. So mga Rank 2 at may salary naman sila,
hindi na sila affected ng wage distortion

Elements: existing hierarchy of position with corresponding salary rats; significance change in
salary rate in a lower paid class without concomitant increase of the higher one; elimination or
severe contraction between 2 levels; existence of same distortion in the same region

Rectification: Art. 124 of the law, it recognizes the validity of the wage increases or correct wage
distortion. So question, if there is a wage distortion brought about by the issuance of wage
order, how do you correct it as it needs to be corrected otherwise there will be disinterest in your
company. So, how do you rectify/correct wage distortion? It depends, it can be corrected if there
is a CBA in the company, then you comply with the CBA provisions. Like going on the grievance
procedure. If there is no CBA, then the management and employee should take and negotiate.
Otherwise, they will elevate the matter to NCLB and if it is not corrected by NCLB, it will be
brought against the labor arbiter.

Rest period

Our employers required to provide employees rest day? Of course, employees are entitled to
rest period not less than 1 hour after 6 consecutive working days. Who determines the
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


schedule? It is the employers because it is an exercise of management prerogatives employers
must respect choice of employee if such is based from religious grounds. Under the law there is
only 1 ground where employee cannot comply with the designated rest day set by the employer
and that is valid ground. He can ask the employer to give him a different rest day. Where the
choice of the employee as to his rest day based on the religious ground will be resolved in a
serious prejudice or obstruction to operation of undertaking and employer will not be expected
to result to normal remedial measure. The employer could so schedule for at lest 2 days for the
employee.

May employee be compelled to work in his scheduled rest day? Yes. But the general rule is that
since it is your rest day, you are nt supposed to be working ad you can politely refuse working
during you rest day. However under the Code you may be required by your employer, provided
that these situations are present: actual or impending injuries caused by Serious accidents, fire,
flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and
property or imminent danger to public safety; When there is urgent work to be performed on
machines, installations, or equipment, in order to avoid serious loss or damage to the employer
or some other cause of similar nature; work is necessary to prevent loss or damage to
perishable goods; completion or continuation of the work started before the eighth hour is
necessary to prevent serious obstruction or prejudice to the business or operations of the
employer; in the event of normal pressure of work due to special circumstances where employer
cannot ordinarily be expected to resort to other measures. Anyway you can find that in your
Code. The general rule, you can refuse on your workday.

Compensation: Where an employee is made or permitted to work on his scheduled rest day, he
shall be paid an additional compensation of at least thirty percent (30%) of his regular wage. An
employee shall be entitled to such additional compensation for work performed on Sunday only
when it is his established rest day. So day rate times 130%. That is when you work on your rest
day, plus 30%.

What if employee doesn’t have regular workday or rest day? He shall be paid additional
compensation of at least 30% of his regular wage for work performed on holiday or Sunday. So
there are 2 types when employee does not have regular workday. Sometimes it’s Tuesday,
sometimes it’s Thursday – so how do you know determine his rest day for purposes of premium
pay? This is the rule now, if he works on Sunday or Holiday, it will be considered his rest day so
employer can never claim that his employee is entitled to pay during his rest day as the
employee has actually does not have any rest day. He cannot, because if that is so then the
employee will be put in a very disadvantageous position.

Holiday Pay

Who are entiled: all employees, those of the government and any of the political subdivisions,
retail and service establisgment, domestic helpers, managerial employees, and other
employees. This is a codal provision. So managerial employees are also entitled to holiday pay.

Importance of knowing the difference classes of holiday – you have the regular, special days,
and special working holidays, but basically you have two – the regular holiday and special day.
There are different rules governing the compensation for employees for the various classes of
holidays. For regular holidays it is an exception to the no work no pay principle and the
employees are entitled to additional compensation but on special days the no work no pay
principle applies and the employee is still entitled to additional compensation if he works. If it is
a regular holiday, if you do not work, you will still be paid 100$ of your salary and wages.
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

Example is if you work on Christmas day, then you will double your wage or salary. That is not
true with respect to special day because in special day, no work no pay. Like for example Araw
ng Maynila, so in Manila if it is declared a special day or holiday, you ma not report for work but
you will not also be paid. So you have to memorize the list of holidays. How many holidays do
we have in the law? We have 12. Familiarize yourself with these regular holidays because the
problem might be based on these holidays and you have to acknowledge or recognize that it is
a regular holiday or a special day. If it is not included in this list, then definitely it is not a regular
holiday, so you don’t apply the exception to the no work no pay principle. Also, these are special
days – All Souls and last day of the year. You know since there are special days which are
national in scope or special days which are local in scope, normally it is announced by
Malacanang. The rules, the employee did not work so the employer shall pay their regular daily
wage, this is for regular holiday and if the employee works, double, he shall be paid at least
200%. If employee works and it falls under his rest day ad holiday, he shall be entitled to an
additional premium pay of at least 30% of his regular daily wage of 200%.

Question. A a worker at BC Company was on leave on March 30 2010. He reported for work on
April 1 and 2, Maundy Thursday and Good Friday. Is A entitled to holiday for the 2 successive
holidays? Yes, under the rules implementing the Labor Code. If there are 2 successive holidays,
the employee may not be paid for both holidays if he absents himself from work the day
immediately preceding the holiday. Unless he works on their first holiday in which case he is
entitled to his holiday pay on the 2nd holiday. In the case at bar, is entitled to holiday pay seems
to work of the first holiday. He did not absent himself as because the day immediately
proceeding the first holiday is his schedule leave.

How about those paid by results or by output, workers on takay or pakyaw basis . The principal
question is whether their work is supervised or not supervised by his employer. If supervised,
they are entitled to holiday pay and if not, then they are not entitled. When entitled, the holiday
pay shall not be less than their average daily earning for the last 7 actual working days
preceding the last holiday; providing however that in nor case hall the holiday pay be less than
the statutory minimum wage rate. Holiday pay of season workers, they may not be paid the
required holiday pay during off-season were they are not at work.

Employer-Employee Relationship

Why is it important to establish employer-employee relationship? Because the benefits granted


in title 1 book 2 and other social legislation are relevant. Also, with respect to jurisdiction in labor
cases and termination of employment. It is only when there is an employer-employee
relationship that the dispute is cognizable by the labor arbiter. If there is no ER-EE relationship
you might need to file your case in another tribunal and not with the labor arbiter.

So these are the principles you have to remember. The existence of ER-EE relationship is
determined by law and not by contract. So even if the employer says that Mr. X is not my
employee because we did not sign any agreement or employment contract, that is not correct.
Because their relationship is governed by law. If the law says that X is your employee, then X is
the employee of the employer, and you cannot do away with it by agreements or contracts.
There is no uniform test to determine ER-EE relationship. In general, we have relied on the so-
called “right of control test” wherein the employer has the control over the means and methods
of the employee in accomplishing a task. The control being exercised is not only with respect to
the result of the work but also with respect to the means and methods employed by the
worker/employee. So if the employer actually exercises control over the means and methods
then he is the employer of the employee, otherwise he is not the employer and there might be
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


another relationship between them and if that is so, it is not the Labor Code that will govern. So
you see. It is important to determine the existence or non-existence of ER-EE relationship.

What are the basic tests and when do we apply these tests to determine the existence of ER-EE
relationship? You are familiar with the 4-fold test. Then you have the 2-tier test, that is another
test in determining ER-EE relation. So what is this 4-fold test? You must be familiar with this test
as this determines the elements present in a ER-EE relationship. First, it is the selection and
engagement of employee. Second, payment of wages. Third, power of dismissal. Fourth, power
of control over the employee’s conduct which means the control over the means and methods
employed in the accomplishment of the desired result. It is said class, among these four the
control test is the most important because there may be instances when it is not clear as to who
selected or engaged the services of the employee. It is not clear as to who is actually paying the
wages of the employee. It is not clear who has the power of dismissal over the employee. But
then if it is very clear as to who exercises the power of control, then that is the employer. it is not
necessary that all of these 4 elements are present, what is necessary is actually the presence of
number 4. one to three are only helpful in determining but they actually do not decide or
determine who is the employee or who is the employer.

So what is this control test? It addresses the issue whether the employer controls or has
reserved the right to control the employee not only as t the result of the work to be done but also
as to the means and methods in which the same is to be accomplished. I believe that during
your law school days, there were cases assigned to you to illustrate this. For example, the
jeepney drivers and taxi drivers of the boundary system. Are the employees? Based on
jurisprudence they are employees because of the application of the control test. So, if you are
given a problem and you are not very sure of your answer, be sure you are able to discuss the
control test and afterwards conclude that. But I would advise you to first discuss what is control
test para yung examiner sabihin na alam nito ang pinagsasabi nito.

Now, 2-tiered test, the commutative (?) power to control the employee with respect to the
means and methods by which the work is to be done and the underlying economic realities of
the activity or relationship. So eto, parang pinagsama ang control test at economic reality test.
Again, I would say that you may only resort to this 2-tier test if there is difficulty in determining
ER-EE relationship based on the 4-fold test. Because if you are able to establish just be
applying the 4-fold test, I say that there is no need for you to apply the 2-tier test. In the US the
touchstone of economic reality in analyzing possible ER-EE relationship for purposes of the
federal labor standards is dependency. So, if a person is economically or financially dependent
on the employer then you can say that that employer is employing the employee. Siya
nagbibigay ng sweldo, ng increase, ng holiday, so the employee has become economically
dependent on the employer. if you cut the relationship, malaking mawawala dun sa employee.
Ergo, he is the employer. economic dependency test. What are to be considered in the
economic dependency test? The extent to which the services performed are an integral [part of
the employer’s business, the extent of the workers investment in equipment and facilities, the
nature and degree of control exercised by the employer, the workers opportunity for profit and
loss, the amount of initiative skill judgment or foresight, the permanency or duration of the ER-
EE relationship, the degree of dependency of the employee to the employer for his continued
employment in that line of business. So it’s a case-to-case basis, and in analyzing a
hypothetical problem, you might use these factors.

So these are the types of employment under Art. 280 of the Labor Code. Elsewhere in the code,
you will find different kinds of employment but now we are only talking of Art. 280. These are the
kinds of employment: probationary, regular, project, seasonal, casual, fixed-term. Again, when
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Atty. Peter-Joey Usita

you enter that examination room, you must be very familiar with these concepts. How is one
different from the other? Probationary employment shall not exceed 6 mos from the day the
employee started working unless it is covered by apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged on a probationary basis may be
terminated for a just cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee. So those are the important principles you have to remember
with regards to probationary employment. Probationary employment is a trial period because
the employer would like to determine or observed if whether this particular applicant has the
skills and qualifications to become a regular employee. So you are given a probationary period
of employment, but under the code it should not exceed 6 mos. So if you’re an employer and
you hire Mr. X, make sure that before 6 mos you are already decided. If you decide to make him
a regular employee, then no problem. But if you’ve observed that he is not worth hiring as a
regular employee, you better tell him hanngang ganito ka nalang. You do not extend him. If it is
extended, he automatically becomes a regular employee. Also, when you employ an employee
as probationary employee, the contract must not exceed 6 mos. Now, just case termination of a
probationary employee. A probationary employee also has security of tenure. Do not under the
wrong impression that a probationary employee does not have security of tenure. He has
security of tenure of that particular period of employment. Kung 6 mos, so his tenure is secure.
So you cannot dismiss him without just cause. For example, 3 mos palang hindi mo pwedeng
sabihin na wag ka nang pumasok bukas, kelangan there should be just cause or authorized
cause. Kung wala, you have to wait for that 6 mos to expire. So ang probationary employee ay
may security of tenure for that period of probation. Reasonable standards, it is important that
when you hire a probationary employee, you must inform him what are the reasonable
standards that he has to achieve or comply with. Why? encase as i’ve said a while ago, this is a
trial period. For example, you hire a secretary, you have to tell him at the end of the 6-month
period you have to type 500 words per minute. Kelangan reasonable standards mo, because if
you do not tell him that, then how can he qualify? And the standards must be reasonable.
Because if it is not reasonable, then there is no way the probationary employee will become
regular. It is an impossible condition. The general rule shall not exceed 6 mos. From the day the
employee started working, so you have exception: if there is an apprenticeship agreement for a
longer period, parties agreed otherwise. I want you to read this case, Buiser v. Leogardo,
because this is a very exceptional case. Another exception is company policy and then nature of
the work. When we say nature of the work, if by practice in the industry a longer period is need
not only 6 mos so that you will be able to observe the employee then that is allowed even if it is
more that 6 mos. The extension of probation, it is allowed, the ER-EE may agree to the
extension for the probation for more than 6 mos. Employee by voluntarily agreeing waives his
benefit attaching to the completion of the period if he still fine (?) to make the (?) the period of
extension. Again this is by way of exception. I normally caution my clients, specially if they have
HR, sabihin nila Atty., meron naming exception ng more than 6 mos. I tell them to stick to the
general rule, 6 mos para safe tayo. I think that‘s a better advise than hiring a probationary
employee for more than 6 mos or extending the probation. Termination. Protected by security of
tenure however may be terminated before the expiration of the probationary period on 3
grounds: just case, failure to meet the standards and qualifications for regularization, failure to
qualify as a regular employer in accordance to reasonable standards. Number 1 siyempre yung
just case, nagnakaw siya and such. Second is failure to qualify for regularization, on the 6th
month, after evaluation he fell short, sabihin nun you were not able to comply with standards.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


Regular employment. By nature of work. You see while it is true that we have regular
employment, we have different types of regular employee. How does one become a regular
employee? By nature of work. Necessity or desirability in the usual business or trade of the
employer. now recall, by years of service, if the employee has been performing a job for at least
1 year, even if the performance is not continuous and merely intermittent, the law (?) makes
repeated and continuing name (?) for performance as sufficient evidence of necessity and not
indispensability. Another, when the employee is considered regular is when he is allowed to
continue working after the probationary period, that’s the one were were discussing a while ago.
So for example you have a casual employee and then you allow him to work again for more
than1 year, doing the same line of work, he now becomes a regular employee.

Another, casual employment. It is any other employment arrangement which does not fall under
regular or by project or seasonal. So what’s my usual example when distinguishing between
regular and casual employment. For example your company is engaged in car manufacturing,
you employed X as a painter in the production line. And you have employed Y as a janitor.
Based on law, X would be a regular employee because the job is necessary and desirable in the
usual trade or business of the employer which is car manufacturing. However Y who is a janitor,
that is not usually necessary and desirable in car manufacturing. Y will be considered as a
causal employee. However if you allowed Y to work as a janitor for more than 1 year especially
if you rehire him every time, then it means to say that Y becomes a regular employee of the
company. What’s the reason for that? Because your repeated hiring of Y would mean that his
services are necessary and desirable to your business. While initially it might not be necessary
and desirable, ultimately it becomes necessary and desirable in the usual trade or business of
the employer.

Seasonal. Where the work is performed is seasonal in nature and the employment is for the
duration of the season, now this seasonal employment is not dependent on the weather ha. It is
dependent on the particular type of work, that is what we are referring to. Example, those who
will be picking mangoes, fruits or harvesting palay, because you do not do this all throughout the
year. This might be a potential bar problem. Can seasonal employee be a regular employee?
Yes, seasonal can be regular. First, the seasonal must perform work or service that is seasonal
in nature and second they must have been employed for more than 1 season. So again, you
have repeated hiring specially if you hire them off-season. Meaning to say that if they will not be
able to devote their time and energy to some other work during the supposed off-season, then it
means to say that these are your regular employees, it’s as if they have their waiting time,
waiting for the next season.

Fixed-term employment/contractual employment. This was first established in the Brent School
v. Zamora. So what is fixed-term employment? Simply means that the employer and employee
mutually, voluntarily, and intelligently agreed on a fixed period or term of employment. We have
said a while ago for example that probationary employment shall not exceed 6 mos., if he
extends it, he becomes regular. What if, X and Y agreed on a fixed term of 1 year, 2 years or 3
years and then after that they refuse to renew the contract. Can the employee claim illegal
dismissal because he has already achieved regularity? He has become a regular employee
because he has worked for more than 6 mos? Now, applying the ruling in Brent, the Court said
that the parties are still free to agree, because that is the rationale of entering or voluntarily
entering in a contract. Provided it is shown that there was no misrepresentation on the part of
the employer and there was negotiation in good faith between the two. The Court will consider
the agreement as valid. It is a fixed term employment. See if you read that case, the issue there
was that the employee was claiming that he is already a regular employee applying the
provisions on probationary employment. More than 6 mos na ako, ang tagal na, tapos ayaw
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

niyong i-renew at tinanggal niyo ako, hindi pwede yan. The Court said that hindi ka naman pinilit
doon sa contract, bakit ka pumirma? Hindi ka pinilit. That contract is valid, it says in your
contract na 3 years, so 3 years and afterwards hindi na na-renew. You cannot also claim that
the term should be extend because it should be mutually agreed upon by the parties eh kung
ayaw ni employer, pwede bai sang party lang magree? Hindi pwede. These are the principles
you have to remember for the validity of fixed-term employment. The fixed period for
employment was knowingly and voluntarily agreed upon by the parties without any force, duress
or improper pressure being brought upon the employee and absent any other circumstances
vitiating consent. So you recall the elements of contracts diba? Consent, object, consideration.
So, consent, walang vitiation of consent. It satisfactorily appears that the ER-EE dealt with each
other on more or less equal terms with no moral dominance, whatever being exercised by the
former to the later. Now, stipulations, clauses, terms and conditions should not be contrary to
laws, morals, good customs, public order or public policy. In this case, it was held your
agreement was not contrary to laws, morals, good customs, public order or public policy,
therefore it is valid.

Project employment. Those employees who are hired for specific undertaking and the
completion or termination of that project has been determined at the time of engagement. So, if I
hired somebody as a project employee, I must tell him right from the beginning as to what that
project is, when it will end, what need to be accomplished. Indicators of private employment, the
duration of specific undertaking for which the worker is engaged is reasonably determinable; the
work or services to be performed by the employee must be in connection with a particular
project he is engaged; the employee was not employee and the way … engagement is free to
offer his services to another employer. Why? because if he is not free to offer then he is
considered as a regular employee. What makes him a project employee is that he is only an
employee during the existence of the project. The termination of his employment in the
particular project is reported to the DOLE; there is an undertaking in the employment contract
where the employer could pay completion bonus as practiced by construction companies. Now,
you know regular employment is inconsistent with project employment. Either you are a regular
employee or you are a project employee, you cannot be both. Project employees are not by law
entitled to separation pay if their services are terminated as a result of the completion of the
project or any phase thereof in which they are employed. So yun yung kinds of employment
under Art. 280.

Job contracting

In light with the recent events, I am not very sure if this is still applicable although it is still there,
but in terms of their application today in the work place, I am not sure, because the DOLE may
have a different policy or interpretation sa mga job contracting na yan. I see that the policy now
is against job contracting, even the legitimate job contracting.

What is job contracting? It refers to an arrangement whereby the principal agrees to farm out
with the contractor the performance or completion of a specific work, job or project with a
definite pre-determined period regardless if such job, work or services are to be completed
within or outside the premises of the principal. What are the relationships which exists in a
legitimate job contracting? It refers to the relationship in contracting or subcontracting
arrangement where there is a specific contract for a job, work, or service between the principal
and the contractor and the contract of employment between the contractor and his workers.
Who are the parties to a legitimate job contracting? There are 3: the principal, the contractor,
and the contractor’s workers. This is the so-called tri-lateral relationship. What are the different
contracts existing in a legitimate job contracting? You have the employment contract between
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


the contractor and its employees and the services agreement between the principal and the
contractor. Let us illustrate for clarity. Let us say for example we have San Beda College, it was
to build a new gymnasium, so in order to have that gymnasium, it will enter into a contract with
X construction company. X construction company will have to engage welders, plumbers,
carpenters and other workers. So these basically are the parties: San Beda is the principal, X
construction company s the independent job contractor, and of course the carpenters et. al are
the workers or employees of X construction company. Now let us examine their relationship –
as between X construction company and the workers, carpenters there is an ER-EE
relationship; between San Beda and X construction there is no ER-EE relationship because
their relationship is governed by the Civil Code on independent contractors. Now, does San
Beda College have any liability in favor of X construction company? Yes, the liability and
responsibility si to pay the contract price for the building of the gymnasium. X also has the
responsibility to erect or build that gymnasium. As any independent contractor, San Beda
College cannot dictate on X construction company as to how it will erect the building as it does
not exercise control over the means and methods of X construction company. But it can only
dictate as to the result od the gymnasium. Between X construction company and the
employees, X construction company exercise control over the means and methods. What if for
example X Construction company fails to pay the wages of the carpenters or the welders?
Kanino pwede ito singilin? Of course, sisingilin nila si X construction company, however if X
construction company suddenly becomes insolvent, can they go after San Beda? Yes, but only
with respect to their wages for services already rendered, that is the only extent of the liability of
San Beda. San Beda College has no obligation to remit the SSS contributions, philhealth, etc.,
why? because these are not the employees of San Beda

What are the requisites of a legitimate job contractor? Contractor must be registered with the
DOLE – now it is very difficult to register with the DOLE. The contractor carries a distinct and
independent business and undertakes to perform a job or service in its own responsibility
according to its own manner free from the control of the principal except as to result thereof.
The contractor has substantial capital and investments on tools, machineries, work premises
and other materials in the conduct of the business. The service agreement between the
principal and contract ensures compliance with all the rights and benefits of workers under the
law.

What are the benefits of the employees? So we are now referring to the carpenters, the
welders. The contractor’s employees shall be entitled to all the rights and privileges as provided
for in the Code to include the following: safe and healthful conditions, labor standards,
retirement benefits, social security, security of tenure – because they are the employees of the
independent job contractor.

Labor-only contracting (prohibited under the Law)

When is there labor-only contracting? It exists when the contractor does not have substantial
capital and/or investments in the form of tools, equipments, macheries, work premieses and
other materials necessary for the conduct of business; the employees recruited and placed are
performing acitvities which are necessarily accepted or desirable to the operation of the
company or directly related to the main bsuness of the principal. In oru given example, if X
construction company actually does not have tools, equipments, machineries, ano siya? Eh di
dummy lang siya ng San Beda. So X construction company, to be a legitimate job construcitr,
must be dependent. Otherwises, if it only relies of om the funding given by San Beda College,
then it is a dummy of San Beda College. So San Beda is actually the employer of the workers
and carpenters because X construction company would now appear to have been engaging in
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

labor-only contracting which is not allowed by law.. It also exceeds when the contractor does not
exercise the right of control over the performance of the work of the employees. There was this
particular case which when apparently there was an X xompany that supplied workers to
perform in particular harvesting. It turns out that this X company does not have sufficient
investment. The Court ruled that the employees of that company ae the employees of San
Miguel Corp. that they resorted to this scheme in order to provide the rights of the employees to
their rightful benefits. If you are an independent and legitimate job contractor, necessarily you
have other clients and customers, so kung sasabihin mo na San Miguel lang client namin, then
you are just a dummy and that is not allowed. You remember again the reason why labor-only
contracting is not allowed? Because it is a form of illegal recruitment wherein the recruiter has
no license and no authority, and thus not allowed to engage in recruitment activities.

Effects. The labor-only contractor will be treated as an agent of the principal. The principal will
be considered as employer of the employees hired by the labor-only contractor. Solidary liability
of the principal and the labor-only contractor. So you note that this is another instance where
you apply the joint and solidary liability, the first one is the one we learned yesterday with regard
to the agent and principal employer of OFWs. Here, you have another instance of joint and
solidary liability, and when is that? Between the principal and labor-only contractor, but that is
not so when you have a principal and a legitimate contractor because they have different
liabilities. A legitimate job contracting, there is no employer-employee relationship between the
employees of the contractor and the principal; while in a labor-only contracting, there is an
employer-employee relationship between the principal and the employees of the labor-only
contractor. Now what is the consequence of that difference? The relief prayed for. There can be
reinstatement or payment of backwages in labor-only contracting because the employees are
the employees of the principal, the contractor is considered as an indirect employer while the
principal is the direct employer of the labor-only contracting employees. There is joint and
several obligation of the principal and contractor for a very limited period, what’s that purpose?
Yung payment lang nung wages for services already rendered, but other than that you cannot
hold the principal jointly and severally liable. Solidary liability of principal and labor-only
contractor in all instances because the principal is the direct employer and then the contractor
undertakes to perform a specific work for the principal while labor-only contractor merely
supplies or places personnel, in other words, it is a mere agent of the principal.

Dismissal from employment

What are the just causes of termination of employment? You have actually 5 since the 6th is
analogous cases. You have serious misconduct, gross and habitual neglect by the employee of
his duties, fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative, commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly authorized
representatives. So after familiarizing yourselves with these grounds, the next question is what
are the elements? What are the requisites for each? Why are we talking about just causes?
Because there is a security of tenure most especially if the employee is a regular employee, you
cannot just dismiss the employee without any lawful cause whether it be a just or authorized
cause. When there is no just or authorized cause, you will automatically have illegal termination.
I always tell my students, you never terminate an employee, you dismiss an employee, you
terminate the services of the employee. Because when you terminate an employee, not only will
you be liable for illegal dismissal, you will likewise be liable for homicide or murder. So do not
terminate an employee, you dismiss an employee.

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


Serious misconduct is defined as the transgression of some established and definite rule of
action, forbidden act, dereliction of duty, willful in character and implies wrongful intent and not a
mere error in judgment. Just a piece of advice, memorize. What are the requisites of willful
misconduct? The misconduct must be serious. Diba? Hindi pwedeng less serious eh. It must
relate to the performance of the employee’s duties. It must show that the employee has become
unfit to continue working for the employer. so yung second one, it must relate to the
performance of the employee’s duties, if it does not relate to the employee’s duties then it is not
considered serious misconduct and not a ground for termination of employment. That employee
mught be guilty or might have violated a special penal law, but the same is not a ground for
termination because it does not relate to the performance of the employee’s duties. For
example, outside of the company premises may nagawa siyang kasalanan, pero its’s not related
to his official functions or duties, you cannot say na tanggal ka na dito. Willful disobedience,
requisites. The employee’s assailed conduct has been willful or intentional and the willfulness
being characterized by a wrongful and perverse attitude; the order violated must have been
reasonable, in connection to the employee’s duties. There must be connection to the
employee’s duties. And of course, it must be reasonable. If the order is not reasonable, if it is
illegal, if you’re the employee, you are not duty-bound to follow that illegal order. neglect of duty
must be gross and habitual. What is the classic example of gross and habitual neglect of duty?
Habitual absenteeism. Now you note that the law says gross and habitual, so they should go
hand-in-hand. Make sure as much as possible, you can always argue in the particular case,
now it may be habitual but if it is not gross, it is not ground for termination of employment. It may
be a ground for suspension but not the ultimate liability of dismissal. How about tardiness, is
that a ground for termination of employment? Based on jurisprudence, it is not. Kahit yung
employee mo lagging na-lalate, jurisprudence will tell you na hindi mo siya pwede idismiss. You
can only impose other sanction(s) if that is your only basis. That tardiness must be gross. So
meaning to say yung tardiness niya kahit habitual hindi pwedeng ground for dismissal, habitual
lang siya at hindi habitual eh. Kelan magiging gross ang tardiness ng employee mo? For
example, it involves a company driver who had the duty of going to the company and getting the
deliviris and delivering it to the customers, but because he wasl late he was not able to deliver.
According to the court, that is not only habitual, that is gross, especially is this case there is only
one driver. So pagka late siya ng 15 or 30 minutes, ayaw nang tanggapin ng mga customers, so
it becomes gross. If you are faced with a situation of tardiness lang, it must be on a case-to-
case basis, because if it is not gross, hindi pwede. Gross neglect, means and absence of that
diligence where an ordinary man will use it in his affairs. Habitual neglect implies repeated
failure to perform one’s duties over a period of time depending upon the circumstances.

Dishonesty. Fraud and willful breach of employee of the trust reposed in him by his employer or
duly authorized representative. The fraud must be committed against the employer or his
representatives in connected to the employee’s work. Fraud requisites – fraud must be
committed against the employee or his representatives in connection with the employee’s work.

Loss of confidence. In applying loss in confidence, you must strictly these criteria – loss of
confidence should not be simulated, not used as a subterfuge or causes which are improper,
not arbitrarily asserted against the evidence to the contrary. It must be genuine, not mere
afterthought and the employee holds a position of trust. So yung last one, that you have to
remember. An employee hold a position of trust and confidence. If he does not hold a position of
confidence. What is there to lose, he is not an employee of trust and confidence. So if you did
not repose in him trust and confidence, necessarily you will not lose the loss of trust and
confidence

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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

The employee is routinely with the care and custody of the employer’s body of properties. So
trust and confidence normally examples dyan are yung managerial employees. So if he is not a
managerial employee, but he is in charge with the care and custody. Even if he is merely a
rank-and-file employee, that is also a ground. Ground of a commission of a crime refers to an
offense by the employee against his employer or any immediate member of his family
(employer). Conviction is not necessary to warrant his dismissal by the employer. if there is
actual evidence regarding the time against the employee, conviction is not necessary to warrant
his dismissal by the employer. so if there is actual evidence regarding he crime committed by
the employee against the person of the employer or his immediate family, there’s no need for
conviction of a criminal offense in the regular courts before you dismiss him. Pwede ring idimiss
of na agad even if nakafile palang yung case. Provided again you comply with the due process
requirements.

Voluntary or willful act/omission of the employee. Authorized cause, dun tayo. So after just
cause you have authorized cause. Business related, you have automation, redundancy,
retrenchment, closure or cessation of operation, you also have health-related causes. We will
discuss about authorized causes because these are common to all of them. Number one is
good faith. There is good faith in effecting the termination, the termination is a matter of last
resort; 2 separate written notices are served on both the affected employees and the DOLE at
least 1-month prior to the intended date of termination; separation is paid to the affected
employees; fair and reasonable criteria in the ascertaining of what positions are to be affected
by the termination. So one-by-one. So what is retrenchment? It is the reduction of the workers in
a company made necessary in the introduction of labor-saving devices. It will result in making
the position held by the employees who are adversely affected thereby redundant and
unnecessary. As an additional requisite, the purpose for such installation must be valid such as
to save on cause, efficiency or other justifiable economic reasons. For example, in an office,
there were used to having 10 secretaries using the typewriters but because of installation of
new computers, 2 nalang ang kailangan mong secretary. you will need to retrench the others.
So long as it is done in good faith, can there be bad faith? So that is an example of labor-saving
devices. Relevant principles related to automation. The installation of these devices is a
management prerogative and of course will not interfere with his exercise in the absence of
arbitrariness or malice on the part of management. Proof of losses is not required.

What is redundancy? It exists when the services of an employee is in excess of what is


reasonably demanded by the actual requirements of the enterprise. Evidence, new staffing
patterns, proposal of the viability of the newly created positions, job description and approval of
the management. While it is said that one thing that is common to all these authorized causes is
good faith, if there is any ground among them where good faith is simulated, it is this one –
redundancy. Evidence of losses is not required, redundancy to save on labor costs is valid.
Last-in-first-out rule is not controlling as employer as the prerogative who to dismiss. Even if
there is a seniority rule, the nature of work of employee should still be taken into account by the
employer. So LIFO is not controlling in implementing retrenchment on redundancy. One of the
economic grounds resorted to by the employer to terminate employment primarily to avoid or
minimize losses. Dito, proof of losses or imminent losses is required to show good faith.

Standards of retrenchment. The losses to be expected must be substantial and inconsequential.


The substantial loss apprehended must be reasonably imminent as such imminence may be
perceived objectively and in good faith by the employer. retrenchment must be reasonably
necessary and likely to effectively prevent the expected losses, and the expected losses if
already realized and the expected imminent losses sought to be forestalled must be proved by

2017 LABOR LAW COMMITTEE


[Rashi Edding][Joe Rivera][Chare Marcial] 32
[Alex Tumulak][April Villamor][Agatha Corpus]
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2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita


sufficient and convincing evidence through presentation externally audited financial statements.
So you really have to consult your accountants or auditors if you will resort to this authorized
causes of dismissal. To show good faith, you have to show proof.

The phrase retrenchment to prevent losses means that retrenchment must be undertaken by
the employer before the losses anticipated actually sustained or realized. The fact that there is
an economic or other crisis affecting a certain sector or a country as a whole is not sufficient
justification for retrenchment, it must be specifically proven by the company.

Closure of cessation of operation of business. It is the complete or partial cessation of the


operations of the employer, a state of financial ruin or promote the business interest of the
employer. closure involves 2 situations, when not due to serious business losses or when due to
serious business losses. If you are an employer, are you allowed to close your business even if
you are not experiencing serious business losses? Yes. Can the government compel you to
continue with your business even if you do not like? So you can close your business anytime
provided that you comply with the rules, especially yung separation pay. What are the related
principles? Principle of closure under Art. 289 applies in cases of both partial or complete
closure or cessation of business operations. The court cannot order an employer to continue his
business. Closure may constitute unfair labor practice if it resorted to as a ruse or scheme to get
rid of employees in account of their union activities. Closure by means of an enactment of law is
valid. Audited financial statements necessary only in closure due to losses. Closure of business
to merge or consolidate with another or to dispose some or all of his assets have to be valid.

Disease. So what are the requisites? Employee has been found to be suffering from any
disease and whose continued employment is either prohibited by law or is prejudicial to his
health or prejudicial to the health of his co-employee. There is a certification from a competent
public health authority that the disease is of such nature or of such state and that it cannot be
cured within a period of 6 months even with proper medical attention. So number three is very
important, certification by a public health authority and hindi pwede sa private, as held even in
jurisprudence. Notice of termination based on this ground should be separately served to the
employee and DOLE at least 1 month prior to the effectivity of termination and separation pay
should be paid to the employee. If the disease can be cured within a period of 6 months with
proper medical assistance, the employer must not terminate the services of the employee but
merely ask him a leave of absence. The employer must reinstatement him to his previous
position immediately upon the restoration of his normal health. I think there is some absurdity in
the law because you cannot compel an employer to dismiss an employee because this is a
management prerogative. Kahit nga yung other causes eh, kung ayaw iexercise ni employer,
hindi pwede icompel si employer.

A competent public authority refers to a government doctor whose medical specialization


pertains to the disease suffered by the employee. Medical certificate is an indispensable
requisite. An employee dismissed without a medical certificate will entitle the employee to moral
damages. Separate notices of the termination to the employee and the DOLE is necessary.
Separation pay in all these authorized causes is required, unlike in just cause walang separation
pay. If based on installation of labor-saving device or redundancy, separation pay should at
least be 1-month or 1-month for every year which ever higher and a fraction of 6-months should
be considered as 1-year. If based on retrenchment or closure not due to serious business
losses, 1-month pay for at least ½ month for every year of service whichever is higher and a
fraction of 6 months should be considered as 1 year. No separation pay is required to be paid
from serious business losses or act of government. So these are by way of exception because

2017 LABOR LAW COMMITTEE


[Rashi Edding][Joe Rivera][Chare Marcial] 33
[Alex Tumulak][April Villamor][Agatha Corpus]
[Nikka Agustin][Sittie Lao][Bea Yu][Coleen De Leon][Jihan Llames][James Pellosis][Gee Lopez][Fawn Reynon]

2017 Pre-Bar Lecture
Labor Law (Labor Standards)
Atty. Peter-Joey Usita

the general rule is separation pay. In case the CBA provides for a higher separation pay, the
same must be followed because that’s the agreement.

Requirements for valid termination. Because when you talk of just cause or authorized cause,
you are also talking about termination of employment. There must be showing of clear, valid,
and legal cause for termination of employment. So it’s either just cause or authorized cause,
ayan yung substantive due process. and then we will have procedural due process. in Abott
laboratories case, it is required that in addition to compliance with the statutory due process, the
employer must also apply the due process procedure prescribed in his own company riles. What
does that mean? Basically, you have the twin notice, but if there is a company rule or policy
requiring 3 or 4 notices, then you have to comply with that. Because the provision of the Labor
Code is only the minimum. If there is a company policy requiring additional requirements, you
have to comply with that.

Twin notice. You have the first written notice which must contain the detailed narration fot he
facts and circumstances which will serve as basis for the charge of employee, it contains a
directive that the employee os to submit his written explanation within a reasonable period of 5
days from receipt of the notice, so that is the minimum ha. After serving the first notice, the
employer should schedule and conduct a hearing or conference where the employee will be
given the opportunity to explain and clarify and present evidence to his support. There are
instances when hearing is not required, when there is an admission or when the employee
waived the right to a hearing. But the duty of the employer is to give him the opportunity to be
heard, it is up to the employee to waive that right. The employer cannot waive it for the
employee. You now have the second written notice. After determining that the termination of the
employee is justified, the employer shall serve the employee a written notice of termination
indicating all circumstances involving the charge against the employee have been considered
and grounds have been established to justify the severance of his employment. Twin notice
then opportunity to be heard and when there is a need to conduct formal hearing, you must
conduct that hearing, otherwise when the employee waives or admits already, no need for that
hearing.

Procedure in authorized cause termination is deemed complied with upon the severance and
serving of the written notice of the intended termination to all the employees to be
terminated/dismissed and the appropriate DOLE regional office at least 1 month before the
intended date of dismissal, specify the grounds therefore and undertaking the giving of
separation pay. You just have to inform the employee and DOLE, walang hearing, no need to
ask for explanation, unlike in just cause.

2017 LABOR LAW COMMITTEE


[Rashi Edding][Joe Rivera][Chare Marcial] 34
[Alex Tumulak][April Villamor][Agatha Corpus]
[Nikka Agustin][Sittie Lao][Bea Yu][Coleen De Leon][Jihan Llames][James Pellosis][Gee Lopez][Fawn Reynon]