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Labor Law Review

University of Southern Philippines Foundation

PART ONE
(LABOR STANDARDS)

Introductory Concepts

A. LABOR LAWS, SOCIAL LEGISLATION AND SOCIAL JUSTICE

1. Definition

Labor legislation consists of statutes, regulations and jurisprudence


governing the relations between capital and labor, by providing for employment
standards and a legal framework for negotiating, adjusting and administering
those standards and other standards and other incidents of employment.

Labor Law - It is the law that governs the rights and duties of employers and
employees, first with respect to the terms and conditions of employment, and
second, with respect to the labor disputes arising from collective bargaining
respecting such terms and conditions.

Social Legislation refers to that body of laws, state policies, fundamental


principles and decisions that seek to provide protection to workers and other
marginalized sectors of society. Wherein it seek to address specific concerns on
health and life insurance, to help the labor secure housing and basic
commodities.

2. Principle of Social Justice

It is the Humanization of Laws and the Equalization of social and economic forces by
the State so that Justice is in its rational and objectively secular conception may at
least be approximated.
(Sec. 10, Art. II, 1987 Constitution)

3. Labor Legislation vs Social Legislation

Labor Legislation Social Legislation

1. Directly affects employment (eg. 1. Govern the effects of employment


Wages) (eg. Compensation for injuries)
2. Designed to meet the daily needs 2. Involves long term benefits.
of workers.
3. Covers employment for profit or 3. Covers employment for profit or
gain. non-profit.
4. Affects WORK of employee. 4. Affects LIFE of employee.
5. Benefits are paid by the workers 5. Benefits are paid by Government
employer. Agencies (eg. Employees
Compensation Commission)

B. INTERPRETATION AND CONSTRUCTION OF LABOR STANDARDS

- ART. 4 Labor Code. Construction in favor of labor. - All doubts in the implementation
and interpretation of the provisions of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor.
- ART. 1700,NCC. The relation between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to the
special Lawson labor unions, collective bargaining, strikes and lockouts, closed
shop, wages, working conditions, hours of labor, and similar subjects.

- ART. 1701, NCC. Neither capital nor labor shall act oppressively against the
other, or impair the interest or convenience of the public.

- ART. 1702, NCC. In case of doubt, all labor legislations and all labor contracts
shall be construed in favor of the safety and decent living of the laborer.

NOTE:

Under Art. 1700 of the Civil Code, there are 4 Parties to an employment contract;
1. Employer
2. Employee
3. State
4. Public

Q: What should be resolved in favor of Labor?


A: The interpretation and implementation of:
1. Provisions of the Labor Code
2. Provisions of the Implementing Rules of the Labor Code
3. Provisions of other Laws (Civil Code, Special Laws, etc.)
4. Evidence
5. Agreements
6. Writing

- Acuna vs CA (GR# 159832 - 05/05/06)

It is a time-honored rule that in controversies between a worker and his employer,


doubts reasonably arising from the evidence, or in the interpretation of agreements
and writing should be resolved in the workers favor. The policy is to extend the
applicability of the decree to a greater number of employees who can avail of the
benefits under the law, which is in consonance with the avowed policy of the State to
give maximum aid and protection to labor. Accordingly, we rule that private
respondents are solidarily liable with the foreign principal for the overtime pay claims
of petitioners.

- G&M Phils. Inc. vs Cuambot (GR# 162308 - 11/22/06)

Indeed, the rule is that all doubts in the implementation and the interpretation of the
Labor Code shall be resolved in favor of labor, in order to give effect to the policy of the
State to 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, and to assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work.

It is a well-settled doctrine, that if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter. It
is a time-honored rule that in controversies between a laborer and his master, doubts
reasonably arising from the evidence, or in the interpretation of agreements and
writing should be resolved in the formers favor. The policy is to extend the doctrine to
a greater number of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and protection of
labor.

- Eureka vs NLRC (GR# 163013 - 04/30/08)

- Continental Steel Mfg. vs Montano (GR# 182836 - 10/13/09)


The issue of civil personality is not relevant herein. Articles 40, 41 and 42 of the Civil
Code on natural persons, must be applied in relation to Article 37 of the same Code,
which states that Juridical Personality is inherent in every natural person.

There is no need to determine whether or not the fetus had civil personality since it is
not her civil rights which are in question but rather that of her father. It is sufficient
that she is recognized as having been born and having died, which is affirmed by Art.
37, for her father to receive the benefits sought.

When conflicting interests of labor and capital are to be weighed on the scales of social
justice, the heavier influence of the latter should be counter-balanced by sympathy and
compassion the law must accord the underprivileged worker.

- Penaflor vs Outdoor Clothing Mfg. Corp. (GR# 177114 - 01/21/10)

In our view, it is more consistent with human experience that Peaflor indeed learned
of the appointment of Buenaobra only on March 13, 2000 and reacted to this
development through his resignation letter after realizing that he would only face
hostility and frustration in his working environment. Three very basic labor law
principles support this conclusion and militate against the companys case.

The first is the settled rule that in employee termination disputes, the employer bears
the burden of proving that the employees dismissal was for just and valid cause. That
Peaflor did indeed file a letter of resignation does not help the companys case as,
other than the fact of resignation, the company must still prove that the employee
voluntarily resigned. There can be no valid resignation where the act was made under
compulsion or under circumstances approximating compulsion, such as when an
employees act of handing in his resignation was a reaction to circumstances leaving
him no alternative but to resign. In sum, the evidence does not support the existence
of voluntariness in Peaflors resignation

Another basic principle is that expressed in Article 4 of the Labor Code that all doubts
in the interpretation and implementation of the Labor Code should be interpreted in
favor of the workingman.

For the Employers Side:

- Cebu Metal Corp. vs Saliling (GR# 154463 - 09/05/06)

It should be remembered that The Philippine Constitution, while inexorably committed


towards the protection of the working class from exploitation and unfair treatment,
nevertheless mandates the policy of social justice so as to strike a balance between an
avowed predilection for labor, on the one hand, and the maintenance of the legal rights
of capital, the proverbial hen that lays the golden egg, on the other. Indeed, we should
not be unmindful of the legal norm that justice is in every case for the deserving, to be
dispensed with in the light of established facts, the applicable law, and existing
jurisprudence.

- Saracom vs Interorient Maritime Ent., Inc. (GR# 167813 - 06/27/06)

As a final note, let it be emphasized that the constitutional policy to provide full
protection to labor is not meant to be a sword to oppress employers. The commitment
of this Court to the cause of labor does not prevent us from sustaining the employer
when it is in the right.

- NS Transportation Employees Assoc. vs NSTS Inc. (GR# 164049 - 10/30/06)

The law, in protecting the rights of the employee, authorizes neither oppression nor
self-destruction of the employer. Contrary to petitioners claim, remand of the case to
the NLRC is proper since the company has yet to present its evidence during the formal
hearing. It is true that both parties have been provided the opportunity to prove their
cases through the pleadings submitted before the NLRC; however, only petitioners
were given the chance to present its side in the formal hearing. The factual issues
raised in the consolidated cases could still be affected by the additional evidence to be
presented by the company. Equity demands that the company must be equally
allowed to adduce its evidence, if the NLRC is to come up with a rational and impartial
decision.

C. MANAGEMENT PREROGATIVE VS LABOR RIGHTS


1. Management Prerogatives

Inherent Nature of Management Prerogatives

Management prerogatives are not expressly provided for under the Labor Code being
inherent in nature. But they are guaranteed under Sec. 1, Art 3, of the Constitution
which states:

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.

Basically, management has the right to control his business (a form of property) in
any way he sees fit to ensure better performance.

Every employer has the inherent right to regulate, according to his


own discretion and judgment, all aspects of employment (since
after all, it is HIS company, HE owns it), including hiring, work
assignments, working methods, the time, place, and manner of
work, work supervision, transfer of employees, lay-off of workers,
and discipline, dismissal, and recall of employees.
(Rural Bank of Cantilan vs Julve, GR# 169750 02/27/07)

But it must be remembered that like all rights, Management


Prerogatives have limitations, and these are: LCF

1. Those provided by Law


2. Those provided under a Contract or a Collective
Bargaining Agreement (CBA)
3. The General Principles of Fair Play and Justice
(Mendoza vs Rural Bank of Lucban, GR# 155421 07/07/04)

BASIC RIGHTS OF EMPLOYER BASIC RIGHTS OF THE EMPLOYEE


(CPSTR) UNDER THE CONSTITUTION (Sec.
3(par. 2), Art. XIII) TReSH
A. Under Labor Standards
1. Conduct of Business 1. Right to Security of Tenure
2. Prescribe Rules 2. Right to Receive a Living Wage
3. Select and Hire Employees 3. Right to Share in the fruits of
4. Transfer or Discharge Employees production
5. Return of Investment and 4. Right to Humane Conditions of
Expansion of Business Work
B. Under Labor Relations OCEP
1. Right to Organize themselves
2. Right to Conduct collective
bargaining or negotiation with
management
3. Right to Engage in peaceful
concerted activities
4. Right to Participate in policy and
decision-making process
- Phil. Industrial Security Agency Corp. vs Aguinaldo

- Mendoza vs Rural Bank of Lucban (GR# 155421 - 07/07/04)

- Placido Urbanes vs CA

- Phil. Am Life & Gen Insurance Co. vs Gramaje (GR# 156963 - 11/11/04)

Respondent's transfer was not a legitimate exercise of management prerogative. It


may be true that in the transfer of respondent from the Pensions Department to the
Legal Department, there was no demotion in rank nor diminution of the salaries,
benefits and privileges. But this is not the only standard that must be satisfied in
order to substantiate the transfer. In the pursuit of its legitimate business
interests, management has the prerogative to transfer or assign employees from
one office or area of operation to another provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and the action is not motivated
by discrimination, made in bad faith, or effected as a form of punishment or
demotion without sufficient cause. Bad faith and discrimination on the part of
petitioner are profusely perceived from its actions. Discrimination is the failure to
treat all persons equally when no reasonable distinction can be found between
those favored and those not favored Art. 248 (e) of the Labor Code. Bad faith
implies a conscious and intentional design to do a wrongful act for a dishonest
purpose or moral obliquity.

- St. Michaels Institute vs Santos (GR# 145280 - 12/04/01)

The management prerogative was unfair and unreasonable. The employers right to
conduct the affairs of his business, according to its own discretion and judgment, is
well-recognized. An employer has a free reign and enjoys wide latitude of discretion
to regulate all aspects of employment, including the prerogative to instill discipline
in its employees and to impose penalties, including dismissal, upon erring
employees. This is a management prerogative, where the free will of management
to conduct its own affairs to achieve its purpose takes form. The only criterion to
guide the exercise of its management prerogative is that the policies, rules and
regulations on work-related activities of the employees must always be fair and
reasonable and the corresponding penalties, when prescribed, commensurate to
the offense involved and to the degree of the infraction. The dismissal meted out
on the respondents for dereliction of duty for one school day and denouncing
school authority, appears to be too harsh a penalty. Even when an employee is
found to have transgressed the employers rules, in the actual imposition of
penalties upon the erring employee, due consideration must still be given to his
length of service and the number of violations committed during his employment.
Where a penalty less punitive would suffice, whatever missteps may have been
committed by the employee ought not to be visited with a consequence so severe
such as dismissal from employment.

- Industrial Timber Corp. vs Ababon (GR# 164518 - 01/25/06)

Ababon, et. al were legally dismissed. Work is a necessity that has economic
significance deserving legal protection. The social justice and protection to labor
provisions in the Constitution dictate so. On the other hand, employers are also
accorded rights and privileges to assure their self-determination and independence,
and reasonable return of capital. This mass of privileges comprises the so-called
management prerogatives. Although they may be broad and unlimited in scope,
the State has the right to determine whether an employer's privilege is exercised in
a manner that complies with the legal requirements and does not offend the
protected rights of labor. One of the rights accorded an employer is the right to
close an establishment or undertaking. The right to close the operation of an
establishment or undertaking is one of the authorized causes in terminating
employment of workers, the only limitation being that the closure must not be for
the purpose of circumventing the provisions on termination of employment
embodied in the Labor Code. ITCs closure or cessation of business was done in
good faith and for valid reasons. The records reveal that the decision to
permanently close business operations was arrived at after a suspension of
operation for several months precipitated by lack of raw materials used for milling
operations, the expiration of the anti-pollution permit in April 1990, and the
termination of the lease contract with IPGC in August 1990 over the plywood plant.

Although the closure was done in good faith and for valid reasons, ITC did not
comply with the notice requirement. While an employer is under no obligation to
conduct hearings before effecting termination of employment due to authorized
cause, however, the law requires that it must notify the DOLE and its employees at
least one month before the intended date of closure. The unfairness of declaring
illegal or ineffectual dismissals for valid or authorized causes but not complying
with statutory due process may have far-reaching consequences. Where the
dismissal is based on an authorized cause under Article 283 of the Labor Code but
the employer failed to comply with the notice requirement, the sanction should be
stiff as the dismissal process was initiated by the employers exercise of his
management prerogative, as opposed to a dismissal based on a just cause under
Article 282 with the same procedural infirmity where the sanction to be imposed
upon the employer should be tempered as the dismissal process was, in effect,
initiated by an act imputable to the employee.

- First Dominion Resources Corp. vs Penaranda (GR# 166616 - 01/27/06)

Under Article 282 of the Labor Code, willful disobedience of a lawful order of the
employer is a valid cause for dismissal. Management has the right to formulate
reasonable rules to regulate the conduct of its employees for the protection of its
interests. These reasonable house rules are considered by the Court as lawful
orders and therefore violations thereof will justify dismissal under Article 282(a) of
the Labor Code. Company Rule 8 is a valid exercise of management prerogative
and thus a lawful order. Respondents were expected to abide by them and their
transgression, despite clear warnings, provided just cause for the termination of
their employment.

2. Limitations on Exercise of Management Prerogatives

MANAGEMENT LIMITATIONS
PREROGATIVE
Power to Hire No Child below 15 shall be employed
Obligation to prevent/deter acts of sexual
harassment
No stipulation against marriage
Nightwork prohibition for women
Equal opportunity for disabled persons
Yellow Dog Contract
Prohibition against Human Trafficking
Employment of Handicapped Workers

Power to Promote Right of the Employee to Refuse

Power to Demote
Power to Transfer Transfer must be reasonable or with a sound
purpose
There must be consideration for the convenience
and welfare of the employee
It must not be prejudicial to the employee
It must not involve a Demotion in Rank or Status,
or a diminution of the employees salary

Power to Discipline
Power to Manage
Power to Fire

1. Hire
R.A. 7610

AN ACT PROVIDING FOR STRONGER DETERRENCE AND SPECIAL


PROTECTION AGAINST CHILD ABUSE, EXPLOITATION AND
DISCRIMINATION, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines


in Congress assembled::

ARTICLE I
Title, Policy, Principles and Definitions of Terms

Section 1. Title. This Act shall be known as the "Special Protection of


Children Against Abuse, Exploitation and Discrimination Act."

Section 2. Declaration of State Policy and Principles. It is hereby


declared to be the policy of the State to provide special protection to children
from all firms of abuse, neglect, cruelty exploitation and discrimination and
other conditions, prejudicial their development; provide sanctions for their
commission and carry out a program for prevention and deterrence of and
crisis intervention in situations of child abuse, exploitation and discrimination.
The State shall intervene on behalf of the child when the parent, guardian,
teacher or person having care or custody of the child fails or is unable to
protect the child against abuse, exploitation and discrimination or when such
acts against the child are committed by the said parent, guardian, teacher or
person having care and custody of the same

It shall be the policy of the State to protect and rehabilitate children gravely
threatened or endangered by circumstances which affect or will affect their
survival and normal development and over which they have no control.

The best interests of children shall be the paramount consideration in all


actions concerning them, whether undertaken by public or private social
welfare institutions, courts of law, administrative authorities, and legislative
bodies, consistent with the principle of First Call for Children as enunciated in
the United Nations Convention of the Rights of the Child. Every effort shall be
exerted to promote the welfare of children and enhance their opportunities for
a useful and happy life.

Section 3. Definition of Terms.

(a) "Children" refers to person below eighteen (18) years of age or those over
but are unable to fully take care of themselves or protect themselves from
abuse, neglect, cruelty, exploitation or discrimination because of a physical or
mental disability or condition;

(b) "Child abuse" refers to the maltreatment, whether habitual or not, of the
child which includes any of the following:

(1) Psychological and physical abuse, neglect, cruelty, sexual abuse and
emotional maltreatment;

(2) Any act by deeds or words which debases, degrades or demeans the
intrinsic worth and dignity of a child as a human being;

(3) Unreasonable deprivation of his basic needs for survival, such as food and
shelter; or

(4) Failure to immediately give medical treatment to an injured child resulting


in serious impairment of his growth and development or in his permanent
incapacity or death.
(c) "Circumstances which gravely threaten or endanger the survival and
normal development of children" include, but are not limited to, the following;

(1) Being in a community where there is armed conflict or being affected by


armed conflict-related activities;

(2) Working under conditions hazardous to life, safety and normal which
unduly interfere with their normal development;

(3) Living in or fending for themselves in the streets of urban or rural areas
without the care of parents or a guardian or basic services needed for a good
quality of life;

(4) Being a member of a indigenous cultural community and/or living under


conditions of extreme poverty or in an area which is underdeveloped and/or
lacks or has inadequate access to basic services needed for a good quality of
life;

(5) Being a victim of a man-made or natural disaster or calamity; or

(6) Circumstances analogous to those abovestated which endanger the life,


safety or normal development of children.

(d) "Comprehensive program against child abuse, exploitation and


discrimination" refers to the coordinated program of services and facilities to
protected children against:

(1) Child Prostitution and other sexual abuse;

(2) Child trafficking;

(3) Obscene publications and indecent shows;

(4) Other acts of abuses; and

(5) Circumstances which threaten or endanger the survival and normal


development of children.1awphi1

ARTICLE II
Program on Child Abuse, Exploitation and Discrimination

Section 4. Formulation of the Program. There shall be a comprehensive


program to be formulated, by the Department of Justice and the Department
of Social Welfare and Development in coordination with other government
agencies and private sector concerned, within one (1) year from the effectivity
of this Act, to protect children against child prostitution and other sexual
abuse; child trafficking, obscene publications and indecent shows; other acts
of abuse; and circumstances which endanger child survival and normal
development.

ARTICLE III
Child Prostitution and Other Sexual Abuse

Section 5. Child Prostitution and Other Sexual Abuse. Children,


whether male or female, who for money, profit, or any other consideration or
due to the coercion or influence of any adult, syndicate or group, indulge in
sexual intercourse or lascivious conduct, are deemed to be children exploited
in prostitution and other sexual abuse.

The penalty of reclusion temporal in its medium period to reclusion perpetua


shall be imposed upon the following:

(a) Those who engage in or promote, facilitate or induce child prostitution


which include, but are not limited to, the following:
(1) Acting as a procurer of a child prostitute;

(2) Inducing a person to be a client of a child prostitute by means of written or


oral advertisements or other similar means;

(3) Taking advantage of influence or relationship to procure a child as


prostitute;

(4) Threatening or using violence towards a child to engage him as a


prostitute; or

(5) Giving monetary consideration goods or other pecuniary benefit to a child


with intent to engage such child in prostitution.

(b) Those who commit the act of sexual intercourse of lascivious conduct with
a child exploited in prostitution or subject to other sexual abuse; Provided,
That when the victims is under twelve (12) years of age, the perpetrators shall
be prosecuted under Article 335, paragraph 3, for rape and Article 336 of Act
No. 3815, as amended, the Revised Penal Code, for rape or lascivious
conduct, as the case may be: Provided, That the penalty for lascivious conduct
when the victim is under twelve (12) years of age shall be reclusion temporal
in its medium period; and

(c) Those who derive profit or advantage therefrom, whether as manager or


owner of the establishment where the prostitution takes place, or of the
sauna, disco, bar, resort, place of entertainment or establishment serving as a
cover or which engages in prostitution in addition to the activity for which the
license has been issued to said establishment.

Section 6. Attempt To Commit Child Prostitution. There is an attempt


to commit child prostitution under Section 5, paragraph (a) hereof when any
person who, not being a relative of a child, is found alone with the said child
inside the room or cubicle of a house, an inn, hotel, motel, pension house,
apartelle or other similar establishments, vessel, vehicle or any other hidden
or secluded area under circumstances which would lead a reasonable person
to believe that the child is about to be exploited in prostitution and other
sexual abuse.

There is also an attempt to commit child prostitution, under paragraph (b) of


Section 5 hereof when any person is receiving services from a child in a sauna
parlor or bath, massage clinic, health club and other similar establishments. A
penalty lower by two (2) degrees than that prescribed for the consummated
felony under Section 5 hereof shall be imposed upon the principals of the
attempt to commit the crime of child prostitution under this Act, or, in the
proper case, under the Revised Penal Code.

ARTICLE IV
Child Trafficking

Section 7. Child Trafficking. Any person who shall engage in trading and
dealing with children including, but not limited to, the act of buying and
selling of a child for money, or for any other consideration, or barter, shall
suffer the penalty of reclusion temporal to reclusion perpetua. The penalty
shall be imposed in its maximum period when the victim is under twelve (12)
years of age.

Section 8. Attempt to Commit Child Trafficking. There is an attempt to


commit child trafficking under Section 7 of this Act:1awphi1@alf

(a) When a child travels alone to a foreign country without valid reason
therefor and without clearance issued by the Department of Social Welfare
and Development or written permit or justification from the child's parents or
legal guardian;
(c) When a person, agency, establishment or child-caring institution recruits
women or couples to bear children for the purpose of child trafficking; or

(d) When a doctor, hospital or clinic official or employee, nurse, midwife, local
civil registrar or any other person simulates birth for the purpose of child
trafficking; or

(e) When a person engages in the act of finding children among low-income
families, hospitals, clinics, nurseries, day-care centers, or other child-during
institutions who can be offered for the purpose of child trafficking.

A penalty lower two (2) degrees than that prescribed for the consummated
felony under Section 7 hereof shall be imposed upon the principals of the
attempt to commit child trafficking under this Act.

ARTICLE V
Obscene Publications and Indecent Shows

Section 9. Obscene Publications and Indecent Shows. Any person who


shall hire, employ, use, persuade, induce or coerce a child to perform in
obscene exhibitions and indecent shows, whether live or in video, or model in
obscene publications or pornographic materials or to sell or distribute the said
materials shall suffer the penalty of prision mayor in its medium period.

If the child used as a performer, subject or seller/distributor is below twelve


(12) years of age, the penalty shall be imposed in its maximum period.

Any ascendant, guardian, or person entrusted in any capacity with the care of
a child who shall cause and/or allow such child to be employed or to
participate in an obscene play, scene, act, movie or show or in any other acts
covered by this section shall suffer the penalty of prision mayor in its medium
period.

ARTICLE VI
Other Acts of Abuse

Section 10. Other Acts of Neglect, Abuse, Cruelty or Exploitation and


Other Conditions Prejudicial to the Child's Development.

(a) Any person who shall commit any other acts of child abuse, cruelty or
exploitation or to be responsible for other conditions prejudicial to the child's
development including those covered by Article 59 of Presidential Decree No.
603, as amended, but not covered by the Revised Penal Code, as amended,
shall suffer the penalty of prision mayor in its minimum period.

(b) Any person who shall keep or have in his company a minor, twelve (12)
years or under or who in ten (10) years or more his junior in any public or
private place, hotel, motel, beer joint, discotheque, cabaret, pension house,
sauna or massage parlor, beach and/or other tourist resort or similar places
shall suffer the penalty of prision mayor in its maximum period and a fine of
not less than Fifty thousand pesos (P50,000): Provided, That this provision
shall not apply to any person who is related within the fourth degree of
consanguinity or affinity or any bond recognized by law, local custom and
tradition or acts in the performance of a social, moral or legal duty.

(c) Any person who shall induce, deliver or offer a minor to any one prohibited
by this Act to keep or have in his company a minor as provided in the
preceding paragraph shall suffer the penalty of prision mayor in its medium
period and a fine of not less than Forty thousand pesos (P40,000); Provided,
however, That should the perpetrator be an ascendant, stepparent or
guardian of the minor, the penalty to be imposed shall be prision mayor in its
maximum period, a fine of not less than Fifty thousand pesos (P50,000), and
the loss of parental authority over the minor.
(d) Any person, owner, manager or one entrusted with the operation of any
public or private place of accommodation, whether for occupancy, food, drink
or otherwise, including residential places, who allows any person to take along
with him to such place or places any minor herein described shall be imposed
a penalty of prision mayor in its medium period and a fine of not less than
Fifty thousand pesos (P50,000), and the loss of the license to operate such a
place or establishment.

(e) Any person who shall use, coerce, force or intimidate a street child or any
other child to;

(1) Beg or use begging as a means of living;

(2) Act as conduit or middlemen in drug trafficking or pushing; or

(3) Conduct any illegal activities, shall suffer the penalty of prision
correccional in its medium period to reclusion perpetua.

For purposes of this Act, the penalty for the commission of acts punishable
under Articles 248, 249, 262, paragraph 2, and 263, paragraph 1 of Act No.
3815, as amended, the Revised Penal Code, for the crimes of murder,
homicide, other intentional mutilation, and serious physical injuries,
respectively, shall be reclusion perpetua when the victim is under twelve (12)
years of age. The penalty for the commission of acts punishable under Article
337, 339, 340 and 341 of Act No. 3815, as amended, the Revised Penal Code,
for the crimes of qualified seduction, acts of lasciviousness with the consent of
the offended party, corruption of minors, and white slave trade, respectively,
shall be one (1) degree higher than that imposed by law when the victim is
under twelve (12) years age.

The victim of the acts committed under this section shall be entrusted to the
care of the Department of Social Welfare and Development.

ARTICLE VII
Sanctions for Establishments or Enterprises

Section 11. Sanctions of Establishments or Enterprises which


Promote, Facilitate, or Conduct Activities Constituting Child
Prostitution and Other Sexual Abuse, Child Trafficking, Obscene
Publications and Indecent Shows, and Other Acts of Abuse. All
establishments and enterprises which promote or facilitate child prostitution
and other sexual abuse, child trafficking, obscene publications and indecent
shows, and other acts of abuse shall be immediately closed and their
authority or license to operate cancelled, without prejudice to the owner or
manager thereof being prosecuted under this Act and/or the Revised Penal
Code, as amended, or special laws. A sign with the words "off limits" shall be
conspicuously displayed outside the establishments or enterprises by the
Department of Social Welfare and Development for such period which shall
not be less than one (1) year, as the Department may determine. The
unauthorized removal of such sign shall be punishable by prision correccional.

An establishment shall be deemed to promote or facilitate child prostitution


and other sexual abuse, child trafficking, obscene publications and indecent
shows, and other acts of abuse if the acts constituting the same occur in the
premises of said establishment under this Act or in violation of the Revised
Penal Code, as amended. An enterprise such as a sauna, travel agency, or
recruitment agency which: promotes the aforementioned acts as part of a tour
for foreign tourists; exhibits children in a lewd or indecent show; provides
child masseurs for adults of the same or opposite sex and said services
include any lascivious conduct with the customers; or solicits children or
activities constituting the aforementioned acts shall be deemed to have
committed the acts penalized herein.

ARTICLE VIII
Working Children
Section 12. Employment of Children. Children below fifteen (15) years of
age may be employed except:

(1) When a child works directly under the sole responsibility of his parents or
legal guardian and where only members of the employer's family are
employed: Provided, however, That his employment neither endangers his
life, safety and health and morals, nor impairs his normal development:
Provided, further, That the parent or legal guardian shall provide the said
minor child with the prescribed primary and/or secondary education; or

(2) When a child's employment or participation in public & entertainment or


information through cinema, theater, radio or television is essential: Provided,
The employment contract concluded by the child's parent or guardian, with
the express agreement of the child concerned, if possible, and the approval of
the Department of Labor and Employment: Provided, That the following
requirements in all instances are strictly complied with:

(a) The employer shall ensure the protection, health, safety and morals of the
child;

(b) the employer shall institute measures to prevent the child's exploitation or
discrimination taking into account the system and level of remuneration, and
the duration and arrangement of working time; and;

(c) The employer shall formulate and implement, subject to the approval and
supervision of competent authorities, a continuing program for training and
skill acquisition of the child.

In the above exceptional cases where any such child may be employed, the
employer shall first secure, before engaging such child, a work permit from
the Department of Labor and Employment which shall ensure observance of
the above requirement.

The Department of Labor Employment shall promulgate rules and regulations


necessary for the effective implementation of this Section.

Section 13. Non-formal Education for Working Children. The


Department of Education, Culture and Sports shall promulgate a course
design under its non-formal education program aimed at promoting the
intellectual, moral and vocational efficiency of working children who have not
undergone or finished elementary or secondary education. Such course design
shall integrate the learning process deemed most effective under given
circumstances.

Section 14. Prohibition on the Employment of Children in Certain


Advertisements. No person shall employ child models in all commercials or
advertisements promoting alcoholic beverages, intoxicating drinks, tobacco
and its byproducts and violence.

Section 15. Duty of Employer. Every employer shall comply with the
duties provided for in Articles 108 and 109 of Presidential Decree No. 603.

Section 16. Penalties. Any person who shall violate any provision of this
Article shall suffer the penalty of a fine of not less than One thousand pesos
(P1,000) but not more than Ten thousand pesos (P10,000) or imprisonment of
not less than three (3) months but not more than three (3) years, or both at
the discretion of the court; Provided, That, in case of repeated violations of
the provisions of this Article, the offender's license to operate shall be
revoked.

ARTICLE IX
Children of Indigenous Cultural Communities

Section 17. Survival, Protection and Development. In addition to the


rights guaranteed to children under this Act and other existing laws, children
of indigenous cultural communities shall be entitled to protection, survival and
development consistent with the customs and traditions of their respective
communities.

Section 18. System of and Access to Education. The Department of


Education, Culture and Sports shall develop and institute an alternative
system of education for children of indigenous cultural communities which
culture-specific and relevant to the needs of and the existing situation in their
communities. The Department of Education, Culture and Sports shall also
accredit and support non-formal but functional indigenous educational
programs conducted by non-government organizations in said communities.

Section 19. Health and Nutrition. The delivery of basic social services in
health and nutrition to children of indigenous cultural communities shall be
given priority by all government agencies concerned. Hospitals and other
health institution shall ensure that children of indigenous cultural communities
are given equal attention. In the provision of health and nutrition services to
children of indigenous cultural communities, indigenous health practices shall
be respected and recognized.

Section 20. Discrimination. Children of indigenous cultural communities


shall not be subjected to any and all forms of discrimination.

Any person who discriminate against children of indigenous cultural


communities shall suffer a penalty of arresto mayor in its maximum period
and a fine of not less than Five thousand pesos (P5,000) more than Ten
thousand pesos (P10,000).

Section 21. Participation. Indigenous cultural communities, through their


duly-designated or appointed representatives shall be involved in planning,
decision-making implementation, and evaluation of all government programs
affecting children of indigenous cultural communities. Indigenous institution
shall also be recognized and respected.

ARTICLE X
Children in Situations of Armed Conflict

Section 22. Children as Zones of Peace. Children are hereby declared as


Zones of Peace. It shall be the responsibility of the State and all other sectors
concerned to resolve armed conflicts in order to promote the goal of children
as zones of peace. To attain this objective, the following policies shall be
observed.

(a) Children shall not be the object of attack and shall be entitled to special
respect. They shall be protected from any form of threat, assault, torture or
other cruel, inhumane or degrading treatment;

(b) Children shall not be recruited to become members of the Armed Forces of
the Philippines of its civilian units or other armed groups, nor be allowed to
take part in the fighting, or used as guides, couriers, or spies;

(c) Delivery of basic social services such as education, primary health and
emergency relief services shall be kept unhampered;

(d) The safety and protection of those who provide services including those
involved in fact-finding missions from both government and non-government
institutions shall be ensured. They shall not be subjected to undue
harassment in the performance of their work;

(e) Public infrastructure such as schools, hospitals and rural health units shall
not be utilized for military purposes such as command posts, barracks,
detachments, and supply depots; and

(f) All appropriate steps shall be taken to facilitate the reunion of families
temporarily separated due to armed conflict.
Section 23. Evacuation of Children During Armed Conflict. Children
shall be given priority during evacuation as a result of armed conflict. Existing
community organizations shall be tapped to look after the safety and well-
being of children during evacuation operations. Measures shall be taken to
ensure that children evacuated are accompanied by persons responsible for
their safety and well-being.

Section 24. Family Life and Temporary Shelter. Whenever possible,


members of the same family shall be housed in the same premises and given
separate accommodation from other evacuees and provided with facilities to
lead a normal family life. In places of temporary shelter, expectant and
nursing mothers and children shall be given additional food in proportion to
their physiological needs. Whenever feasible, children shall be given
opportunities for physical exercise, sports and outdoor games.

Section 25. Rights of Children Arrested for Reasons Related to Armed


Conflict. Any child who has been arrested for reasons related to armed
conflict, either as combatant, courier, guide or spy is entitled to the following
rights;

(a) Separate detention from adults except where families are accommodated
as family units;

(b) Immediate free legal assistance;

(c) Immediate notice of such arrest to the parents or guardians of the child;
and

(d) Release of the child on recognizance within twenty-four (24) hours to the
custody of the Department of Social Welfare and Development or any
responsible member of the community as determined by the court.

If after hearing the evidence in the proper proceedings the court should find
that the aforesaid child committed the acts charged against him, the court
shall determine the imposable penalty, including any civil liability chargeable
against him. However, instead of pronouncing judgment of conviction, the
court shall suspend all further proceedings and shall commit such child to the
custody or care of the Department of Social Welfare and Development or to
any training institution operated by the Government, or duly-licensed
agencies or any other responsible person, until he has had reached eighteen
(18) years of age or, for a shorter period as the court may deem proper, after
considering the reports and recommendations of the Department of Social
Welfare and Development or the agency or responsible individual under
whose care he has been committed.

The aforesaid child shall subject to visitation and supervision by a


representative of the Department of Social Welfare and Development or any
duly-licensed agency or such other officer as the court may designate subject
to such conditions as it may prescribe.

The aforesaid child whose sentence is suspended can appeal from the order of
the court in the same manner as appeals in criminal cases.

Section 26. Monitoring and Reporting of Children in Situations of


Armed Conflict. The chairman of the barangay affected by the armed
conflict shall submit the names of children residing in said barangay to the
municipal social welfare and development officer within twenty-four (24)
hours from the occurrence of the armed conflict.

ARTICLE XI
Remedial Procedures

Section 27. Who May File a Complaint. Complaints on cases of unlawful


acts committed against the children as enumerated herein may be filed by the
following:
(a) Offended party;

(b) Parents or guardians;

(c) Ascendant or collateral relative within the third degree of


consanguinity;1awphi1@ITC

(d) Officer, social worker or representative of a licensed child-caring


institution;

(e) Officer or social worker of the Department of Social Welfare and


Development;

(f) Barangay chairman; or

(g) At least three (3) concerned responsible citizens where the violation
occurred.

Section 28. Protective Custody of the Child. The offended party shall
be immediately placed under the protective custody of the Department of
Social Welfare and Development pursuant to Executive Order No. 56, series of
1986. In the regular performance of this function, the officer of the
Department of Social Welfare and Development shall be free from any
administrative, civil or criminal liability. Custody proceedings shall be in
accordance with the provisions of Presidential Decree No. 603.

Section 29. Confidentiality. At the instance of the offended party, his


name may be withheld from the public until the court acquires jurisdiction
over the case.

It shall be unlawful for any editor, publisher, and reporter or columnist in case
of printed materials, announcer or producer in case of television and radio
broadcasting, producer and director of the film in case of the movie industry,
to cause undue and sensationalized publicity of any case of violation of this
Act which results in the moral degradation and suffering of the offended party.

Section 30. Special Court Proceedings. Cases involving violations of this


Act shall be heard in the chambers of the judge of the Regional Trial Court
duly designated as Juvenile and Domestic Court.

Any provision of existing law to the contrary notwithstanding and with the
exception of habeas corpus, election cases, and cases involving detention
prisoners and persons covered by Republic Act No. 4908, all courts shall give
preference to the hearing or disposition of cases involving violations of this
Act.

ARTICLE XII
Common Penal Provisions

Section 31. Common Penal Provisions.

(a) The penalty provided under this Act shall be imposed in its maximum
period if the offender has been previously convicted under this Act;

(b) When the offender is a corporation, partnership or association, the officer


or employee thereof who is responsible for the violation of this Act shall suffer
the penalty imposed in its maximum period;

(c) The penalty provided herein shall be imposed in its maximum period when
the perpetrator is an ascendant, parent guardian, stepparent or collateral
relative within the second degree of consanguinity or affinity, or a manager or
owner of an establishment which has no license to operate or its license has
expired or has been revoked;
(d) When the offender is a foreigner, he shall be deported immediately after
service of sentence and forever barred from entry to the country;

(e) The penalty provided for in this Act shall be imposed in its maximum
period if the offender is a public officer or employee: Provided, however, That
if the penalty imposed is reclusion perpetua or reclusion temporal, then the
penalty of perpetual or temporary absolute disqualification shall also be
imposed: Provided, finally, That if the penalty imposed is prision correccional
or arresto mayor, the penalty of suspension shall also be imposed; and

(f) A fine to be determined by the court shall be imposed and administered as


a cash fund by the Department of Social Welfare and Development and
disbursed for the rehabilitation of each child victim, or any immediate
member of his family if the latter is the perpetrator of the offense.

ARTICLE XIII
Final Provisions

Section 32. Rules and Regulations. Unless otherwise provided in this


Act, the Department of Justice, in coordination with the Department of Social
Welfare and Development, shall promulgate rules and regulations of the
effective implementation of this Act.

Such rules and regulations shall take effect upon their publication in two (2)
national newspapers of general circulation.

Section 33. Appropriations. The amount necessary to carry out the


provisions of this Act is hereby authorized to be appropriated in the General
Appropriations Act of the year following its enactment into law and thereafter.

Section 34. Separability Clause. If any provision of this Act is declared


invalid or unconstitutional, the remaining provisions not affected thereby shall
continue in full force and effect.

Section 35. Repealing Clause. All laws, decrees, or rules inconsistent with
the provisions of this Acts are hereby repealed or modified accordingly.

Section 36. Effectivity Clause. This Act shall take effect upon completion
of its publication in at least two (2) national newspapers of general circulation.

Approved: June 17, 1992.lawphi1

R.A. 9231

AN ACT PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF


CHILD LABOR AND AFFORDING STRONGER PROTECTION FOR THE
WORKING CHILD, AMENDING FOR THIS PURPOSE REPUBLIC ACTNO.
7610, AS AMENDED, OTHERWISE KNOWN AS THE "SPECIAL
PROTECTION OF CHILDREN AGAINST CHILD ABUSE, EXPLOITATION
AND DISCRIMINATION ACT"

Be it enacted by the Senate and the House of Representatives of the


Philippines in Congress assembled:

Section 1. Section 2 of Republic Act No. 7610, as amended, otherwise known


as the "Special Protection of Children Against Child Abuse, Exploitation and
Discrimination Act", is hereby amended to read as follows:

"Sec. 2. Declaration of State Policy and Principles. - It is hereby declared to be


the policy of the State to provide special protection to children from all forms
of abuse, neglect, cruelty, exploitation and discrimination, and other
conditions prejudicial to their development including child labor and its worst
forms; provide sanctions for their commission and carry out a program for
prevention and deterrence of and crisis intervention in situations of child
abuse, exploitation and discrimination. The State shall intervene on behalf of
the child when the parent, guardian, teacher or person having care or custody
of the child fails or is unable to protect the child against abuse, exploitation
and discrimination or when such acts against the child are committed by the
said parent, guardian, teacher or person having care and custody of the same.

"It shall be the policy of the State to protect and rehabilitate children gravely
threatened or endangered by circumstances which affect or will affect their
survival and normal development and over which they have no control.

"The best interests of children shall be the paramount consideration in all


actions concerning them, whether undertaken by public or private social
welfare institutions, courts of law, administrative authorities, and legislative
bodies, consistent with the principle of First Call for Children as enunciated in
the United Nations Convention on the Rights of the Child. Every effort shall be
exerted to promote the welfare of children and enhance their opportunities for
a useful and happy life."

Section 2. Section 12 of the same Act, as amended, is hereby further


amended to read as follows:

"Sec. 2. Employment of Children - Children below fifteen (15) years of age


shall not be employed except:

"1) When a child works directly under the sole responsibility of his/her parents
or legal guardian and where only members of his/her family are
employed: Provided, however, That his/her employment neither endangers
his/her life, safety, health, and morals, nor impairs his/her normal
development:Provided, further, That the parent or legal guardian shall provide
the said child with the prescribed primary and/or secondary education; or

"2) Where a child's employment or participation in public entertainment or


information through cinema, theater, radio, television or other forms of media
is essential: Provided, That the employment contract is concluded by the
child's parents or legal guardian, with the express agreement of the child
concerned, if possible, and the approval of the Department of Labor and
Employment: Provided, further, That the following requirements in all
instances are strictly complied with:

"(a) The employer shall ensure the protection, health, safety, morals and
normal development of the child;

"(b) The employer shall institute measures to prevent the child's exploitation
or discrimination taking into account the system and level of remuneration,
and the duration and arrangement of working time; and

"(c) The employer shall formulate and implement, subject to the approval and
supervision of competent authorities, a continuing program for training and
skills acquisition of the child.

"In the above-exceptional cases where any such child may be employed, the
employer shall first secure, before engaging such child, a work permit from
the Department of Labor and Employment which shall ensure observance of
the above requirements.

"For purposes of this Article, the term "child" shall apply to all persons under
eighteen (18) years of age."

Section 3. The same Act, as amended, is hereby further amended by adding


new sections to be denominated as Sections 12-A, 12-B, 12-C, and 12-D to
read as follows:

"Sec. 2-A. Hours of Work of a Working Child. - Under the exceptions provided
in Section 12 of this Act, as amended:
"(1) A child below fifteen (15) years of age may be allowed to work for not
more than twenty (20) hours a week: Provided, That the work shall not be
more than four (4) hours at any given day;

"(2) A child fifteen (15) years of age but below eighteen (18) shall not be
allowed to work for more than eight (8) hours a day, and in no case beyond
forty (40) hours a week;

"(3) No child below fifteen (15) years of age shall be allowed to work between
eight o'clock in the evening and six o'clock in the morning of the following day
and no child fifteen (15) years of age but below eighteen (18) shall be allowed
to work between ten o'clock in the evening and six o'clock in the morning of
the following day."

"Sec. 12-B. Ownership, Usage and Administration of the Working Child's


Income. - The wages, salaries, earnings and other income of the working child
shall belong to him/her in ownership and shall be set aside primarily for
his/her support, education or skills acquisition and secondarily to the
collective needs of the family: Provided, That not more than twenty percent
(20%) of the child's income may be used for the collective needs of the family.

"The income of the working child and/or the property acquired through the
work of the child shall be administered by both parents. In the absence or
incapacity of either of the parents, the other parent shall administer the same.
In case both parents are absent or incapacitated, the order of preference on
parental authority as provided for under the Family Code shall apply.

"Sec. 12-C. Trust Fund to Preserve Part of the Working Child's Income. - The
parent or legal guardian of a working child below eighteen (18) years of age
shall set up a trust fund for at least thirty percent (30%) of the earnings of the
child whose wages and salaries from work and other income amount to at
least two hundred thousand pesos (P200,000.00) annually, for which he/she
shall render a semi-annual accounting of the fund to the Department of Labor
and Employment, in compliance with the provisions of this Act. The child shall
have full control over the trust fund upon reaching the age of majority.

"Sec. 12-D. Prohibition Against Worst Forms of Child Labor. - No child shall be
engaged in the worst forms of child labor. The phrase "worst forms of child
labor" shall refer to any of the following:

"(1) All forms of slavery, as defined under the "Anti-trafficking in Persons Act
of 2003", or practices similar to slavery such as sale and trafficking of
children, debt bondage and serfdom and forced or compulsory labor, including
recruitment of children for use in armed conflict; or

"(2) The use, procuring, offering or exposing of a child for prostitution, for the
production of pornography or for pornographic performances; or

"(3) The use, procuring or offering of a child for illegal or illicit activities,
including the production and trafficking of dangerous drugs and volatile
substances prohibited under existing laws; or

"(4) Work which, by its nature or the circumstances in which it is carried out,
is hazardous or likely to be harmful to the health, safety or morals of children,
such that it:

"a) Debases, degrades or demeans the intrinsic worth and dignity of a child as
a human being; or

"b) Exposes the child to physical, emotional or sexual abuse, or is found to be


highly stressful psychologically or may prejudice morals; or

"c) Is performed underground, underwater or at dangerous heights; or


"d) Involves the use of dangerous machinery, equipment and tools such as
power-driven or explosive power-actuated tools; or

"e) Exposes the child to physical danger such as, but not limited to the
dangerous feats of balancing, physical strength or contortion, or which
requires the manual transport of heavy loads; or

"f) Is performed in an unhealthy environment exposing the child to hazardous


working conditions, elements, substances, co-agents or processes involving
ionizing, radiation, fire, flammable substances, noxious components and the
like, or to extreme temperatures, noise levels, or vibrations; or

"g) Is performed under particularly difficult conditions; or

"h) Exposes the child to biological agents such as bacteria, fungi, viruses,
protozoans, nematodes and other parasites; or

"i) Involves the manufacture or handling of explosives and other pyrotechnic


products."

Section 4. Section 13 of the same Act is hereby amended to read as follows:

"Sec. 13. Access to Education and Training for Working Children - "a) No child
shall be deprived of formal or non-formal education. In all cases of
employment allowed in this Act, the employer shall provide a working child
with access to at least primary and secondary education.

"b) To ensure and guarantee the access of the working child to education and
training, the Department of Education (DEPED) shall: (1) formulate,
promulgate, and implement relevant and effective course designs and
educational programs; (2) conduct the necessary training for the
implementation of the appropriate curriculum for the purpose; (3) ensure the
availability of the needed educational facilities and materials; and (4) conduct
continuing research and development program for the necessary and relevant
alternative education of the working child.

"c) The DEPED shall promulgate a course design under its non-formal
education program aimed at promoting the intellectual, moral and vocational
efficiency of working children who have not undergone or finished elementary
or secondary education. Such course design shall integrate the learning
process deemed most effective under given circumstances."

Section 5. Section 14 of the same Act is hereby amended to read as follows:

"Sec. 14. Prohibition on the Employment of Children in Certain


Advertisements. - No child shall be employed as a model in any advertisement
directly or indirectly promoting alcoholic beverages, intoxicating drinks,
tobacco and its byproducts, gambling or any form of violence or
pornography."

Section 6. Section 16 of the same Act, is hereby amended to read as follows:

"Sec. 16. Penal Provisions -

"a) Any employer who violates Sections 12, 12-A, and Section 14 of this act,
as amended, shall be penalized by imprisonment of six (6) months and one (1)
day to six (6) years or a fine of not less than Fifty thousand pesos
(P50,000.00) but not more than Three hundred thousand pesos (P300,000.00)
or both at the discretion of the court.

"b) Any person who violates the provision of Section 12-D of this act or the
employer of the subcontractor who employs, or the one who facilitates the
employment of a child in hazardous work, shall suffer the penalty of a fine of
not less than One hundred thousand pesos (P100,000.00) but not more than
One million pesos (P1,000,000.00), or imprisonment of not less than twelve
(12) years and one (1) day to twenty (20) years, or both such fine and
imprisonment at the discretion of the court.

"c) Any person who violates Sections 12-D(1) and 12-D(2) shall be prosecuted
and penalized in accordance with the penalty provided for by R. A. 9208
otherwise known as the "Anti-trafficking in Persons Act of
2003":Provided, That Such penalty shall be imposed in its maximum period.

"d) Any person who violates Section 12-D (3) shall be prosecuted and
penalized in accordance with R.A. 9165, otherwise known as the
"Comprehensive Dangerous Drugs Act of 2002"; Provided, That such penalty
shall be imposed in its maximum period.

"e) If a corporation commits any of the violations aforecited, the board of


directors/trustees and officers, which include the president, treasurer and
secretary of the said corporation who participated in or knowingly allowed the
violation, shall be penalized accordingly as provided for under this Section.

"f) Parents, biological or by legal fiction, and legal guardians found to be


violating Sections 12, 12-A, 12-B and 12-C of this Act shall pay a fine of not
less than Ten thousand pesos (P10,000.00) but not more than One hundred
thousand pesos (P100,000.00), or be required to render community service
for not less than thirty (30) days but not more than one (1) year, or both such
fine and community service at the discretion of the court: Provided, That the
maximum length of community service shall be imposed on parents or legal
guardians who have violated the provisions of this Act three (3)
times; Provided, further, That in addition to the community service, the
penalty of imprisonment of thirty (30) days but not more than one (1) year or
both at the discretion of the court, shall be imposed on the parents or legal
guardians who have violated the provisions of this Act more than three (3)
times.

"g) The Secretary, of Labor and Employment or his/her duly authorized


representative may, after due notice and hearing, order the closure of any
business firm or establishment found to have violated any of the provisions of
this Act more than three (3) times. He/she shall likewise order the immediate
closure of such firm or establishment if:

"(1) The violation of any provision of this Act has resulted in the death,
insanity or serious physical injury of a child employed in such establishment;
or

"(2) Such firm or establishment is engaged or employed in prostitution or in


obscene or lewd shows.

"h) In case of such closure, the employer shall be required to pay the
employee(s) the separation pay and other monetary benefits provided for by
law."

Section 7. The same Act is hereby further amended by adding a new section
to be denominated as Section 16-A, to read as follows:

"Sec. 16-A. Trust Fund from Fines and Penalties - The fine imposed by the
court shall be treated as a Trust Fund, administered by the Department of
Labor and Employment and disbursed exclusively for the needs, including the
costs of rehabilitation and reintegration into the mainstream of society of the
working children who are victims of the violations of this Act, and for the
programs and projects that will prevent acts of child labor."

Section 8. Section 27 of the same Act is hereby amended to read as follows:

"Sec. 27. Who May File a Complaint - Complaints on cases of unlawful acts
committed against children as enumerated herein may be filed by the
following:
"(a) Offended party;

"(b) Parents or guardians;

"(c) Ascendant or collateral relative within the third degree of consanguinity;

"(d) Officer, social worker or representative of a licensed child-caring


institution;

"(e) Officer or social worker of the Department of Social Welfare and


Development;

"(f) Barangay chairman of the place where the violation occurred, where the
child is residing or employed; or

"(g) At least three (3) concerned, responsible citizens where the violation
occurred."

Section 9. The same Act is hereby further amended by adding new sections
to Section 16 to be denominated as Sections 16-A, 16-B and 16-C to read as
follows:

"Sec. 16-A. Jurisdiction - The family courts shall have original jurisdiction over
all cases involving offenses punishable under this Act: Provided, That in cities
or provinces where there are no family courts yet, the regional trial courts and
the municipal trial courts shall have concurrent jurisdiction depending on the
penalties prescribed for the offense charged.

"The preliminary investigation of cases filed under this Act shall be terminated
within a period of thirty (30) days from the date of filing.

"If the preliminary investigation establishes a prima facie case, then the
corresponding information shall be filed in court within forty eight (48) hours
from the termination of the investigation.

"Trial of cases under this Act shall be terminated by the court not later than
ninety (90) days from the date of filing of information. Decision on said cases
shall be rendered within a period of fifteen (15) days from the date of
submission of the case.

"Sec. 15. Exemptions from Filing Fees. - When the victim of child labor
institutes a separate civil action for the recovery of civil damages, he/she shall
be exempt from payment of filing fees.

"Sec. 16-C. Access to Immediate Legal, Medical and Psycho-Social Services -


The working child shall have the right to free legal, medical and psycho-social
services to be provided by the State."

Section 10. Implementing Rules and Regulations - The Secretary of Labor


and Employment, in coordination with the Committees on Labor and
Employment of both Houses of Congress, shall issue the necessary
Implementing Rules and Regulations (IRR) to effectively implement the
provisions of this Act, in consultation with concerned public and private
sectors, within sixty (60) days from the effectivity of this Act.

Such rules and regulations shall take effect upon their publication in two (2)
national newspapers of general circulation.

Section 11. Separability Clause. - If any provision of this Act is declared


invalid or unconstitutional, the validity of the remaining provisions hereof shall
remain in full force and effect.

Section 12. Repealing Clause. - All laws, decrees, or rules inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.
Section 13. Effectivity. - This Act shall take effect fifteen (15) days from the
date of its complete publication in the Official Gazette or in at least two (2)
national newspapers of general circulation.

R.A. 7877 (applicability to MPs)

AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN


THE EMPLOYMENT, EDUCATION OR TRAINING ENVIRONMENT, AND
FOR OTHER PURPOSES.

Be it enacted by the Senate and House of Representatives of the Philippines in


Congress assembled:

SECTION 1. Title. - This Act shall be known as the "Anti-Sexual Harassment Act
of 1995."

SECTION 2. Declaration of Policy. - The State shall value the dignity of every
individual, enhance the development of its human resources, guarantee full
respect for human rights, and uphold the dignity of workers, employees,
applicants for employment, students or those undergoing training, instruction
or education. Towards this end, all forms of sexual harassment in the
employment, education or training environment are hereby declared
unlawful.

SECTION 3. Work, Education or Training -Related, Sexual Harassment


Defined. - Work, education or training-related sexual harassment is
committed by an employer, employee, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainor, or any other person
who, having authority, influence or moral ascendancy over another in a work
or training or education environment, demands, requests or otherwise
requires any sexual favor from the other, regardless of whether the demand,
request or requirement for submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual harassment is


committed when:

1. The sexual favor is made as a condition in the hiring or in the


employment, re-employment or continued employment of said
individual, or in granting said individual favorable compensation, terms
of conditions, promotions, or privileges; or the refusal to grant the
sexual favor results in limiting, segregating or classifying the employee
which in any way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;

2. The above acts would impair the employee's rights


or privileges under existing labor laws; or

3. The above acts would result in an intimidating, hostile, or


offensive environment for the employee.

(b) In an education or training environment, sexual harassment is


committed:

1. Against one who is under the care, custody or supervision of the


offender;
2. Against one whose education, training, apprenticeship or
tutorship is entrusted to the offender;

3. When the sexual favor is made a condition to the giving of a


passing grade, or the granting of honors and scholarships, or the
payment of a stipend, allowance or other benefits, privileges, or
consideration; or
4. When the sexual advances result in an intimidating, hostile or
offensive environment for the student, trainee or apprentice.

Any person who directs or induces another to commit any act of sexual
harassment as herein defined, or who cooperates in the commission thereof
by another without which it would not have been committed, shall also be
held liable under this Act.

SECTION 4. Duty of the Employer or Head of Office in a Work-related,


Education or Training Environment. - It shall be the duty of the employer or
the head of the work-related, educational or training environment or
institution, to prevent or deter the commission of acts of sexual harassment
and to provide the procedures for the resolution, settlement or prosecution of
acts of sexual harassment. Towards this end, the employer or head of office
shall:

(a) Promulgate appropriate rules and regulations in consultation with and


joint1y approved by the employees or students or trainees, through their duly
designated representatives, prescribing the procedure for the investigation
of sexual harassment cases and the administrative sanctions therefor.

Administrative sanctions shall not be a bar to prosecution in the proper courts


for unlawful acts of sexual harassment.

The said rules and regulations issued pursuant to this subsection (a) shall
include, among others, guidelines on proper decorum in the workplace and
educational or training institutions.

(b) Create a committee on decorum and investigation of cases on sexual


harassment. The committee shall conduct meetings, as the case may be, with
officers and employees, teachers, instructors, professors, coaches, trainors,
and students or trainees to increase understanding and prevent incidents of
sexual harassment. It shall also conduct the investigation of alleged cases
constituting sexual harassment.

In the case of a work-related environment, the committee shall be composed


of at least one (1) representative each from the management, the union, if
any, the employees from the supervisory rank, and from the rank and file
employees.

In the case of the educational or training institution, the committee shall be


composed of at least one (1) representative from the administration, the
trainors, instructors, professors or coaches and students or trainees, as the
case may be.

The employer or head of office, educational or training institution shall


disseminate or post a copy of this Act for the information of all concerned.

SECTION 5. Liability of the Employer, Head of Office, Educational or Training


Institution. - The employer or head of office, educational or training
institution shall be solidarily liable for damages arising from the acts
of sexual harassment committed in the employment, education or training
environment if the employer or head of office, educational or training
institution is informed of such acts by the offended party and no immediate
action is taken.

SECTION 6. Independent Action for Damages. - Nothing in this Act shall


preclude the victim of work, education or training-related sexual harassment
from instituting a separate and independent action for damages and other
affirmative relief.

SECTION 7. Penalties. - Any person who violates the provisions of this Act
shall, upon conviction, be penalized by imprisonment of not less than one (1)
month nor more than six (6) months, or a fine of not less than Ten thousand
pesos (P10,000) nor more than Twenty thousand pesos (P20,000), or both
such fine and imprisonment at the discretion of the court.
Any action arising from the violation of the provisions of this Act shall
prescribe in three (3) years.

SECTION 8. Separability Clause. - If any portion or provision of this Act is


declared void or unconstitutional, the remaining portions or provisions hereof
shall not be affected by such declaration.

SECTION 9. Repealing Clause. - All laws, decrees, orders, rules and


regulations, other issuances, or parts thereof inconsistent with the provisions
of this Act are hereby repealed or modified accordingly.

SECTION 10. Effectivity Clause.- This Act shall take effect fifteen (15) days
after its complete publication in at least two (2) national newspapers of
general circulation.

Art. 136(a) Labor Code

Stipulation against marriage. - It shall be unlawful for an employer to require


as a condition of employment or continuation of employment that a woman
employee shall not get married, or to stipulate expressly or tacitly that upon
getting married, a woman employee shall be deemed resigned or separated,
or to actually dismiss, discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.

Art. 130 Labor Code

Nightwork prohibition. - No woman, regardless of age, shall be employed or


permitted or suffered to work, with or without compensation:

(a) In any industrial undertaking or branch thereof between ten oclock at


night and six oclock in the morning of the following day; or

(b) In any commercial or non-industrial undertaking or branch thereof, other


than agricultural, between midnight and six oclock in the morning of the
following day; or

(c) In any agricultural undertaking at nighttime unless she is given a period of


rest of not less than nine (9) consecutive hours.

R.A. 7277

AN ACT PROVIDING FOR THE REHABILITATION, SELF-DEVELOPMENT


AND SELF-RELIANCE OF DISABLED PERSONS AND THEIR INTEGRATION
INTO THE MAINSTREAM OF SOCIETY AND FOR OTHER PURPOSES.

TITLE I
GENERAL PROVISIONS

CHAPTER I
BASIC PRINCIPLE

Section 1. Title. This Act shall be known and cited as the "Magna Carta for
Disabled Persons."

Sec. 2. Declaration of Policy The grant of the rights and privileges for
disabled persons shall be guided by the following principles:
(a) Disabled persons are part of Philippine society, thus the State shall give
full support to the improvement of the total well-being of disabled persons
and their integration into the mainstream of society. Toward this end, the
State shall adopt policies ensuring the rehabilitation, self-development and
self-reliance of disabled persons. It shall develop their skills and potentials to
enable them to compete favorably for available opportunities.
(b) Disabled persons have the same rights as other people to take their proper
place in society. They should be able to live freely and as independently as
possible. This must be the concern of everyone the family, community and
all government and nongovernment organizations. Disabled persons' rights
must never be perceived as welfare services by the Government.

(c) The rehabilitation of the disabled persons shall be the concern of the
Government in order to foster their capacity to attain a more meaningful,
productive and satisfying life. To reach out to a greater number of disabled
persons, the rehabilitation services and benefits shall be expanded beyond
the traditional urban-based centers to community based programs, that will
ensure full participation of different sectors as supported by national and local
government agencies.

(d) The State also recognizes the role of the private sector in promoting the
welfare of disabled persons and shall encourage partnership in programs that
address their needs and concerns.

(e) To facilitate integration of disabled persons into the mainstream of society,


the State shall advocate for and encourage respect for disabled persons. The
State shall exert all efforts to remove all social, cultural, economic,
environmental and attitudinal barriers that are prejudicial to disabled persons.

Sec. 3. Coverage. This Act shall cover all disabled persons and, to the
extent herein provided, departments, offices and agencies of the National
Government or nongovernment organizations involved in the attainment of
the objectives of this Act.
Sec. 4. Definition of Terms. For purposes of this Act, these terms are
defined as follows:
(a) Disabled persons are those suffering from restriction or different abilities,
as a result of a mental, physical or sensory impairment, to perform an activity
in the manner or within the range considered normal for a human being;

(b) Impairment is any loss, diminution or aberration of psychological,


physiological, or anatomical structure or function;

(c) Disability shall mean 1) a physical or mental impairment that substantially


limits one or more psychological, physiological or anatomical function of an
individual or activities of such individual; 2) a record of such an impairment; or
3) being regarded as having such an impairment;

(d) Handicap refers to a disadvantage for a given individual, resulting from an


impairment or a disability, that limits or prevents the function or activity, that
is considered normal given the age and sex of the individual;

(e) Rehabilitation is an integrated approach to physical, social, cultural,


spiritual, educational and vocational measures that create conditions for the
individual to attain the highest possible level of functional ability;

(f) Social Barriers refer to the characteristics of institutions, whether legal,


economic, cultural, recreational or other, any human group, community, or
society which limit the fullest possible participation of disabled persons in the
life of the group. Social barriers include negative attitudes which tend to
single out and exclude disabled persons and which distort roles and inter-
personal relationships;

(g) Auxiliary Aids and Services include:

(1) qualified interpreters or other effective methods of delivering materials to


individuals with hearing impairments;

(2) qualified readers, taped tests, or other effective methods of delivering


materials to individuals with visual impairments;

(3) acquisition or modification of equipment or devices; and


(4) other similar services and actions or all types of aids and services that
facilitate the learning process of people with mental disability.

(h) Reasonable Accommodation include 1) improvement of existing facilities


used by employees in order to render these readily accessible to and usable
by disabled persons; and 2) modification of work schedules, reassignment to a
vacant position, acquisition or modification of equipment or devices,
appropriate adjustments or modifications of examinations, training materials
or company policies, rules and regulations, the provision of auxiliary aids and
services, and other similar accommodations for disabled persons;

(i) Sheltered Employment refers to the provision of productive work for


disabled persons through workshops providing special facilities, income-
producing projects or homework schemes with a view to giving them the
opportunity to earn a living thus enabling them to acquire a working capacity
required in open industry;

(j) Auxiliary Social Services are the supportive activities in the delivery of
social services to the marginalized sectors of society;

(k) Marginalized Disabled Persons refer to disabled persons who lack access to
rehabilitative services and opportunities to be able to participate fully in
socioeconomic activities and who have no means of livelihood and whose
incomes fall below the poverty threshold; chan robles virtual law library

(l) Qualified Individual with a Disability shall mean an individual with a


disability who, with or without reasonable accommodations, can perform the
essential functions of the employment position that such individual holds or
desires. However, consideration shall be given to the employer's judgment as
to what functions of a job are essential, and if an employer has prepared a
written description before advertising or interviewing applicants for the job,
this description shall be considered evidence of the essential functions of the
job;

(m) Readily Achievable means a goal can be easily attained and carried out
without much difficulty or expense. In determining whether an action is
readily achievable, factors to be considered include

(1) the nature and cost of the action;

(2) the overall financial resources of the facility or facilities involved in the
action; the number of persons employed at such facility; the effect on
expenses and resources, or the impact otherwise of such action upon the
operation of the facility;

(3) the overall financial resources of the covered entity with respect to the
number of its employees; the number, type and location of its facilities; and

(4) the type of operation or operations of the covered entity, including the
composition, structure and functions of the work force of such entity; the
geographic separateness, administrative or fiscal relationship of the facility or
facilities in question to the covered entity.

(n) Public Transportation means transportation by air, land and sea that
provides the public with general or special service on a regular and continuing
basis;

(o) Covered Entity means an employer, employment agency, labor


organization or joint-labor management committee; and

(p) Commerce shall be taken to mean as travel, trade, traffic, commerce,


transportation, or communication among the provinces or between any
foreign country or any territory or possession and any province.
TITLE II
RIGHTS AND PRIVILEGES OF DISABLED PERSONS

CHAPTER I
EMPLOYMENT

Sec. 5. Equal Opportunity for Employment. No disable person shall be


denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment
and the same compensation, privileges, benefits, fringe benefits, incentives or
allowances as a qualified able bodied person.

Five percent (5%) of all casual emergency and contractual positions in the
Departments of Social Welfare and Development; Health; Education, Culture
and Sports; and other government agencies, offices or corporations engaged
in social development shall be reserved for disabled persons.

Sec. 6. Sheltered Employment If suitable employment for disabled persons


cannot be found through open employment as provided in the immediately
preceding Section, the State shall endeavor to provide it by means of
sheltered employment. In the placement of disabled persons in sheltered
employment, it shall accord due regard to the individual qualities, vocational
goals and inclinations to ensure a good working atmosphere and efficient
production.

Sec. 7. Apprenticeship. Subject to the provisions of the Labor Code as


amended, disabled persons shall be eligible as apprentices or learners:
Provided, That their handicap is not as much as to effectively impede the
performance of job operations in the particular occupation for which they are
hired; Provided, further, That after the lapse of the period of apprenticeship, if
found satisfactory in the job performance, they shall be eligible for
employment.

Sec. 8. Incentives for Employers. (a) To encourage the active participation


of the private sector in promoting the welfare of disabled persons and to
ensure gainful employment for qualified disabled persons, adequate
incentives shall be provided to private entities which employ disabled
persons.

(b) Private entities that employ disabled persons who meet the required skills
or qualifications, either as regular employee, apprentice or learner, shall be
entitled to an additional deduction, from their gross income, equivalent to
twenty-five percent (25%) of the total amount paid as salaries and wages to
disabled persons: Provided, however, That such entities present proof as
certified by the Department of Labor and Employment that disabled persons
are under their employ: Provided, further, That the disabled employee is
accredited with the Department of Labor and Employment and the
Department of Health as to his disability, skills and qualifications.

(c) Private entities that improve or modify their physical facilities in order to
provide reasonable accommodation for disabled persons shall also be entitled
to an additional deduction from their net taxable income, equivalent to fifty
percent (50%) of the direct costs of the improvements or modifications. This
Section, however, does not apply to improvements or modifications of
facilities required under Batas Pambansa Bilang 344.

Sec. 9. Vocational Rehabilitation. Consistent with the principle of equal


opportunity for disabled workers and workers in general, the State shall take
appropriate vocational rehabilitation measures that shall serve to develop the
skills and potentials of disabled persons and enable them to compete
favorably for available productive and remunerative employment
opportunities in the labor market.

The State shall also take measures to ensure the provision of vocational
rehabilitation and livelihood services for disabled persons in the rural areas. In
addition, it shall promote cooperation and coordination between the
government and nongovernmental organizations and other private entities
engaged in vocational rehabilitation activities.

The Department of Social Welfare and Development shall design and


implement training programs that will provide disabled persons with
vocational skills to enable them to engage in livelihood activities or obtain
gainful employment. The Department of Labor and Employment shall likewise
design and conduct training programs geared towards providing disabled
persons with skills for livelihood.

Sec. 10. Vocational Guidance and Counseling. The Department of Social


and Welfare and Development, shall implement measures providing and
evaluating vocational guidance and counseling to enable disabled persons to
secure, retain and advance in employment. It shall ensure the availability and
training of counselors and other suitably qualified staff responsible for the
vocational guidance and counseling of disabled persons.

Sec. 11. Implementing Rules and Regulations. The Department of Labor


and Employment shall in coordination with the Department of Social Welfare
and Development (DSWD) and National Council for the Welfare of the
Disabled Persons (NCWDP) shall promulgate the rules and regulations
necessary to implement the provisions under this Chapter.

CHAPTER II
EDUCATION

Sec. 12. Access to Quality Education. The State shall ensure that disabled
persons are provided with access to quality education and ample
opportunities to develop their skills. It shall take appropriate steps to make
such education accessible to all disabled persons. It shall be unlawful for any
learning institution to deny a disabled person admission to any course it offers
by reason of handicap or disability.
The State shall take into consideration the special requirements of disabled
persons in the formulation of educational policies and programs. It shall
encourage learning institutions to take into account the special needs of
disabled persons with respect to the use of school facilities, class schedules,
physical education requirements, and other pertinent consideration.

The State shall also promote the provision by learning institutions, especially
higher learning institutions of auxiliary services that will facilitate the learning
process for disabled persons.

Sec. 13. Assistance to Disabled Students. The State shall provide financial
assistance to economically marginalized but deserving disabled students
pursuing post secondary or tertiary education. Such assistance may be in the
form of scholarship grants, student loan programs, subsidies, and other
incentives to qualified disabled students in both public and private schools. At
least five percent (5%) of the allocation for the Private Education Student
Financial Assistance Program created by virtue of R.A. 6725 shall be set aside
for disabled students pursuing vocational or technical and degree courses.

Sec. 14. Special Education. The State shall establish, maintain and support
complete, adequate and integrated system of special education for the
visually impaired, hearing impaired, mentally retarded persons and other
types of exceptional children in all regions of the country. Toward this end, the
Department of Education, Culture and Sports shall establish, special education
classes in public schools in cities, or municipalities. It shall also establish,
where viable, Braille and Record Libraries in provinces, cities or
municipalities.

The National Government shall allocate funds necessary for the effective
implementation of the special education program nationwide. Local
government units may likewise appropriate counterpart funds to supplement
national funds.
Sec. 15. Vocational or Technical and Other Training Programs. The State
shall provide disabled persons with training in civics, vocational efficiency,
sports and physical fitness, and other skills. The Department of Education,
Culture and Sports shall establish in at least one government-owned
vocational and technical school in every province a special vocational and
technical training program for disabled persons. It shall develop and
implement sports and physical fitness programs specifically designed for
disabled persons taking into consideration the nature of their handicap.

Sec. 16. Non-Formal Education. The State shall develop non-formal


education programs intended for the total human development of disabled
persons. It shall provide adequate resources for non-formal education
programs and projects that cater to the special needs of disabled persons.

Sec. 17. State Universities and Colleges. If viable and needed, the State
University or State College in each region or province shall be responsible for
(a) the development of material appliances and technical aids for disabled
persons; (b) the development of training materials for vocational rehabilitation
and special education instructions; (c) the research on special problems,
particularly of the visually-impaired, hearing-impaired, speech-impaired, and
orthopedically-impaired students, mentally retarded, and multi-handicapped
and others, and the elimination of social barriers and discrimination against
disabled persons; and (d) inclusion of the Special Education for Disabled
(SPED) course in the curriculum.

The National Government shall provide these state universities and colleges
with necessary special facilities for visually-impaired, hearing-impaired,
speech-impaired, and orthopedically-impaired students. It shall likewise
allocate the necessary funds in support of the above.

CHAPTER III
HEALTH

Sec. 18. National Health Program. The Department of Health in


coordination with the National Council for the Welfare of Disabled Persons,
shall institute a national health program which shall aim to attain the
following:
(a) prevention of disability, whether occurring prenatally or postnatally;

(b) recognition and early diagnosis of disability; and

(c) early rehabilitation of the disabled.

Sec. 19. Rehabilitation Centers. The Department of Health shall establish


medical rehabilitation centers in government provincial hospitals, and shall
include in its annual appropriation the necessary funds for the operation of
such centers.

The Department of Health shall formulate and implement a program to enable


marginalized disabled persons to avail of free rehabilitation services in
government hospitals.

Sec. 20. Health Services. The State shall protect and promote the right to
health of disabled persons and shall adopt an integrated and comprehensive
approach to their health development which shall make essential health
services available to them at affordable cost.

The National Government shall provide an integrated health service for


disabled persons which shall include, but not limited to, the following:

(a) prevention of disability through immunization, nutrition, environmental


protection and preservation, and genetic counseling; and early detection of
disability and timely intervention to arrest disabling condition; and

(b) medical treatment and rehabilitation.


The Department of Health shall field medical personnel specializing in the
treatment and rehabilitation of disabled persons to provincial hospitals and,
when viable, to municipal health centers. It shall also train its field health
personnel in the provision of medical attention to disabled persons. It shall
further ensure that its field health units have the necessary capabilities to fit
prosthetic and orthotic appliances on disabled persons.

CHAPTER IV
AUXILIARY SOCIAL SERVICES

Sec. 21. Auxiliary Social Services. The State shall ensure that marginalized
persons are provided with the necessary auxiliary services that will restore
their social functioning and participation in community affairs. Towards this
end, the Department of Social Welfare and Development shall develop and
implement programs on auxiliary social services that respond to the needs of
marginalized disabled persons. The components of such a program shall be as
follows:
(a) assistance in the acquisition of prosthetic devices and medical intervention
of specialty services;

(b) provision of specialized training activities designed to improve functional


limitations of disabled persons related to communication skills;

(c) development among disabled persons of a positive self-image through the


provision of counseling, orientation and mobility and strengthening daily living
capability;

(d) provision of family care services geared towards developing the capability
of families to respond to the needs of the disabled members of the family;

(e) provision of substitute family care services and the facilities therefor for
abandoned, neglected, abused and unattached disabled persons who need
custodial care;

(f) provision of after care and follow-up services for the continued
rehabilitation in a community-based setting of disabled persons who were
released from residential care or rehabilitation centers; and

(g) provision of day care services for disabled children of pre-school age.

CHAPTER V
TELECOMMUNICATIONS

Sec. 22. Broadcast Media. Television stations shall be encouraged to


provide a signlanguage inset or subtitles in at least one (1) newscast
program a day and special programs covering events of national significance.

Sec. 23. Telephone Services. All telephone companies shall be encouraged


to install special telephone devices or units for the hearing-impaired and
ensure that they are commercially available to enable them to communicate
through the telephone system.

Sec. 24. Free Postal Charges for the Disabled. Postal charges shall be free
on the following:

(a) articles and literatures like books and periodicals, orthopedic and other
devices, and teaching aids for the use of the disabled sent by mail within the
Philippines and abroad; and

(b) aids and orthopedic devices for the disabled sent by abroad by mail for
repair:
Provided, That the aforesaid items are for personal purposes only: Provided,
further, That the disabled person is a marginalized disabled as certified by the
Social Welfare and Development Office of the local government unit
concerned or the Department of Social Welfare and Development.
CHAPTER VI
ACCESSIBILITY

Sec. 25. Barrier-Free Environment. The State shall ensure the attainment
of a barrier-free environment that will enable disabled persons to have access
in public and private buildings and establishments and such other places
mentioned in Batas Pambansa Bilang 344, otherwise known as the
"Accessibility Law".

The national and local governments shall allocate funds for the provision of
architectural facilities or structural features for disabled persons in
government buildings and facilities.

Sec. 26. Mobility. The State shall promote the mobility of disabled persons.
Disabled persons shall be allowed to drive motor vehicles, subject to the rules
and regulations issued by the Land Transportation Office pertinent to the
nature of their disability and the appropriate adaptations or modifications
made on such vehicles.

Sec. 27. Access to Public Transport Facilities. The Department of Social


Welfare and Development shall develop a program to assist marginalized
disabled persons gain access in the use of public transport facilities. Such
assistance may be in the form of subsidized transportation fare.

The said department shall also allocate such funds as may be necessary for
the effective implementation of the public transport program for the disabled
persons.

The "Accessibility Law", as amended, shall be made suppletory to this Act.

Sec. 28. Implementing Rules and Regulations. The Department of


Transportation and Communications shall formulate the rules and regulations
necessary to implement the provisions of this Chapter.

CHAPTER VII
POLITICAL AND CIVIL RIGHTS

Sec. 29. System of Voting. Disabled persons shall be allowed to be assisted


by a person of his choice in voting in the national or local elections. The
person thus chosen shall prepare the ballot for the disabled voter inside the
voting booth. The person assisting shall bind himself in a formal document
under oath to fill out the ballot strictly in accordance with the instructions of
the voter and not to reveal the contents of the ballot prepared by him.
Violation of this provision shall constitute an election offense.
Polling places should be made accessible to disabled persons during national
or local elections.

Sec. 30. Right to Assemble. Consistent with the provisions of the


Constitution, the State shall recognize the right of disabled persons to
participate in processions, rallies, parades, demonstrations, public meetings,
and assemblages or other forms of mass or concerned action held in public.

Sec. 31. Right to Organize. The State recognizes the right of disabled
persons to form organizations or associations that promote their welfare and
advance or safeguard their interests. The National Government, through its
agencies, instrumentalities and subdivisions, shall assist disabled persons in
establishing self-help organizations by providing them with necessary
technical and financial assistance.

Concerned government agencies and offices shall establish close linkages


with organizations of the disabled persons in order to respond expeditiously to
the needs of disabled persons. National line agencies and local government
units shall assist disabled persons in setting up specific projects that will be
managed like business propositions.
To ensure the active participation of disabled persons in the social and
economic development of the country, their organizations shall be
encouraged to participate in the planning, organization and management of
government programs and projects for disabled persons.

Organizations of disabled persons shall participate in the identification and


preparation of programs that shall serve to develop employment opportunities
for the disabled persons.

TITLE III
PROHIBITION ON DISCRIMINATION AGAINST DISABLED PERSONS

CHAPTER I
DISCRIMINATION ON EMPLOYMENT

Sec. 32. Discrimination on Employment. No entity, whether public or


private, shall discriminate against a qualified disabled person by reason of
disability in regard to job application procedures, the hiring, promotion, or
discharge of employees, employee compensation, job training, and other
terms, conditions, and privileges of employment. The following constitute acts
of discrimination:
(a) Limiting, segregating or classifying a disabled job applicant in such a
manner that adversely affects his work opportunities;

(b) Using qualification standards, employment tests or other selection criteria


that screen out or tend to screen out a disabled person unless such standards,
tests or other selection criteria are shown to be job-related for the position in
question and are consistent with business necessity;

(c) Utilizing standards, criteria, or methods of administration that:

(1) have the effect of discrimination on the basis of disability; or

(2) perpetuate the discrimination of others who are subject to common


administrative control.
(d) Providing less compensation, such as salary, wage or other forms of
remuneration and fringe benefits, to a qualified disabled employee, by reason
of his disability, than the amount to which a non-disabled person performing
the same work is entitled;

(e) Favoring a non-disabled employee over a qualified disabled employee with


respect to promotion, training opportunities, study and scholarship grants,
solely on account of the latter's disability;

(f) Re-assigning or transferring a disabled employee to a job or position he


cannot perform by reason of his disability;

(g) Dismissing or terminating the services of a disabled employee by reason of


his disability unless the employer can prove that he impairs the satisfactory
performance of the work involved to the prejudice of the business entity:
Provided, however, That the employer first sought to provide reasonable
accommodations for disabled persons;

(h) Failing to select or administer in the most effective manner employment


tests which accurately reflect the skills, aptitude or other factor of the
disabled applicant or employee that such tests purports to measure, rather
than the impaired sensory, manual or speaking skills of such applicant or
employee, if any; and

(i) Excluding disabled persons from membership in labor unions or similar


organizations.
Sec. 33. Employment Entrance Examination. Upon an offer of employment,
a disabled applicant may be subjected to medical examination, on the
following occasions:
(a) all entering employees are subjected to such an examination regardless of
disability;

(b) information obtained during the medical condition or history of the


applicant is collected and maintained on separate forms and in separate
medical files and is treated as a confidential medical record; Provided,
however, That:
(1) supervisors and managers may be informed regarding necessary
restrictions on the work or duties of the employees and necessary
accommodations;

(2) first aid and safety personnel may be informed, when appropriate, if the
disability may require emergency treatment;

(3) government officials investigating compliance with this Act shall be


provided relevant information on request; and

(4) the results of such examination are used only in accordance with this Act.

CHAPTER II
DISCRIMINATION ON TRANSPORTATION

Sec. 34. Public Transportation. It shall be considered discrimination for the


franchisees or operators and personnel of sea, land, and air transportation
facilities to charge higher fare or to refuse to convey a passenger, his
orthopedic devices, personal effects, and merchandise by reason of his
disability.

CHAPTER III
DISCRIMINATION ON THE USE OF PUBLIC ACCOMMODATIONS AND SERVICES

Sec. 35. Public Accommodations and Services. For purposes of this


Chapter, public accommodations and services shall include the following:
(a) an inn, hotel, motel, or other place of lodging, except for an establishment
located within a building that contains not more than five (5) rooms for rent or
hire and that is actually occupied by the proprietor of such establishment as
the residence of such proprietor;

(b) a restaurant, bar, or other establishment serving food or drink;

(c) a motion picture, theater, concert hall, stadium, or other place of


exhibition or entertainment;

(d) an auditorium, convention center, lecture hall, or other place of public


gathering;

(e) a bakery, grocery store, hardware store, shopping center, or other sales or
rental establishment;

(f) a bank, barber shop, beauty shop, travel service, funeral parlor, gas
station, office of a lawyer, pharmacy, insurance office, professional office of a
health care provider, hospital or other service establishment;

(g) a terminal, depot, or other station used for specified public transportation;

(h) a museum, gallery, library or other place of public display or collection;

(i) a park, zoo, amusement park, or other place of recreation;


(j) a nursery, elementary, secondary, undergraduate, or post-graduate private
school, or other place of education;

(k) a gymnasium, health spa, bowling alley, golf course; or

(l) other place of exercise or recreation.

Sec. 36. Discrimination on the Use of Public Accommodations. (a) No


disabled person shall be discriminated on the basis of disability in the full and
equal enjoyment of the goods, services, facilities, privileges, advantages or
accommodations of any place of public accommodation by any person who
owns, leases, or operates a place of public accommodation. The following
constitute acts of discrimination:
(1) denying a disabled person, directly or through contractual, licensing, or
other arrangement, the opportunity to participate in or benefit from the
goods, services, facilities, privileges, advantages, or accommodations of an
entity by reason of his disability;

(2) affording a disabled person, on the basis of his disability, directly or


through contractual, licensing, or other arrangement, with the opportunity to
participate in or benefit from a good service, facility, privilege, advantage, or
accommodation that is not equal to that afforded to other able-bodied
persons; and

(3) providing a disabled person, on the basis of his disability, directly or


through contractual, licensing, or other arrangement, with a good, service,
facility, advantage, privilege, or accommodation that is different or separate
form that provided to other able-bodied persons unless such action is
necessary to provide the disabled person with a good, service, facility,
advantage, privilege, or accommodation, or other opportunity that is as
effective as that provided to others;

For purposes of this Section, the term "individuals or class of individuals"


refers to the clients or customers of the covered public accommodation that
enters into the contractual, licensing or other arrangement.

(b) Integrated Settings Goods, services, facilities, privileges, advantages,


and accommodations shall be afforded to individual with a disability in the
most integrated setting appropriate to the needs of the individual.

(c) Opportunity to Participate Notwithstanding the existence of separate or


different programs or activities provided in accordance with this Section, an
individual with a disability shall not be denied the opportunity to participate in
such programs or activities that are not separate or different.

(d) Association It shall be discriminatory to exclude or otherwise deny equal


goods, services, facilities, advantages, privileges, accommodations or other
opportunities to an individual or entity because of the known disability of an
individual with whom the individual or entity is known to have a relationship
or association.

(e) Prohibitions For purposes of this Section, the following shall be


considered as discriminatory:

(1) the imposition or application of eligibility criteria that screen out or tend to
screen out an individual with a disability or any class or individuals with
disabilities from fully and equally enjoying any goods, services, facilities,
privileges, advantages, or accommodations, unless such criteria can be shown
to be necessary for the provision of the goods, services, facilities, privileges,
or accommodations being offered;

(2) a failure to make reasonable modifications in policies, practices, or


procedures, when such modifications are necessary to afford such goods,
services, facilities, privileges, advantages, or accommodations to individuals
with disabilities, unless the entity can demonstrate that making such
modifications would fundamentally alter the nature of the goods, facilities,
services, privileges, advantages, or accommodations;

(3) failure to take such steps as may be necessary to ensure that no individual
with a disability is excluded, denied services, segregated or otherwise treated
differently than other individuals because of the absence of auxiliary aids and
services, unless the entity can demonstrate that taking such steps would
fundamentally alter the nature of the good, service, facility, privilege,
advantage or accommodation being offered or would result in undue burden;

(4) a failure to remove architectural barriers, and communication barriers that


are structural in nature, in existing facilities, where such removal is readily
achievable; and

(5) where an entity can demonstrate that the removal of a barrier under
clause (4) is not readily achievable, a failure to make such goods, services,
facilities, privileges, advantages, or accommodations available through
alternative methods if such methods are readily achievable.

Sec. 37. Use of Government Recreational or Sports Centers Free of Charge.


Recreational or sports centers owned or operated by the Government shall be
used, free of charge, by marginalized disabled persons during their social,
sports or recreational activities.

Sec. 38. Implementing Rules and Regulations. The Department of Public


Works and Highways shall formulate the rules and regulations necessary to
implement the provisions of this Chapter.

TITLE IV
FINAL PROVISIONS

Sec. 39. Housing Program. The National Government shall take into
consideration in its national shelter program the special housing requirements
of disabled persons.

Sec. 40. Role of National Agencies and Local Government Units. Local
government units shall promote the establishment of organizations of
disabled persons in their respective territorial jurisdictions. National agencies
and local government units may enter into joint ventures with organizations or
associations of disabled persons to explore livelihood opportunities and other
undertakings that shall enhance the health, physical fitness and the economic
and social well-being of disabled persons.

Sec. 41. Support From Nongovernment Organizations. Nongovernment


organizations or private volunteer organizations dedicated to the purpose of
promoting and enhancing the welfare of disabled persons shall, as they, are
hereby encouraged, become partners of the Government in the
implementation of vocational rehabilitation measures and other related
programs and projects. Accordingly, their participation in the implementation
of said measures, programs and projects is to be extended all possible
support by the Government.

The Government shall sponsor a volunteer service program which shall


harness the involvement of private individuals in the provision of assistance to
disabled persons.

Sec. 42. Tax Incentives. (a) Any donation, bequest, subsidy or financial aid
which may be made to government agencies engaged in the rehabilitation of
disabled persons and organizations of disabled persons shall be exempt from
the donor's tax subject to the provisions of Section 94 of the National Internal
Revenue Code (NIRC), as amended and shall be allowed as deductions from
the donor's gross income for purposes of computing the taxable income
subject to the provisions of Section 29 (h) of the Code.
(b) Donations from foreign countries shall be exempt from taxes and duties on
importation subject to the provisions of Section 105 of the Tariff and Customs
Code of the Philippines, as amended, Section 103 of the NIRC, as amended
and other relevant laws and international agreements.

(c) Local manufacturing or technical aids and appliances used by disabled


persons shall be considered as a preferred area of investment subject to the
provisions of Executive Order No. 226 otherwise known as the "Omnibus
Investments Code of 1987" and, as such, shall enjoy the rights, privileges and
incentives as provided in said Code such as, but not limited, to the following:

(1) repatriation of investments;

(2) remittance of earnings;

(3) remittance of payments on foreign contracts;

(4) freedom from expropriations;

(5) freedom from requisition of investment;

(6) income tax holiday;

(7) additional deduction for labor expense;

(8) tax and duty exemption on imported capital equipment;

(9) tax credit on domestic capital equipment;

(10) exemption from contractor's tax;

(11) simplification of customs procedures;

(12) unrestricted use of consigned equipment;

(13) employment of foreign nationals;

(14) tax credit for taxes and duties on raw materials;

(15) access to bonded manufacturing/traded warehouse system;

(16) exemption from taxes and duties on imported spare parts; and

(17) exemption from wharfage dues and any export tax, duty, impost and
fee.

Sec. 43. Continuity Clause. Should any department or agency tasked with
the enforcement or formulation of rules and regulations and guidelines for
implementation of any provision of this Act is abolished, merged with another
department or agency or modified, such shall not affect the enforcement or
formulation of rules, regulations and guidelines for implementation of this Act
to the effect that
(a) In case of abolition, the department or agency established to replace the
abolished department or agency shall take-over the functions under this Act of
the abolished department or agency.

(b) In case the department or agency tasked with the enforcement or


formulation of rules, regulations and guidelines for implementation of this Act
is merged with another department or agency, the former shall continue the
functions under this Act of the merged department or agency.

(c) In case of modification, the department or agency modified shall continue


the functions under this Act of the department or agency that has undergone
the modification.
Sec. 44. Enforcement by the Secretary of Justice.
(a) Denial of Right
(1) Duty to Investigate the Secretary of Justice shall investigate alleged
violations of this Act, and shall undertake periodic reviews of compliance of
covered entities under this Act.
(b) Potential Violations If the Secretary of Justice has reasonable cause to
believe that
(1) any person or group of persons is engaged in a pattern or practice of
discrimination under this Act; or

(2) any person or group or persons has been discriminated against under this
Act and such discrimination raises an issue of general public importance, the
Secretary of Justice may commence a legal action in any appropriate court.
Sec. 45. Authority of Court. The court may grant any equitable relief that
such court considers to be appropriate, including, to the extent required by
this Act:
(a) granting temporary, preliminary or permanent relief;

(b) providing an auxiliary aid or service, modification of policy, practice or


procedure, or alternative method; and

(c) making facilities readily accessible to and usable by individuals with


disabilities.

Sec. 46. Penal Clause. (a) Any person who violates any provision of this Act
shall suffer the following penalties:
(1) for the first violation, a fine of not less than Fifty thousand pesos
(P50,000.00) but not exceeding One hundred thousand pesos (P100,000.00)
or imprisonment of not less than six (6) months but not more than two (2)
years, or both at the discretion of the court; and

(2) for any subsequent violation, a fine of not less than One hundred thousand
pesos (P100,000.00) but not exceeding Two hundred thousand pesos
(P200,000.00) or imprisonment for not less than two (2) years but not more
than six (6) years, or both at the discretion of the court.
(b) Any person who abuses the privileges granted herein shall be punished
with imprisonment of not less than six (6) months or a fine of not less than
Five thousand pesos (P5,000.00), but not more than Fifty thousand pesos
(P50,000.00), or both, at the discretion of the court.

(c) If the violator is a corporation, organization or any similar entity, the


officials thereof directly involved shall be liable therefor.

(d) If the violator is an alien or a foreigner, he shall be deported immediately


after service of sentence without further deportation proceedings.

Sec. 47. Appropriations. The amount necessary to carry out the provisions
of this Act shall be included in the General Appropriations Act of the year
following its enactment into law and thereafter.

Sec. 48. Separability Clause. Should any provisions of this Act be found
unconstitutional by a court of law, such provisions shall be severed from the
remainder of the Act, and such action shall not affect the enforceability of the
remaining provisions of this Act.

Sec. 49. Repealing Clause. All laws, presidential decrees, executive orders
and rules and regulations inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

Sec. 50. Effectivity. This Act shall take effect fifteen (15) days after its
publication in any two (2) newspapers of general circulation.

Approved: March 24, 1992


Yellow Dog Contract

ART. 248. Labor Code. Unfair labor practices of employers. - It shall be


unlawful for an employer to commit any of the following unfair labor practice:
xx (b) To require as a condition of employment that a person or an employee
shall not join a labor organization or shall withdraw from one to which he
belongs;

R.A. 9208

AN ACT TO INSTITUTE POLICIES TO ELIMINATE TRAFFICKING IN


PERSONS ESPECIALLY WOMEN AND CHILDREN, ESTABLISHING THE
NECESSARY INSTITUTIONAL MECHANISMS FOR THE PROTECTION AND
SUPPORT OF TRAFFICKED PERSONS, PROVIDING PENALTIES FOR ITS
VIOLATIONS, AND FOR OTHER

Be it enacted by the Senate and the House of Representatives of the


Philippines in Congress assembled:

Section 1. Title. This Act shall be known as the "Anti-Trafficking in


Persons Act of 2003".

Section 2. Declaration of Policy. It is hereby declared that the State values


the dignity of every human person and guarantees the respect of individual
rights. In pursuit of this policy, the State shall give highest priority to the
enactment of measures and development of programs that will promote
human dignity, protect the people from any threat of violence and
exploitation, eliminate trafficking in persons, and mitigate pressures for
involuntary migration and servitude of persons, not only to support trafficked
persons but more importantly, to ensure their recovery, rehabilitation and
reintegration into the mainstream of society.

It shall be a State policy to recognize the equal rights and inherent human
dignity of women and men as enshrined in the United Nations Universal
Declaration on Human Rights, United Nations Convention on the Rights of the
Child, United Nations Convention on the Protection of Migrant Workers and
their Families. United Nations Convention Against Transnational Organized
Crime Including its Protocol to Prevent, Suppress and Punish Trafficking in
Persons, Especially Women and Children and all other relevant and universally
accepted human rights instruments and other international conventions to
which the Philippines is a signatory.

Section 3. Definition of Terms. - As used in this Act:

(a) Trafficking in Persons - refers to the recruitment, transportation, transfer


or harboring, or receipt of persons with or without the victim's consent or
knowledge, within or across national borders by means of threat or use of
force, or other forms of coercion, abduction, fraud, deception, abuse of power
or of position, taking advantage of the vulnerability of the person, or, the
giving or receiving of payments or benefits to achieve the consent of a person
having control over another person for the purpose of exploitation which
includes at a minimum, the exploitation or the prostitution of others or other
forms of sexual exploitation, forced labor or services, slavery, servitude or the
removal or sale of organs.

The recruitment, transportation, transfer, harboring or receipt of a child for


the purpose of exploitation shall also be considered as "trafficking in persons"
even if it does not involve any of the means set forth in the preceding
paragraph.

(b) Child - refers to a person below eighteen (18) years of age or one who is
over eighteen (18) but is unable to fully take care of or protect himself/herself
from abuse, neglect, cruelty, exploitation, or discrimination because of a
physical or mental disability or condition.

(c) Prostitution - refers to any act, transaction, scheme or design involving the
use of a person by another, for sexual intercourse or lascivious conduct in
exchange for money, profit or any other consideration.

(d) Forced Labor and Slavery - refer to the extraction of work or services from
any person by means of enticement, violence, intimidation or threat, use of
force or coercion, including deprivation of freedom, abuse of authority or
moral ascendancy, debt-bondage or deception.

(e) Sex Tourism - refers to a program organized by travel and tourism-related


establishments and individuals which consists of tourism packages or
activities, utilizing and offering escort and sexual services as enticement for
tourists. This includes sexual services and practices offered during rest and
recreation periods for members of the military.

(f) Sexual Exploitation - refers to participation by a person in prostitution or


the production of pornographic materials as a result of being subjected to a
threat, deception, coercion, abduction, force, abuse of authority, debt
bondage, fraud or through abuse of a victim's vulnerability.

(g) Debt Bondage - refers to the pledging by the debtor of his/her personal
services or labor or those of a person under his/her control as security or
payment for a debt, when the length and nature of services is not clearly
defined or when the value of the services as reasonably assessed is not
applied toward the liquidation of the debt.

(h) Pornography - refers to any representation, through publication, exhibition,


cinematography, indecent shows, information technology, or by whatever
means, of a person engaged in real or simulated explicit sexual activities or
any representation of the sexual parts of a person for primarily sexual
purposes.

(i) Council - shall mean the Inter-Agency Council Against Trafficking created
under Section 20 of this Act.

Section 4. Acts of Trafficking in Persons. - It shall be unlawful for any person,


natural or juridical, to commit any of the following acts:

(a) To recruit, transport, transfer; harbor, provide, or receive a person by any


means, including those done under the pretext of domestic or overseas
employment or training or apprenticeship, for the purpose of prostitution,
pornography, sexual exploitation, forced labor, slavery, involuntary servitude
or debt bondage;

(b) To introduce or match for money, profit, or material, economic or other


consideration, any person or, as provided for under Republic Act No. 6955,
any Filipino woman to a foreign national, for marriage for the purpose of
acquiring, buying, offering, selling or trading him/her to engage in
prostitution, pornography, sexual exploitation, forced labor, slavery,
involuntary servitude or debt bondage;

(c) To offer or contract marriage, real or simulated, for the purpose of


acquiring, buying, offering, selling, or trading them to engage in prostitution,
pornography, sexual exploitation, forced labor or slavery, involuntary
servitude or debt bondage;

(d) To undertake or organize tours and travel plans consisting of tourism


packages or activities for the purpose of utilizing and offering persons for
prostitution, pornography or sexual exploitation;

(e) To maintain or hire a person to engage in prostitution or pornography;


(f) To adopt or facilitate the adoption of persons for the purpose of
prostitution, pornography, sexual exploitation, forced labor, slavery,
involuntary servitude or debt bondage;

(g) To recruit, hire, adopt, transport or abduct a person, by means of threat or


use of force, fraud, deceit, violence, coercion, or intimidation for the purpose
of removal or sale of organs of said person; and

(h) To recruit, transport or adopt a child to engage in armed activities in the


Philippines or abroad.

Section 5. Acts that Promote Trafficking in Persons. - The following acts


which promote or facilitate trafficking in persons, shall be unlawful:

(a) To knowingly lease or sublease, use or allow to be used any house,


building or establishment for the purpose of promoting trafficking in persons;

(b) To produce, print and issue or distribute unissued, tampered or fake


counseling certificates, registration stickers and certificates of any
government agency which issues these certificates and stickers as proof of
compliance with government regulatory and pre-departure requirements for
the purpose of promoting trafficking in persons;

(c) To advertise, publish, print, broadcast or distribute, or cause the


advertisement, publication, printing, broadcasting or distribution by any
means, including the use of information technology and the internet, of any
brochure, flyer, or any propaganda material that promotes trafficking in
persons;

(d) To assist in the conduct of misrepresentation or fraud for purposes of


facilitating the acquisition of clearances and necessary exit documents from
government agencies that are mandated to provide pre-departure registration
and services for departing persons for the purpose of promoting trafficking in
persons;

(e) To facilitate, assist or help in the exit and entry of persons from/to the
country at international and local airports, territorial boundaries and seaports
who are in possession of unissued, tampered or fraudulent travel documents
for the purpose of promoting trafficking in persons;

(f) To confiscate, conceal, or destroy the passport, travel documents, or


personal documents or belongings of trafficked persons in furtherance of
trafficking or to prevent them from leaving the country or seeking redress
from the government or appropriate agencies; and

(g) To knowingly benefit from, financial or otherwise, or make use of, the labor
or services of a person held to a condition of involuntary servitude, forced
labor, or slavery.

Section 6. Qualified Trafficking in Persons. - The following are considered as


qualified trafficking:

(a) When the trafficked person is a child;

(b) When the adoption is effected through Republic Act No. 8043, otherwise
known as the "Inter-Country Adoption Act of 1995" and said adoption is for the
purpose of prostitution, pornography, sexual exploitation, forced labor,
slavery, involuntary servitude or debt bondage;

(c) When the crime is committed by a syndicate, or in large scale. Trafficking


is deemed committed by a syndicate if carried out by a group of three (3) or
more persons conspiring or confederating with one another. It is deemed
committed in large scale if committed against three (3) or more persons,
individually or as a group;
(d) When the offender is an ascendant, parent, sibling, guardian or a person
who exercises authority over the trafficked person or when the offense is
committed by a public officer or employee;

(e) When the trafficked person is recruited to engage in prostitution with any
member of the military or law enforcement agencies;

(f) When the offender is a member of the military or law enforcement


agencies; and

(g) When by reason or on occasion of the act of trafficking in persons, the


offended party dies, becomes insane, suffers mutilation or is afflicted with
Human Immunodeficiency Virus (HIV) or the Acquired Immune Deficiency
Syndrome (AIDS).

Section 6. Confidentiality. - At any stage of the investigation, prosecution


and trial of an offense under this Act, law enforcement officers, prosecutors,
judges, court personnel and medical practitioners, as well as parties to the
case, shall recognize the right to privacy of the trafficked person and the
accused. Towards this end, law enforcement officers, prosecutors and judges
to whom the complaint has been referred may, whenever necessary to ensure
a fair and impartial proceeding, and after considering all circumstances for the
best interest of the parties, order a closed-door investigation, prosecution or
trial. The name and personal circumstances of the trafficked person or of the
accused, or any other information tending to establish their identities and
such circumstances or information shall not be disclosed to the public.

In cases when prosecution or trial is conducted behind closed-doors, it shall be


unlawful for any editor, publisher, and reporter or columnist in case of printed
materials, announcer or producer in case of television and radio, producer and
director of a film in case of the movie industry, or any person utilizing tri-
media facilities or information technology to cause publicity of any case of
trafficking in persons.

Section 8. Prosecution of Cases. - Any person who has personal knowledge of


the commission of any offense under this Act, the trafficked person, the
parents, spouse, siblings, children or legal guardian may file a complaint for
trafficking.

Section 9. Venue. - A criminal action arising from violation of this Act shall be
filed where the offense was committed, or where any of its elements occurred,
or where the trafficked person actually resides at the time of the commission
of the offense: Provided, That the court where the criminal action is first filed
shall acquire jurisdiction to the exclusion of other courts.

Section 10. Penalties and Sanctions. - The following penalties and sanctions
are hereby established for the offenses enumerated in this Act:

(a) Any person found guilty of committing any of the acts enumerated in
Section 4 shall suffer the penalty of imprisonment of twenty (20) years and a
fine of not less than One million pesos (P1,000,000.00) but not more than Two
million pesos (P2,000,000.00);

(b) Any person found guilty of committing any of the acts enumerated in
Section 5 shall suffer the penalty of imprisonment of fifteen (15) years and a
fine of not less than Five hundred thousand pesos (P500,000.00) but not more
than One million pesos (P1,000,000.00);

(c) Any person found guilty of qualified trafficking under Section 6 shall suffer
the penalty of life imprisonment and a fine of not less than Two million pesos
(P2,000,000.00) but not more than Five million pesos (P5,000,000.00);

(d) Any person who violates Section 7 hereof shall suffer the penalty of
imprisonment of six (6) years and a fine of not less than Five hundred
thousand pesos (P500,000.00) but not more than One million pesos
(P1,000,000.00);

(e) If the offender is a corporation, partnership, association, club,


establishment or any juridical person, the penalty shall be imposed upon the
owner, president, partner, manager, and/or any responsible officer who
participated in the commission of the crime or who shall have knowingly
permitted or failed to prevent its commission;

(f) The registration with the Securities and Exchange Commission (SEC) and
license to operate of the erring agency, corporation, association, religious
group, tour or travel agent, club or establishment, or any place of
entertainment shall be cancelled and revoked permanently. The owner,
president, partner or manager thereof shall not be allowed to operate similar
establishments in a different name;

(g) If the offender is a foreigner, he shall be immediately deported after


serving his sentence and be barred permanently from entering the country;

(h) Any employee or official of government agencies who shall issue or


approve the issuance of travel exit clearances, passports, registration
certificates, counseling certificates, marriage license, and other similar
documents to persons, whether juridical or natural, recruitment agencies,
establishments or other individuals or groups, who fail to observe the
prescribed procedures and the requirement as provided for by laws, rules and
regulations, shall be held administratively liable, without prejudice to criminal
liability under this Act. The concerned government official or employee shall,
upon conviction, be dismissed from the service and be barred permanently to
hold public office. His/her retirement and other benefits shall likewise be
forfeited; and

(i) Conviction by final judgment of the adopter for any offense under this Act
shall result in the immediate rescission of the decree of adoption.

Section 11. Use of Trafficked Persons. - Any person who buys or engages the
services of trafficked persons for prostitution shall be penalized as follows:

(a) First offense - six (6) months of community service as may be determined
by the court and a fine of Fifty thousand pesos (P50,000.00); and

(b) Second and subsequent offenses - imprisonment of one (1) year and a fine
of One hundred thousand pesos (P100,000.00).

Section 12. Prescriptive Period. - Trafficking cases under this Act shall
prescribe in ten (10) years: Provided, however, That trafficking cases
committed by a syndicate or in a large scale as defined under Section 6 shall
prescribe in twenty (20) years.

The prescriptive period shall commence to run from the day on which the
trafficked person is delivered or released from the conditions of bondage and
shall be interrupted by the filing of the complaint or information and shall
commence to run again when such proceedings terminate without the
accused being convicted or acquitted or are unjustifiably stopped for any
reason not imputable to the accused.

Section 13. Exemption from Filing Fees. - When the trafficked person
institutes a separate civil action for the recovery of civil damages, he/she shall
be exempt from the payment of filing fees.

Section 14. Confiscation and Forfeiture of the Proceeds and Instruments


Derived from Trafficking in Persons. - In addition to the penalty imposed for
the violation of this Act, the court shall order the confiscation and forfeiture, in
favor of the government, of all the proceeds and properties derived from the
commission of the crime, unless they are the property of a third person not
liable for the unlawful act; Provided, however, That all awards for damages
shall be taken from the personal and separate properties of the
offender; Provided, further, That if such properties are insufficient, the balance
shall be taken from the confiscated and forfeited properties.

When the proceeds, properties and instruments of the offense have been
destroyed, diminished in value or otherwise rendered worthless by any act or
omission, directly or indirectly, of the offender, or it has been concealed,
removed, converted or transferred to prevent the same from being found or to
avoid forfeiture or confiscation, the offender shall be ordered to pay the
amount equal to the value of the proceeds, property or instruments of the
offense.

Section 15. Trust Fund. - All fines imposed under this Act and the proceeds
and properties forfeited and confiscated pursuant to Section 14 hereof shall
accrue to a Trust Fund to be administered and managed by the Council to be
used exclusively for programs that will prevent acts of trafficking and protect,
rehabilitate, reintegrate trafficked persons into the mainstream of society.
Such programs shall include, but not limited to, the following:

(a) Provision for mandatory services set forth in Section 23 of this Act;

(b) Sponsorship of a national research program on trafficking and


establishment of a data collection system for monitoring and evaluation
purposes;

(c) Provision of necessary technical and material support services to


appropriate government agencies and non-government organizations (NGOs);

(d) Sponsorship of conferences and seminars to provide venue for consensus


building amongst the public, the academe, government, NGOs and
international organizations; and

(e) Promotion of information and education campaign on trafficking.

Section 16. Programs that Address Trafficking in Persons. - The government


shall establish and implement preventive, protective and rehabilitative
programs for trafficked persons. For this purpose, the following agencies are
hereby mandated to implement the following programs;

(a) Department of Foreign Affairs (DFA) - shall make available its resources
and facilities overseas for trafficked persons regardless of their manner of
entry to the receiving country, and explore means to further enhance its
assistance in eliminating trafficking activities through closer networking with
government agencies in the country and overseas, particularly in the
formulation of policies and implementation of relevant programs.

The DFA shall take necessary measures for the efficient implementation of the
Machine Readable Passports to protect the integrity of Philippine passports,
visas and other travel documents to reduce the incidence of trafficking
through the use of fraudulent identification documents.

It shall establish and implement a pre-marriage, on-site and pre-departure


counseling program on intermarriages.

(b) Department of Social Welfare and Development (DSWD) - shall implement


rehabilitative and protective programs for trafficked persons. It shall provide
counseling and temporary shelter to trafficked persons and develop a system
for accreditation among NGOs for purposes of establishing centers and
programs for intervention in various levels of the community.

(c) Department of Labor and Employment (DOLE) - shall ensure the strict
implementation and compliance with the rules and guidelines relative to the
employment of persons locally and overseas. It shall likewise monitor,
document and report cases of trafficking in persons involving employers and
labor recruiters.
(d) Department of Justice (DOJ) - shall ensure the prosecution of persons
accused of trafficking and designate and train special prosecutors who shall
handle and prosecute cases of trafficking. It shall also establish a mechanism
for free legal assistance for trafficked persons, in coordination with the DSWD,
Integrated Bar of the Philippines (IBP) and other NGOs and volunteer groups.

(e) National Commission on the Role of Filipino Women (NCRFW) - shall


actively participate and coordinate in the formulation and monitoring of
policies addressing the issue of trafficking in persons in coordination with
relevant government agencies. It shall likewise advocate for the inclusion of
the issue of trafficking in persons in both its local and international advocacy
for women's issues.

(f) Bureau of Immigration (BI) - shall strictly administer and enforce


immigration and alien administration laws. It shall adopt measures for the
apprehension of suspected traffickers both at the place of arrival and
departure and shall ensure compliance by the Filipino fiancs/fiances and
spouses of foreign nationals with the guidance and counseling requirement as
provided for in this Act.

(g) Philippine National Police (PNP) - shall be the primary law enforcement
agency to undertake surveillance, investigation and arrest of individuals or
persons suspected to be engaged in trafficking. It shall closely coordinate with
various law enforcement agencies to secure concerted efforts for effective
investigation and apprehension of suspected traffickers. It shall also establish
a system to receive complaints and calls to assist trafficked persons and
conduct rescue operations.

(h) Philippine Overseas Employment Administration (POEA) - shall implement


an effective pre-employment orientation seminars and pre-departure
counseling programs to applicants for overseas employment. It shall likewise
formulate a system of providing free legal assistance to trafficked persons.

(i) Department of the Interior and Local Government (DILG) - shall institute a
systematic information and prevention campaign and likewise maintain a
databank for the effective monitoring, documentation and prosecution of
cases on trafficking in persons.

(j) Local government units (LGUs) - shall monitor and document cases of
trafficking in persons in their areas of jurisdiction, effect the cancellation of
licenses of establishments which violate the provisions of this Act and ensure
effective prosecution of such cases. They shall also undertake an information
campaign against trafficking in persons through the establishment of the
Migrants Advisory and Information Network (MAIN) desks in municipalities or
provinces in coordination with DILG, Philippine Information Agency (PIA),
Commission on Filipinos Overseas (CFO), NGOs and other concerned agencies.
They shall encourage and support community based initiatives which address
the trafficking in persons.

In implementing this Act, the agencies concerned may seek and enlist the
assistance of NGOs, people's organizations (Pos), civic organizations and other
volunteer groups.

Section 17. Legal Protection to Trafficked Persons. - Trafficked persons shall


be recognized as victims of the act or acts of trafficking and as such shall not
be penalized for crimes directly related to the acts of trafficking enumerated
in this Act or in obedience to the order made by the trafficker in relation
thereto. In this regard, the consent of a trafficked person to the intended
exploitation set forth in this Act shall be irrelevant.

Section 18. Preferential Entitlement Under the Witness Protection Program. -


Any provision of Republic Act No. 6981 to the contrary notwithstanding, any
trafficked person shall be entitled to the witness protection program provided
therein.
Section 19. Trafficked Persons Who are Foreign Nationals. - Subject to the
guidelines issued by the Council, trafficked persons in the Philippines who are
nationals of a foreign country shall also be entitled to appropriate protection,
assistance and services available to trafficked persons under this
Act: Provided, That they shall be permitted continued presence in the
Philippines for a length of time prescribed by the Council as necessary to
effect the prosecution of offenders.

Section 20. Inter-Agency Council Against Trafficking. - There is hereby


established an Inter-Agency Council Against Trafficking, to be composed of
the Secretary of the Department of Justice as Chairperson and the Secretary
of the Department of Social Welfare and Development as Co-Chairperson and
shall have the following as members:

(a) Secretary, Department of Foreign Affairs;

(b) Secretary, Department of Labor and Employment;

(c) Administrator, Philippine Overseas Employment Administration;

(d) Commissioner, Bureau of Immigration;

(e) Director-General, Philippine National Police;

(f) Chairperson, National Commission on the Role of Filipino Women; and

(g) Three (3) representatives from NGOs, who shall be composed of one (1)
representative each from among the sectors representing women, overseas
Filipino workers (OFWs) and children, with a proven record of involvement in
the prevention and suppression of trafficking in persons. These
representatives shall be nominated by the government agency
representatives of the Council, for appointment by the President for a term of
three (3) years.

The members of the Council may designate their permanent representatives


who shall have a rank not lower than an assistant secretary or its equivalent
to meetings, and shall receive emoluments as may be determined by the
Council in accordance with existing budget and accounting, rules and
regulations.

Section 21. Functions of the Council. - The Council shall have the following
powers and functions:

(a) Formulate a comprehensive and integrated program to prevent and


suppress the trafficking in persons;

(b) Promulgate rules and regulations as may be necessary for the effective
implementation of this Act;

(c) Monitor and oversee the strict implementation of this Act;

(d) Coordinate the programs and projects of the various member agencies to
effectively address the issues and problems attendant to trafficking in
persons;

(e) Coordinate the conduct of massive information dissemination and


campaign on the existence of the law and the various issues and problems
attendant to trafficking through the LGUs, concerned agencies, and NGOs;

(f) Direct other agencies to immediately respond to the problems brought to


their attention and report to the Council on action taken;

(g) Assist in filing of cases against individuals, agencies, institutions or


establishments that violate the provisions of this Act;
(h) Formulate a program for the reintegration of trafficked persons in
cooperation with DOLE, DSWD, Technical Education and Skills Development
Authority (TESDA), Commission on Higher Education (CHED), LGUs and NGOs;

(i) Secure from any department, bureau, office, agency, or instrumentality of


the government or from NGOs and other civic organizations such assistance
as may be needed to effectively implement this Act;

(j) Complement the shared government information system for migration


established under Republic Act No. 8042, otherwise known as the "Migrant
Workers and Overseas Filipinos Act of 1995" with data on cases of trafficking
in persons, and ensure that the proper agencies conduct a continuing
research and study on the patterns and scheme of trafficking in persons which
shall form the basis for policy formulation and program direction;

(k) Develop the mechanism to ensure the timely, coordinated, and effective
response to cases of trafficking in persons;

(l) Recommend measures to enhance cooperative efforts and mutual


assistance among foreign countries through bilateral and/or multilateral
arrangements to prevent and suppress international trafficking in persons;

(m) Coordinate with the Department of Transportation and Communications


(DOTC), Department of Trade and Industry (DTI), and other NGOs in
monitoring the promotion of advertisement of trafficking in the internet;

(n) Adopt measures and policies to protect the rights and needs of trafficked
persons who are foreign nationals in the Philippines;

(o) Initiate training programs in identifying and providing the necessary


intervention or assistance to trafficked persons; and

(p) Exercise all the powers and perform such other functions necessary to
attain the purposes and objectives of this Act.

Section 22. Secretariat to the Council. - The Department of Justice shall


establish the necessary Secretariat for the Council.

Section 23. Mandatory Services to Trafficked Persons. - To ensure recovery,


rehabilitation and reintegration into the mainstream of society, concerned
government agencies shall make available the following services to trafficked
persons:

(a) Emergency shelter or appropriate housing;

(b) Counseling;

(c) Free legal services which shall include information about the victims' rights
and the procedure for filing complaints, claiming compensation and such
other legal remedies available to them, in a language understood by the
trafficked person;

(d) Medical or psychological services;

(e) Livelihood and skills training; and

(f) Educational assistance to a trafficked child.

Sustained supervision and follow through mechanism that will track the
progress of recovery, rehabilitation and reintegration of the trafficked persons
shall be adopted and carried out.

Section 24. Other Services for Trafficked Persons. -


(a) Legal Assistance. - Trafficked persons shall be considered under the
category "Overseas Filipino in Distress" and may avail of the legal assistance
created by Republic Act No. 8042, subject to the guidelines as provided by
law.

(b) Overseas Filipino Resource Centers. - The services available to overseas


Filipinos as provided for by Republic Act No. 8042 shall also be extended to
trafficked persons regardless of their immigration status in the host country.

(c) The Country Team Approach. - The country team approach under
Executive Order No. 74 of 1993, shall be the operational scheme under which
Philippine embassies abroad shall provide protection to trafficked persons
insofar as the promotion of their welfare, dignity and fundamental rights are
concerned.

Section 25. Repatriation of Trafficked Persons. - The DFA, in coordination


with DOLE and other appropriate agencies, shall have the primary
responsibility for the repatriation of trafficked persons, regardless of whether
they are documented or undocumented.

If, however, the repatriation of the trafficked persons shall expose the victims
to greater risks, the DFA shall make representation with the host government
for the extension of appropriate residency permits and protection, as may be
legally permissible in the host country.

Section 26. Extradition. - The DOJ, in consultation with DFA, shall endeavor
to include offenses of trafficking in persons among extraditable offenses.

Section 27. Reporting Requirements. - The Council shall submit to the


President of the Philippines and to Congress an annual report of the policies,
programs and activities relative to the implementation of this Act.

Section 28. Funding. - The heads of the departments and agencies


concerned shall immediately include in their programs and issue such rules
and regulations to implement the provisions of this Act, the funding of which
shall be included in the annual General Appropriations Act.

Section 29. Implementing Rules and Regulations. - The Council shall


promulgate the necessary implementing rules and regulations within sixty
(60) days from the effectivity of this Act.

Section 30. Non-restriction of Freedom of Speech and of Association,


Religion and the Right to Travel. - Nothing in this Act shall be interpreted as a
restriction of the freedom of speech and of association, religion and the right
to travel for purposes not contrary to law as guaranteed by the Constitution.

Section 31. Separability Clause. - If, for any reason, any section or provision
of this Act is held unconstitutional or invalid, the other sections or provisions
hereof shall not be affected thereby.

Section 32. Repealing clause. - All laws, presidential decrees, executive


orders and rules and regulations, or parts thereof, inconsistent with the
provisions of this Act are hereby repealed or modified accordingly: Provided,
That this Act shall not in any way amend or repeal the provision of Republic
Act No. 7610, otherwise known as the "Special Protection of Children Against
Child Abuse, Exploitation and Discrimination Act".

Section 33. Effectivity. - This Act shall take effect fifteen (15) days from the
date of its complete publication in at least two (2) newspapers of general
circulation.

D.O. 64-04 Series of 2004


DEPARTMENT ORDER NO. 65-04
.
Rules and Regulations Implementing
Republic Act No. 9231, Amending R.A. 7610, as Amended

SECTION 3. Definition of Terms As used in these Rules, the term:

(a) Child refers to any person under 18 years of age.

(b) Child labor refers to any work or economic activity performed by


a child that subjects him/her to any form of exploitation or is harmful to
his/her health and safety or physical, mental or psychosocial
development.

(c) Working Child refers to any child engaged as follows:

i. when the child is below eighteen (18) years of age, in work or


economic activity that is not child labor as defined in the immediately
preceding sub-paragraph, and

ii. when the child below fifteen (15) years of age, (i) in work where
he/she is directly under the responsibility of his/her parents or legal
guardian and where only members of the childs family are employed;
or (ii)in public entertainment or information.

(f) Members of the family refers to the childs parents, guardian,


brothers or sisters whether of full or half blood, and other ascendants
and descendants or collateral relatives within the fourth civil degree of
consanguinity.

(g) Employer refers to any person, whether natural or juridical who,


whether for valuable consideration or not, directly or indirectly
procures, uses, avails itself of, contracts out or otherwise derives
benefit from the work or services of a child in any occupation,
undertaking, project or activity, whether for profit or not. It includes
any person acting in the interest of the employer.

(j) Work permit refers to the permit secured by the employer,


parent or guardian from the Department for any child below 15 years
of age in any work allowed under Republic Act No. 9231.

(k) Hours of work include (1) all time during which a child is required
to be at a prescribed workplace, and (2) all time during which a child is
suffered or permitted to work. Rest periods of short duration during
working hours shall be counted as hours worked.

(l) Workplace refers to the office, premises or worksite where a child


is temporarily or habitually assigned. Where there is no fixed or
definite workplace, the term shall include the place where the child
actually performs work to render service or to take an assignment, to
include households employing children.

(q) Forced labor and slavery refers to the extraction of work or


services from any person by means of enticement, violence,
intimidation or threat, use of force or coercion, including deprivation of
freedom, abuse of authority or moral ascendancy, debt bondage or
deception.

(r) Child pornography refers to any representation of a child


engaged in real or simulated explicit sexual activities or any
representation of the sexual parts of a child for primarily sexual
purposes.
Chapter 2 Prohibition on the Employment of Children

SECTION 4. General Prohibition Except as otherwise provided in these


Rules, no child below 15 years of age shall be employed, permitted or
suffered to work, in any public or private establishment.

SECTION 5. Prohibition on the Employment of Children in Worst Forms


of Child Labor No child shall be engaged in the worst forms of child
labor. The phrase worst forms of child labor shall refer to any of the
following:

(a) All forms of slavery, as defined under the Anti-trafficking in


Persons Act of 2003, or practices similar to slavery such as sale and
trafficking of children, debt bondage and serfdom and forced or
compulsory labor, including recruitment children for use in armed
conflict.

(b) The use, procuring, offering or exposing of a child for prostitution,


for the production of pornography or for pornographic performances;

(c) The use, procuring or offering of a child for illegal or illicit activities,
including the production or trafficking of dangerous drugs or volatile
substances prohibited under existing laws; or

(d) Work which, by its nature or the circumstances in which it is


carried out, is hazardous or likely to be harmful to the health, safety or
morals of children, such that it:

i. Debases, degrades or demeans the intrinsic worth and dignity of a


child as a human being; or

ii. Exposes the child to physical, emotional or sexual abuse, or is found


to be highly stressful psychologically or may prejudice morals; or
iii. Is performed underground, underwater or at dangerous heights; or
iv. Involves the use of dangerous machinery, equipment and tools
such as power-driven or explosive power-actuated tools; or
v. Exposes the child to physical danger such as, but not limited to the
dangerous feats of balancing, physical strength or contortion, or which
requires the manual transport of heavy loads; or
vi. Is performed in an unhealthy environment exposing the child to
hazardous working conditions, elements, substances, co-agents or
processes involving ionizing, radiation, fire, flammable substances,
noxious components and the like, or to extreme temperatures, noise
levels or vibrations; or
vii. Is performed under particularly difficult conditions; or

viii. Exposes the child to biological agents such as bacteria, fungi,


viruses, protozoa, nematodes and other parasites; or

ix. Involves the manufacture or handling of explosives and other


pyrotechnic products.

SECTION 6. Prohibition on the Employment of Children in Certain


Advertisements No child below 18 years of age shall be employed as
a model in any advertisement directly or indirectly promoting alcoholic
beverages, intoxicating drinks, tobacco and its byproducts, gambling
or any form of violence or pornography.

Chapter 3 Exceptions to the Prohibition


SECTION 7. Exceptions and Conditions The following shall be the only
exceptions to the prohibition on the employment of a child below 15
year of age:

(a) When the child works under the sole responsibility of his/her
parents or guardian, provided that only members of the childs family
are employed.

(b) When the childs employment or participation in public


entertainment or information is essential, regardless of the extent of
the childs role.

Such employment shall be strictly under the following conditions:

i. The total number of hours worked shall be in accordance with


Section 15 of these Rules;

ii. The employment does not endanger the childs life, safety, health
and morals, nor impair the childs normal development;
iii. The child is provided with at least the mandatory elementary or
secondary education; and
iv. The employer secures a work permit for the child in accordance
with Section 8-12 of these Rules.

Chapter 4 Requirements to Avail of Exception To Employment


Prohibition

SECTION 8. Work Permit Except as provided is Section 13, no child


below 15 years of age shall be allowed to commence work without a
work permit. An employer must first secure a work permit from the
Regional Office of the Department having jurisdiction over the
workplace of the child. In cases where the work is done in more than
one workplace falling under the jurisdiction of more than one Regional
Office, the application shall be made with the Regional Office having
jurisdiction over the principal office of the employer. However, at least
two days prior to the performance of the work, the employer shall
inform the Regional Office having jurisdiction over the workplace of the
activities to be under taken involving the child.

SECTION 9. Requirements for the Issuance of Work Permit The


employer shall submit to the appropriate Regional Office the Following:

(a) A duly accomplished and verified application for work permit


containing the following information:

i. Terms and conditions of employment including hours of work,


number of working days, remuneration, and rest period, which shall be
in accordance with law;

ii. Measures to ensure the protection, health, safety, morals, and


normal development of the child, including but not limited to the
following:

1. comfortable workplace and adequate quarters;


2. break or rest periods in comfortable day beds or couches;
3. clean and separate dressing rooms and toilet facilities for boys and
girls;
4. provision for adequate meals and snacks and sanitary eating
facility;
5. provision of all the necessary assistance to ensure the adequate and
immediate medical and dental attendance and treatment to an injured
or sick child in case of emergency.
(b) Except when the child is below seven years old,

i. Proof that the child is enrolled and regularly attending elementary or


secondary school classes, consisting of certificate of enrolment for the
current year or current school identification or report card; or

ii. If the child is not enrolled, a brief description of the program for
education, training and skills acquisition for the child, in accordance
with Section 19 (b) of these Rules.

(c) An authenticated copy of the childs Birth Certificate or a


Certificate of late Registration of Birth issued by the NSO or the
city/municipal registrar;

(d) A medical certificate issued by a licensed physician stating that


he/she has personally examined the child for whom a work permit is
being secured, and that the child is fit to undertake the work in which
he/she is to be engaged. Such certificate must bear in print the
certifying physicians full name and his/her license number;

(e) Two passport size photographs of the child;

(f) When the employer is the parent, guardian, or a family member


other than the parent of the child, he/she shall present any valid
document such as latest passport, latest postal/company identification
card, and drivers license establishing his/her identity. A legal
guardian is likewise required to present a duly authenticated proof of
legal guardianship while a family member shall present any proof of
relationship to the child;

(g) When the employer is in public entertainment or information,


he/she shall submit a certified true copy of the employers business
permit or certificate of registration and a written employment contract
to be approved by the Department. An express agreement of the child
to the provisions of the contract is needed when such child is between
seven and below 15 years of age.

SECTION 12. Validity of Work Permit The work permit shall state the
period of its validity based on the employment contract of the
application for work permit, as the case may be. However, the period
of validity shall in no case exceed one year.

SECTION 13. Employment of Spot Extras In public entertainment or


information, the requirements for the issuance of work permit stated in
Section 8-12 shall not be applicable to the employment of spot extras
or those being cast outright on the day of the filming or taping.
Instead, the employer shall file a notice with the Regional Office where
the work is to be performed that it will undertake activities involving
child work. The notice shall be in the form prescribed by the
Department and shall state the approximate number of child workers
to be employed, the date, place and time the work is to be performed,
and an undertaking that the employment shall be in conformity with
Republic Act No. 9231 and these Rules.

Chapter 5 Hours of Work

SECTION 15. Hours of Work of a Working Child The following hours of


work shall be observed for any child allowed to work under Republic
Act No. 9231 and these Rules:

(a) For a child below 15 years of age, the hours of work shall not be
more than twenty (20) hours as week, provided that the work shall not
be more than four hours at any given day;
(b) For a child 15 years of age, but below 18, the hours of work shall
not be more than eight hours a day, and in no case beyond 40 hours a
week; and

(c) No child below 15 year of age shall be allowed to work between


eight oclock in the evening and six oclock in the morning of the
following day and no child 15 years of age but below 18 shall be
allowed to work between ten oclock in the evening and six oclock in
the morning of the following day.

Sleeping time as well travel time of a child engaged in public


entertainment or information from his/her residence to his/her
workplace shall not be included as hours worked without prejudice to
the application of existing rules on employees compensation.

Chapter 6 Working Childs Income

SECTION 16. Ownership and Use of the Working Childs Income The
wages, salaries, earnings and other income of the working child belong
to him/her in ownership and shall be set aside primarily for his/her
support, education, or skills acquisition and secondarily to the
collective needs of the family: Provided, That not more than twenty
percent (20%) of the childs income may be used for the collective
needs of the family.

SECTION 22. Grounds for Suspension and Cancellation of Work Permit


The Regional Director shall suspend or cancel the work permit issued
to a working child under the following instances:

(a) If there is fraud or misrepresentation in the application for work


permit or any of its supporting documents;

(b) If the terms and conditions set forth in the childs employment
contract and/or employers undertaking have been violated;

(c) If the employer fails to institute measures to ensure the protection,


health, safety, morals, and normal development of the child as
required in Section 7 (b)ii;

(d) If the employer fails to formulate and implement a program for the
education, training and skills acquisition of the child; or

(e) If a child has been deprived access to formal, non-formal or


alternative learning systems of education.

D.O. 04 Series of 1999

2. Promote

Defined

- Millares vs Subido (GR# L-23281 - 08/10/67)

The transfer was in violation of the Civil Service Rules. A transfer is a


"movement from one position to another which is of equivalent rank, level or
salary, without break in service." Promotion, on the other hand, is the
"advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an
increase in salary. Under the Civil Service rules, promotion and transfer
connote two different personnel movements which cannot take place, in a
single instance, at the same time. Whereas the first denotes a scalar ascent
of a senior officer or employee to another position, higher either in rank or
salary, the second refers to a lateral movement from one position to
another, of equivalent rank, level or salary. This rule prohibiting an
immediate increase of compensation in cases of transfers was intended to
safeguard the rule on seniority. The latest appointment of Millares, insofar
as it involves an immediate increase of compensation, is violative of Civil
Service rules and, therefore, invalid. To comply strictly with the Civil Service
policy regulations in force at the time of petitioner-appellee's transfer, the
same should not have included any immediate increase in salary, but
without prejudice to a subsequent promotional appointment after a
minimum service of three months in the new position.

Does not mean salary increase

- PTT Corp. vs CA

Employees refusal to be promoted

- Erasmo vs HIG Corp. (GR# 139251 - 08/29/02)

Petitioners promotional appointment as VP of TS/GCIG is merely temporary


in nature. As such, being temporary in character, her promotion was
terminable at the pleasure of the appointing power with or without a cause
and such promotion does not enjoy security of tenure. The mere fact that a
position belongs to the Career Service does not automatically confer
security of tenure on its occupant even if such person does not possess the
required qualifications. The right to security of tenure will have to depend on
the nature of a person's appointment, which in turn depends on his eligibility
or lack of it. A person who does not have the requisite qualifications for the
position cannot be appointed to it in the first place, or as an exception to the
rule, may be appointed to it merely in an acting capacity in the absence of
appropriate eligibles. When petitioner accepted the temporary appointment,
in effect, she had abandoned her right to security of tenure. The power of
appointment is essentially discretionary and cannot be controlled, not even
by the Court, as long as it is exercised properly by the appointing authority.

3. Demote

Nature

- Leonardo vs NLRC (GR# 125303, 126937 - 06/16/00)

The demotion of petitioner FUERTE was pursuant to a company policy


intended to foster competition among its employees, therefore, valid. Under
this scheme, the employees are required to comply with a monthly sales
quota. Should a supervisor such as FUERTE fail to meet his quota for a
certain number of consecutive months, he will be demoted, whereupon his
supervisors allowance will be withdrawn and be given to the individual who
takes his place. When the employee concerned succeeds in meeting the
quota again, he is re-appointed supervisor and his allowance is restored. The
right to demote an employee falls within the category of management
prerogatives. This arrangement appears to us to be an allowable exercise of
company rights. An employer is entitled to impose productivity standards for
its workers, and in fact, non-compliance may be visited with a penalty even
more severe than demotion. Thus, the practice of a company in laying off
workers because they failed to make the work quota has been recognized.
Moreover, the right to demote employees requires due process, as required
by law, as it has the same effect on dismissals. The employee being
demoted should as in cases of dismissals, be given a chance to contest the
same. In this case, due process was observed by the respondent company.

With regard to LEONARDO, the evidence shows that he abandoned his work
with the respondents after being pressed to present the customer regarding
his unauthorized solicitation of sideline work from the latter, he never
reported back to work anymore. For abandonment to constitute a valid
cause for termination of employment there must be a deliberate unjustified
refusal of the employee to resume his employment. Such element is present
in this case.

- Fuerte vs Aquino

Due Process

- Floren Hotel vs NLRC (GR# 155264 - 05/06/05)

Due process was not observed as CALIMLIM and RICO were not given the
chance to be heard. The employers right to demote an employee requires
the observance of the twin-notice requirement. Furthermore, the transfer of
the employees to be considered a valid exercise of management
prerogatives, the employer must show that the transfer is not unreasonable,
inconvenient or prejudicial to the former; neither would it involve a
demotion in rank or a diminution of employees' salaries, privileges and other
benefits. In this case, Calimlim and Rico were being forced to accept
alternate work periods in their new jobs as janitors, otherwise they would be
unemployednot only did this new schedule entail a diminution of wages,
because they would only be allowed to work every other week, the new
schedule was also clearly for an undefined period and could continue for as
long as the management so desires. Under these circumstances, the
temporary transfer could not be a valid exercise of management
prerogatives.

4. Transfer

- Sentinel Security Agency vs NLRC (GR# 122466 - 09/03/98)

The transfer did not constitute a management prerogative, therefore, the


transfer is invalid. The transfer of an employee involves a lateral movement
within the business or operation of the employer, without demotion in rank,
diminution of benefits or, worse, suspension of employment even if temporary.
The recall and transfer of security guards require reassignment to another post
and are not equivalent to their placement on "floating status." Off-detailing
security guards for a reasonable period of six months is justified only in bona
fide cases of suspension of operation, business or undertaking. In this case, the
agency hired new security guards to replace the complainants, resulting in a
lack of posts to which the complainants could have been reassigned. If indeed
they were merely transferred, there would have been no need to make them
wait for six months.

- OSS Security & Allied Services Inc. vs NLRC (GR# 112752 - 02/09/00)

In the case, nowhere in the record does it show that the transfer of private
respondent was anything but done in good faith, without grave abuse of
discretion, and in the best interest of the business enterprise.

Petitioner proved that the transfer was effected in good faith to comply with
reasonable request of its client, for a more disciplined service of the security
guards on detail. The renewal of the contract of petitioner hinged on the action
taken by the former on the latters request. Most contracts for security services
stipulate that the client may request the replacement of the guards assigned to
it. A relief and transfer order does not sever employment.

An employee has the right to security of tenure, but this does not give her such
vested right in her position as would deprive petitioner of its prerogative to
change her assignment a transfer where her service, as security guard, will be
most beneficial to the client.

- Mendoza vs Rural Bank of Lucban (GR# 155421 - 07/07/04)

The test for determining the validity of the transfer of employees is explained as
follows;

1. The managerial prerogative to transfer personnel must be exercised


without grave abuse of discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be confused with the
manner in which that right is exercised. Thus, it cannot be used as a
subterfuge by the employer to rid himself of an undesirable worker.

2. The employer must be able to show that the transfer is not reasonable,
inconvenient or prejudicial to the employee; nor does it involve a demotion
in rank or diminution of his salaries, privileges and other benefits. Should
the employer fail to overcome this burden of proof, the employees
transfer shall be tantamount to constructive dismissal.

- Benguet Electric Cooperative vs Fianza (GR# 158606 - 03/09/04)

The abolition of a position deemed no longer necessary is a management


prerogative and absent any findings of malice and arbitrariness on the part of
management, will no efface such privilege if only to protect the person holding
that office. In cases, when an employees position is established due to
corporate restructuring, the law, in general, permits the severance of the
employer-employee relationship, provided that certain requirements are met. In
the case, Fianza was not terminated from employment, but was transferred to
another department.

Managements prerogative of transferring and reassigning employees from one


operation to another in order to meet the requirements of the business is
generally does not constitute constructive dismissal.

- Tecson vs Glaxxo Wellcom Phils. Inc. (GR# 162994 - 09/17/04)

- SMC vs Pontillas (GR# 155178 - 05/07/08)

- Norkis Trading vs Gnillo (GR# 159730 - 02/11/08)

Well-settled is the rule that it is the prerogative of the employer to transfer and
reassign employees for valid reasons and according to the requirement of its
business. An owner of a business enterprise is given considerable leeway in
managing his business. Our law recognizes certain rights, collectively called
management prerogative as inherent in the management of business
enterprises. We have consistently recognized and upheld the prerogative of
management to transfer an employee from one office to another within the
business establishment, provided that there is no demotion in rank or
diminution of his salary, benefits and other privileges and the action is not
motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. This privilege is inherent in
the right of employers to control and manage their enterprises effectively.

The right of employees to security of tenure does not give them vested rights to
their positions to the extent of depriving management of its prerogative to
change their assignments or to transfer them. Managerial prerogatives,
however, are subject to limitations provided by law, collective bargaining
agreements, and general principles of fair play and justice.

The employer bears the burden of showing that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; and does not involve
a demotion in rank or a diminution of his salaries, privileges and other
benefits.18Should the employer fail to overcome this burden of proof, the
employees transfer shall be tantamount to constructive dismissal.

Constructive dismissal is defined as a quitting because continued employment


is rendered impossible, unreasonable or unlikely; when there is a demotion in
rank or a diminution of pay.20 Likewise, constructive dismissal exists when an
act of clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee, leaving him with no option but to forego his
continued employment.

A transfer is defined as a "movement from one position to another which is of


equivalent rank, level or salary, without break in service." Promotion, on the
other hand, is the "advancement from one position to another with an increase
in duties and responsibilities as authorized by law, and usually accompanied by
an increase in salary." Conversely, demotion involves a situation in which an
employee is relegated to a subordinate or less important position constituting a
reduction to a lower grade or rank, with a corresponding decrease in duties and
responsibilities, and usually accompanied by a decrease in salary.

In this case, while the transfer of respondent from Credit and Collection
Manager to Marketing Assistant did not result in the reduction of his salary,
there was a reduction in his duties and responsibilities which amounted to a
demotion tantamount to a constructive dismissal as correctly held by the NLRC
and the CA.

- Aguanza vs Asian Terminal Inc. (GR# 163505 - 08/14/09)

ATIs transfer of Bismark IVs base from Manila to Bataan was, contrary to
Aguanzas assertions, a valid exercise of management prerogative. The transfer
of employees has been traditionally among the acts identified as a
management prerogative subject only to limitations found in law, collective
bargaining agreement, and general principles of fair play and justice. Even as
the law is solicitous of the welfare of employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives. The free
will of management to conduct its own business affairs to achieve its purpose
cannot be denied.

On the other hand, the transfer of an employee may constitute constructive


dismissal "when continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank and/or a diminution in pay; or when a
clear discrimination, insensibility or disdain by an employer becomes
unbearable to the employee."

Aguanzas continued employment was not impossible, unreasonable or unlikely;


neither was there a clear discrimination against him. Among the employees
assigned to Bismark IV, it was only Aguanza who did not report for work in
Bataan. Aguanzas assertion that he was not allowed to "time in" in Manila
should be taken on its face: Aguanza reported for work in Manila, where he
wanted to work, and not in Bataan, where he was supposed to work. There was
no demotion in rank, as Aguanza would continue his work as Crane Operator.
Furthermore, despite Aguanzas assertions, there was no diminution in pay.

- Endico vs Quantum Food Distribution Center (GR# 161615 - 01/30/09)

There was no constructive dismissal. Reassignments made by management


pending investigation of violations of company policies and procedures
allegedly committed by an employee fall within the ambit of management
prerogative. The decision of the Quantum Foods to transfer Endico pending
investigation was a valid exercise of management prerogative to discipline its
employees. The transfer while incidental to the changes against Endico was not
meant as penalty but rather as preventive measure to avoid further loss of
sales and destruction of Quantum Foods image and goodwill.

Limits

- Mendoza vs Rural Bank of Lucban

- Benguet Electric Cooperative vs Fianza

- Dusit Hotel Nikko vs NUWHRAIN (GR# 160391 - 08/09/05)

We agree with the contention of the petitioners that it is the prerogative of


management to transfer an employee from one office to another within the
business establishment based on its assessment and perception of the
employees qualification, aptitude and competence, and in order to ascertain
where he can function with the maximum benefit to the company. However,
this Court emphasized that:

But, like other rights, there are limits thereto. The managerial prerogative to
transfer personnel must be exercised without grave abuse of discretion, bearing
in mind the basic elements of justice and fair play. Having the right should not
be confused with the manner in which that right is exercised. Thus, it cannot be
used as a subterfuge by the employer to rid himself of an undesirable worker. In
particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a
demotion in rank or a diminution of his salaries, privileges and other benefits.
Should the employer fail to overcome this burden of proof, the employees
transfer shall be tantamount to constructive dismissal, which has been defined
as a quitting because continued employment is rendered impossible,
unreasonable or unlikely; as an offer involving a demotion in rank and
diminution in pay.

- Allied Banking Corp. vs CA (GR# 144412 - 11/18/03)

The rule is that the transfer of an employee ordinarily lies within the ambit of
the employers prerogatives. The employer exercises the prerogative to transfer
an employee for valid reasons and according to the requirement of its business,
provided the transfer does not result in demotion in rank or diminution of the
employees salary, benefits and other privileges. In illegal dismissal cases, the
employer has the burden of showing that the transfer is not unnecessary,
inconvenient and prejudicial to the displaced employee.

Certainly the Court cannot accept the proposition that when an employee
opposes his employers decision to transfer him to another work place, there
being no bad faith or underhanded motives on the part of either party, it is the
employees wishes that should be made to prevail.

- Floren Hotel vs NLRC

Effects of Refusal by Emplyee

- Benguet Electric Cooperative vs Fianza

- Allied Banking Corp. vs CA (GR# 144412 - 11/18/03)

The refusal to obey a valid transfer order constitutes willful disobedience of a


lawful order of an employer. Employees may object to, negotiate and seek
redress against employers for rules or orders that they regard as unjust or
illegal. However, until and unless these rules or orders are declared illegal or
improper by competent authority, the employees ignore or disobey them at
their peril. For Galanidas continued refusal to obey Allied Banks transfer
orders, we hold that the bank dismissed Galanida for just cause in accordance
with Article 282 (a) of the Labor Code. Galanida is thus not entitled to
reinstatement or to separation pay.

Related Cases

- Phil-Singapore Transport Services Inc. vs NLRC (GR# 95449 - 08/18/97)

It is noteworthy to state that an employer is free to manage and regulate,


according to his own discretion and judgment, all phases of employment, which
includes hiring, work assignments, working methods, time, place and manner of
work, supervision of workers, working regulations, transfer of employees, lay-off
of workers, and the discipline, dismissal and recall of work. While the law
recognizes and safeguards this right of an employer to exercise what are clearly
management prerogatives, such right should not be abused and used as a tool
of oppression against labor. The company's prerogatives must be exercised in
good faith and with due regard to the rights of labor. A priori, they are not
absolute prerogatives but are subject to legal limits, collective bargaining
agreements and the general principles of fair play and justice.

- Palomares vs NLRC (GR# 120064 - 08/15/97)

Regulation of manpower by the company clearly falls within management


prerogative. Even as the law is solicitous of the welfare of employees, it must
also protect the right of an employer to exercise what are clearly management
prerogatives, subject to the constitutional requirement for the protection of
labor and the promotion of social justice which tilts the scales of justice,
whenever there is doubt, in favor of the worker. In the case at bar, we conclude
that NSC acted within the parameters of a valid exercise of management
prerogative.

- Arellano, Jr. vs NLRC (GR# 127896 - 08/21/97)

- Sobrepena, Jr. vs CA

- Brew Master Intl. vs NAFLU (GR# 119243 - 04/17/97)

- Isabelo vs NLRC (GR# 113366-68 - 07/24/97)

It is the employer's prerogative, based on its assessment and perception of its


employees' qualifications, aptitudes, and competence, to move them around in
the various areas of its business operations in order to ascertain where they will
function with maximum benefits to the company. An employee's right to
security of tenure does not give them such a vested right in his position as
would deprive the company of its prerogative to change his assignment or
transfer him where he will be most useful.

- Phimco Industries Inc. vs NLRC (GR# 118041 - 06/11/97)

- Benguet Electric Cooperative vs Fianza (GR# 158606 - 03/09/04)

The abolition of a position deemed no longer necessary is a management


prerogative and absent any findings of malice and arbitrariness on the part of
management, will no efface such privilege if only to protect the person holding
that office. In cases, when an employees position is established due to
corporate restructuring, the law, in general, permits the severance of the
employer-employee relationship, provided that certain requirements are met. In
the case, Fianza was not terminated from employment, but was transferred to
another department.

Managements prerogative of transferring and reassigning employees from one


operation to another in order to meet the requirements of the business is
generally does not constitute constructive dismissal.

- PAL vs NLRC (04/04/00)

5. Discipline
6. Management
7. Dismiss

D. PRESIDENTIAL DECREE NO. 442 (BRIEF HISTORICAL


BACKGROUND)
1. Significance

- P.D. 442 (11/01/74)

A DECREE INSTITUTING A LABOR CODE, THERBY REVISING AND


CONSOLIDATING LABOR AND SOCIAL LAWS TO AFFORD PROTECTION TO
LABOR, PROMOTE EMPLOYMENT AND HUMAN RESOURCES DEVELOPMENT
AND ENSURE INDUSTRIAL PEACE BASED ON SOCIAL JUSTICE.

Article 1. This Decree shall be known as the Labor Code of the Philippines
May 1, 1974 PD 442 was signed into law
Took effect Nov. 1, 1974

Article 2. This Code shall take effect Six months after its promulgation
RA 6715- Herrera-Veloso Law
Sen. Blas Ople Father of Labor Code

NOTE: Before the effectivity of the Labor code, there was no provision on the terms
and conditions of employment. This is the significance of the effectivity of the Labor
Code.

- R.A. 6715 (03/21/98)

AN ACT TO EXTEND PROTECTION TO LABOR, STRENGTHEN THE CONSTITUTIONAL


RIGHTS OF WORKERS TO SELF-ORGANIZATION, COLLECTIVE BARGAINING AND
PEACEFUL CONCERTED ACTIVITIES, FOSTER INDUSTRIAL PEACE AND HARMONY,
PROMOTE THE PREFERENTIAL USE OF VOLUNTARY MODES OF SETTLING LABOR
DISPUTES, AND REORGANIZE THE NATIONAL LABOR RELATIONS COMMISSION,
AMENDING FOR THESE PURPOSES CERTAIN PROVISIONS OF PRESIDENTIAL DECREE
NO. 442, AS AMENDED, OTHERWISE KNOWN AS THE LABOR CODE OF THE
PHILIPPINES, APPROPRIATING FUNDS THEREFORE AND FOR OTHER PURPOSES

Computation of Backwages after RA 6715 took effect, the award of


backwages from the time compensation was withheld up to the actual
reinstatement.

E. BASIS FOR THE ENACTMENT OF LABOR LAWS


1. Police Power

- PASEI vs Drillon (GR# 81958 - 06/30/88)

The concept of Police Power is well-established in this jurisdiction. It has been


defined as the "State Authority to enact legislation that may interfere with personal
liberty or property in order to promote the general welfare." As defined, it consists
of (1) an imposition of restraint upon liberty or property, (2) in order to foster the
common good.

Police Power is an implied limitation on the Bill of Rights, since it is subject of the
far more overriding demands and requirements of the greater number. It is the
states authority to enact legislation that may interfere with personal liberty or
property in order to promote the general welfare.

2. Social Justice and Human Rights Provision

- Sec. 16, Art. II, 1987 Constitution

The State affirms labor as a primary social economic force. It shall protect the
rights of workers and promote their welfare.

3. Doctrine of Incorporation

- Sec. 2, Art. II, 1987 Constitution

The Philippines renounces war as an instrument of national policy, adopts the


generally accepted principles of international law as part of the law of the land and
adheres to the policy of peace, equality, justice, freedom, cooperation, and amity
with all nations.

F. LIMITATIONS IN THE ENACTMENT OF LABOR LAWS (REFER TO


1987 CONSTITUTION)
1. Equal Protection Clause
(Sec. 1, Art. III, Constitution)

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.

2. Due Process Clause


(Sec. 1, Art. III, Constitution)

3. Prohibition Against Involuntary Servitude


(Sec. 18(2), Art. III, Constitution)

No involuntary servitude in any form shall exist except as a punishment for a crime
whereof the party shall have been duly convicted.

4. Non-Impairment Clause
(Sec. 10, Art. III, Constitution)

No law impairing the obligation of contracts shall be passed.

5. Requirement of Publication

- Art. 2, Civil Code

Laws shall take effect after fifteen days following the completion of their publication
in the Official Gazette, unless it is otherwise provided. This Code shall take effect
one year after such publication.
G. CONSTITUTIONAL RIGHTS OF WORKERS IN LABOR STANDARDS

Sec. 3, Art. XIII, 1987 Constitution

The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for
all.

It shall guarantee the rights of all workers to self-organization, collective bargaining


and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-
making processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their 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.

1. Security of Tenure
2. Humane Conditions of Work
3. Living Wage

What is guaranteed is LIVING WAGE, and not MINIMUM WAGE.

Q: What is the difference between LIVING WAGE vs MINIMUM WAGE?


A:
Minimum Wage Living Wage
1. It is a definite 1. It is an ideal amount
amount with no fixed value
2. It is set by the 2. It is mandated by the
RTWPB Constitution (Sec. 3, Art.
XIII)

4. Just Share in the Fruits of Production


5. Co-determination

NOTE:

BASIC RIGHTS OF BASIC RIGHTS OF THE EMPLOYEE


EMPLOYER (CPSTR) UNDER THE CONSTITUTION (Sec.
3(par. 2), Art. XIII) TReSH

A. Under Labor Standards


1. Conduct of Business 1. Right to Security of Tenure
2. Prescribe Rules 2. Right to Receive a Living Wage
3. Select and Hire Employees 3. Right to Share in the fruits of
4. Transfer or Discharge production
Employees 4. Right to Humane Conditions of
5. Return of Investment and Work
Expansion of Business
B. Under Labor Relations
1. Right to Organize themselves
2. Right to Conduct collective
bargaining or negotiation with
management
3. Right to Engage in peaceful
concerted activities
4. Right to Participate in policy and
decision-making process

Specific Rights of Workers

Security of tenure
Workers cannot be dismissed without just and authorized causes
Workers shall be made regular after 6 months probation unless a different
period is agreed upon by the worker and the employee

Hours of work
Normal working hours of eight hours a day
Meal and rest period: meal break of less than one hour shall be considered
compensable working time

Wage and wage related benefits


(a) minimum wage
(b) holiday pay one day for every regular holiday even if unworked subject
to certain conditions
(c) premium pay for work within 8 hours on:

special rest day; 30% of the basic daily rate


rest day falling on a special day: plus 50%
rest day falling on a regular holiday: plus 30% of the 200% of
the basic daily rate

Overtime pay
Ordinary days: 25% of the basic hourly rate
Special/rest/holiday: 30% of the regular hourly rate on said days

Night shift differential pay


10% of the basic or regular rate between 10pm and 6am

Service incentive leave


5 days with pay per year after one year of service

Service charges
85 % (distribution to rank and file employees); 15% (losses, breakages,
distribution to managerial employees)

Separation pay
month pay for every year of service for authorized causes of separation

13th month pay


1/12 of the total basic salary earned within the calendar year

Payment of wages
Shall be paid in cash, legal tender, at or near the place of work
May be made through a bank upon written petition of majority of the workers
in establishments with 25 or more employees and within one kilometer radius
to a bank
Shall be made direct to the employees
Shall be given not less than once every 2 weeks or twice within a month at
intervals not exceeding 16 days
Labor-only contracting is prohibited and the person acting as contractor is
merely an agent of the employer
Preference of workers money claims over government and other creditors in
case of bankruptcy or liquidation of business

Safe and healthful conditions of work and welfare services


Proper illumination and ventilation, fire exits and extinguishers, occupational
health personnel services, family welfare or family planning services at the
workplace)

Employment of Young Workers


Minimum employable age is 15 age
A worker below 15 should be directly under the sole responsibility of parents
or guardians; work does not interfere with childs schooling and normal
development
No person below eighteen can be employed in hazardous or deleterious
undertaking

Employment of women
Nightwork prohibition unless allowed by the rules:
Industrial undertaking from 10 pm to 6 am
Commercial from 12 mn to 6 am
Agricultural at nighttime unless given not less than 9
consecutive hours of rest
Welfare facilities must be provided in the workplace
Prohibition against discrimination with respect to pay,
promotion, training opportunities, study, and scholarship grants

Self-organization and collective bargaining


Employees can form organizations such as union and welfare committees
An employee can join a union on the very first day of his employment
Collective Bargaining a contract between workers and employers on terms
and conditions of employment which are OVER and ABOVE those mandated
by law

Labor education through seminars, dialogues, and


information, education and communication materials

Peaceful concerted activities in accordance with


law

Participation an policy and decision-making


processes affecting their rights and benefits

Free access to the courts and quasi-judicial bodies


and speedy disposition of their cases

ECC benefits for work-related contingencies


medical benefits for sickness and injuries
disability benefits
rehabilitation
death and funeral

SSS Benefits
maternity
sickness
disability
retirement
death

H. LABOR CONTRACTS AND INTERPRETATION

- Gonzales vs NLRC (GR# 125735 - 08/26/99)

Employment is no merely a contractual relationship, it has assumed the nature of a


property right. It may spell the difference whether or not a family will have food on
their table, a roof over their heads, and education for their children. It is for this reason
that the state has taken up measures to protect employees from unjustified dismissals.
It is also because of this that the right to security of tenure is not only a statutory right,
but more so, a constitutional right.

- Servidad vs NLRC (GR# 28682 - 03/18/99)

The private respondent sought to alternatively avail of probationary employment and


employment for a fixed term so as to preclude the regularization of the status of
petitioner. The utter disregard of public policy by the contract in question negates the
ruling of the NLRC that said contract is the Law between the parties.

GENERAL RULE: A Contract of Employment is the Law between the Parties (Employer -
Employee)
EXCEPTION: If the contract is contrary to Law or Public Policy, it becomes void. (Art.
1700 NCC)

- Grandteq Industrial Steel Products Inc. vs Margallo

I. LABOR CODE APPLICABILITY

- J.V. Angeles Construction vs NLRC (04/14/99)

R.A. 7641 is undoubtedly, a social legislation. The law has been enacted as a labor
protection measure and as a curative statue that - absent a retirement plan devised
by, an agreement with, or a voluntary grant from an employer can respond, in part at
least to the financial well-being of workers during their twilight years soon following
their life of labor. There should be little doubt about the fact that the law can apply to
labor contracts still existing at the time the statute has taken effect, and that its
benefits can be reckoned not only from the date of the laws enactment but
retroactively to the time said employment contracts have started.

- Austria vs NLRC (08/16/99)

The case at bar does not concern an ecclesiastical or purely religious affair as to bar
the State from taking cognizance of the same. An ecclesiastical affair is one that
concerns doctrine, creed, or form or worship of the church, or the adoption and
enforcement within a religious association of needful laws and regulations for the
government of the membership, and the power of excluding from such associations
those deemed unworthy of membership. Based on this definition, an ecclesiastical
affair involves the relationship between the church and its members and relate to
matters of faith, religious doctrines, worship and governance of the congregation. To
be concrete, examples of this so-called ecclesiastical affairs to which the State cannot
meddle are proceedings for excommunication, ordinations of religious ministers,
administration of sacraments and other activities with which attached religious
significance. The case at bar does not even remotely concern any of the above cited
examples. While the matter at hand relates to the church and its religious minister it
does not ipso facto give the case a religious significance. Simply stated, what is
involved here is the relationship of the church as an employer and the minister as an
employee. It is purely secular and has no relation whatsoever with the practice of
faith, worship or doctrines of the church. In this case, petitioner was not
excommunicated or expelled from the membership of the SDA but was terminated
from employment. Indeed, the matter of terminating an employee, which is purely
secular in nature, is different from the ecclesiastical act of expelling a member from
the religious congregation.

J. DEFINITION

1. Employer (Art. 212(e) Labor Code)

Any person acting in the interest of an employer, directly or indirectly. The term shall
not include any labor organization or any of its officers or agents except when acting
as employer.
2. Employee (Art. 212(f) Labor Code)

Any person in the employ of an employer. The term shall not be limited to the
employees of a particular employer, unless the Code so explicitly states. It shall
include any individual whose work has ceased as a result of or in connection with any
current labor dispute or because of any unfair labor practice if he has not obtained
any other substantially equivalent and regular employment.

3. Test to Determine the Existence of Employer-Employee Relationship

FOUR-FOLD TEST
1. Right To Hire
2. Payment of Wages
3. Power of Dismissal
4. Control over the conduct of work

- CRC Agricultural Trading vs NLRC (GR# 177664 12/23/09)

Finally, a careful review of the record shows that the worker performed his work
as driver under the petitioners supervision and control. The company
determined how, where, and when the worker performed his task. They, in fact,
requested the worker to live inside their compound so he (the worker) could be
readily available when the company needed his services. Undoubtedly, the
company exercised control over the means and methods by which the worker
accomplished his work as a driver.

- Dealco Farms Inc. vs NLRC (GR# 153192 01/30/09)

It is shown by jurisprudence that the element of Control is the most important


determining factor. The Control Test merely calls for the existence of the right
to control, and not necessarily the exercise thereof.

- WPP Mtg. Comm. Inc. vs Galera (GR# 169207/169239 03/25/10)

Additionally, the following provisions in her employment contract are convincing


indicators that Galera was an employee and not a corporate officer:

(1) it mandates where and how often she is to perform her work;
(2) the wages she receives are completely controlled by WPP;
(3) she is subject to the regular disciplinary procedures of WPP;
(4) section 14 thereof clearly states that she is a permanent employee
not a Vice-President or a member of the Board of Directors;
(5) the intellectual property rights created or discovered by petitioner
during her employment shall automatically belong to private respondent
WPP [Under the Intellectual Property Code, this condition prevails if the
creator of the work subject to the laws of patent or copyright is an employee
of the one entitled to the patent or copyright]; and
(6) the disciplinary procedure states that her right of redress is through
Mindshares Chief Executive Officer for the Asia-Pacific.

This last circumstance implies that she was not even under the disciplinary
control of WPPs Board of Directors, and therefore, she could not have been a
WPP corporate officer as only the WPP Board of Directors could appoint and
terminate its own corporate officer.

- Gomez vs PDMC (GR# 174044 11/27/09)

- Tomaquin vs PLDT (GR# 185251 10/02/09)

To reiterate, while respondent and SSCP no longer had any legal relationship
with the termination of the Agreement, petitioners remained at their post
securing the premises of respondent while receiving their salaries, allegedly
from SSCP. Clearly, such a situation makes no sense, and the denials proffered
by respondent do not shed any light to the situation. It is but reasonable to
conclude that, with the behest and, presumably, directive of respondent,
petitioners continued with their services. Evidently, such are indicia of control
that respondent exercised over petitioners.

Such power of control has been explained as the right to control not only the
end to be achieved but also the means to be used in reaching such end. With
the conclusion that respondent directed petitioners to remain at their posts and
continue with their duties, it is clear that respondent exercised the power of
control over them; thus, the existence of an employer-employee relationship.

- Masonic Contractor Inc. vs Madjos (GR# 185094 11/25/09)

TWO-TIERED APPROACH

- Angelina Francisco vs NLRC (GR# 170087 08/31/06)

There are instances when, aside from the employers power to control the employee
with respect to the means and methods by which the work is to be accomplished,
economic realities of the employment relationship help provide a comprehensive
analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer, or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1)
the putative employers power to control the employee with respect to
the means and methods by which the work is to be accomplished; (2) the
underlying economic realities of the activity of relationship. Thus, the
determination of the relationship between employer and employee depends upon
the circumstances of the whole economic activity. The proper standard of economic
dependence is whether the worker is dependent on the alleged employer for his
continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of the
Company because she was under the control and supervision of the latter. Under
the broader economic reality test, the petitioner can likewise be said to be an
employee of respondent corporation because she had served the company for six
years before her dismissal, receiving check vouchers indicating her salaries/
benefits, 13th month pay, bonuses and allowances as well as deductions and SSS
contributions. It is therefore apparent that petitioner is economically dependent
on respondent for her continued employment in the latters line of
business (test).

POWER OF CONTROL TEST

ECONOMIC REALITY TEST


Determine the underlying economic realities of the activity or
relationships.
The determination of the relationship between employer and
employee depends upon the circumstances of the whole economic activity

A. The (broad) extent to which the services performed are an integral part
of the employers business.
B. The (limited) extent of the workers investment in the equipment and
facilities
C. The nature (close supervision) and (high) degree of control exercised
by the employer
D. The workers (limited) opportunities for profit and loss
E. The (small) amount of initiative, skill, judgment or foresight required
for the success of the claimed independent enterprise
F. The (high degree of) permanency and duration of the relationship
between the worker and the employer
G. The degree of dependency of the worker upon the employer for his
continued employment in that line of business.
The benchmark of economic reality in analyzing possible employment
relationships for purposes of applying the Labor Code ought to be the
ECONOMIC DEPENDENCE of the worker on his employee. (Orozco vs CA 562
SCRA 36, 2008)

Note: Unlike employee, independent contractor does not solely depend on


the company for continued work as they can pursue other jobs. Independent
Contractors are not governed by the Labor Code but by the Civil Code on
Obligations and Contracts.

Main Concepts

A. RECRUITMENT AND PLACEMENT OF WORKERS


1. Migrant Workers and Overseas Filipinos Act of 1995 (R.A. 8042)

AN ACT TO INSTITUTE THE POLICIES OF OVERSEAS EMPLOYMENT AND ESTABLISH A


HIGHER STANDARD OF PROTECTION AND PROMOTION OF THE WELFARE OF MIGRANT
WORKERS, THEIR FAMILIES AND OVERSEAS FILIPINOS IN DISTRESS, AND FOR OTHER
PURPOSES.

Section 1. Short Title. - This Act shall be known and cited as the "Migrant Workers
and Overseas Filipinos Act of 1995".

Sec. 2. Declaration of Policies.

(a) In the pursuit of an independent foreign policy and while considering national
sovereignty, territorial integrity, national interest and the right to self- determination
paramount in its relations with other states, the State shall, at all times, uphold the
dignity of its citizens whether in country or overseas, in general, and Filipino migrant
workers, in particular.

(b) The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment
opportunities for all. Towards this end, the State shall provide adequate and timely
social, economic and legal services to Filipino migrant workers.

(c) While recognizing the significant contribution of Filipino migrant workers to the
national economy through their foreign exchange remittances, the State does not
promote overseas employment as a means to sustain economic growth an achieve
national development. The existence of the overseas employment program rests
solely on the assurance that the dignity and fundamental human rights and freedoms
of the Filipino citizen shall not, at any time, be compromised or violated. The State,
therefore, shall continuously create local employment opportunities and promote the
equitable distribution of wealth and the benefits of development.

(d) The State affirms the fundamental equality before the law of women and men and
the significant role of women in nation-building. Recognizing the contribution of
overseas migrant women workers and their particular vulnerabilities, the State shall
apply gender sensitive criteria in the formulation and implementation of policies and
programs affecting migrant workers and the composition of bodies tasked for the
welfare of migrant workers.

(e) Free access to the courts and quasi-judicial bodies and adequate legal assistance
shall not be denied to any person by reason of poverty. In this regard, it is imperative
that an effective mechanism be instituted to ensure that the rights and interest of
distressed overseas Filipinos, in general, and Filipino migrant workers, in particular,
documented or undocumented, are adequately protected and safeguarded.
(f) The right of Filipino migrant workers and all overseas Filipinos to participate in the
democratic decision-making processes of the State and to be represented in
institutions relevant to overseas employment is recognized and guaranteed.

(g) The State recognizes that the ultimate protection to all migrant workers is the
possession of skills. Pursuant to this and as soon as practicable, the government shall
deploy and/or allow the deployment only of skilled Filipino workers.

(h) Non-governmental organizations, duly recognized as legitimate, are partners of


the State in the protection of Filipino migrant workers and in the promotion of their
welfare. The State shall cooperate with them in a spirit of trust and mutual respect.

(i) Government fees and other administrative costs of recruitment, introduction,


placement and assistance to migrant workers shall be rendered free without
prejudice to the provision of Sec. 36 hereof.

Nonetheless, the deployment of Filipino overseas workers, whether land- based or


sea-based, by local service contractors and manning agencies employing them shall
be encouraged. Appropriate incentives may be extended to them.

Sec. 3. Definitions. - For purposes of this Act:

(a) Migrant worker refers to a person who is to be engaged, is engaged or has been
engaged in a remunerated activity in a state of which he or she is not a legal
resident; to be used interchangeably with overseas Filipino worker.

(b) Gender-sensitivity shall mean cognizance of the inequalities and inequities


prevalent in society between women and men and a commitment to address issues
with concern for the respective interests of the sexes.

(c) Overseas Filipinos refers to dependents of migrant workers and other Filipino
nationals abroad who are in distress as mentioned in Sec.s 24 and 26 of this Act.

I. DEPLOYMENT
Sec. 4. Deployment of Migrant Workers. - The State shall deploy overseas Filipino
workers only in countries where the rights of Filipino migrant workers are protected.
The government recognizes any of the following as a guarantee on the part of the
receiving country for the protection and the rights of overseas Filipino workers:

(a) It has existing labor and social laws protecting the rights of migrant workers;

(b) It is a signatory to multilateral conventions, declarations or resolutions relating to


the protection of migrant workers;

(c) It has concluded a bilateral agreement or arrangement with the government


protecting the rights of overseas Filipino workers; and

(d) It is taking positive, concrete measures to protect the rights of migrant workers.

Sec. 5. Termination or Ban on Deployment. - Notwithstanding the provisions of Sec.


hereof, the government, in pursuit of the national interest or when public welfare so
requires, may, at any time, terminate or impose a ban on the deployment of migrant
workers.

II. ILLEGAL RECRUITMENT


Sec. 6. Definition. - For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers
and includes referring, contract services, promising or advertising for employment
abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of
authority contemplated under Article 13(f) of Presidential Decree No. 442, as
amended, otherwise known as the Labor Code of the Philippines: Provided, That any
such non-licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged. It shall
likewise include the following acts, whether committed by any person, whether a
non-licensee, non-holder, licensee or holder of authority:

(a) To charge or accept directly or indirectly any amount greater than that specified
in the schedule of allowable fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay any amount greater than that actually
received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in relation to


recruitment or employment;

(c) To give any false notice, testimony, information or document or commit any act of
misrepresentation for the purpose of securing a license or authority under the Labor
Code;

(d) To induce or attempt to induce a worker already employed to quit his


employment in order to offer him another unless the transfer is designed to liberate a
worker from oppressive terms and conditions of employment;

(e) To influence or attempt to influence any person or entity not to employ any
worker who has not applied for employment through his agency;

(f) To engage in the recruitment or placement of workers in jobs harmful to public


health or morality or to the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor and


Employment or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement vacancies,
remittance of foreign exchange earnings, separation from jobs, departures and such
other matters or information as may be required by the Secretary of Labor and
Employment;

(i) To substitute or alter to the prejudice of the worker, employment contracts


approved and verified by the Department of Labor and Employment from the time of
actual signing thereof by the parties up to and including the period of the expiration
of the same without the approval of the Department of Labor and Employment;

(j) For an officer or agent of a recruitment or placement agency to become an officer


or member of the Board of any corporation engaged in travel agency or to be
engaged directly or indirectly in the management of a travel agency;

(k) To withhold or deny travel documents from applicant workers before departure for
monetary or financial considerations other than those authorized under the Labor
Code and its implementing rules and regulations;

(l) Failure to actually deploy without valid reason as determined by the Department
of Labor and Employment ; and

(m) Failure to reimburse expenses incurred by the worker in connection with his
documentation and processing for purposes of deployment, in cases where the
deployment does not actually take place without the worker's fault. Illegal
recruitment when committed by a syndicate or in large scale shall be considered an
offense involving economic sabotage. Illegal recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or more persons conspiring or
confederating with one another. It is deemed committed in large scale if committed
against three (3) or more persons individually or as a group.

The persons criminally liable for the above offenses are the principals, accomplices
and accessories. In case of juridical persons, the officers having control, management
or direction of their business shall be liable.

Sec. 7. Penalties. -

(a) Any person found guilty of illegal recruitment shall suffer the penalty of
imprisonment of not less than six (6) years and one (1) day but not more than twelve
(12) years and a fine of not less than Two hundred thousand pesos (P200,000.00) nor
more than Five hundred thousand pesos (P500,000.00).

(b) The penalty of life imprisonment and a fine of not less than Five hundred
thousand pesos (P500,000.00) nor more than One million pesos (P1,000,000.00) shall
be imposed if illegal recruitment constitutes economic sabotage as defined herein.
Provided, however, That the maximum penalty shall be imposed if the person illegally
recruited is less than eighteen (18) years of age or committed by a non-licensee or
non-holder of authority.

Sec. 8. Prohibition on Officials and Employees. - It shall be unlawful for any official or
employee of the Department of Labor and Employment, the Philippine Overseas
Employment Administration (POEA), or the Overseas Workers Welfare Administration
(OWWA), or the Department of Foreign Affairs, or other government agencies
involved in the implementation of this Act, or their relatives within the fourth civil
degree of consanguinity or affinity, to engage, directly or indirectly in the business of
recruiting migrant workers as defined in this Act. The penalties provided in the
immediate preceding paragraph shall be imposed upon them.

Sec. 9. Venue. - A criminal action arising from illegal recruitment as defined herein
shall be filed with the Regional Trial Court of the province or city where the offense
was committed or where the offended party actually resides at the time of the
commission of the offense: Provided, That the court where the criminal action is first
filed shall acquire jurisdiction to the exclusion of other courts: Provided, however,
That the aforestated provisions shall also apply to those criminal actions that have
already been filed in court at the time of the effectivity of this Act.

Sec. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the
Labor Arbiters of the National Labor Relations Commission (NLRC) shall have the
original and exclusive jurisdiction to hear and decide, within ninety (90) calendar
days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas
deployment including claims for actual, moral, exemplary and other forms of
damages.

The liability of the principal/employer and the recruitment/placement agency for any
and all claims under this Sec. shall be joint and several. This provision shall be
incorporated in the contract for overseas employment and shall be a condition
precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all money
claims or damages that may be awarded to the workers. 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.

Such liabilities shall continue during the entire period or duration of the employment
contract and shall not be affected by any substitution, amendment or modification
made locally or in a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims


inclusive of damages under this Sec. shall be paid within four (4) months from the
approval of the settlement by the appropriate authority.
In case of termination of overseas employment without just, valid or authorized
cause as defined by law or contract, the worker shall be entitled to the full
reimbursement of his placement fee with interest at twelve percent (12%) per
annum, plus his salaries for the unexpired portion of his employment contract or for
three (3) months for every year of the unexpired term, whichever is less.

Noncompliance with the mandatory periods for resolutions of cases provided under
this Sec. shall subject the responsible officials to any or all of the following penalties:

(a) The salary of any such official who fails to render his decision or resolution within
the prescribed period shall be, or caused to be, withheld until the said official
complies therewith;

(b) Suspension for not more than ninety (90) days; or

(c) Dismissal from the service with disqualification to hold any appointive public
office for five (5) years. Provided, however, That the penalties herein provided shall
be without prejudice to any liability which any such official may have incurred under
other existing laws or rules and regulations as a consequence of violating the
provisions of this paragraph.

Sec. 11. Mandatory Periods for Resolution of Illegal Recruitment Cases. - The
preliminary investigations of cases under this Act shall be terminated within a period
of thirty (30) calendar days from the date of their filing. Where the preliminary
investigation is conducted by a prosecution officer and a prima facie case is
established, the corresponding information shall be filed in court within twenty-four
(24) hours from the termination of the investigation. If the preliminary investigation is
conducted by a judge and a prima facie case is found to exist, the corresponding
information shall be filed by the proper prosecution officer within forty-eight (48)
hours from the date of receipt of the records of the case.

Sec. 12. Prescriptive Periods. - Illegal recruitment cases under this Act shall prescribe
in five (5) years: Provided, however, That illegal recruitment cases involving
economic sabotage as defined herein shall prescribe in twenty (20) years.

Sec. 13. Free Legal Assistance; Preferential Entitlement Under the Witness Protection
Program. - A mechanism for free legal assistance for victims of illegal recruitment
shall be established within the Department of Labor and Employment including its
regional offices. Such mechanism must include coordination and cooperation with the
Department of Justice, the Integrated Bar of the Philippines, and other non-
governmental organizations and volunteer groups.

The provisions of Republic Act No. 6981 to the contrary notwithstanding, any person
who is a victim of illegal recruitment shall be entitled to the Witness Protection
Program provided thereunder.

III. SERVICES
Sec. 14. Travel Advisory/Information Dissemination. - To give utmost priority to the
establishment of programs and services to prevent illegal recruitment, fraud and
exploitation or abuse of Filipino migrant workers, all embassies and consular offices,
through the Philippine Overseas Employment Administration (POEA), shall issue
travel advisories or disseminate information on labor and employment conditions,
migration realities and other facts; and adherence of particular countries to
international standards on human and workers' rights which will adequately prepare
individuals into making informed and intelligent decisions about overseas
employment. Such advisory or information shall be published in a newspaper of
general circulation at least three (3) times in every quarter.

Sec. 15. Repatriation of Workers; Emergency Repatriation Fund. - The repatriation of


the worker and the transport of his personal belongings shall be the primary
responsibility of the agency which recruited or deployed the worker overseas. All
costs attendant to repatriation shall be borne by or charged to the agency concerned
and/or its principal. Likewise, the repatriation of remains and transport of the
personal belongings of a deceased worker and all costs attendant thereto shall be
borne by the principal and/or the local agency. However, in cases where the
termination of employment in due solely to the fault of the worker, the
principal/employer or agency shall not in any manner be responsible for the
repatriation of the former and/or his belongings.

The Overseas Workers Welfare Administration (OWWA), in coordination with


appropriate international agencies, shall undertake the repatriation of workers in
cases of war, epidemic, disaster or calamities, natural or man-made, and other
similar events without prejudice to reimbursement by the responsible principal or
agency. However, in cases where the principal or recruitment agency cannot be
identified, all costs attendant to repatriation shall be borne by the OWWA.

For this purpose, there is hereby created and established an emergency repatriation
fund under the administration, control and supervision of the OWWA, initially to
consist of One hundred million pesos (P100,000,000.00), which shall be taken from
the existing fund controlled and administered by the OWWA. Thereafter, such fund
shall be provided for in the General Appropriations Act from year to year: Provided,
That the amount appropriated shall in no case be less than One hundred million
pesos (P100,000,000.00), inclusive of outstanding balances.

Sec. 16. Mandatory Repatriation of Underage Migrant Workers. - Upon discovery or


being informed of the presence of migrant workers whose actual ages fall below the
minimum age requirement for overseas deployment, the responsible officers in the
foreign service shall without delay repatriate said workers and advise the
Department of Foreign Affairs through the fastest means of communication available
of such discovery and other relevant information.

Sec. 17. Establishment of Re-placement and Monitoring Center. - A re- placement and
monitoring center is hereby created in the Department of Labor and Employment for
returning Filipino migrant workers which shall provide a mechanism for their
reintegration into the Philippine society, serve as a promotion house for their local
employment, and tap their skills and potentials for national development.

The Department of Labor and Employment, the Overseas Workers Welfare


Administration, and the Philippine Overseas Employment Administration shall, within
ninety (90) days from the effectivity of this Act, formulate a program that would
motivate migrant workers to plan for productive options such as entry into highly
technical jobs or undertakings, livelihood and entrepreneurial development, better
wage employment, and investment of savings.

For this purpose, the Technical Education and Skills Development Authority (TESDA),
the Technology Livelihood Resource Center (TLRC), and other government agencies
involved in training and livelihood development shall give priority to returnees who
had been employed as domestic helpers and entertainers.

Sec. 18. Functions of the Re-placement and Monitoring Center. - The Center shall
provide the following services:

(a) Develop livelihood programs and projects for returning Filipino migrant workers in
coordination with the private sector;

(b) Coordinate with appropriate private and government agencies in the promotion,
development, re-placement and the full utilization of their potentials;

(c) Institute, in cooperation with other government agencies concerned, a computer-


based information system on skilled Filipino migrant workers which shall be
accessible to all local recruitment agencies and employers, both public and private;

(d) Provide a periodic study and assessment of job opportunities for returning Filipino
migrant workers; and
(e) Develop and implement other appropriate programs to promote the welfare of
returning Filipino migrant workers.

Sec. 19. Establishment of a Migrant Workers and other Overseas Filipinos Resource
Center. - Within the premises and under the administrative jurisdiction of the
Philippine Embassy in countries where there are large concentrations of Filipino
migrant workers, there shall be established a Migrant Workers and Other Overseas
Filipinos Resource Center with the following services:

(a) Counselling and legal services;

(b) Welfare assistance including the procurement of medical and hospitalization


services;

(c) Information, advisory and programs to promote social integration such as post-
arrival orientation, settlement and community networking services and activities for
social interaction;

(d) Institute a scheme of registration of undocumented workers to bring them within


the purview of this Act. For this purpose, the Center is enjoined to compel existing
undocumented workers to registered with it within six (6) months from the effectivity
of this Act, under pain of having his/her passport cancelled;

(e) Human resource development, such as training and skills upgrading;

(f) Gender sensitive program and activities to assist particular needs of women
migrant workers;

(g) Orientation program for returning worker and other migrants; and

(h) Monitoring of daily situations, circumstances and activities affecting migrant


workers and other overseas Filipinos.

The establishment and operations of the Center shall be a joint undertaking of the
various government agencies. The Center shall be open for twenty-four (24) hours
daily including Saturdays, Sunday and holidays, and shall be staffed by Foreign
Service personnel, service attaches or officers who represent other Philippine
government agencies abroad and, if available, individual volunteers and bona fide
non-government organizations from the host countries. In countries categorized as
highly problematic by the Department of Foreign Affairs and the Department of Labor
and Employment and where there is a concentration of Filipino migrant workers, the
government must provide a lawyer and a social worker for the Center. The Labor
Attache shall coordinate the operation of the Center and shall keep the Chief of
Mission informed and updated on all matters affecting it.

The Center shall have a counterpart 24-hour information and assistance center at the
Department of Foreign Affairs to ensure a continuous network and coordinative
mechanism at the home office.

Sec. 20. Establishment of a Shared Government Information System for Migration. -


An inter-agency committee composed of the Department of Foreign Affairs and its
attached agency, the Commission on Filipinos Overseas, the Department of Labor
and Employment, the Philippine Overseas Employment Administration, the Overseas
Workers Welfare Administration, the Department of Tourism, the Department of
Justice, the Bureau of Immigration, the National Bureau of Investigation, and the
National Statistics Office shall be established to implement a shared government
information system for migration. The inter- agency committee shall initially make
available to itself the information contained in existing data bases/files. The second
phase shall involve linkaging of computer facilities in order to allow free flow data
changes and sharing among concerned agencies.
The inter-agency committee shall convene to identify existing data bases which shall
be declassified and shared among member agencies. These shared data bases shall
initially include, but not be limited to, the following information:

(a) Masterlists of Filipino migrant workers/overseas Filipinos classified according to


occupation/job category, civil status, by country/state of destination including visa
classification;

(b) Inventory of pending legal cases involving Filipino migrant workers and other
Filipino nationals, including those serving prison terms;

(c) Masterlist of departing/arriving Filipinos;

(d) Statistical profile on Filipino migrant workers/overseas Filipinos/tourists;

(e) Blacklisted foreigners/undesirable aliens;

(f) Basic data on legal systems, immigration policies, marriage laws and civil and
criminal codes in receiving countries particularly those with large numbers of
Filipinos;

(g) List of labor and other human rights instruments where receiving countries are
signatories;

(h) A tracking system of past and present gender disaggregated cases involving male
and female migrant workers; and

(i) Listing of overseas posts which may render assistance to overseas Filipinos, in
general, and migrant workers, in particular.

Sec. 21. Migrant Workers Loan Guarantee Fund. - In order to further prevent
unscrupulous illegal recruiters from taking advantage of workers seeking
employment abroad, the OWWA, in coordination with government financial
institutions, shall institute financing schemes that will expand the grant of pre-
departure loan and family assistance loan. For this purpose, a Migrant Workers Loan
Guarantee Fund is hereby created and the revolving amount of One hundred million
pesos (P100,000,000.00) from the OWWA is set aside as a guarantee fund in favor of
participating government financial institutions.

Sec. 22. Rights and Enforcement Mechanism Under International and Regional
Human Rights Systems. - The Department of Foreign Affairs is mandated to
undertake the necessary initiative such as promotions, acceptance or adherence of
countries receiving Filipino workers to multilateral convention, declaration or
resolutions pertaining to the protection of migrant workers' rights. The Department of
Foreign Affairs is also mandated to make an assessment of rights and avenues of
redress under international and regional human rights systems that are available to
Filipino migrant workers who are victims of abuse and violation and, as far as
practicable and through the Legal Assistant for Migrant Workers Affairs created under
this Act, pursue the same on behalf of the victim if it is legally impossible to file
individual complaints. If a complaints machinery is available under international or
regional systems, the Department of Foreign Affairs shall fully apprise the Filipino
migrant workers of the existence and effectiveness of such legal options.

IV. GOVERNMENT AGENCIES


Sec. 23. Role of Government Agencies. - The following government agencies shall
perform the following to promote the welfare and protect the rights of migrant
workers and, as far as applicable, all overseas Filipinos:

(a) Department of Foreign Affairs - The Department, through its home office or
foreign posts, shall take priority action or make representation with the foreign
authority concerned to protect the rights of migrant workers and other overseas
Filipinos and extend immediate assistance including the repatriation of distressed or
beleaguered migrant workers and other overseas Filipinos;

(b) Department of Labor and Employment - The Department of Labor and


Employment shall see to it that labor and social welfare laws in the foreign countries
are fairly applied to migrant workers and whenever applicable, to other overseas
Filipinos including the grant of legal assistance and the referral to proper medical
centers or hospitals:

(b.1) Philippine Overseas Employment Administration - Subject to deregulation and


phase-out as provided under Sec.s 29 and 30 herein, the Administration shall
regulate private sector participation in the recruitment and overseas placement of
workers by setting up a licensing and registration system. It shall also formulate and
implement, in coordination with appropriate entities concerned, when necessary, a
system for promoting and monitoring the overseas employment of Filipino workers
taking into consideration their welfare and the domestic manpower requirements.

(b.2) Overseas Workers Welfare Administration - The Welfare officer or in his


absence, the coordinating officer shall provide the Filipino migrant worker and his
family all the assistance they may need in the enforcement of contractual obligations
by agencies or entities and/or by their principals. In the performance of this function,
he shall make representation and may call on the agencies or entities concerned to
conferences or conciliation meetings for the purpose of settling the complaints or
problems brought to his attention.

V. THE LEGAL ASSISTANT FOR MIGRANT WORKERS AFFAIRS


Sec. 24. Legal Assistant for Migrant Workers Affairs. - There is hereby created the
position of Legal Assistant for Migrant Workers Affairs under the Department of
Foreign Affairs who shall be primarily responsible for the provision and overall
coordination of all legal assistance services to be provided to Filipino migrant workers
as well as overseas Filipinos in distress. He shall have the rank, salary and privileges
equal to that of an undersecretary of said Department.

The said Legal Assistant for Migrant Workers Affairs, shall be appointed by the
President and must be of proven competence in the field of law with at least ten (10)
years of experience as a legal practitioner and must not have been a candidate to an
elective office in the last local or national elections.

Among the functions and responsibilities of the aforesaid Legal Assistant are:

(a) To issue the guidelines, procedures and criteria for the provision of legal
assistance services to Filipino migrant workers;

(b) To establish close linkages with the Department of Labor and Employment, the
POEA, the OWWA and other government agencies concerned, as well as with non-
governmental organizations assisting migrant workers, to ensure effective
coordination and cooperation in the provision of legal assistance to migrant workers;

(c) To tap the assistance of reputable law firms and the Integrated Bar of the
Philippines and other bar associations to complement the government's efforts to
provide legal assistance to our migrant workers;

(d) To administer the legal assistance fund for migrant workers established under
Sec. 25 thereof and to authorize disbursements therefrom in accordance with the
purposes for which the fund was set up; and

(e) To keep and maintain the information system as provided in Sec. 20.
The Legal Assistant for Migrant Workers Affairs shall have authority to hire private
lawyers, domestic or foreign, in order to assist him in the effective discharge of the
above functions.

Sec. 25. Legal Assistance Fund. - There is hereby established a legal assistance fund
for migrant workers, hereinafter referred to as the Legal Assistance Fund, in the
amount of One hundred million pesos (P100,000,000.00) to be constituted from the
following sources:

Fifty million pesos (P50,000,000.00) from the Contingency Fund of the President;

Thirty million pesos (P30,000,000.00) from the Presidential Social Fund; and

Twenty million pesos (P20,000,000.00) from the Welfare Fund for Overseas Workers
established under Letter of Instruction No. 537, as amended by Presidential Decrees
Nos. 1694 and 1809.

Any balances of existing funds which have been set aside by the government
specifically as legal assistance or defense fund to help migrant workers shall, upon
effectivity of this Act, be turned over to, and form part of, the Fund created under
this Act.

Sec. 26. Uses of the Legal Assistance Fund. - The Legal Assistance Fund created
under the preceding Sec. shall be used exclusively to provide legal services to
migrant workers and overseas Filipinos in distress in accordance with the guidelines,
criteria and procedures promulgated in accordance with Sec. 24(a) hereof. The
expenditures to be charged against the Fund shall include the fees for the foreign
lawyers to be hired by the Legal Assistant for Migrant Workers Affairs to represent
migrant workers facing charges abroad, bail bonds to secure the temporary release
of workers under detention, court fees and charges and other litigation expenses.

VI. COUNTRY-TEAM APPROACH

Sec. 27. Priority Concerns of Philippine Foreign Service Posts. - The country-team
approach, as enunciated under Executive Order No. 74, series of 1993, shall be the
mode under which Philippine embassies or their personnel will operate in the
protection of the Filipino migrant workers as well as in the promotion of their welfare.
The protection of the Filipino migrant workers and the promotion of their welfare, in
particular, and the protection of the dignity and fundamental rights and freedoms of
the Filipino citizen abroad, in general, shall be the highest priority concerns of the
Secretary of Foreign Affairs and the Philippine Foreign Service Posts.

Sec. 28. Country-Team Approach. - Under the country-team approach, all officers,
representatives and personnel of the Philippine government posted abroad
regardless of their mother agencies shall, on a per country basis, act as one country-
team with a mission under the leadership of the ambassador. In this regard the
ambassador may recommend to the Secretary of the Department of Foreign Affairs
the recall of officers, representatives and personnel of the Philippine government
posted abroad for acts inimical to the national interest such as, but not limited to,
failure to provide the necessary services to protect the rights of overseas Filipinos.

Upon receipt of the recommendation of the ambassador, the Secretary of the


Department of Foreign Affairs shall, in the case of officers, representatives and
personnel of other departments, endorse such recommendation to the department
secretary concerned for appropriate action. Pending investigation by an appropriate
body in the Philippines, the person recommended for recall may be placed under
preventive suspension by the ambassador.

In host countries where there are Philippine consulates, such consulates shall also
constitute part of the country-team under the leadership of the ambassador.

In the implementation of the country-team approach, visiting Philippine delegations


shall be provided full support and information.
VII. DEREGULATION AND PHASE-OUT

Sec. 29. Comprehensive Deregulation Plan on Recruitment Activities. - Pursuant to a


progressive policy of deregulation whereby the migration of workers becomes strictly
a matter between the worker and his foreign employer, the DOLE, within one (1) year
from the effectivity of this Act, is hereby mandated to formulate a five-year
comprehensive deregulation plan on recruitment activities taking into account labor
market trends, economic conditions of the country and emerging circumstances
which may affect the welfare of migrant workers.

Sec. 30. Gradual Phase-out of Regulatory Functions. - Within a period of five (5) years
from the effectivity of this Act, the DOLE shall phase-out the regulatory functions of
the POEA pursuant to the objectives of deregulation.

VIII. PROFESSIONAL AND OTHER HIGHLY-SKILLED FILIPINOS ABROAD


Sec. 31. Incentives to Professionals and Other Highly-Skilled Filipinos Abroad. -
Pursuant to the objective of encouraging professionals and other highly-skilled
Filipinos abroad especially in the field of science and technology to participate in, and
contribute to national development, the government shall provide proper and
adequate incentives and programs so as to secure their services in priority
development areas of the public and private sectors.

IX. MISCELLANEOUS PROVISIONS

Sec. 32. POEA and OWWA Board; Additional Memberships. - Notwithstanding any
provision of law to the contrary, the respective Boards of the POEA and the OWWA
shall, in addition to their present composition, have three (3) members each who
shall come from the women, sea-based and land-based sectors respectively, to be
appointed by the President in the same manner as the other members.

Sec. 33. Report to Congress. - In order to inform the Philippine Congress on the
implementation of the policy enunciated in Sec. 4 hereof, the Department of Foreign
Affairs and the Department of Labor and Employment shall submit to the said body a
semi- annual report of Philippine foreign posts located in countries hosting Filipino
migrant workers. The report shall include, but shall not be limited to, the following
information:

(a) Masterlist of Filipino migrant workers, and inventory of pending legal cases
involving them and other Filipino nationals including those serving prison terms;

(b) Working conditions of Filipino migrant workers;

(c) Problems encountered by the migrant workers, specifically violations of their


rights;

(d) Initiatives/actions taken by the Philippine foreign posts to address the problems of
Filipino migrant workers;

(e) Changes in the laws and policies of host countries; and

(f) Status of negotiations on bilateral labor agreements between the Philippines and
the host country.

Any officer of the government who fails to report as stated in the preceding Sec. shall
be subject to administrative penalty.

Sec. 34. Representation in Congress. - Pursuant to Sec. 5(2), Article VI of the


Constitution and in line with the objective of empowering overseas Filipinos to
participate in the policy making process to address Filipino migrant concerns, two (2)
sectoral representatives for migrant workers in the House of Representatives shall be
appointed by the President from the ranks of migrant workers: Provided, That at least
one (1) of the two (2) sectoral representatives shall come from the women migrant
workers sector: Provided, further, That all nominees must have at least two (2) years
experience as a migrant worker.

Sec. 35. Exemption from Travel Tax and Airport Fee. - All laws to the contrary
notwithstanding, the migrant worker shall be exempt from the payment of travel tax
and airport fee upon proper showing of proof of entitlement by the POEA.

Sec. 36. Non-increase of Fees; Abolition of Repatriation Bond. - Upon approval of this
Act, all fees being charged by any government office on migrant workers shall remain
at their present levels and the repatriation bond shall be abolished.

Sec. 37. The Congressional Migrant Workers Scholarship Fund. - There is hereby
created a Congressional Migrant Workers Scholarship Fund which shall benefit
deserving migrant workers and/or their immediate descendants below twenty-one
(21) years of age who intend to pursue courses or training primarily in the field of
science and technology. The initial seed fund of Two hundred million pesos
(P200,000,000.00) shall be constituted from the following sources:

(a) Fifty million pesos (P50,000,000.00) from the unexpended Countrywide


Development Fund for 1995 in equal sharing by all Members of Congress; and

(b) The remaining One hundred fifty million pesos (P150,000,000.00) shall be funded
from the proceeds of Lotto draws.

The Congressional Migrant Workers Scholarship Fund as herein created shall be


administered by the DOLE in coordination with the Department of Science and
Technology (DOST). To carry out the objectives of this Sec., the DOLE and the DOST
shall formulate the necessary rules and regulations.

Sec. 38. Appropriation and Other Sources of Funding. - The amount necessary to
carry out the provisions of this Act shall be provided for in the General Appropriations
Act of the year following its enactment into law and thereafter.

Sec. 39. Migrant Workers Day. - The day of signing by the President of this Act shall
be designated as the Migrant Workers Day and shall henceforth be commemorated
as such annually.

Sec. 40. Implementing Rules and Regulations. - The departments and agencies
charged with carrying out the provisions of this Act shall, within ninety (90) days after
the effectivity of this Act, formulate the necessary rules and regulations for its
effective implementation.

Sec. 41. Repealing Clause. - All laws, decrees, executive orders, rules and
regulations, or parts thereof inconsistent with the provisions of this Act are hereby
repealed or modified accordingly.

Sec. 42. Separability Clause. - If, for any reason, any Sec. or provision of this Act is
held unconstitutional or invalid, the other Sec.s or provisions hereof shall not be
affected thereby.

Sec. 43. Effectivity Clause. - This Act shall take effect after fifteen (15) days from its
publication in the Official Gazette or in at least two (2) national newspapers of
general circulation whichever comes earlier

Constitutionality

- Executive Secretary vs CA (GR# 131719 05/25/04)

A profession, trade or calling is a property right within the meaning of our


constitutional guarantees. One cannot be deprived of the right to work and the
right to make a living because these rights are property rights, the arbitrary and
unwarranted deprivation of which normally constitutes an actionable wrong.

Nevertheless, no right is absolute, and the proper regulation of a profession,


calling, business or trade has always been upheld as a legitimate subject of a
valid exercise of the police power by the state particularly when their conduct
affects either the execution of legitimate governmental functions, the
preservation of the State, the public health and welfare and public morals.

The equal protection clause is directed principally against undue favor and
individual or class privilege. It is not intended to prohibit legislation which is
limited to the object to which it is directed or by the territory in which it is to
operate. It does not require absolute equality, but merely that all persons be
treated alike under like conditions both as to privileges conferred and liabilities
imposed.

- People vs Chowdury (01/15/00)

The elements of illegal recruitment in large scale are:

1. The accused undertook any recruitment activity defined under Art. 13(b) or
any prohibited practice enumerated under Art. 34 of the Labor Code;

2. He did not have a license or authority to lawfully engage in the recruitment


and placement of workers;

3. He committed the same against three (3) or more persons, individually or as


a group.

Q: Who are principals, accomplices and accessories described in Sec. 6 or R.A.


8042?
A: They are the same as those in Art. 17, 18, and 19 of the Revised Penal Code.

Q: Art. 20 of the RPC provides for Accessories who are exempt from Criminal
Liability, will this also apply here in R.A. 8042?
A:

Jurisdiction of Money Claims, Death Benefits, and other Benefits

SEC. 10. MONEY CLAIMS. Both withstanding any provision of law to the contrary,
the Labor Arbiters of the National Labor Relations Commission (NLRC) shall
have the original and exclusive jurisdiction to hear and decide, within
ninety (90) calendar days after filing of the complaint, the claims arising out of
an employer-employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment (prior to R.A. 8042, jurisdiction
was with the POEA and covered only Filipinos employed overseas) including
claims for actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement


agency for any and all claims under this section shall be joint and several. This
provisions shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to be filed
by the recruitment/placement agency, as provided by law, shall be answerable for
all money claims or damages that may be awarded to the workers. 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.

Such liabilities shall continue during the entire period or duration of the
employment contract and shall not be affected by any substitution, amendment
or modification made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary agreement on
money claims inclusive of damages under this section shall be paid within four (4)
months from the approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or


authorized cause as defined by law or contract, the workers shall be entitled to
the full reimbursement of his placement fee with interest of twelve percent (12%)
per annum, plus his salaries for the unexpired portion of his employment contract
or for three (3) months for every year of the unexpired term, whichever is less.

Non-compliance with the mandatory periods for resolutions of cases


provided under this section shall subject the responsible officials to any or all of
the following penalties:

a. The salary of any such official who fails to render his decision or
resolutions within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;
b. Suspension for not more than ninety (90) days; or
c. Dismissal from the service with disqualifications to hold any
appointive public office for five (5) years.

Provided, however, that the penalties herein provided shall be without


prejudice to any liability which any such official may have incurred under other
existing laws or rules and regulations as a consequence of violating the provisions
of this paragraph.

Jurisdiction over Disciplinary Actions of OFWs


(Sec. 1, Rule VII, Book VII, POEA Rules and Regulations - Old)

R.A. 8042 has transferred from the POEA to the NLRC the jurisdiction over OFWs
claims arising from employer-employee relationship. But POEA retains original
and exclusive jurisdiction over cases involving violations of POEA Rules
and Regulations, disciplinary cases and other cases that are
administrative in character involving OFWs.

Thus, POEA performs regulatory, enforcement, and limited or special adjudicatory


functions.

What are grounds for disciplinary actions? (PUG is VVECs TO GOD)


(Sec. 2, Rule VII, Book VII, POEA Rules and Regulations - Old)

1) Prostitution;
2) Unjust refusal to depart for the worksite;
3) Gunruning or possession of deadly weapons;
4) Vandalism or destroying company property;
5) Violation of the laws and sacred practices of the host country and
unjustified breach of employment contract;
6) Embezzlement of funds of the company or fellow worker entrusted for
delivery to relatives in the Philippines;
7) Creating trouble at the worksite or in the vessel;
8) Gambling;
9) Initiating or joining a strike or work stoppage where the laws of the
host country prohibit strikes or similar actions;
10) Commission of Felony punishable by Philippine Laws or by the host
country;
11) Theft or robbery;
12) Drunkenness;
13) Drug Addiction or possession or trafficking of prohibited drugs; and
14) Desertion or abandonment

What are beyond the jurisdiction of the POEA?


No jurisdiction to enforce Foreign Judgment (RTCs have jurisdiction
Art. 221 Labor Code)
No jurisdiction over Torts (McKenzie vs Cui GR# 48831 02/06/89)

Liability of Local Recruitment Agency and Foreign Principal

Liability of recruitment agency


(Sec. 10, Rule V, Book I, Implementing Regulations of the Labor Code)

The recruitment agency is solidarily liable with the foreign principal for unpaid
salaries of worker it recruited. Before recruiting, the agency is required to
submit a document containing its power to sue and to be sued jointly and
solidarily with the principal or foreign-based employer for any of the violations
of the recruitment agreement, and the contracts of employment.

(Sec. 10(par.2) of R.A. 8042)


The liability of the principal/employer and the recruitment/placement agency
for any and all claims under this section shall be joint and several.

Nota Bene:

The recruitment agency may still be sued even if the agency agreement
between recruitment agency and the principal is already severed if no notice
of the termination was given to the employee based on Article 1921 of the
New Civil Code. (Catan vs. NLRC)

Contract by Principal
Even if it was the principal of the manning agency who entered into contract
with the employee, the manning agent in the Philippines is jointly and
severally liable with the principal. (Seagull Maritime Corp. vs. Balatongan)

Suability of Foreign Corporation


A foreign corporation that, through unlicensed agents, recruits, workers in the
country may be sued in and found liable by Philippine courts. (Facilities
Management Corp. vs. De La Osa)

Entities Authorized to Engage in Recruitment and Placement

General Rule: No person or entity shall engage in the recruitment and


placement of workers, locally and overseas.

Exceptions:

1. Public employment offices;


2. Private recruitment entities;
3. Private employment agencies;
4. Shipping or manning agents or representative;
5. POEA;
6. Construction contractors if authorized by the DOLE and the
Construction Industry Authority;
7. Members of the diplomatic corps (but hiring must also go through
POEA);
8. Other persons or entities as may be authorized by the DOLE Secretary;
and
9. Name hirees

Country Team Approach


(Sec. 27-28 of R.A. 8042)

SEC. 27. PRIORITY CONCERNS OF PHILIPPINE FOREIGN SERVICE POSTS. - The


country team approach, as enunciated under Executive Order No. 74, series of
1993, shall be the mode under which Philippine embassies or their personnel will
operate in the protection of the Filipino migrant workers as well as in the
promotion of their welfare. The protection of the Filipino migrant workers and the
promotion of their welfare, in particular, and the protection of the dignity and
fundamental rights and freedoms of the Filipino citizen abroad, in general, shall
be the highest priority concerns of the Secretary of Foreign Affairs and the
Philippine Foreign Service Posts.

SEC. 28. COUNTRY-TEAM APPROACH. - Under the country-team approach, all


officers, representatives and personnel of the Philippine government posted
abroad regardless of their mother agencies shall, on a per country basis, act as
one country-team with a mission under the leadership of the ambassador. In this
regard, the ambassador may recommend to the Secretary of the Department of
Foreign Affairs the recall of officers, representatives and personnel of the
Philippine government posted abroad for acts inimical to the national interest
such as, but not limited to, failure to provide the necessary services to protect the
rights of overseas Filipinos.

Upon receipt of the recommendation of the ambassador, the Secretary of the


Department of Foreign Affairs shall, in the case of officers, representatives and
personnel of other departments, endorse such recommendation to the
department secretary concerned for appropriate action. Pending investigation by
an appropriate body in the Philippines, the person recommended for recall may
be placed under preventive suspension by the ambassador.

In host countries where there are Philippine consulates, such consulates shall also
constitute part of the country-team under the leadership of the ambassador.

In the implementation of the country-team approach, visiting Philippine


delegations shall be provided full support and information.

2. Effect of Absence of Consideration

- People vs Piedra (01/24/00)

The fact that appellant did not receive any payment for the promised or offered
employment is f no moment. From the language of the statute, the act of
recruitment may be "for profit or not"; it suffices that the accused "promises or
offers for a fee employment" to warrant conviction for illegal recruitment. (Sec. 6
of R.A. 8042)

3. Illegal Recruitment

Definition
(Sec. 6 of R.A. 8042)

DEFINITIONS. - For purposes of this Act, illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting, utilizing, hiring, procuring
workers and includes referring, contact services, promising or advertising for
employment abroad, whether for profit or not, when undertaken by a non-license
or non-holder of authority contemplated under Article 13(f) of Presidential Decree
No. 442, as amended, otherwise known as the Labor Code of the Philippines.
Provided, that such non-license or non-holder, who, in any manner, offers or
promises for a fee employment abroad to two or more persons shall be deemed
so engaged. It shall likewise include the following acts, whether committed by any
persons, whether a non-licensee, non-holder, licensee or holder of authority.

a. To charge or accept directly or indirectly any amount greater than the


specified in the schedule of allowable fees prescribed by the Secretary of
Labor and Employment, or to make a worker pay any amount greater than
that actually received by him as a loan or advance;
b. To furnish or publish any false notice or information or document in
relation to recruitment or employment;
c. To give any false notice, testimony, information or document or
commit any act of misrepresentation for the purpose of securing a license or
authority under the Labor Code;
d. To induce or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is designed to
liberate a worker from oppressive terms and conditions of employment;
e. To influence or attempt to influence any persons or entity not to
employ any worker who has not applied for employment through his agency;
f. To engage in the recruitment of placement of workers in jobs harmful
to public health or morality or to dignity of the Republic of the Philippines;
g. To obstruct or attempt to obstruct inspection by the Secretary of Labor
and Employment or by his duly authorized representative;
h. To fail to submit reports on the status of employment, placement
vacancies, remittances of foreign exchange earnings, separations from jobs,
departures and such other matters or information as may be required by the
Secretary of Labor and Employment;
i. To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and Employment
from the time of actual signing thereof by the parties up to and including the
period of the expiration of the same without the approval of the Department
of Labor and Employment;
j. For an officer or agent of a recruitment or placement agency to
become an officer or member of the Board of any corporation engaged in
travel agency or to be engaged directly on indirectly in the management of a
travel agency;
k. To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations other than those
authorized under the Labor Code and its implementing rules and regulations;
l. Failure to actually deploy without valid reasons as determined by the
Department of Labor and Employment; and
m. 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.
Illegal recruitment when committed by a syndicate or in large scale shall be
considered as offense involving economic sabotage.

Illegal recruitment is deemed committed by a syndicate carried out by a group of


three (3) or more persons conspiring or confederating with one another. It is
deemed committed in large scale if committed against three (3) or more persons
individually or as a group.

The persons criminally liable for the above offenses are the principals,
accomplices and accessories. In case of juridical persons, the officers having
control, management or direction of their business shall be liable.

Elements of Illegal Recruitment


(Sec. 6 of R.A. 8042)

A. The offender has no valid license or authority required by law to enable


one to engage lawfully in recruitment and placement of workers.
B. He or she undertakes either any activity within the meaning of
"recruitment and placement" defined under Art. 13(b), or any prohibited
practices enumerated under Art. 34 of the Labor Code. In case of illegal
recruitment in large scale, a third element is added: that the accused commits
the acts against three(3) or more persons, individually or as a group.

(ART. 13(b) Labor Code)


"Recruitment and placement" refers to any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring workers, and includes
referrals, contract services, promising or advertising for employment, locally or
abroad, whether for profit or not: Provided, That any person or entity which, in
any manner, offers or promises for a fee, employment to two or more persons
shall be deemed engaged in recruitment and placement.

(ART. 34, Labor Code)


Prohibited practices. - It shall be unlawful for any individual, entity, licensee, or
holder of authority:

(a) To charge or accept, directly or indirectly, any amount greater than


that specified in the schedule of allowable fees prescribed by the Secretary of
Labor, or to make a worker pay any amount greater than that actually
received by him as a loan or advance;

(b) To furnish or publish any false notice or information or document in


relation to recruitment or employment;

(c) To give any false notice, testimony, information or document or


commit any act of misrepresentation for the purpose of securing a license or
authority under this Code.

(d) To induce or attempt to induce a worker already employed to quit his


employment in order to offer him to another unless the transfer is designed to
liberate the worker from oppressive terms and conditions of employment;

(e) To influence or to attempt to influence any person or entity not to


employ any worker who has not applied for employment through his agency;

(f) To engage in the recruitment or placement of workers in jobs harmful


to public health or morality or to the dignity of the Republic of the Philippines;

(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor


or by his duly authorized representatives;

(h) To fail to file reports on the status of employment, placement


vacancies, remittance of foreign exchange earnings, separation from jobs,
departures and such other matters or information as may be required by the
Secretary of Labor.

(i) To substitute or alter employment contracts approved and verified by


the Department of Labor from the time of actual signing thereof by the parties
up to and including the periods of expiration of the same without the approval
of the Secretary of Labor;

(j) To become an officer or member of the Board of any corporation


engaged in travel agency or to be engaged directly or indirectly in the
management of a travel agency; and

(k) To withhold or deny travel documents from applicant workers before


departure for monetary or financial considerations other than those
authorized under this Code and its implementing rules and regulations.

Economic Sabotage
(People vs Buli-E)

When illegal recruitment is committed in large scale or when it is committed by a


syndicate, i.e., if it is carried out by a group of three or more persons conspiring
and/or confederating with one another, it is considered as an offense involving
economic sabotage.

Q: What is meant by Large Scale Illegal Recruitment?


A: The elements of illegal recruitment in large scale are:

1. The accused undertook any recruitment activity defined under Art.


13(b) or any prohibited practice enumerated under Art. 34 of the Labor
Code;
2. He did not have a license or authority to lawfully engage in the
recruitment and placement of workers;
3. He committed the same against three (3) or more persons, individually
or as a group.

Q: What is meant by a Syndicate?


A: Carried out by a group of three or more persons conspiring and/or
confederating with one another.

ILLEGAL RECRUITMENT ECONOMIC SABOTAGE


HOW
WHO

Prescriptive Period for Illegal Recruitment and Economic Sabotage


(R.A. 8042)

Illegal Recruitment Economic Sabotage


Prescriptive Period 5 Years (Sec. 12) 20 Years (Sec. 12)
Imprisonment Prison Mayor 6yrs 1 day Life Imprisonment (Sec.7)
to 12 yrs (Sec.7)
Fine 200,000 to 500,000 500,001 to 1,000,000
(Sec.7) (Sec.7)

Liabilities (Civil, Criminal, and Administrative)

- People vs BULI-E (404 SCRA 105)

Under Art. 13(b) of the Labor Code, recruitment and placement refer to any act
of canvassing, enlisting, contracting, transporting, utilizing hiring, or procuring
of workers, and includes referrals, contract services, promising or advertising
for employment, locally or abroad, whether for profit or not; provided that any
person or entity which, in any manner, offers or promises or a fee employment
to two or more persons shall be deemed engaged in recruitment or placement.

The elements of illegal recruitment in large scale are:

1. The accused undertook any recruitment activity defined under Art. 13(b) or
any prohibited practice enumerated under Art. 34 of the Labor Code;
2. He did not have a license or authority to lawfully engage in the recruitment
and placement of workers;
3. He committed the same against three (3) or more persons, individually or as
a group.

When illegal recruitment is committed in large scale or when it is committed by


a syndicate, i.e., if it is carried out by a group of three or more persons
conspiring and/or confederating with one another, it is considered as an offense
involving economic sabotage.

- People vs Baytic (398 SCRA 18)

Illegal recruitment is committed when two (2) elements concur.

First, the offender has no valid license or authority required by law to enable
one to engage lawfully in recruitment and placement of workers.

Second, he or she undertakes either any activity within the meaning of


"recruitment and placement" defined under Art. 13(b), or any prohibited
practices enumerated under Art. 34 of the Labor Code. In case of illegal
recruitment in large scale, a third element is added: that the accused commits
the acts against three (3) or more persons, individually or as a group.

- People vs Corpus (412 SCRA 479)

An employee of a company or corp. engaged in illegal recruitment may be held


liable as principal, together with his employer, if it is shown that he actively and
consciously participated in illegal recruitment. Settled is the rule that the
existence of the corporate entity does not shield from prosecution the corporate
agent who knowingly and intentionally causes the corp. to commit a crime.

The corp. obviously acts, and can act, only by and through its human agents,
and it is their conduct which the law must deter. The employee or agent of a
corp. engaged in unlawful business naturally aids and abets in the carrying on
of such business and will be prosecuted as principal if, with knowledge of the
business, its purpose and effect, he consciously contributes his efforts to its
conduct and promotion, however slight his contribution may be.

The law of Agency, as applied in civil cases, has no application in criminal cases,
and no man can escape punishment when he participates in the commission of
a crime upon the ground that he simply acted as an agent of any party. The
culpability of the employee therefore hinges on his knowledge of the offense
and his active participation in its commission.

Where it is shown that the employee was merely acting under the direction of
his superiors and was unaware that his acts constituted a crime, he may not be
held criminally liable for an act done for and in behalf of his employer.

- CRIMINAL CASE NOT A BAR TO CIVIL CASE

The estafa cases pending before the courts will not bar a prosecution for illegal
recruitment, since they are entirely different offenses and neither one
necessarily includes or is necessarily included in the other.

A person who is convicted of illegal recruitment may, in addition be convicted of


Estafa under Art. 315(a) or the Revised Penal Code. There is no problem of
jeopardy because illegal recruitment is malum prohibitum, in which criminal
intent is not necessary, whereas estafa is malum in se in which criminal intent
of the accused is necessary.
(People vs Crispin Billaber, GR# 114967-68 01/26/04)

- ADMINISTRATIVE LIABILITY

Sec. 1, Rule X, Book II of the Rules and Regulations Governing Overseas


Employment provides that "recruitment and placement activities of agents or
representatives appointed by a licensee, whose appointments were not
authorized by the Administration shall likewise constitute illegal recruitment."
(People vs Flor Gutierrez, GR# 124439 02/05/04)

- CRIMINAL LIABILITY

The following elements of Estafa under Art. 315(2-a) are also present in this
case for Illegal Recruitment, to wit:

1. The accused has defrauded the offended party my means of abuse of


confidence or by deceit;
2. As a result, damage or prejudice, which is capable of pecuniary estimation, is
caused to the offended party or third person.

Appelant misrepresented himself to Jaime Cabus and Roberto Perlas as one who
can make arrangements for job placements in Taiwan and Japan and, by reason
of such misrepresentations, the two complainants were induced to part with
their money, causing them damage.
(People vs Ramon Dujua, GR# 149014-16 02/05/04)

- People vs Leticia Sagayaga (GR# 143726 02/23/04)

- People vs Mario Alzona (GR# 132029 07/30/04)

- Rodolfo vs People (498 SCRA 377)


The act of referral, which is included in recruitment, is "the act of passing along
or forwarding of an applicant for employment after an initial interview of a
selected applicant for employment to a selected employer, placement officer or
bureau." Petitioner's admission that she brought private complainants to the
agency whose owner she knows and her acceptance of fees including those for
the processing betrays her guilt.

Q: Where is the Venue for Criminal Cases involving Illegal Recruitment?


A: The complainant may, at his option, file at the RTC of the province or city;

1. Where the offense was committed; or


2. Where the offended party; resides at the time of the
commission of the offense
()

C. WAGES
1. Basic Concept and Principles

Characteristics of Wages
(Art. 97(f) Labor Code)

"Wage" paid to any employee shall mean 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. "Fair and reasonable value" shall not include any profit to the
employer, or to any person affiliated with the employer.

NOTE: The last sentence of Art. 97 is the basis for the concept of FACILITIES.

FAIR DAYS WAGE FOR A FAIR DAYS LABOR


(Aklan Electric Coop vs NLRC)

If there is no work performed by the employee, there can be no wage or pay


UNLESS the laborer was able, willing, and ready to work but was illegally lock
out, suspended or dismissed otherwise illegally prevented from working.

Wage vs Salary

WAGE SALARY
Compensation for skilled or unskilled Paid to white collar workers or
manual labor; refers to WORKERS PROFESSIONALS and denote a higher
grade of employment
Under Art. 1708 Civil Code, it is not It is not exempt from execution,
subject to execution, garnishment or garnishment or attachment.
attachment.

EXCEPT:
For debts related to food, clothing,
shelter, medicines.

NOTE:

General Rule: Title 2 (Wages) applies to all employees.


Exceptions:
1. Farm tenancy or leasehold
2. Household or domestic helpers
3. Homeworkers engaged in needlework
4. Workers employed in any establishment duly registered with the
National Cottage Industry Development Authority (NCIDA)
5. Workers in duly registered cooperatives when so recommended by the
Bureau of Cooperative Development upon approval by the Sec. of Labor.
(Art. 98 Labor Code)
6. Workers of a Barangay Micro Business Enterprise (R.A. 9178
11/13/02)
7. Retail/Service establishments with less than ten(10) workers upon
application with the appropriate Regional Board. (Sec. 4 R.A. 6727)

Non-Diminution of Benefits

ART. 100 (Labor Code) Prohibition against elimination or diminution of benefits.


- Nothing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of
promulgation of this Code.

Concept
The principle of non-diminution of benefits states that: any benefit and
supplement being enjoyed by employees cannot be reduced, diminished,
discontinued or eliminated by the employer.

This principle is founded on the Constitutional mandate to protect the rights of


workers and promote their welfare, and to afford labor full protection. Said
mandate in turn is the basis of Article 4 of the Labor Code which states that all
doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations shall be rendered in favor of labor.

Benefit and supplement definition


Employee benefits are compensations given to employees in addition to regular
salaries or wages. Some benefits are legally required, e.g., social security
benefits, medicare, retirement benefits, maternity benefits, service incentive
leave, etc. Other benefits are offered by the employer as an incentive to attract
and retain employees as well as increase employee morale and improve job
performance.
Supplements include those benefits or privileges granted to an employee for the
convenience of the employer, e.g., board and lodging within the company
premises.

Common application
In employment setting, the principle of non-diminution of benefits finds
application when a change initiated by the employer to existing company policies,
specially matters concerning employee benefits, results in reduction, diminution
or withdrawal of some or all of the the benefits already enjoyed by the
employees. For example, if the employees of a certain company is traditionally
granted 14th month pay, and the employer subsequently withdrew such benefit,
or reduced its amount, the reduction or withdrawal is objectionable on the ground
that it would result to diminution of benefits.

Requirements
The application of the principle presupposes that a company practice, policy and
tradition favorable to the employees has been clearly established; and that the
payments made by the company pursuant to it have ripened into benefits
enjoyed by them.
To ripen into benefits, the following requisites must concur:
1. It should have been practiced over a long period of time; and
2. It must be shown to have been consistent and deliberate.

With regard to the length of time the company practice should have been
exercised to constitute voluntary employer practice which cannot be unilaterally
withdrawn by the employer, the Court has not laid down any rule requiring a
specific minimum number of years.

1. In the case of Davao Fruits Corporation vs Associated Labor


Unions (G.R. No. 85073, August 24, 1993), the company practice lasted for six
years.
2. In Davao Integrated Port Stevedoring Services vs. Abarquez (G.R. No.
102132, March 19, 1993), the employer, for three years and nine months,
approved the commutation to cash of the unenjoyed portion of the sick leave
with pay benefits of its Intermittent workers.
3. In Tiangco vs Leogardo, Jr. (G.R. No. L-57636, May 16, 1983), the
employer carried on the practice of giving a fixed monthly emergency
allowance from November 1976 to February 1980, or three years and four
months.
4. In the case of Sevilla Trading Company vs Semana, ibid., the employer
kept the practice of including non-basic benefits such as paid leaves for
unused sick leave and vacation in the computation of their 13th-month pay for
at least two (2) years.

In all these cases, the grant of benefits has been held to have ripened into
company practice or policy which cannot be peremptorily withdrawn.

- CONDITIONS TO DETEMINE WHEN THERE IS DIMINUTION OF BENEFITS

Diminution of benefits is a unilateral withdrawal by the employer of benefits


already enjoyed by the employee. There is diminution if:

a) The grant is founded on policy or ripened into practice.


b) The practice is consistent and deliberate.
c) The practice is not due to error in construction or application of a
doubtful or difficult question of law.
d) The diminution or discontinuation is unilaterally done by the employer.

In this case, the overpayment of the employees was a result of an error, hence
there is no diminution.
(TSPIC Corp. vs TSPIC Employees Union, GR# 163419 02/13/08)

- WHAT IS MEANT BY CUSTOMARY OR RIPENED INTO PRACTICE?

"Customary" is founded on long-established and constant practice connoting


regularity.

The receipt of an allowance on a monthly basis does not ispo facto characterize
it as regular and forming part of salary because the nature of the grant is a
factor worth considering. We agree with the observation of the Office of the
Solicitor General that the subject allowances were temporarily, not regularly
received by petitioners because - in the case of housing allowance, once a
vacancy occurs in the company provided housing accommodations, the
employee concerned transfers to the company premises and his housing
allowance is discontinued.

On the other hand, the transportation allowance is in the form of advances for
actual transportation expenses subject to liquidation given only to employees
who have personal cars. The Bislig allowance is given to Division Managers and
corporate officers assigned in Bislig, Surigao del Norte. Once the officer is
transferred outside of Bislig, the allowance stops.

When the conditions for the availment of the allowances ceased to exist, the
allowance likewise ceased. Petitioners continuous enjoyment of the disputed
allowances was based on contingencies, and hence are not part of wages and
may be eliminates.
(Millares vs NLRC - 03/29/99)
- DIMINUTION MAY MEAN THAT ONE GROUP IS GIVEN MORE THAN
ANOTHER EVEN THOUGH BOTH PERFORM THE SAME FUNCTION

Q: A school employs both local-hire and foreign-hire teachers. The foreign-hire


teachers were given an added 25% in their salary and some benefits like
transportation and housing, shipping costs etc. These were given based on two
things: dislocation and limited tenure. The added compensation was the
schools way of remaining competitive on an international level in terms of
attracting competent teachers. The local-hire teachers, part of the union
contested the difference, a deadlock resulted so the teachers went on strike. Is
there discrimination in terms of wages?

A: Yes, there is discrimination. The principle equal pay for equal work should
apply in this case. Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar
salaries. If an employee is paid less it is upon the employer to explain why the
employee is treated differently. Dislocation and limited tenure cannot serve as
adequate or valid bases for the difference in the salary rates. The other
benefits are enough to make up for these two factors. There is no reasonable
distinction between the work of a local-hire and a foreign-hire that will justify
the difference.
(Intl School Alliance of Educators vs Quisumbing - 06/01/00)

- Aklan Electric Cooperative vs NLRC (01/25/99)

Methods of Fixing Compensation


(Art. 97 Labor Code)

a. Time Spent (Daily and Monthly paid workers)


b. Commission - Direct remuneration received by an agent, salesman,
executor, broker, or trustee calculated as a percentage on the amount of his
transactions or on the profit to the principal.
c. Task basis (Art. 101 Labor Code)
d. Piece-rate basis (Art. 101 Labor Code)

ART. 101. Payment by results. - (a) The Secretary of Labor and Employment
shall regulate the payment of wages by results, including pakyao, piecework,
and other non-time work, in order to ensure the payment of fair and
reasonable wage rates, preferably through time and motion studies or in
consultation with representatives of workers and employers organizations.

2. Facilities and Supplements

FACILITIES shall include all articles or services for the benefit of the
employee or his family but shall not include tools of the trade or articles or
services primarily for the benefit of the employer or necessary to the conduct of
the employers business. These are DEDUCTIBLE from wages.
(Sec. 5, Rule VII, Book III, IRR)

Requirements for Deducting Amount of Facilities (Mabeza vs NLRC):

Proof must be shown that such facilities are customarily furnished by


the trade.
The provision of deductible facilities must be voluntarily accepted in
writing by the employee.
The facilities must be charged at a fair and reasonable value.

SUPPLEMENTS - constitute extra remuneration or special privileges or


benefits given to or received by the laborers over and above their ordinary
earnings. These are NOT DEDUCTIBLE from wages.

- REQUISITES FOR VALID DEDUCTION OF FACILITIES


Granting that meals and lodging were provided and indeed constituted facilities,
such facilities could not be deducted without the employer complying first with
certain legal requirements:

1. Proof must be shown that such facilities are customarily furnished by the trade
2. The provision of deductible facilities must be voluntarily accepted in writing by
the employee
3. Facilities must be charged at fair and reasonable value
(Mabeza vs NLRC, GR# 118506 04/18/97)

- Cebu Autobus Co. vs United Cebu Autobus Employees Assoc. (GR# 9742
10/27/55)

- HOW TO DETERMINE WHETHER IT IS A SUPPLEMENT OF A FACILITY

In determining whether a benefit or privilege is a supplement or a facility, the


criterion is not the kind of benefit or item but its purpose. The benefit given to
employees which constitutes an extra remuneration above and over his basic or
ordinary wage is a supplement; and if it forms part of the employees basic wage, it
is a facility.

Therefore, no deduction should be made from the wages of the members of a


commercial ship for meals freely given them by their employer, not as part of their
wages but as a necessary matter in the maintenance of their health and efficiency,
such benefit being in the nature of a supplement.
(States Marine Corp. vs Cebu Seamens Assn. Inc., GR# 12444 02/28/63)

Foods or snacks or other convenience provided by the employers are deemed as


supplements if they are granted for the convenience of the employer - the criterion
in making a distinction between a supplement and a facility does not so much lie in
the kind, but the purpose.

Considering therefore that hotel workers are required to work different shifts and
are expected to be available at various odd hours, their ready availability is a
necessary matter in the operations of a small hotel such as petitioners business.
The deduction of the cost of meals from respondents wages, therefore, should be
removed.
(Mayon Hotel & Restaurant vs Adana, GR# 157634 05/16/05)

3. Procedure in Fixing the Minimum Wage

ART. 122. Labor Code. Creation of Regional Tripartite Wages and Productivity
Boards. - There is hereby created Regional Tripartite Wages and Productivity
Boards, hereinafter referred to as Regional Boards, in all regions, including
autonomous regions as may be established by law. The Commission shall
determine the offices/headquarters of the respective Regional Boards.

The Regional Boards shall have the following powers and functions in their
respective territorial jurisdictions:

a. To develop plans, programs and projects relative to wages, incomes


and productivity improvement for their respective regions;

b. To determine and fix minimum wage rates applicable in their regions,


provinces or industries therein and to issue the corresponding wage orders,
subject to guidelines issued by the Commission;

c. To undertake studies, researches, and surveys necessary for the


attainment of their functions, objectives and programs, and to collect and
compile data on wages, incomes, productivity and other related information
and periodically disseminate the same;
d. To coordinate with the other Regional Boards as may be necessary to
attain the policy and intention of this Code;

e. To receive, process and act on applications for exemption from


prescribed wage rates as may be provided by law or any Wage Order; and

f. To exercise such other powers and functions as may be necessary to


carry out their mandate under this Code.

Implementation of the plans, programs, and projects of the Regional Boards


referred to in the second paragraph, letter (a) of this Article, shall be through the
respective regional offices of the Department of Labor and Employment within
their territorial jurisdiction; Provided, however, That the Regional Boards shall
have technical supervision over the regional office of the Department of Labor
and Employment with respect to the implementation of said plans, programs and
projects.

(Composition)
Each Regional Board shall be composed of the Regional Director of the
Department of Labor and Employment as chairman, the Regional Directors
of the National Economic and Development Authority and the Department
of Trade and Industry as vice-chairmen and two (2) members each from
workers and employers sectors who shall be appointed by the President of
the Philippines, upon the recommendation of the Secretary of Labor and
Employment, to be made on the basis of the list of nominees submitted by the
workers and employers sectors, respectively, and who shall serve for a term of
five (5) years.

Each Regional Board to be headed by its chairman shall be assisted by a


Secretariat. (As amended by Republic Act No. 6727, June 9, 1989).

Q: Who shall comprise the RTWPB?


A: Regional Director of DOLE
Regional Director of NEDA
Regional Director of DTI
2 Members from the Employees Sector
2 Members from the Employers Sector
Secretariat

Q: Who determines the Minimum Wage?


A: RTWPB Regional Tripartite Wages & Productivity Board in conjunction with the
NWPC National Wages & Productivity Board. Also CONGRESS may enact
legislation to set the minimum wage.

Q: How is an increase in the minimum wage initiated?


A: By a PETITION or Moto Proprio by the Board.

Q: Who can Petition the RTWPB?


A: Labor Groups, or Employer with substantial business interests in the affected
region

a) Issuance of Wage Order

Within 30 days after the conclusion of the last hearing, the RTWPB shall
decide on the merits of the petition, and where appropriate, issue a wage
order establishing the regional minimum wage rates to be paid by employers,
which shall in no case be lower than the applicable statutory minimum wage
rates. The Wage Order may include wages by industry, province or locality as
may be deemed necessary by the Board.
The RTWPB shall furnish the NWPC a copy of the decision on the petition or
the Wage Order.

b) Contents of Wage Order


A Wage Order shall specify the region, province, or industry to which
the minimum wage rates prescribed under the Order shall apply and provide
exemptions, if any, subject to guidelines issued by the NWPC.

c) Frequency of Wage Order

Any Wage Order issued by the RTWPB may not be disturbed for a
period of 12 months from its Effectivity, and no petition for wage increase
shall be entertained within said period.
Except:
Supervening conditions (i.e., increase in price of gas, basic commodities,
etc.)
Congress itself issues a law increasing wages.

d) Effectivity of Wage Order

The Wage Order shall take effect 15 days after its publication in at
least 1 newspaper of general circulation in the Region.

e) Implementing Rules/Regulations of the Wage Order

The RTWPB shall prepare, for approval of the Sec. of Labor, upon
recommendation of the Commissioner, the necessary Implementing Rules and
Regulations, not later than 10 days from the issuance of the Wage Order.
The Sec. of Labor shall act on the Rules within 20 days from his receipt
thereof.
Once approve, it shall be published in at least 1 newspaper of general
circulation.

f) Review of Wage Order

The NWPC may review the Wage Order upon APPEAL or MOTO
PROPRIO.
Grounds for filing an appeal:
a) Non-conformity with prescribed guidelines and/or procedure
b) Questions of law
c) Grave abuse of discretion
(Rule V, Revised Rules of Procedure on Minimum Wage Fixing 11/29/95)
An appeal will not stay the order unless the appellant files adequate
surety.

Regionalized (through RTWPB Regional Tripartite Wages & Productivity


Board) vs Legislated Wage Fixing

Factors in Determination of Minimum Wage Fixing


(Art. 124 Labor Code)

Art. 124 Standards/Criteria for minimum wage fixing. - The regional minimum
wages to be established by the Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum standards of living necessary for
the health, efficiency and general well-being of the employees within the
framework of the national economic and social development program. In the
determination of such regional minimum wages, the Regional Board shall, among
other relevant factors, consider the following:

a. The demand for living wages;


b. Wage adjustment vis--vis the consumer price index;
c. The cost of living and changes or increases therein;
d. The needs of workers and their families;
e. The need to induce industries to invest in the countryside;
f. Improvements in standards of living;
g. The prevailing wage levels;
h. Fair return of the capital invested and capacity to pay of employers;
i. Effects on employment generation and family income; and
j. The equitable distribution of income and wealth along the imperatives of
economic and social development.

The wages prescribed in accordance with the provisions of this Title shall be the
standard prevailing minimum wages in every region. These wages shall include
wages varying with industries, provinces or localities if in the judgment of the
Regional Board, conditions make such local differentiation proper and necessary
to effectuate the purpose of this Title.

Any person, company, corporation, partnership or any other entity engaged in


business shall file and register annually with the appropriate Regional Board,
Commission and the National Statistics Office, an itemized listing of their labor
component, specifying the names of their workers and employees below the
managerial level, including learners, apprentices and disabled/handicapped
workers who were hired under the terms prescribed in the employment contracts,
and their corresponding salaries and wages.

Where the application of any prescribed wage increase by virtue of a law or wage
order issued by any Regional Board results in distortions of the wage structure
within an establishment, the employer and the union shall negotiate to correct
the distortions. Any dispute arising from wage distortions shall be resolved
through the grievance procedure under their collective bargaining agreement
and, if it remains unresolved, through voluntary arbitration. Unless otherwise
agreed by the parties in writing, such dispute shall be decided by the voluntary
arbitrators within ten (10) calendar days from the time said dispute was referred
to voluntary arbitration.

In cases where there are no collective agreements or recognized labor unions, the
employers and workers shall endeavor to correct such distortions. Any dispute
arising therefrom shall be settled through the National Conciliation and Mediation
Board and, if it remains unresolved after ten (10) calendar days of conciliation,
shall be referred to the appropriate branch of the National Labor Relations
Commission (NLRC). It shall be mandatory for the NLRC to conduct continuous
hearings and decide the dispute within twenty (20) calendar days from the time
said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of any increase in prescribed wage rates pursuant to the
provisions of law or wage order.

As used herein, a wage distortion shall mean a situation where an increase in


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

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

All recognized learnership and apprenticeship agreements shall be considered


automatically modified insofar as their wage clauses are concerned to reflect the
prescribed wage rates. (As amended by Republic Act No. 6727, June 9, 1989).

Wage Order and Appeal


(Art. 123 Labor Code)

ART. 123. Wage Order. - Whenever conditions in the region so warrant, the
Regional Board shall investigate and study all pertinent facts; and based on the
standards and criteria herein prescribed, shall proceed to determine whether a
Wage Order should be issued. Any such Wage Order shall take effect after fifteen
(15) days from its complete publication in at least one (1) newspaper of general
circulation in the region.

In the performance of its wage-determining functions, the Regional Board shall


conduct public hearings/consultations, giving notices to employees and
employers groups, provincial, city and municipal officials and other interested
parties.

Any party aggrieved by the Wage Order issued by the Regional Board may appeal
such order to the Commission within ten (10) calendar days from the publication
of such order. It shall be mandatory for the Commission to decide such appeal
within sixty (60) calendar days from the filing thereof.

The filing of the appeal does not stay the order unless the person appealing such
order shall file with the Commission, an undertaking with a surety or sureties
satisfactory to the Commission for the payment to the employees affected by the
order of the corresponding increase, in the event such order is affirmed. (As
amended by Republic Act No. 6727, June 9, 1989).

Effectivity of Wage Order

A Wage Order shall take effect fifteen (15) days after its publication in at least 1
newspaper of general circulation in the Region.

- Jaguar Security & Investigation Agency vs Sales (GR# 162420


04/22/08)

4. Wage Distortion

Definition

ART. 124 Labor Code - Where the application of any prescribed wage increase
by virtue of a law or wage order issued by any Regional Board results in
distortions of the wage structure within an establishment, the employer and the
union shall negotiate to correct the distortions. Any dispute arising from wage
distortions shall be resolved through the grievance procedure under their
collective bargaining agreement and, if it remains unresolved, through voluntary
arbitration. Unless otherwise agreed by the parties in writing, such dispute shall
be decided by the voluntary arbitrators within ten (10) calendar days from the
time said dispute was referred to voluntary arbitration.

It is a situation where an increase in prescribed wage rates results in


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

Elements of Wage Distortion

a) An existing hierarchy of positions with corresponding salary rates.


b) A significant change or increase in the salary rate of a lower pay class
without a corresponding increase in the salary rate of a higher class.
c) The elimination of the distinction between the two groups or classes.
d) The distortion exists in the same region of the country.

How to Resolve Wage Distortion (Organized and Unorganized


Establishments)
(Sec. 7, R.A. 6727)

Wage Distortions. Where the application of any wage increase resulting from a
Wage Order issued by any Board results in distortions in the wage structure
within an establishment, the employer and the union shall negotiate to correct
the distortions using the grievance procedure under the collective bargaining
agreement. If it remains unresolved, it shall be decided through voluntary
arbitration within ten calendar days from the time the dispute was referred for
voluntary arbitration, unless otherwise agreed by the parties in writing.

Where there are no collective agreements or recognized labor unions, the


employer and workers shall endeavor to correct the wage distortion. Any dispute
arising therefrom shall be settled through the National Conciliation and Mediation
Board and if it remains unresolved after ten calendar days of conciliation, it shall
be referred to the appropriate branch of the National Labor Relations Commission
(NLRC). The NLRC shall conduct continuous hearings and decide the dispute
within twenty calendar days from the time said dispute is submitted for
compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of any wage increase prescribed pursuant to the provisions
of law or Wage Order.

ORGANIZED ESTABLISHEMENTS: (Sec. 7(par. 1), R.A. 6727)


Employer and Union shall negotiate to correct the distortion.
Any dispute arising therefrom should be resolved through a grievance
procedure in the CBA.
If the dispute remains unresolved, it shall be resolved through
VOLUNTARY ARBITRATION.

UNORGANIZED ESTABLISHMENTS: (Sec. 7(par. 2), R.A. 6727)


The employers and workers shall endeavor to correct the distortion.
Any dispute arising therefrom shall be settled through the NCMB.
If it remains unresolved after 10 days, it shall be referred to the NLRC.

- ELEMENTS OF WAGE DISTORTION

Wage distortion presupposes a classification of positions and ranking of these


positions with corresponding ranks basically in terms of wages and other
emoluments. Where a significant change occurs at the lowest level of positions
in terms of basic wage without a corresponding change in the other level in the
hierarchy of positions, negating as a result thereof the distinction between one
level of positions from the next higher level, and resulting in a parity between
the lowest level and the next higher level or rank, between new entrants and
old hires, there is exists a wage distortion.

Wage Distortion involves 4 Elements:


1. An existing hierarchy of positions with corresponding salary rates.
2. A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one.
3. The elimination of the distinction between the 2 levels.
4. The existence of the distortion in the same region of the country.

In the present case, it is clear that no wage distortion resulted when respondent
implemented the subject Wage Orders in the covered branches. In the said
branches, there was an increase in the salary rates of all pay classes.
Furthermore, the hierarchy of positions based on skills, length of service, and
other logical bases of differentiation was preserved. In other words, the
quantitative difference in compensation between different pay classes remained
the same in all branches in the affected region.

A wage disparity between employees in different rungs is not at issue here, but
a wage disparity between employees in the same rung but located in different
regions of the country. Contrary to petitioners postulation, a disparity in wages
between employees holding similar positions but in different regions does not
constitute wage distortion as contemplated by law. As previously enunciated, it
is the hierarchy of positions and the disparity of their corresponding wages and
other emoluments that are sought to be preserved by the concept of wage
distortion. Put differently, a wage distortion arises when a wage order
engenders wage parity between employees in different rungs of the
organizational ladder of the same establishment. It bears emphasis that wage
distortion involves a parity in the salary rates of different pay classes which, as
a result, eliminates the distinction between the different ranks in the same
region.
(Prubankers Assoc. vs Prudential Bank, 01/25/99)

- REQUIREMENT TO RECTIFY WAGE DISTORTION

Normally, a company has a wage structure or method of determining wages of


its employees. In a problem dealing with "wage distortion", the basic
assumption is that there exists a grouping or classification of employees that
establishes distinctions among them on some relevant or legitimate bases.

For purposes of determining the existence of wage distortion, employees cannot


create their own independent classification and use it as a basis to demand an
across-the-board increase in salary.

The formulation of a wage structure through the classification of employees is a


matter of management judgment and discretion.

The mere factual existence of wage distortion does not, however, ipso facto
result in an obligation to rectify it, absent a law or other source of obligation
which requires its rectification. Unlike in Metro Transit(case) where there
existed a "company practice", no such management practice is herein alleged
to obligate Bankard to provide an across-the-board increase to all its regular
employees.
(Bankard Employees Union vs NLRC, GR# 140689 02/17/04)

- MANNER OF RESOLVING WAGE DISTORTION

The re-establishment of a significant gap or differential between regular


employees and casual employees by operation of the CBA was more than
substantial compliance with the requirements of the several Wage Orders and
of Art. 124 of the Labor Code.

The fact that the re-establishment was the result of collective bargaining
negotiations, instead of through a special grievance procedure, is not sufficient
legal basis for rejecting such re-establishment.
(P.I. Mfg. Inc. vs PIMSFA, GR# 167217 02/04/08)

- TSPIC Corp. vs TSPIC-EU (GR# 163419 02/13/08)

- TWO METHODS FOR FIXING WAGE DISTORTION

Workers already being paid more than the existing minimum wage (up to a
certain amount stated in the Wage Order) are also to be given a wage increase.
The Court said that there are 2 ways to fix minimum wage:
1. The "floor-wage" method, which involves the fixing of a determinate
amount to be added to the prevailing statutory minimum wage rates, and
2. The "salary-ceiling" method, where the wage adjustment was to be
applied to employees receiving a certain denominated salary ceiling.

In line with its declared policy, R.A. 6727 created the NWPC, vested with the
power to prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the Regional, Provincial, or
Industry levels; and authorized the RTWPB to determine and fix the minimum
wage rates applicable in their respective Regions, Province, or Industries therein
and issue the corresponding Wage Orders, subject to the guidelines issued by
the NWPC.

The RTWPB, pursuant to its wage fixing authority, may issue Wage Orders which
set the daily minimum wage rates, based on the standards of criteria set by Art.
124 of the Labor Code.
(Metrobank Inc. vs NWPC, GR# 144322 02/06/07)

- Norkis Free & Independent Workers Union vs Norkis Trading Co. (GR#
157098 06/30/05)

Notably, the RTWPB was interpreting only its own issuance, not a statutory
provision. The best authority to construe a rule or an issuance is the very
source, in this case the RTWPB. Without a doubt, the RTWPB, like any other
executive agency, has the authority to interpret its own rules and issuances;
any phrase contained in its interpretation becomes a part of those rules or
issuances themselves.

Therefore, it was proper for the CA to consider the letter written by the RTWPB
to explain the scope and import of the latters own Order, as such interpretation
is deemed part of the Order itself.

5. Exemption from Minimum Wage Law

Art. 98 Labor Code

Application of Title. - This Title shall not apply to farm tenancy or leasehold,
domestic service and persons working in their respective homes in needle work or
in any cottage industry duly registered in accordance with law.

General Rule: Title 2 (Wages) applies to all employees.

Exceptions:
1. Farm tenancy or leasehold
2. Household or domestic helpers
3. Homeworkers engaged in needlework
4. Workers employed in any establishment duly registered with the
National Cottage Industry Development Authority (NCIDA)
5. Workers in duly registered cooperatives when so recommended by the
Bureau of Cooperative Development upon approval by the Sec. of Labor.
(Art. 98 Labor Code)
6. Workers of a Barangay Micro Business Enterprise (R.A. 9178
11/13/02)
7. Retail/Service establishments with less than ten (10) workers upon
application with the appropriate Regional Board. (Sec. 4, R.A. 6727)

NWPC Guidelines No. 01 Series of 1996

NWPC Guidelines No. 001-95


REVISED RULES OF PROCEDURE ON MINIMUM WAGE FIXING
Pursuant to Article 121(c) of the Labor Code as amended by Section 3 of R.A.
6727, the National Wages and Productivity Commission hereby adopts and
promulgates the following revised rules of procedure governing the
proceedings in the Commission and the Regional Tripartite Wages and
Productivity Boards in the fixing of minimum wage rates by region, province,
or industry.

RULE I
GENERAL PROVISIONS
Section 3. Scope. This Rules shall govern proceedings in the National Wages
and Productivity Commission and the Regional Tripartite Wages and
Productivity Boards in the fixing of minimum wage rates.
Section 4. Definition of Terms. As used in this Rules:

a) "Act means Republic No. 6727;

b) "Board" means the Regional Tripartite Wages and Productivity Board;

c) "Commission" means the National Wages and Productivity Commission;

d) "Chairman" means Chairman of the Commission;

e) "Member" refers to the members of the Commission or Board, including its


Chairman;

f) "Regional Chairman" means the Chairman of the Board;

g) "Party" means any legitimate organization of workers or employers with


substantial interest in the region, province or industry therein as determined by the
Board, and who stands to be directly affected by the Commission/Board proceedings,
order, decision or resolutions;

h) "Industry" refers to a trade, business or a sector thereof, or group of


businesses in similar or allied activities in which individuals are gainfully employed;

i) "Locality" refers to a geographical area smaller than a province and includes


industrial estates/export processing zones;

j) "Region" refers to a geographical area composed of a group provinces and/or


cities as defined under Presidential Decree No. 1, as amended, including those that
may be subsequently established by law;

k) "Regional Minimum Wage Rates" refer to the lowest basic wage rates that an
employer can pay his workers, as fixed by the Board which shall not be lower than
the applicable statutory minimum wage rates;

l) "Statutory Minimum Wages" refer to the lowest basic wages as provided by


law;

m) "Wage Distortion" shall mean a situation where an increase in prescribed


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

n) "Wage Order" refers to the Order promulgated by the Board pursuant to its
wage
fixing authority.

RULE II

MINIMUM WAGE FIXING


Section 1. Conduct of Wage and Productivity Studies. The Board shall,
subject to guidelines issued by the Commission, conduct continuing studies of
wage rates, productivity and other conditions in the region, provinces or
industries therein. The Board shall investigate and study all pertinent facts,
and based on standards and criteria prescribed under Section 2 of this Rule,
shall determine whether a wage order should be issued.
Section 2. Standards/Criteria for Minimum Wage Fixing. The minimum wage
rates to be established by the Board shall be as nearly adequate as is
economically feasible to maintain the minimum standards of living necessary
for the health, efficiency and general well-being of the workers within the
framework of national economic and social development goals. In the
determination of regional minimum wages, the Board shall, among other
relevant factors, consider the following:

(a) Needs for workers and their families


1) Demand for living wages
2) Wage adjustment vis--vis the consumer price
index
3) Cost of living and changes therein
4) Needs of workers and their families
5) Improvements in standards of living
(b) Capacity to Pay
1) Fair return on capital invested and capacity to
pay of employers
2) Productivity
(c) Comparable wages and incomes
1) Prevailing wage levels
(d) Requirements of economic and social development
1) Need to induce industries to invest in the
countryside
2) Effects on employment generation and family
income
3) Equitable distribution of income and wealth along
the imperatives of economic and social
development
Section 3. Procedures in Minimum Wage Fixing.
(a) Motu Proprio by the Board
Whenever conditions in the region, province or industry so warrant, the
Board may, motu propio or as directed by the Commission, initiate action
or inquiry to determine whether a wage order should be issued. The Board
shall conduct public hearings in the manner prescribed under this Rule and
Rule III. The Board may also conduct consultations with concerned sectors/
industries.
(b) By Virtue of a Petition Filed
1) FORM AND CONTENT OF PETITION.
Any party may file a verified petition for wage increase with the appropriate
Board in ten (10) typewritten legible copies which shall contain the following:

(a) name/s, and address/es of petitioner/s and signature/s of authorized official/s;


(b) grounds relied upon to justify the increase being sought;
(c) amount of increase being sought;
(d) area and/or industry covered.

2) BOARD ACTION.
If the petition conforms with the requirements prescribed in the preceding
sub-section b.1., the Board shall conduct public hearings in the manner
prescribed under this Rule and Rule III, to determine whether a wage order
should be issued. The Board may also conduct consultations with concerned
sectors/industries.
3) PUBLICATION OF NOTICE OF PETITION/PUBLIC HEARING.
A notice of the petition and/or public hearing shall be published in a
newspaper of general circulation in the region and/or posted in public places
as determined by the Board. The notice shall include the name/s and
address/es of the petitioner/s, the subject of the petition and the date/s,
place/s and time of the hearings. The publication or posting shall be made at
least fifteen (15) days before the date of initial hearing and shall be in
accordance with the suggested form attached as Annex "A".
4) OPPOSITION.
Any party may file his opposition to the petition on or before the initial
hearing, copy furnished the petitioner/s. The opposition shall be filed with the
appropriate Board in ten (10) typewritten legible copies which shall contain
the following:
(a) name/s and address/es of the oppositor/s and signature/s of
authorized official/s;
(b) reasons or grounds for the opposition; and
(c) relief sought.

5) CONSOLIDATION OF PETITIONS.
If there is more than one petition filed, the Board may, motu proprio or on
motion of any party, consolidate these for purposes of conducting joint
hearings or proceedings to expedite resolutions of petitions. Petitions received
after publication of an earlier petition need not go through the
publication/posting requirement.
6) ASSISTANCE OF OTHER GOVERNMENT AND PRIVATE
ORGANIZATIONS.
The Board may enlist the assistance and cooperation of any government
agency or private person or organization to furnish information in aid of its
wage fixing function.

RULE III

CONDUCT OF HEARINGS
Section 1. Public Hearings. Prior to the issuance of a wage order, public
hearings shall be conducted giving notices to employees' and employers'
groups, provincial, city and municipal officials and other interested parties.
Section 2. Who May Conduct. Hearings may be conducted by the Board en
banc or by a duly authorized committee thereof wherein each sector shall be
represented. The presence of the Regional Chairman or any of the Vice
Chairmen shall be required. If unable to attend, Board Members may send
observers. The Board shall determine the date/s, place/s, and time of the
hearings which shall open to the public except as otherwise requested by a
party and so determined by the Board.
Section 3. Order of Hearing. As much as practicable, the petitioner/s shall
present his/their evidence first, followed by the oppositor/s. The Board may
then call on other persons to present their views and submit position papers
and other supporting documents.
Section 4. Manner and Duration of Hearings. Public hearings shall be
conducted in a manner that shall ensure that all sectors and parties who stand
to be directly affected by the decisions and orders of the Board are given the
widest opportunity to be heard. Pursuant to this, the hearings shall be
conducted in each province in the region as far as practicable.
Hearings shall be conducted within forty five (45) days from the date of initial
hearing except when conditions in the region warrant otherwise.
Section 5. Records of Proceedings. The Board Secretariat shall keep
records/minutes of all Board proceedings, duly noted by the Members of the
Board.
Section 6. Non-applicability of Technical Rules. The Board shall not be bound
strictly by technical rules evidence and procedures.
Section 7. Prohibition Against Injunction. No preliminary or permanent
injunction or temporary restraining order may be issued by any court, tribunal
or any other entity against any proceeding before the Commission or Board.

RULE IV

WAGE ORDER
Section 1. Issuance of Wage Order. Within thirty (30) days after conclusion of
the last hearing, the Board shall decide on the merits of the petition, and
where appropriate, issue a wage order establishing the regional minimum
wage rates to be paid by employers which shall in no case be lower than the
applicable statutory minimum wage rates. The Wage Order may include
wages by industry, province or locality as may be deemed necessary by the
Board provided, however, that such wage rates shall not be lower than the
regional minimum wage rates unless expressly specified in the Wage Order.
The Board shall furnish the Commission a copy of the decision on the petition
or the Wage Order.
Section 2. Contents of Wage Order. A Wage Order shall specify the region,
province, or industry to which the minimum wage rates prescribed under the
Order shall apply and provide exemptions, if any, subject to guidelines issued
by the Commission.
Section 3. Frequency of Wage Order. Any Wage Order issued by the Board
may not be disturbed for a period of twelve (12) months from its effectivity,
and no petition for wage increase shall be entertained within the said period.
In the event, however, that supervening conditions, such as extraordinary
increase in prices of petroleum products and basic goods/services, demand a
review of the minimum wage rates as determined by the Board and confirmed
by the Commission, the Board shall proceed to exercise its wage fixing
function even before the expiration of the said period.
Section 4. Effectivity. A Wage Order shall take effect fifteen (15) days after
its publication in at least one (1) newspaper of general circulation in the
region.
Section 5. Implementing Rules/ Regulations. The Board shall prepare, for
approval of the Secretary of Labor and Employment upon recommendation of
the Commission, the necessary Implementing Rules and Regulations not later
than ten (10) days from the issuance of a Wage Order.
The Secretary of Labor and Employment shall act on the Implementing Rules
within a period of twenty (20) days from receipt of the said Implementing
Rules by the Commission. Once approved, the Board shall cause the
publication of the Implementing Rules and Regulations in at least one (1)
newspaper of general circulation in the region.
Section 6. Review of Wage Order. The Commission may review the Wage
Order issued by the Board motu propio or upon appeal.
Section 7. Correction of Error. The Board may, motu propio or upon
manifestation of any party, proceed to correct any patent error, errors in
computation or typographical errors in any Wage Order.
Section 8. Amendments to Wage Order. In case of substantive changes in
the Wage Order, the Board must comply with the required procedures
provided under Section 1 of Rule II and Section 4 of Rule IV.

RULE V

APPEAL
Section 1. Appeal to the Commission. Any party aggrieved by a Wage Order
issued by the Board may appeal such Order to the Commission by filing a
verified appeal with the Board in three (3) typewritten legible copies, not later
than ten (10) days from the date of publication of the Order. The appeal shall
be accompanied by a memorandum of appeal which shall state the grounds
relied upon and the arguments in support of the appeal.
The Board shall serve notice of the appeal to concerned parties.
Failure to file an appeal within the reglementary period fixed under this
section or to submit the required documents shall be a ground for dismissal of
the appeal.
Section 2. Grounds for Appeal. An appeal may be filed on the following
grounds:
(a) non-conformity with prescribed guidelines and/or
procedures;

(b) questions of law;

(c)grave abuse of discretion.

Section 3. Transmittal of Records. Immediately upon receipt of the appeal,


the Board Secretariat shall transmit to the Commission Secretariat the appeal
and a copy of the subject Wage Order together with the complete records of
the case and all relevant documents.
Section 4. Period to Act on Appeal. The Commission shall decide on the
appeal within sixty (60) days from the filing of said appeal.
Section 5. Effect of Appeal. The filing of the appeal does not operate to stay
the Order unless the party appealing such Order shall file with the
Commission an undertaking with a surety or sureties satisfactory to the
Commission for payment to employees affected by the Order of the
corresponding increase, in the event such Order is affirmed.

RULE VI

QUORUM
Section 1. Quorum. Four (4) members of the Commission or Board shall
constitute a quorum to transact business, provided that the Chairman or the
Vice Chairman is present and each sector is represented. The Commission or
Board may dispense with the proviso requiring sectoral representation if the
two (2) representatives of any sector fail to attend, without justifiable reason,
two (2) consecutive scheduled meetings with proper notice.
Section 2. Votes Required. Any decision of the Commission or Board shall
require the affirmative of not less than four (4) of its members.

RULE VII

WAGE DISTORTION
Section 1. Correction of Wage Distortion. Where the application of any
prescribed wage increase by virtue of a Wage Order issued by the Board
results in distortions of the wage structure within an establishment, the
employer and the union shall negotiate to correct the distortions. Any dispute
arising from wage distortions shall be resolved through the grievance
procedure under their collective bargaining agreement and, if it remains
unresolved, through voluntary arbitration. Unless otherwise agreed by the
parties in writing, such dispute shall be decided by the voluntary arbitrator or
panel of voluntary arbitrators within ten (10) days from the time said dispute
was referred to voluntary arbitration.
In cases where there are no collective agreements or recognized labor unions,
the employers and workers shall endeavor to correct such distortions. Any
dispute arising therefrom shall be settled through the National Conciliation
and Mediation Board and, if it remains unresolved after ten (10) days of
conciliation, shall be referred to the appropriate branch of the National Labor
Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct
continuous hearings and decide the dispute within twenty (20) days from the
time said dispute is submitted for compulsory arbitration.
The pendency of a dispute arising from a wage distortion shall not in any way
delay the applicability of any increase in prescribed wage rates pursuant to
the provisions of the Wage Order.

RULE VIII

EXEMPTIONS
Section 1. Application for Exemption. Whenever a wage order provides for
exemption, applications for exemption shall be filed with the appropriate
Board which shall process these applications, subject to guidelines issued by
the Commission.

RULE IX

ENFORCEMENT
Section 1. Enforcement of Wage Orders. Compliance with the Wage Order
issued by the Board shall be enforced by the appropriate Regional Office of
the Department of Labor and Employment in accordance with enforcement
procedures under Articles 128 and 129 of the Labor Code as amended.
NWPC Guidelines No. 01 Series of 1996

NWPC GUIDELINES NO. 01


Series of 1996
RULES ON EXEMPTION FROM COMPLIANCE WITH THE PRESCRIBED
WAGE INCREASES/COST OF LIVING ALLOWANCES GRANTED BY
THE REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARDS
Pursuant to Section 3, Article 121 b of RA 6727 and Section 1, Rule VIII of
the Revised Rules of Procedure on Minimum Wage Fixing, the following rules
on exemption are hereby issued for strict compliance by all concerned:

SECTION 1. DEFINITION OF TERMS


A. Commission - refers to the National Wages and Productivity Commission.
B. Board - refers to the Regional Tripartite Wages and Productivity Board.
C. Order - refers to the Wage Order promulgated by the Board pursuant to its
wage- fixing authority.
D. Establishment - refers to an economic unit which engages in one or
predominantly one kind of economic activity at a single fixed location.

For purposes of determining eligibility for exemption, establishments


under the same owner/s but separately registered with the Securities and
Exchange Commission (SEC), Department of Trade and Industry (DTI) or
Cooperative Development Authority (CDA) as the case may be,
irrespective of their location, shall be treated as individual and distinct
establishments.
E. Retail Establishment - refers to one principally engaged in the sale of
goods to end users for personal or household use.

A retail establishment that regularly engages in wholesale activities loses


its retail character.
F. Service Establishment - refers to one principally engaged in the sale of
services to individuals for their own or household use and is generally
recognized as such.
G. Distressed Establishment - refers to an establishment which meets the
criteria enumerated in Section 3 A of these Guidelines.
H. Capital - refers to paid-up capital at the end of the last full accounting
period, in the case of corporations or total invested capital at the
beginning of the period under review, in the case of partnerships and
single proprietorships.
I. Full Accounting Period - refers to a period of twelve (12) months or one
year of business operations.
J. Deficit - refers to the negative balance of the retained earnings
account of a corporation. Retained earnings represent the cumulative
balance of periodic earnings, dividend distributions, prior period
adjustments and other capital adjustments.
K. Stock Corporation - refers to one organized for profit and issues shares
of stock to its members.
L. Non-stock Non-profit Organization - refers to one organized principally
for public purposes such as charitable, educational, cultural or similar
purposes and does not issue shares of stock to its members.
M. Partnership - refers to an association of two or more persons who bind
themselves to contribute money, property or industry to a common fund
with the intention of dividing the profits among themselves or for the
exercise of a profession.
N. Single Proprietorship - refers to a business unit owned and controlled
by only one person.
O. Cooperative - refers to a duly registered association of persons who
voluntarily join together to form a business establishment which they
themselves own, control and patronize and which may fall under any of
the following types: credit, consumers, producers, marketing, service or
multi-purpose.
P. New Business Enterprises - refer to establishments, including non-profit
institutions, established within two (2) years from effectivity of the Wage
Order based on the latest registration with the appropriate government
agency such as SEC, DTI, CDA and Mayor's Office.
Q. Quasi-banks - refer to institutions such as investment houses and
financing companies performing quasi-banking functions as defined by the
Bangko Sentral ng Pilipinas.

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS


Exemption of establishments from compliance with the wage increases and
cost of living allowances prescribed by the Boards may be granted in order to
(1) assist establishments experiencing temporary difficulties due to losses
maintain the financial viability of their businesses and continued employment
of their workers; (2) encourage the establishment of new businesses and the
creation of more jobs, particularly in areas outside the National Capital Region
and Export Processing Zones, in line with the policy on industry dispersal; and
(3) ease the burden of micro establishments, particularly in the retail and
service sector, that have a limited capacity to pay.
Pursuant to the above, the following categories of establishments may be
exempted upon application with and as determined by the Board, in
accordance with applicable criteria on exemption as provided in these
Guidelines; provided further that such categories are expressly specified in
the Order.

1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing not more than ten (10)
workers
4. Establishments adversely affected by natural calamities

Exemptible categories outside of the abovementioned list may be allowed


only if they are in accord with the rationale for exemption reflected in the first
paragraph of this section. The concerned Regional Board shall submit strong
and justifiable reason/s for the inclusion of such categories which shall be
subject to review/approval by the Commission.

SECTION 3. CRITERIA FOR EXEMPTION


The following criteria shall be used to determine whether the applicant-
establishment is qualified for exemption:

A. Distressed Establishments
For Stock Corporations/Cooperatives
When deficit as of the last full accounting period or interim period, if
any, immediately preceding the effectivity of the Order amounts to 20% or
more of the paid-up capital for the same period; or
When an establishment registers capital deficiency i.e., negative
stockholders' equity as of the last full accounting period or interim period,
if any, immediately preceding the effectivity of the Order.

For Single Proprietorships/Partnerships


Single proprietorships/partnerships operating for at least two (2) years
may be granted exemption:
When the net accumulated losses for the last two (2) full
accounting periods and interim period, if any, preceding the effectivity
of the Order amounts to 20% or more of the total invested capital at
the beginning of the period under review; or
When an establishment registers capital deficiency i.e.,
negative net worth as of the last full accounting period or interim
period, if any, immediately preceding the effectivity of the Order.

Single proprietorships/partnerships operating for less than two (2)


years may be granted exemption when the net accumulated losses for the
period immediately preceding the effectivity of the Order amounts to 20%
or more of the total invested capital at the beginning of the period under
review.

For Non-stock Non-profit Organizations


Non-stock Non-profit organizations operating for at least two (2) years
may be granted exemption:
When the net accumulated losses for the last two (2) full
accounting periods and interim period, if any, immediately preceding
the effectivity of the Order amounts to 20% or more of the fund
balance/members' contribution at the beginning of the period under
review; or
When an establishment registers capital deficiency i.e.,
negative fund balance/members' contribution as of the last full
accounting period or interim period, if any, immediately preceding the
effectivity of the Order.

Non-stock non-profit organizations operating for less than two (2) years
may be granted exemption when the net accumulated losses for the
period immediately preceding the effectivity of the Order amounts to 20%
or more of the fund balance/members' contribution at the beginning of
the period under review.

For Banks and Quasi-banks


Under receivership/liquidation
Exemption may be granted to a bank or quasi-bank under
receivership or liquidation when there is a certification from the
Bangko Sentral ng Pilipinas that it is under receivership or liquidation
as provided in Section 30 of RA 7653, otherwise known as the New
Central Bank Act.

Under controllership/conservatorship
A bank or quasi-bank under controllership/conservatorship may
apply for exemption as a distressed establishment under Section 3 A of
this Guidelines.

B. New Business Enterprises


Exemption may be granted to New Business Enterprises established outside the
National Capital Region (NCR) and Export Processing Zones within two (2) years
from effectivity of the Order, classified under any of the following:
Agricultural establishments whether plantation or non-plantation.
Establishments with total assets after financing of five million pesos
(P5,000,000.00) and below.

C. Retail/Service Establishments Regularly Employing Not More Than


Ten (10) Workers
Exemption may be granted to a retail/service establishment when:
It is engaged in the retail sale of goods and/or services to end users for
personal or household use; and
It is regularly employing not more than ten (10) workers regardless of
status, except the owner/s, for at least six (6) months in any calendar year.

D. Establishments Adversely Affected by Natural Calamities


The establishment must be located in an area declared by a competent
authority as under a state of calamity.
The natural calamities, such as earthquakes, lahar flow, typhoons,
volcanic eruptions, fire, floods and similar occurrences, must have occurred
within 6 months prior to the effectivity of the Wage Order.
Losses suffered by the establishment as a result of the calamity that
exceed the insurance coverage should amount to 20% or more of the
stockholders' equity as of the last full accounting period in the case of
corporations and cooperatives, total invested capital in the case of
partnerships and single proprietorships and fund balance/members'
contribution in the case of non-stock non-profit organizations.
Only losses or damage to properties directly resulting from the calamity and
not incurred as a result of normal business operations shall be considered.
Where necessary, the Board or its duly-authorized representative shall
conduct an ocular inspection of the establishment or engage the services of
experts to validate the extent of damages suffered

SECTION 4. DOCUMENTS REQUIRED


The following supporting documents shall be submitted together with the
application:
A. For All Categories of Exemption
Proof of notice of filing of the application to the President of the
union/contracting party if one is organized in the establishment, or if there is no
union, a copy of a circular giving general notice of the filing of the application to all
the workers in the establishment. The proof of notice, which may be translated in the
vernacular, shall state that the workers' representative was furnished a copy of the
application with all the supporting documents. The notice shall be posted in a
conspicuous place in the establishment.

B. For Distressed Establishments


For Corporations
Audited financial statements (together with the Auditor's
opinion and the notes thereto) for the last two (2) full accounting
periods preceding the effectivity of the Order filed with and
stamped "received" by the appropriate government agency.
Audited interim quarterly financial statements (together with the
Auditor's opinion and the notes thereto) for the period immediately
preceding the effectivity of the Order.

Submission of audited interim financial statements shall be in accordance with


the following schedule:

EFFECTIVITY DATE OF INTERIM STATEMENTS REQUIRED


WAGE ORDER
First Quarter of the Year No interim statements required; only the audited
statement for the last two full accounting periods
Second Quarter of the Year

Month 1 - None; same as first quarter


Month 2 - None; same as first quarter
Month 3 - First quarter audited statement
Third Quarter of the Year

Month 1 - First quarter audited statement


Month 2 - First quarter audited statement
Month 3 - First & second quarters audited statements
Fourth Quarter of the Year

Month 1 - Second quarter audited statement


Month 2 - Second quarter audited statement
Month 3 - First, second & third quarters audited
statements

For Banks and Quasi Banks


Certification from Bangko Sentral ng Pilipinas that it is under
receivership/liquidation.

C. For New Business Enterprises


Affidavit from employer regarding the following:
a) Principal Economic Activity
b) Date of Registration with Appropriate Government Agency
c) Amount of Total Assets
Certificate of registration from the appropriate government agency.

D. For Retail/Service Establishments Employing not more than Ten (10)


Employees

Affidavit from employer stating the following:


a) It is a retail/service establishment.
b) It is regularly employing not more than ten (10) workers for at least six
months in any calendar year
Business Permit for the current year from the appropriate government
agency.

E. For Establishments Adversely Affected by Natural Calamities

Affidavit from the General Manager or Chief Executive Officer of the


establishment regarding the following:
a) Date and type of calamity
b) Amount of losses/damages suffered as a direct result of the calamity
c) List of properties damaged/lost together with estimated valuation
d) For properties that are not insured, a statement that the same are not
covered by insurance.
Copies of insurance policy contracts covering the properties damaged, if any.
Adjuster's report for insured properties.
Audited financial statements for the last full accounting period preceding the
effectivity of the Order stamped received by the appropriate government
agency.

The Board may require the submission of other pertinent documents to support the
application for exemption.

SECTION 5. ACTION ON APPLICATION FOR EXEMPTION


Upon receipt of an application with complete documents, the
Board shall take the following steps:
a) Notify the DOLE Regional Office having jurisdiction over the
workplace of the pendency of the application requesting that action on
any complaint for non-compliance with the Order be deferred pending
resolution of the application by the Board.
b) Request the DOLE Regional Office to conduct ocular inspection,
if necessary, of establishments applying for exemption to verify
number of workers, nature of business and other relevant information.
c) Act and decide on the application for exemption with complete
documents, as much as practicable, within 45 days from the date of
filing. In case of contested application, the Board may conduct
conciliation or call hearings thereon.
d) Transmit the decision of the Board to the applicant
establishment, the workers or president of the union, if any, and the
Commission, for their information; and the DOLE Regional Office
concerned, for their implementation/enforcement.
The Board may create a Special Committee with one representative from
each sector to expedite processing of applications for exemption.

SECTION 6. APPLICATION FOR PROJECTS/BRANCHES/DIVISIONS


Where the exemption being sought is for a particular
project/branch/division not separately registered and licensed, the
consolidated audited financial statements of the establishment shall be used
as basis for determining its distressed condition.

SECTION 7. DISTRESSED PRINCIPAL


Exemption granted to a distressed principal shall not extend to its
contractor in case of contract(s) for construction, security, janitorial and/or
similar services with respect to the employees of the latter assigned to the
former.

SECTION 8. EXTENT AND DURATION OF EXEMPTION


A full exemption of one (1) year shall be granted to all categories of
establishments that meet the applicable criteria for exemption under Section
3 of this Guidelines.
However, a partial exemption of 50% with respect to the amount or period
of exemption shall be granted only in the case of distressed establishments as
follows:
a) For corporations/cooperatives
When deficit as of the last full accounting period or interim period, if
any, immediately preceding the effectivity of the Order amounts to
less than 20% of the paid-up capital of the same period.
b) For single proprietorships/partnerships
When the net accumulated losses for the period under review amounts
to at least 15% but less than 20% of the total invested capital at the
beginning of the period under review.
c) Non-stock non-profit organizations
When the net accumulated losses for the period under review
preceding the effectivity of the Order amounts to at least 15% but less
than 20% of the fund balance/members' contribution at the beginning
of the period under review.

SECTION 9. PROCEDURES ON EXEMPTION


A. For Filing of Application
1. An application, in three (3) legible copies may be filed with the
appropriate Board by the owner/manager or duly authorized
representative of an establishment, in person or by registered mail.
The date of mailing shall be deemed as the date of filing.
2. Applications for all categories shall be filed not later than sixty
(60) days from publication of the approved implementing rules of
the Order.
In the case of NBEs, applications shall be filed not later than sixty
(60) days from date of registration.
3. The application shall be under oath and accompanied by
complete supporting documents as enumerated under Section 4 of
this Guidelines. In the case of an application with incomplete
supporting documents, the applicant shall be notified to complete the
same within ten (10) days from receipt of the notice; otherwise, the
application shall be dismissed.
B. For Filing of Opposition
Any worker or, if unionized, the union in the applicant establishment, may
file with the appropriate Board within fifteen (15) days from receipt of the
notice of the filing of the application, an opposition to the application for
exemption stating the reasons why the same should not be approved,
furnishing the applicant a copy thereof. The fifteen (15) day period shall
run only upon receipt of complete supporting documents. The opposition
shall be in three (3) legible copies, under oath and accompanied by
pertinent documents, if any.
C. For Filing of Motion for Reconsideration
The aggrieved party may file with the Board a motion for reconsideration
of the decision on the application for exemption within ten (10) days from
its receipt and shall state the particular grounds upon which the motion is
based, copy furnished the other party and the DOLE Regional Office
concerned.
No second motion for reconsideration shall be entertained in any case. The
decision of the Board shall be final and executory unless appealed to the
Commission.
D. For Filing of Appeal to the Commission

1. Appeal - Any party aggrieved by the decision of the Board may


file an appeal to the Commission, through the Board, in two (2) legible
copies, not later than ten (10) days from date of receipt of the
decision.
2. The appeal, with proof of service to the other party, shall be
accompanied with a memorandum of appeal which shall state the date
appellant received the decision, the grounds relied upon and the
arguments in support thereof.
3. The appeal shall not be deemed perfected if it is filed with any
office or entity other than the Board.
4. Grounds for Appeal - An appeal may be filed on the following
grounds:
a) Non-conformity with the prescribed guidelines and/or
procedures on exemption;

b) Prima facie evidence of grave abuse of discretion on the part


of the Board; or

c) Questions of law.
I. Opposition - The appellee may file with the Board his
reply or opposition to the appeal within ten (10) days from
receipt of the appeal. Failure of the appellee to file his reply or
opposition shall be construed as waiver on his part to file the
same.
II. Transmittal of records - Within five (5) days upon receipt
of the reply or opposition of the appellee or after the expiration
of the period to file the same, the entire records of the case
which shall be consecutively numbered, shall be transmitted by
the Board to the Commission.

SECTION 10. QUORUM AND VOTES REQUIRED


Four (4) members of the Commission or Board shall constitute a quorum to
decide on the applications for or on appeals on exemption, provided each
sector is represented. The Commission or Board may dispense with the latter
proviso if the two (2) representatives of any sector fail to attend two (2)
consecutive scheduled meetings with proper notice. The affirmative vote of
the majority of the members constituting a quorum shall be necessary to
carry a decision.

SECTION 11. EFFECT OF DISAPPROVED APPLICATION FOR EXEMPTION


In the event that the application for exemption is not approved, covered
workers shall be paid the mandated wage increase/allowance as provided for
under the Order retroactive to the date of effectivity of the Order plus simple
interest of one percent (1%) per month.

SECTION 12. NON-DIMINUTION OF BENEFITS


Exemption granted under these Guidelines shall not be construed to
reduce existing wages and other benefits enjoyed by the workers under
existing laws, decrees, issuances or under any contract of agreement between
the workers and employees.

SECTION 13. SUPPLEMENTARY GUIDELINES ON EXEMPTION


The Board may issue supplementary guidelines for exemption in
accordance with this Guidelines, subject to review/approval by the
Commission.

SECTION 14. EFFECTIVITY


This Guidelines shall take effect fifteen (15) days after publication in a
newspaper of general circulation.
SECTION 15. REPEAL
All Commission Guidelines previously adopted and inconsistent herewith
are hereby repealed.

SUMMARY OF EXEMPTIONS TO IMPLEMENTATION OF MINIMUM WAGE ORDER

Under the Labor Code (Art. 98 Under the NWPC Guidelines


Labor Code)
1. Farm tenancy or leasehold 1. Distressed establishments
2. Household or domestic helpers
3. Homeworkers engaged in 2. New business enterprises
needlework (NBEs)
4. Workers employed in any 3. Retail/Service
establishment duly registered with establishments employing not
the National Cottage Industry more than ten (10) workers
Development Authority (NCIDA)
5. Workers in duly registered 4. Establishments adversely
cooperatives when so recommended affected by natural calamities
by the Bureau of Cooperative
Development upon approval by the
Sec. of Labor.
6. Workers of a Barangay Micro
Business Enterprise (R.A. 9178
11/13/02)

Q: What is the difference between the exemptions under the labor code and those
under the NWPC Guidelines?
A: Under the NWPC Guidelines, the establishment must APPLY for an exemption (Sec.
2(par. 2) NWPC Guidelines), whereas those under the Labor Code, the establishment
NEED NOT APPLY.

- RCPI vs NLRC (207 SCRA 581)

Wage Order No. 6 was promulgated by the President of the Philippines to


increase the statutory minimum wage rates and cost of living allowances in the
private sector. But it also provided for an exemption to its application in favor of
Distressed Enterprises for a period not exceeding 2 years. The National Wages
Council promulgated Policy Guidelines No. 8 to give the criteria for the
exemption under Sec. 5 thereof.

Since the purpose of the wage exemption is to assist financially beleaguered


companies, the distinction between real or actual income and theoretical
earnings arising from accounting principles becomes important.

Under the spirit of Wage Order No. 6, it is the actual ability of a firm to spend for
its current needs and costs and not how the assets and liabilities of a firm may
appear in the technical jargon of Higher Accounting Principles which is
important.

- Joy Brothers Inc. vs NWPC (273 SCRA 622)

Sec. 8(a) of the Rules Implementing Wage Order No. NCR-03 provides that
exemption from compliance with the wage increase may be granted to
distressed establishments.

"Distressed Establishments" are those whose paid-up capital has been impaired
by at least 25% or which registers capital deficiency or negative net worth.

2. Wages

Form of Payment

PAYMENT SHOULD BE MADE IN LEGAL TENDER


- Art. 102 Labor Code
Forms of payment. - No employer shall pay the wages of an employee by means
of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object
other than legal tender, even when expressly requested by the employee.

Payment of wages by check or money order shall be allowed when such manner
of payment is customary on the date of effectivity of this Code, or is necessary
because of special circumstances as specified in appropriate regulations to be
issued by the Secretary of Labor and Employment or as stipulated in a collective
bargaining agreement.

- Art. 1705 (CC). The laborer's wages shall be paid in legal currency.

- Art. 288 (RPC). Other similar coercions; (Compulsory purchase of


merchandise and payment of wages by means of tokens.) The penalty of
arresto mayor or a fine ranging from 200 to 500 pesos, or both, shall be
imposed upon any person, agent or officer, of any association or corporation
who shall force or compel, directly or indirectly, or shall knowingly permit any
laborer or employee employed by him or by such firm or corporation to be
forced or compelled, to purchase merchandise or commodities of any kind.

The same penalties shall be imposed upon any person who shall pay the wages
due a laborer or employee employed by him, by means of tokens or objects
other than the legal tender currency of the laborer or employee.

ATM Guidelines
- Labor Advisory Nov. 25, 1996

The following conditions must concur:


1. The ATM system of payment is within the written consent of the
employees concerned;
2. The employees are given reasonable time to withdraw their
wages from the bank facilities which time, if done during working hours,
shall be considered as compensable hours;
3. The system shall allow workers to receive their wages within
the period or frequency and in the amount prescribed under the Labor
Code.
4. There is a bank or ATM facility within the radius of 1 kilometer
to the place of work.
5. Upon the request of the concerned employee/s, the employer
shall issue a record of payment of wages, benefits, and deductions for a
particular period.
6. There shall be no additional expenses and no diminution of
benefits and privileges as a result of the ATM system of payment.
7. The employer shall assume responsibility in case the wage
protection provisions of law and regulations are not complied with under
the arrangement.

Payment by Check or Money Order

(Sec. 2, Rule VIII, Book III, IRR)

SECTION 2. Payment by check. Payment of wages by bank checks,


postal checks or money orders is allowed where such manner of wage
payment is customary on the date of the effectivity of the Code, where it is
so stipulated in a collective agreement, or where all of the following
conditions are met:

(a) There is a bank or other facility for encashment within a radius


of one (1) kilometer from the workplace;
(b) The employer or any of his agents or representatives does not
receive any pecuniary benefit directly or indirectly from the
arrangement;
(c) The employees are given reasonable time during banking hours
to withdraw their wages from the bank which time shall be considered as
compensable hours worked if done during working hours; and
(d) The payment by check is with the written consent of the
employees concerned if there is no collective agreement authorizing the
payment of wages by bank checks.

Payment Through a Bank

(Sec. 19-20, Chapter 1, Book III, IRR)

SECTION 19. Payment of Wages. Upon written petition of the majority of


the workers and employees concerned, all private establishments, companies,
businesses and other entities with at least twenty workers and located within
one kilometer radius to a commercial, savings or rural bank, shall pay the
wages and other benefits of their workers through any of said banks, within
the period and in the manner and form prescribed under the Labor Code as
amended.

SECTION 20. Duty of Bank. Whenever applicable and upon request of


concerned worker or union, the bank through which wages and other benefits
are paid issue a certification of the record of payment of said wages and
benefits of a particular worker or workers for a particular payroll period.

(RA 6727-PAYMENT THRU BANKS)


SECTION 7. - Upon written permission of the majority of the employees or
workers concerned, all private establishments, companies, businesses, and
other entities with twenty five (25) or more employees and located within one
(1) kilometer radius to a commercial, savings or rural bank shall pay the
wages and other benefits of their employees through any of said banks and
within the period of payment of wages fixed by Presidential Decree No. 422,
as amended, otherwise known as the Labor Code of the Philippines.

SO, the following conditions must concur for the valid payment of wages thru
banks:
1. upon written permission of the majority of the employees or workers
concerned;
2. all private establishments, companies, businesses, and other entities
with at least 25 or more employees;
3. located within 1 kilometer radius to a commercial, savings or rural
banks shall pay wages or benefits of their employees through any of the
banks;
4. within the period of payment of wages fixed by PD 442, the Labor
Code, as amended;

Place of Payment

ART. 104. Labor Code. Place of payment. - Payment of wages shall be made at
or near the place of undertaking, except as otherwise provided by such
regulations as the Secretary of Labor and Employment may prescribe under
conditions to ensure greater protection of wages.
EXCEPTIONS: (Sec. 4, Rule VII, Book III, IRR)

SECTION 4. Place of payment. As a general rule, the place of payment shall


be at or near the place of undertaking. Payment in a place other than the work
place shall be permissible only under the following circumstances: (Any of the
following)

a. When payment cannot be effected at or near the place of work by


reason of the deterioration of peace and order conditions, or by reason of
actual or impending emergencies caused by fire, flood, epidemic or other
calamity rendering payment thereat impossible;
b. When the employer provides free transportation to the employees
back and forth; and
c. Under any other analogous circumstances; Provided, That the time
spent by the employees in collecting their wages shall be considered as
compensable hours worked;
d. No employer shall pay his employees in any bar, night or day club,
drinking establishment, massage clinic, dance hall, or other similar places or
in places where games are played with stakes of money or things
representing money except in the case of persons employed in said places.

Time of Payment

ART. 103. Labor Code. Time of payment. - Wages shall be paid at least once
every two (2) weeks or twice a month at intervals not exceeding sixteen (16)
days. If on account of force majeure or circumstances beyond the employers
control, payment of wages on or within the time herein provided cannot be made,
the employer shall pay the wages immediately after such force majeure or
circumstances have ceased. No employer shall make payment with less
frequency than once a month.

The payment of wages of employees engaged to perform a task which cannot be


completed in two (2) weeks shall be subject to the following conditions, in the
absence of a collective bargaining agreement or arbitration award:

1. That payments are made at intervals not exceeding sixteen (16) days,
in proportion to the amount of work completed;

2. That final settlement is made upon completion of the work.

Whom to Pay?

ART. 105. Labor Code. Direct payment of wages. - Wages shall be paid directly
to the workers to whom they are due, except:

(a) In cases of force majeure rendering such payment impossible or under other
special circumstances to be determined by the Secretary of Labor and
Employment in appropriate regulations, in which case, the worker may be paid
through another person under written authority given by the worker for the
purpose; or

(b) Where the worker has died, in which case, the employer may pay the wages
of the deceased worker to the heirs of the latter without the necessity of intestate
proceedings. The claimants, if they are all of age, shall execute an affidavit
attesting to their relationship to the deceased and the fact that they are his heirs,
to the exclusion of all other persons. If any of the heirs is a minor, the affidavit
shall be executed on his behalf by his natural guardian or next-of-kin. The
affidavit shall be presented to the employer who shall make payment through the
Secretary of Labor and Employment or his representative. The representative of
the Secretary of Labor and Employment shall act as referee in dividing the
amount paid among the heirs. The payment of wages under this Article shall
absolve the employer of any further liability with respect to the amount paid.

General Rule: Wages shall be made direct to the employee to whom they are
due
Exceptions:

1. Payment through a member of workers family - Where the


employer is authorized in writing by the employee to pay his wages to a
member of his family.

2. Payment through another person


(a) In cases of force majeure rendering such payment impossible or
under other special circumstances to be determined by the Secretary of
Labor and Employment in appropriate regulations, in which case, the
worker may be paid through another person under written authority given
by the worker for the purpose;
(b) When authorized under existing law, including payments for insurance
premiums of the employee and union dues where the right check-off has
been recognized by the employer in accordance with a CBA or authorized in
writing by the individual employees concerned.

3. Payment through heirs of worker - In case where the worker has


died, employer may pay wages of the deceased workers to the heirs of the
latter without the necessity of intestate proceedings.

Procedure: (Sec. 6, Rule VIII, Book III, IRR)


1. Claimants shall execute an affidavit attesting their relationship to the
deceased and the fact that they are his heirs, to the exclusion of all others
(Affidavit of Next kin);
2. In case of a minor heir, affidavit shall be executed on his behalf by his
natural guardian or next of kin;
3. Affidavit shall be presented to the employer who shall make payment
through the Secretary of Labor or his representative;
4. The representative shall act as referee in dividing the amount paid
among the heirs; and
5. Payment of wages under this Article shall absolve the employer of any
further liability with respect to the amount paid.

RULES ON PAYMENT OF WAGES

What Must be Gen. Rule Legal Tender


paid?
Exception ATM, Bank Deposit, Check

Who must be Paid? Gen. Rule Employee Directly

Exception Employees Family, Heirs, Third Persons

Where must it be Gen. Rule At or Near the Place of Undertaking (work)


Paid?
Exception Other places under conditions in Sec. 4, Rule
VII, Book III, IRR

When must it be Gen. Rule Once every 2 weeks, or twice a month, but not
Paid? beyond 16 days per payment.

Exception In cases where there is Force Majeure

Valid Deductions
ART. 113. Labor Code. Wage deduction. - No employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees,
except:

a. In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;

b. For union dues, in cases where the right of the worker or his union to check-off
has been recognized by the employer or authorized in writing by the
individual worker concerned; and

c. In cases where the employer is authorized by law or regulations issued by the


Secretary of Labor and Employment.

(Rule VIII, Book III, IRR)


SEC. 10. Wages deduction. Deductions from the wages of the employees
may be made by the employer in any of the following cases:

a. When the deductions are authorized by law, including deductions for the
insurance premiums advanced by the employer in behalf of the employee as
well as union dues where the right to check-off has been recognized by the
employer or authorized in writing by the individual employee himself.
b. When the deductions are with the written authorization of the employees for
payment to the third person and the employer agrees to do so; Provided, That
the latter does not receive any pecuniary benefit, directly or indirectly, from
the transaction.

GENERAL RULE:

Wage deduction is strictly prohibited.

EXEMPTIONS:

REQUIRING EMPLOYEES CONSENT NOT REQUIRING EMPLOYEES


CONSENT

Summary on the rule regarding prohibition on wages:

GENERAL RULE: No employer shall limit or otherwise interfere with the freedom
of any employee to dispose of his wages. He shall not in any manner force,
compel, or oblige his employees to purchase merchandise, commodities, or
other property from the employer or from any other person, or otherwise make
use of any services of such employer or any other person.

EXEMPTIONS:

1. By specific requirement of law:


a. Deduction for income tax (CTRP)
b. Deductions for social security premiums (RA 1161)
c. Deductions for medical premiums (PD 1519)
d. Deductions for employees compensation premium (PD 442)

2. By specific authorization of law:


a. SEE art. 113, LC on exceptions
b. Facilities [Art. 97(f)]
c. In cases where the employee is indebted to the employer, where such
indebtedness has become due and demandable (Art. 1706, NCC);
d. In court awards, wages may be the subject of execution or attachment,
but only for debts incurred for food, shelter, clothing and medical
attendance (Art. 1703, NCC). Eg. Judgment for support.
e. For loss or damage, provided the following requisites are met:
i. The employee concerned must clearly shown to be responsible for the
loss or damage;
ii. The employee should be given reasonable opportunity to show cause
why deduction should not be made;
iii. The amount to be deducted should be fair and reasonable and should
not exceed the actual loss or damage; and
iv. The deduction should not exceed 20% of the employees wage in
week.
v. When the employer is engaged in such trade where deposit is a
recognized one or is necessary or desirable as determined by the
Secretary of Labor (Sec. 11, Rule VIII, Book III, IRR).
f. Wage deduction, provided:
i. Authorized by law eg. Insurance premiums and check or authorized in
writing by the individual employee himself;
ii. With the written authorization of the employees for payment to a third
person and the employer agrees to do so, provided that the latter does
not receive any pecuniary benefit, directly or indirectly, from the
transaction (Sec. 10, Rule VIII, Book III, IRR).

Penalty in case of violation:

ART. 288, RPC. Other similar coercions; (Compulsory purchase of merchandise


and payment of wages by means of tokens.) The penalty of arresto mayor or a
fine ranging from 200 to 500 pesos, or both, shall be imposed upon any person,
agent or officer, of any association or corporation who shall force or compel,
directly or indirectly, or shall knowingly permit any laborer or employee employed
by him or by such firm or corporation to be forced or compelled, to purchase
merchandise or commodities of any kind.
The same penalties shall be imposed upon any person who shall pay the wages
due a laborer or employee employed by him, by means of tokens or objects other
than the legal tender currency of the laborer or employee.

Prohibitions Regarding Wages

ART. 112. Labor Code. Non-interference in disposal of wages. - No employer


shall limit or otherwise interfere with the freedom of any employee to dispose of
his wages. He shall not in any manner force, compel, or oblige his employees to
purchase merchandise, commodities or other property from any other person, or
otherwise make use of any store or services of such employer or any other
person.

ART. 118. Labor Code. Retaliatory measures. - It shall be unlawful for an


employer to refuse to pay or reduce the wages and benefits, discharge or in any
manner discriminate against any employee who has filed any complaint or
instituted any proceeding under this Title or has testified or is about to testify in
such proceedings.

ART. 117. Labor Code. Deduction to ensure employment. - It shall be unlawful


to make any deduction from the wages of any employee for the benefit of the
employer or his representative or intermediary as consideration of a promise of
employment or retention in employment.

ART. 116. Labor Code. Withholding of wages and kickbacks prohibited. - It shall
be unlawful for any person, directly or indirectly, to withhold any amount from the
wages of a worker or induce him to give up any part of his wages by force,
stealth, intimidation, threat or by any other means whatsoever without the
workers consent.

ART. 114. Labor Code. Deposits for loss or damage. - No employer shall require
his worker to make deposits from which deductions shall be made for the
reimbursement of loss of or damage to tools, materials, or equipment supplied by
the employer, EXCEPT when the employer is engaged in such trades,
occupations or business where the practice of making deductions or requiring
deposits is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor and Employment in appropriate rules and regulations.

SEC. 9. (Rule VIII, Book III, IRR)


Non-interference in disposal of wages. No employer shall limit or
otherwise interfere with the freedom of any employee to dispose of his wages and
no employer shall in any manner oblige any of his employees to patronize any
store or avail of the services offered by any person.

Penalty for Non-Compliance of Wage Order


(Sec. 10, Chapter III, IRR of R.A. 6727)

SECTION 10. Penal Provisions. Any person, corporation, trust, firm,


partnership, association or entity which refuses or fails to pay any of the
prescribed increases or adjustments in the wage rates, made in accordance with
the Act shall be punished by a fine not exceeding P25,000 and/or imprisonment of
not less than one year nor more than two years: Provided, that any person
convicted under the Act shall not be entitled to the benefits provided for under
the Probation Law.

If the violation is committed by a corporation, trust or firm, partnership,


association or any other entity, the penalty of imprisonment shall be imposed
upon the entitys responsible officers, including, but not limited to, the president,
vice-president, chief executive officer, general manager, managing director or
partner.

Allowances

- Millares vs NLRC (same)

Tips

- DEFINITION; NATURE

It has been said that a TIP denotes a voluntary act, but it has also been said
that from the very beginning of the practice of tipping it was evident that,
whether considered from the standpoint of the giver or the recipient, a TIP
lacked the essential element of a gift, namely, the free bestowing of a gratuity
without consideration, and that, despite its apparent voluntariness, there is an
element of compulsion in TIPPING.

It is more frequently used to indicate additional compensation, and in this sense


TIP is defined as meaning a gratuity; a gift; a present; a fee; money given, as to
a servant, to ensure better or more prompt service. A TIP may range from pure
gift out of benevolence or friendship, to a compensation for a service measured
by its supposed value but not fixed by an agreement, although usually the word
is applied to what is paid to a servant in addition to the regular compensation
for his service in order to secure better service or in recognition of it.

Although a customer may give a TIP as a consideration for services rendered, its
value still depends on the giver, and it is given in addition to the compensation
by the employer; A gratuity given by an employer in order to inspire the
employee to exert more effort in his work is more appropriately called a bonus.

Since a tip is considered a pure gift out of benevolence or friendship, it cannot


be demanded from the customer. Whether or not TIPS will be given is
dependent on the will and generosity of the giver.

The contract of employment between petitioners and Orlando is categorical that


the monthly salary of Orlando is $450 flat rate. This already included his
overtime pay which is integrated in his 12 hours of work. The words "plus tips of
$2 per passenger per day" were written at the line for overtime. Since payment
for overtime was included in the monthly salary of Orlando, the supposed TIPS
mentioned in the contract should be deemed included thereat.
(Ace Navigation Co. Inc. vs CA, 08/15/00)

NOTE:

Tips come from the customers, not the Employer, hence they are generally not
demandable.

Bonus

- DEFINTION; NATURE

By definition, a "BONUS" is a gratuity or act of liberality of the giver. It is


something given in addition to what is ordinarily received by or strictly due the
recipient. A bonus is granted and paid to an employee for his industry and
loyalty which contributed to the success of the employers business and made
possible the realization of profits.
(Protacio vs Laya Mananghaya & Co., GR# 168654 03/25/09)

- IS A BONUS DEMANDABLE?

By definition, a bonus is a gratuity or act of liberality of the giver. It is


something given in addition to what is ordinarily received by or strictly due the
recipient. A bonus is granted and paid to an employee for his industry and
loyalty which contributed to the success of the employers business and made
possible the realization of profits. A bonus is also granted by an enlightened
employer to spur the employee to greater efforts for the success of the business
and realization of bigger profits.

Generally, a bonus is not a demandable and enforceable obligation. For a bonus


to be enforceable, it must have been promised by the employer and expressly
agreed upon by the parties. Given that the bonus in this case is integrated in
the CBA, the same partakes the nature of a demandable obligation. Verily, by
virtue of its incorporation in the CBA, the Christmas bonus due to respondent
Association has become more than just an act of generosity on the part of the
petitioner but a contractual obligation it has undertaken.

All given, business losses are a feeble ground for petitioner to repudiate its
obligation under the CBA. The rule is settled that any benefit and supplement
being enjoyed by the employees cannot be reduced, diminished, discontinued
or eliminated by the employer. The principle of non-diminution of benefits is
founded on the constitutional mandate to protect the rights of workers and to
promote their welfare and to afford labor full protection. Hence, absent any
proof that the employers consent was vitiated by fraud, mistake or duress, it is
presumed that it entered into the CBA voluntarily and had full knowledge of the
contents thereof and was aware of its commitments under the contract.
(Lepanto Ceramics Inc. vs Lepanto Ceramics Employees Assoc., GR# 03/02/10)

GENERAL RULE:
A BONUS is not a demandable and enforceable obligation.

EXCEPTION:
When it is made part of the wage or salary or compensation.
When considered as part of the compensation and therefore
demandable and enforceable, the amount is usually fixed.

When it is included in the CBA.

EXCEPTION TO THE EXCEPTION:


If the amount would be a contingent one dependent upon
the realization of the profits, the bonus is also not
demandable and enforceable.

- WAIVER OF BENEFITS
Going now to the question of whether respondents members individual
acceptance of the award and the resulting payments made by petitioner
operate as a ratification of the DOLE Secretarys award which renders CA-G.R.
SP No. 72965 moot, we find that such do not operate as a ratification of the
DOLE Secretarys award; nor a waiver of their right to receive further benefits,
or what they may be entitled to under the law. The appellate court correctly
ruled that the respondents members were merely constrained to accept
payment at the time. Christmas was then just around the corner, and the union
members were in no position to resist the temptation to accept much-needed
cash for use during the most auspicious occasion of the year. Time and again,
we have held that necessitous men are not, truly speaking, free men; but to
answer a present emergency, will submit to any terms that the crafty may
impose upon them.
(UST vs SM UST, GR# 169940 09/14/09)

3. Administration and Enforcement of Wage Orders (Art. 128-129 Labor Code)

Chapter VI
ADMINISTRATION AND ENFORCEMENT

ART. 128. Visitorial and enforcement power.


(a) The Secretary of Labor and Employment or his duly authorized
representatives, including labor regulation officers, shall have access to
employers records and premises at any time of the day or night whenever work
is being undertaken therein, and the right to copy therefrom, to question any
employee and investigate any fact, condition or matter which may be necessary
to determine violations or which may aid in the enforcement of this Code and of
any labor law, wage order or rules and regulations issued pursuant thereto.

(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists,
the Secretary of Labor and Employment or his duly authorized representatives
shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings
of labor employment and enforcement officers or industrial safety engineers
made in the course of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the employer contests the
findings of the labor employment and enforcement officer and raises issues
supported by documentary proofs which were not considered in the course of
inspection. (As amended by Republic Act No. 7730, June 2, 1994).

(c) An order issued by the duly authorized representative of the Secretary of


Labor and Employment under this Article may be appealed to the latter. In case
said order involves a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and Employment in
the amount equivalent to the monetary award in the order appealed from. (As
amended by Republic Act No. 7730, June 2, 1994).

(d) The Secretary of Labor and Employment may likewise order stoppage of work
or suspension of operations of any unit or department of an establishment when
non-compliance with the law or implementing rules and regulations poses grave
and imminent danger to the health and safety of workers in the workplace. Within
twenty-four hours, a hearing shall be conducted to determine whether an order
for the stoppage of work or suspension of operations shall be lifted or not. In case
the violation is attributable to the fault of the employer, he shall pay the
employees concerned their salaries or wages during the period of such stoppage
of work or suspension of operation.

(e) It shall be unlawful for any person or entity to obstruct, impede, delay or
otherwise render ineffective the orders of the Secretary of Labor and Employment
or his duly authorized representatives issued pursuant to the authority granted
under this Article, and no inferior court or entity shall issue temporary or
permanent injunction or restraining order or otherwise assume jurisdiction over
any case involving the enforcement orders issued in accordance with this Article.

(f) Any government employee found guilty of violation of, or abuse of authority,
under this Article shall, after appropriate administrative investigation, be subject
to summary dismissal from the service.

(g) The Secretary of Labor and Employment may, by appropriate regulations,


require employers to keep and maintain such employment records as may be
necessary in aid of his visitorial and enforcement powers under this Code.

ART. 129. Recovery of wages, simple money claims and other benefits. - Upon
complaint of any interested party, the Regional Director of the Department of Labor
and Employment or any of the duly authorized hearing officers of the Department is
empowered, through summary proceeding and after due notice, to hear and decide
any matter involving the recovery of wages and other monetary claims and benefits,
including legal interest, owing to an employee or person employed in domestic or
household service or househelper under this Code, arising from employer-employee
relations: Provided, That such complaint does not include a claim for reinstatement:
Provided further, That the aggregate money claims of each employee or househelper
does not exceed Five thousand pesos (P5,000.00). The Regional Director or hearing
officer shall decide or resolve the complaint within thirty (30) calendar days from the
date of the filing of the same. Any sum thus recovered on behalf of any employee or
househelper pursuant to this Article shall be held in a special deposit account by, and
shall be paid on order of, the Secretary of Labor and Employment or the Regional
Director directly to the employee or househelper concerned. Any such sum not paid
to the employee or househelper because he cannot be located after diligent and
reasonable effort to locate him within a period of three (3) years, shall be held as a
special fund of the Department of Labor and Employment to be used exclusively for
the amelioration and benefit of workers.

Any decision or resolution of the Regional Director or hearing officer pursuant to this
provision may be appealed on the same grounds provided in Article 223 of this Code,
within five (5) calendar days from receipt of a copy of said decision or resolution, to
the National Labor Relations Commission which shall resolve the appeal within ten
(10) calendar days from the submission of the last pleading required or allowed
under its rules.

The Secretary of Labor and Employment or his duly authorized representative may
supervise the payment of unpaid wages and other monetary claims and benefits,
including legal interest, found owing to any employee or househelper under this
Code. (As amended by Section 2, Republic Act No. 6715, March 21, 1989).

NOTES:

Article 128. Visitorial and Enforcement Power.

Visitorial Power power of the Secretary of Labor or any of his duly authorized
representative to have access to employers records and premises at any time of the
day or night whenever work is being undertaken therein.

It includes the right to enjoy to copy therefrom, to question any employee and
investigate any fact, condition or matter which may aid in the enforcement of the
Code and of any labor law, wage order, or rules and regulations.

Enforcement Power (as amended by R.A 7730) - power of the Secretary of


Labor to compel employer to comply with labor standards upon finding of violations
discovered in the course of the exercise of the Visitorial power.

Only claims where employer-employee relations still exist can be covered

Includes the power to:

Issue Compliance Orders based on the findings of labor employment and


enforcement officers or industrial safety engineers made in the course of
inspection, and must observe 7 cardinal requirements of due process in
administrative proceeding;

Issue Writs of Execution for the enforcement of orders except in cases


where the employer contests the findings of the said labor officers and raises
issues supported by documentary proofs which were not considered in the
course of inspection;

Order Work Stoppage/Suspension of Operations when non-compliance


with the law or implementing rules and regulations poses grave and imminent
danger to the health and safety of the workers in the workplace; and

Conduct hearings within 24 hours to determine whether:


an order for stoppage of works/suspension of operations shall be lifted or not;
and
employer shall pay the employees concerned their salaries in case the
violation is attributable to his fault.

Procedure

COMPLAINT or ROUTINE INSPECTION

ACTUAL INSPECTION

(inspection lists the violation in his


checklist)

INSPECTORS FINDING OF VIOLATION

ISSUANCE OF COMPLIANCE ORDER

In case of non-compliance

ISSUANCE OF WRIT OF NON-


COMPLIANCE

In case party disagrees with RDs


findings

HEARING

DECISION

MR APPEAL
(8-10 days with Secretary of Labor)

(certiorari with the CA within 60 days)

INSPECTORS FINDING OF VIOLATION

WORK STOPPAGE
Instances when enforcement power may not be used:
Case does not arise from the exercise of Visitorial power;
When employer-employee relationship ceased to exist at the time of the
inspection; and
If employer contests the finding of the Labor Regulation Officer and such
contestable issue is not verifiable in the normal course of inspection.

Article 129. Recovery of wages, simple money claims and other benefits.

Requisites of regional directors authority, under Art. 129:


(Rajah Humabon Hotel vs. Trajano)

The claim is presented by an employee or a person employed in domestic or


household service;
The claimant does not seek reinstatement;
The claim arises from employer employee relationship;
The aggregate money claims of each employee or househelper does not
exceed Php. 5,000

Adjudicatory power:
The Regional Director or any of his duly authorized hearing officer is empowered
through summary proceeding and after due notice, to hear and decide cases
involving recovery of wages and other monetary claims and benefits, including legal
interests.

SUMMARY ON JURISDICTION:

If all the requisites are present - Regional Director of DOLE


If any of the requisites are absent, - Labor Arbiter
excluding employer-employee
relationship - Regional Trial Court
If there is no employer employee-
relationship

Can be delegated:
Under Sec. 2(e) D.O. No. 57-04 the DOLE may delegate to local government units the
conduct of technical safety inspection required under Art. 165 of the Labor Code.

Comprises:
Self-assessment is a voluntary compliance mode applicable to and encouraged in
establishments with at least 200 workers and, regardless of number of workers, to
unionized firms with CBAs.

Inspection is undertaken in workplaces with 10 to 199 workers by DOLE inspectors.

Advisory services provide services to establishment with less than 10 workers and
those registered as BMBEs (barangay micro-business enterprises). These small
businesses are given assistance to improve their productivity, thereby facilitating
their eventual compliance with labor standards.

- AUTHORITY/JURISDICTION OF THE SECRITARY OF LABOR/REGIONAL


DIRECTOR TO DETERMINE EXISTENCE OF EMPLOYER-EMPLOYEE
RELATIONSHIP

The Secretary of Labor or his duly authorized representatives is empowered to hear


and decide, in a summary proceeding, any matter involving the recovery of any
amount of wages and other monetary claims arising out of employer-employee
relations at the time of the inspection, even if the amount of the money claim
exceeds P5,000.00.
However, if the labor standards case is covered by the exception clause in Article
128(b) of the Labor Code, then the Regional Director will have to endorse the case
to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional
Director or his representatives of jurisdiction, the following elements must be
present: (a) that the employer contests the findings of the labor regulations officer
and raises issues thereon; (b) that in order to resolve such issues, there is a need to
examine evidentiary matters; and (c) that such matters are not verifiable in the
normal course of inspection. The rules also provide that the employer shall raise
such objections during the hearing of the case or at any time after receipt of the
notice of inspection results.
(Balladares vs Peak Ventures Corp., GR# 161794 06/16/09)

- Jethro Intelligence & Security Corp. vs Sec. of Labor (GR# 172537


08/14/09)

In the case at bar, the Secretary of Labor correctly assumed jurisdiction over the
case as it does not come under the exception clause in Art. 128(b) of the Labor
Code. While petitioner Jethro appealed the inspection results and there is a need to
examine evidentiary matters to resolve the issues raised, the payrolls presented by
it were considered in the ordinary course of inspection. While the employment
records of the employees could not be expected to be found in Yakults premises in
Calamba, as Jethros offices are in Quezon City, the records show that Jethro was
given ample opportunity to present its payrolls and other pertinent documents
during the hearings and to rectify the violations noted during the ocular inspection.
It, however, failed to do so, more particularly to submit competent proof that it was
giving its security guards the wages and benefits mandated by law.

Jethros failure to keep payrolls and daily time records in Yakults premises was not
the only labor standard violation found to have been committed by it; it likewise
failed to register as a service contractor with the DOLE, pursuant to Department
Order No. 18-02 and, as earlier stated, to pay the wages and benefits in accordance
with the rates prescribed by law.

- Peoples Broadcasting vs Sec. of Labor (GR# 179652 05/08/09)

The DOLE in the exercise of its visitorial and enforcement power somehow has to
make a determination of the existence of an employer-employee relationship. Such
prerogatival determination, however, cannot be coextensive with the visitorial and
enforcement power itself. Indeed, such determination is merely preliminary,
incidental and collateral to the DOLEs primary function of enforcing labor
standards provisions. The determination of the existence of employer-employee
relationship is still primarily lodged with the NLRC. This is the meaning of the clause
in cases where the relationship of employer-employee still exists in Art. 128 (b).

Thus, before the DOLE may exercise its powers under Article 128, two important
questions must be resolved: (1) Does the employer-employee relationship still
exist, or alternatively, was there ever an employer-employee relationship to speak
of; and (2) Are there violations of the Labor Code or of any labor law? The
existence of an employer-employee relationship is a statutory prerequisite to and a
limitation on the power of the Secretary of Labor, one which the legislative branch
is entitled to impose.

The rationale underlying this limitation is to eliminate the prospect of competing


conclusions of the Secretary of Labor and the NLRC, on a matter fraught with
questions of fact and law, which is best resolved by the quasi-judicial body, which is
the NRLC, rather than an administrative official of the executive branch of the
government. If the Secretary of Labor proceeds to exercise his visitorial and
enforcement powers absent the first requisite, as the dissent proposes, his office
confers jurisdiction on itself which it cannot otherwise acquire.

- Phil. Hoteliers Inc. vs NUWHRAIN-APL-IUF (GR# 181972 08/25/09)

Since Dusit Hotel is explicitly mandated by the Article 96 of the Labor Code to pay
its employees and management their respective shares in the service charges
collected, the hotel cannot claim that payment thereof to its 82 employees
constitute substantial compliance with the payment of ECOLA under WO No. 9.
Undoubtedly, the hotel employees right to their shares in the service charges
collected by Dusit Hotel is distinct and separate from their right to ECOLA;
gratification by the hotel of one does not result in the satisfaction of the other.

- Alberta Yanson vs Sec. of Labor (GR# 159026 02/11/09)

R. CLASSIFICATION OF EMPLOYEES
1. Regular vs Casual Employees

ART. 280. Labor Code. Regular and casual employment. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral agreement of
the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the
usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which has
been determined at the time of the engagement of the employee or where the work
or service to be performed is seasonal in nature and the employment is for the
duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding


paragraph: Provided, That any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.

SEC. 5. (Rule I, Book VI, IRR)


Regular and casual employment.
(a) The provisions of written agreements to the contrary notwithstanding and
regardless of the oral agreements of the parties, an employment shall be
considered to be regular employment for purposes of Book VI of the Labor Code
where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer except
where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is
seasonal in nature and the employment is for the duration of the season.
(b) Employment shall be deemed as casual in nature if it is not covered by the
preceding paragraph; Provided, That any employee who has rendered at least
one year of service, whether such service is continuous or not, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
(c) An employee who is allowed to work after a probationary period shall be
considered a regular employee.
REGULAR EMPLOYEE CASUAL EMPLOYEE
Engaged to perform activities Engaged to perform activities
which are usually necessary or which are not necessary or desirable
desirable in the usual business or in the usual business or trade of the
trade of the employer. employer.
Employee becomes a Regular An employee who is not seasonal,
Employee at the moment of project, or regular.
employment if he performs activities Employee becomes a Regular
which are usually necessary or Employee after 1 yr employment,
desirable in the usual business or whether continuous or broken, even if
trade of the employer. their function is not usually necessary
or desirable in the usual business or
trade of the employer.

- SMC vs Teodosio (GR# 163033 10/02/09)

There are two kinds of regular employees, namely:


(1) those who are engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer; and
(regular employees by nature of work)

(2) those who have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are employed.
(regular employees by years of service)

The former (1) refers to those employees who perform a particular activity which is
necessary or desirable in the usual business or trade of the employer, regardless of
their length of service;

While the latter (2) refers to those employees who have been performing the job,
regardless of the nature thereof, for at least a year.

If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability, of that activity to the business.

Based on the circumstances surrounding respondents employment by SMC, this


Court is convinced that he has attained the status of a regular employee long
before he executed the employment contract with a fixed period. Although
respondent was initially hired by SMC as a casual employee, respondent has
attained the status of a regular employee. Respondent was initially hired by SMC on
September 5, 1991 until March 1992. He was rehired for the same position in April
1992 which lasted for five to six months. After three weeks, he was again rehired as
a forklift operator and he continued to work as such until August 1993. Thus, at the
time he signed the Employment with a Fixed Period contract, respondent had
already been in the employ of SMC for at least twenty-three (23) months.

The Labor Code provides that a casual employee can be considered as a regular
employee if said casual employee has rendered at least one year of service
regardless of the fact that such service may be continuous or broken. Section 3,
Rule V, Book II of the Implementing Rules and Regulations of the Labor Code clearly
defines the term at least one year of service to mean service within 12 months,
whether continuous or broken, reckoned from the date the employee started
working, including authorized absences and paid regular holidays, unless the
working days in the establishment, as a matter of practice or policy, or as provided
in the employment contract, is less than 12 months, in which case said period shall
be considered one year. If the employee has been performing the job for at least
one year, even if the performance is not continuous or merely intermittent, the law
deems the repeated and continuing need for its performance as sufficient evidence
of the necessity, if not indispensability, of that activity to the business of the
employer.

- PLDT vs Arceo (489 SCRA 617 2006)

Under the foregoing provision, a regular employee is:

1. One who is either engaged to perform activities that are necessary or


desirable in the usual trade or business of the employer, or;
2. A casual employee who has rendered at least 1 year of service,
whether continuous or broken, with respect to the activity in which he is
employed.

- ABS-CBN vs Nazareno (503 SCRA 204 2006)

It is immaterial that petitioner hired respondents as "talents". The fact that


respondents received pre-agreed "talent fees" instead of salaries, that they did not
observe the required office hours, and that they were permitted to join other
productions during their free time are not conclusive of the nature of their
employment. Respondents cannot be considered as "talents" because they are not
actors or actresses or radio specialists or mere clerks or utility employees. They are
regular employees who perform several different duties under the control and
direction of ABS-CBN executives and supervisors.
The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer, does not
furnish an independent business or professional service, such work is a regular
employment of such employee and not an independent contractor.

Q: What is meant by Talent?


A:

- Poseidon Fishing vs NLRC (482 SCRA 717 2006)

As petitioners themselves admitted in their petition before this Court, private


respondent was repeatedly hired as part of the boat's crew and he acted in various
capacities onboard the vessel.

The test to determine whether employment is regular or not is the reasonable


connection between the particular activity performed by the employee in relation to
the usual business of trade of the employer;

If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the repeated
and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business.

The Court ruled that once a project or work pool employee has been:

1. Continuously re-hired by the same employer for the same tasks or nature of
tasks; and
2. These tasks are vital, necessary and indispensable to the usual business or trade
of the employer

Then the employee must be deemed to be a regular employee.

- Big AA Mfg. vs Antonio (484 SCRA 33 2006)

Considering the submission of the parties, we are constrained to agree with the
unanimous ruling of the Court of Appeals, NLRC and Labor Arbiter that respondents
are petitioners regular employees. Respondents were employed for more than one
year and their work as carpenters was necessary or desirable in petitioners usual
trade or business of manufacturing office furniture. Under Article 280 of the Labor
Code, the applicable test to determine whether an employment should be
considered regular or non-regular is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or
trade of the employer.

True, certain forms of employment require the performance of usual or desirable


functions and exceed one year but do not necessarily result to regular employment
under Article 280 of the Labor Code. Some specific exceptions include project or
seasonal employment. Yet, in this case, respondents cannot be considered project
employees. Petitioner had neither shown that respondents were hired for a specific
project the duration of which was determined at the time of their hiring nor
identified the specific project or phase thereof for which respondents were hired.

We also agree that Eutiquio was not an independent contractor for he does not
carry a distinct and independent business, and he does not possess substantial
capital or investment in tools, equipment, machinery or work premises. He works
within petitioners premises using the latters tools and materials, as admitted by
petitioner. Eutiquio is also under petitioners control and supervision. Attesting to
this is petitioners admission that it allowed respondents to use its facilities for the
proper implementation of job orders. Moreover, the Implementing Guidelines
regulating attendance, overtime, deadlines, penalties; providing petitioners right
to fire employees or contractors; requiring the carpentry division to join
petitioners exercise program; and providing rules on machine maintenance, all
reflect control and supervision over respondents.

- Paguio vs NLRC (GR# 147816 05/09/2003)


A "regular employment", whether it is one or not, is aptly gauged from the
concurrence, or non-concurrence, of the following factors;

1. The manner of selection and engagement of the putative employee,


2. The mode of payment of wages,
3. The presence or absence of the power of dismissal, and
4. The power to control the conduct of the putative employee or the
power to control the employee with respect to the means and methods by
which his work is to be accomplished.

The "control test" assumes primacy in the overall consideration. Under this test, an
employment relation obtains where work is performed of services are rendered
under the control and supervision of the party contracting for the service, not only
as to the result of the work but also as to the manner and details of the
performance desired.

2. Seasonal

- Hacienda Fatima vs NFSWF (396 SCRA 518)

The fact that respondents do not work continuously for 1 whole year but only for
the duration of the season does not detract from considering them in regular
employment since this Court has already settled that seasonal workers who are
called to work from time to time and are temporarily laid off during off-season are
not separated from service in said period, but merely considered on leave until-
reopened.

Q: May Seasonal Employees be Regular Employees?


A: YES. For the duration of the Season, they are protected by the Right to Security
of Tenure. Off-season, they are considered on leave, but they are still employed
such that if they are not made to work when the season resumes, that is
tantamount to illegal dismissal.

3. Project

GENERAL RULE:
Employment for at least 1 year, whether continuous or broken renders an
employee as REGULAR.

EXCEPTION:
When the employment is for a SPECIFIC PROJECT or UNDERTAKING.

EXCEPTION TO EXCEPTION:
Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee.

An employee is continuously, as opposed to intermittently, re-hired by the


same employer for the same tasks or nature of tasks, and, these tasks are
vital, necessary and indispensable to the usual business or trade of the
employer.

If after the project, the employer fails to submit the required Statistical
Report to the DOLE at the end of the project, the employees therein may be

- Ronilo Sorreda vs Cambridge Electronics Corp. (GR# 172927 02/11/10)

The Court cannot countenance the employees claim that a contract of perpetual
employment was ever constituted. While the Constitution recognizes the primacy of
labor, it also recognizes the critical role of private enterprise in nation-building and
the prerogatives of management. A contract of perpetual employment deprives
management of its prerogative to decide whom to hire, fire and promote, and
renders inutile the basic precepts of labor relations. While management may validly
waive it prerogatives, such waiver should not be contrary to law, public order,
public policy, morals or good customs. An absolute and unqualified employment for
life in the mold of petitioners concept of perpetual employment is contrary to
public policy and good customs, as it unjustly forbids the employer from
terminating the services of an employee despite the existence of a just or valid
cause. It likewise compels the employer to retain an employee despite the
attainment of the statutory retirement age, even if the employee has became a
non-performing asset or, worse, a liability to the employer.

- Willam Uy Construction Corp. vs Trinidad (GR# 183250 03/10/10)

The test for distinguishing a project employee from a regular employee is


whether or not he has been assigned to carry out a specific project or
undertaking, with the duration and scope of his engagement specified at the time
his service is contracted. Here, it is not disputed that petitioner company
contracted respondent Trinidads service by specific projects with the duration of
his work clearly set out in his employment contracts. He remained a project
employee regardless of the number of years and the various projects he worked for
the company.

Generally, length of service provides a fair yardstick for determining when an


employee initially hired on a temporary basis becomes a permanent one, entitled to
the security and benefits of regularization. But this standard will not be fair, if
applied to the construction industry, simply because construction firms cannot
guarantee work and funding for its payrolls beyond the life of each project. And
getting projects is not a matter of course. Construction companies have no control
over the decisions and resources of project proponents or owners. There is no
construction company that does not wish it has such control but the reality,
understood by construction workers, is that work depended on decisions and
developments over which construction companies have no say.

In this case, respondent Trinidads series of employments with petitioner company


were co-terminous with its projects. When its Boni Serrano-Katipunan Interchange
Project was finished in December 2004, Trinidads employment ended with it. He
was not dismissed. His employment contract simply ended with the project for
which he had signed up. His employment history belies the claim that he
continuously worked for the company. Intervals or gaps separated one contract
from another.

- Rosita Pangilinan vs GMC (GR# 149329 07/12/04)

Art. 280 of the Labor Code comprehends 3 kinds of employees;

A. Regular Employees or those whose work is necessary or indispensable


to the usual business of the employer,
B. Project Employees or those whose employment has been fixed for a
specific project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the work
or services to be performed is seasonal in nature and the employment is for the
duration of the season, and
C. Casual Employee or those who are neither regular not project
employees.

Stipulations in employment contracts providing for term employment or fixed


period employment are valid when the period were agreed upon knowingly and
voluntarily by the parties without force, duress or improper pressure, being brought
to bear upon the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and employee dealt
with each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter.

Lack of notice of termination is of no consequence, because when the contract


specifies the period of its duration, it terminates on the expiration of such period. A
contract for employment for a definite period terminates by its own term at the end
of such period.

- C.E. Construction Corp. vs Cloco, Jr. (GR# 156896 09/08/04)


The Supreme Court held that the fact that the workers have been employed with
the company for several years on various projects, the longest being 9 years, did
not automatically make them regular employees considering that the definition of
regular employment in Art. 280 of the Labor Code, makes specific exception with
respect to project employment.

The re-hiring of petitioners on a project-to-project basis did not confer upon them
regular employment status. The practice was dictated by the practical
consideration that experienced construction workers are more preferred. It did not
change their status as project employees.

- Abesco vs Ramirez (487 SCRA 9)

Project employees who work under different project employment contracts for
several years do not automatically become regular employees. Employees who are
members of a "work pool" from which a company draws workers for deployment to
its different projects do not become regular employees by reason of that fact alone.

The principal test in determining whether employees are "Project employees" or


"Regular employees" is whether they are assigned to carry out a specific project or
undertaking, the duration and scope of which are specified at the time they are
engaged for that project.

- Samson vs NLRC (GR# 113166 02/01/96)

Where from the circumstances it is apparent that periods have been imposed to
preclude the acquisition of tenurial security by the employee, they should be struck
down as contrary to public policy, morals, good customs, or public order.

As observed by the Solicitor General, the record of this case discloses, as part of
petitioners position paper, a certification duly issued by private respondent on a
continuing basis since 1965. The certification indubitably indicates that after a
particular project has been accomplished, petitioner would be re-hired immediately
the following day, save for a gap of 1 day to 1 week from the last project to the
succeeding one. There can, therefore, be no escape from the conclusion that
petitioner is a regular employee of private respondent.

- ABS-CBN vs Nazareno (503 SCRA 204)

The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer, does not
furnish an independent business or professional service, such work is a regular
employment of such employee and not an independent contractor.

While length of time may not be a sole controlling test for project employment, it
can be a strong factor to determine whether the employee was hired for a specific
undertaking or in fact tasked to perform functions which are vital, necessary and
indispensable to the usual trade or business of the employer.

- Poseidon Fishing vs NLRC (482 SCRA 717)

The acid test in considering fixed-term contracts as valid is; if from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be disregarded for
being contrary to public policy.

- PLDT vs Ylagan (508 SCRA 31)

A project is a job or undertaking which is distinct, separate and identifiable from the
undertakings of the company, and a project employee is assigned to a project
which begins and ends at determined or determinable times.

Once someone claimed as a project employee has been;

1. Continuously, as opposed to intermittently, re-hired by the same


employer for the same tasks or nature of tasks, and,
2. These tasks are vital, necessary and indispensable to the usual
business or trade of the employer,

Then the employee must be deemed a regular employee.

- Bahia Shipping Services vs Chua (GR# 162195 -04/08/08)

Although an overseas employment contract may guarantee the right to overtime


pay, entitlement to such benefit must first be established, otherwise the same
cannot be allowed.

- Virgilio Sapio vs Castro (GR# 155034 05/22/08)

Absent any evidence to the contrary, good faith must be presumed in this case.
Entries in the payroll, being entries in the course of business, enjoy the
presumption of regularity under Sec. 43, Rule 130. Hence, while as a general rule,
the burden of proving payment of monetary claims rests on the employer, when
fraud is alleged in the preparation of the payroll, the burden of evidence shifts to
the employee and it is incumbent upon him to adduce clear and convincing
evidence in support of his claim. Unfortunately, petitioners bare assertions of fraud
do not suffice to overcome the disputable presumption of regularity.

4. Piece Rate

- Labor Congress of the Phils vs NLRC (290 SCRA 509)

While petitioners mode of compensation was on a "per piece" basis, the status and
nature of their employment was that of regular employees.

As to the other benefits, namely, holiday pay, premium pay, 13th month pay, and
service incentive leave which the Labor Arbiter failed to rule on but which
petitioners prayed for in their complaint, we hold that petitioners are so entitled to
these benefits.

Three (3) factors lead us to conclude that petitioners, although piece rate workers,
were regular employees of private respondents.

1. As to the nature of petitioners tasks, their job of repacking snack food


was necessary or desirable in the usual business of private respondents, who
were engaged in the manufacture and selling of such food products.
2. Petitioners worked for private respondents throughout the year, their
employment not having been dependent on a specific project or season.
3. The length of time that petitioners worked for private respondents.

- Lambo vs NLRC (10/26/99)

There are two categories of employees paid by results:

1. Those whose time and performance are supervised by the employer. (Here, there
is an element of control and supervision over the manner as to how the work is to
be performed. A piece-rate worker belongs to this category especially if he
performs his work in the company premises.)

2. Those whose time and performance are unsupervised. (Here, the employers
control is over the result of the work. Workers on pakyao and takay basis belong to
this group.)

Both classes of workers are paid per unit accomplished. In this case, petitioners
belong to the first category.

NOTES:

Why is fixed term employment allowed?


Because Art. 280, LC, enumerating instances of employment with a period, is NOT
exclusive. It merely enumerates the examples, it is not the sole and exclusive scope
of employment.
Art. 280 of the Labor Code, under a narrow and literal interpretation, not only fails to
exhaust the gamut of employment contracts to which the lack of a fixed period would
be an anomaly, but would also appear to restrict, without reasonable distinctions, the
right of an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such literal interpretation should be eschewed or
avoided. (Brent School, Inc. vs. Zamora, Feb. 5, 1990)

The decisive determinant in term employment should not be the activities that the
employee is called upon to perform, BUT the day certain agreed upon by he
parties for the commencement and termination of their employment relationship, a
day certain being understood to be that which must necessarily come, although it
may not be known when. The term period was further defined to be the length of
existence; duration (Phil. Village Hotel vs. NLRC, 230 SCRA 423)

GENERAL RULE:
Fixed term employment is valid

EXCEPTION:
When such agreement is entered into to circumvent the security of tenure. [that is,
repetitive hiring with proof of circumvention of the law; contract is void, hence
employee is regular]

Two criteria used to test the validity of fixed term employment:


(a) The fixed period of employment was knowingly and voluntarily agreed upon
by the parties without any force, duress or improper pressure being brought to
bear upon the employee and absent any other circumstances vitiating his
consent; or
(b) It satisfactorily appears that the employer and the employee dealt with each
other on more or less equal terms with no moral dominance whatever being
exercised by the former on the latter. [Pantranco North Express, Inc. vs. NLRC,
239 SCRA 272]

5. Probationary

ART. 281. Labor Code. Probationary employment. - Probationary employment shall


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

SEC. 6. (Rule I, Book VI, IRR)


Probationary employment. (a) Where the work for which an employee has been
engaged is learnable or apprenticeable in accordance with the standards prescribed
by the Department of Labor, the probationary employment period of the employee
shall be limited to the authorized learnership or apprenticeship period, whichever is
applicable.

(b) Where the work is neither learnable nor apprenticeable, the probationary
employment period shall not exceed six (6) months reckoned from the date the
employee actually started working.

(c) The services of an employee who has been engaged on probationary basis may
be terminated only for a just cause or when authorized by existing laws, or when he
fails to qualify as a regular employee in accordance with reasonable standards
prescribed by the employer.

(d) In all cases involving employees engaged on probationary basis, the employer
shall make known to the employee the standards under which he will qualify as a
regular employee at the time of his engagement.

ART. 58. Labor Code. - Definition of Terms. - As used in this Title:


(a) "Apprenticeship" means practical training on the job supplemented by related
theoretical instruction.

(b) An "apprentice" is a worker who is covered by a written apprenticeship


agreement with an individual employer or any of the entities recognized under this
Chapter.

(c) An "apprenticeable occupation" means any trade, form of employment or


occupation which requires more than three (3) months of practical training on the job
supplemented by related theoretical instruction.

(d) "Apprenticeship agreement" is an employment contract wherein the employer


binds himself to train the apprentice and the apprentice in turn accepts the terms of
training.

ART. 73. Labor Code. Learners defined. - Learners are persons hired as trainees in
semi-skilled and other industrial occupations which are non-apprenticeable and which
may be learned through practical training on the job in a relatively short period of
time which shall not exceed three (3) months.

GENERAL RULE:
Probationary Period shall not Exceed 6 months.

EXCEPTIONS:
Apprenticeship - Not more than 6 months (Sec. 19, Rule II, Book VI, IRR)
Learners - Not more than 3 months (Art. 73, Labor Code)

- Cebu Marine Beach Resort vs NLRC (GR# 143252 10/23/03)

It is settled that while probationary employees do not enjoy permanent status, they
are entitled to the constitutional protection of security of tenure. Their employment
may only be terminated for just cause or when they fail to qualify as regular
employees in accordance with reasonable standards made known to them by their
employer at the time of engagement, and after due process.

Being in the nature of a "trial period", the essence of a probationary period of


employment fundamentally lies in the purpose or objective sought to be attained
by both the employer and the employee during said period.

- Radin Alcira vs NLRC (GR# 149859 06/09/04)

It is settled that even if probationary employees do not enjoy permanent status,


they are accorded the constitutional protection of security of tenure. This means
they may only be terminated for just cause or when they fail to qualify as regular
employees in accordance with reasonable standards made known to them by the
employer.

However, this constitutional protection ends on the expiration of the probationary


period. On that date, the parties are free to either renew or terminate their contract
of employment.

- HOW LONG IS THE PROBATIONARY PERIOD?

Applying Art. 13 of the Civil Code, the probationary period of 6 months consists of
180 days. This is in conformity with par. 1 of Art. 13 of the Civil Code, which
provides that the months which are not designated by their names shall be
understood as consisting of 30 days each.

Under Art. 282 of the Labor Code, an unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual neglect of duties. Gross
negligence has been defined to be the want or absence of even slight care or
diligence as to amount to reckless disregard of the safety of person or property. It
evinces a thoughtless disregard of consequences without exerting any effort to
avoid them. In this case, there is no such evidence of gross negligence on the part
of Private Respondent.
(Mistubishi Motors vs Chrysler Phils. Labor Union, GR# 148738 06/29/04)

NOTE:
In Mariwasa Manufacturing, Inc. vs. Leogardo (G.R. No 74246 01/26/89), the
Supreme Court stated that the extension of the probationary period was ex gratia,
an act of liberality on the part of the employer affording the employee a second
chance to make good after having initially failed to prove his worth as an employee.
Such an act cannot unjustly be turned against said employers account to compel it
to keep on its payroll one who could not perform according to its work standards.
By voluntarily agreeing to an extension of the probationary period, the employee in
effect waived any benefit attaching to the completion of said period if he still failed
to make the grade during the period of extension.

- GROUNDS FOR TERMINATING A PROBATIONARY EMPLOYEE

It is an elementary rule in the law on labor relations that a probationary employee


engaged to work beyond the probationary period of 6 months, as provided under
Art. 281 of the Labor Code, or for any length of time set forth by the employer (3
months in this case), shall be considered a regular employee. Any circumvention of
this provision would be violative of the State's avowed protection for labor.

As stated in Art. 281, a probationary employee can be legally terminated either;

1. For a just cause; or,


2. When the employee fails to qualify as a regular employee in
accordance with the reasonable standards made known to him by the employer
at the start of the employment.

Nonetheless, the power of the employer to terminate an employee on probation is


not without limitations;

1. This power must be exercised on accordance with the specific


requirements of the contract.
2. The dissatisfaction on the part of the employer must be real and in
good faith, not feigned so as to circumvent the contract of the law.
3. There must be no unlawful discrimination in the dismissal.

In termination cases, the burden of proving just or valid cause for dismissing an
employee rests on the employer.
(Dusit Hotel Nikko vs Gatbonton, GR# 161654 05/05/06)

- Mercado vs AMA Computer (GR# 183572 04/13/10)

If the school were to apply the probationary standards (as in fact it says it did in the
present case), these standards must not only be reasonable but must have also
been communicated to the teachers at the start of the probationary period, or at
the very least, at the start of the period of application of the said standards. These
terms, in addition to those expressly provided by the Labor Code, would serve as
the just cause for the termination of the probationary contract. As explained
above, the details of this finding of just cause must be communicated to the
affected teachers as a matter of due process.

AMACC, by its submissions, admits that it did not renew the petitioners contracts
because they failed to pass the Performance Appraisal System for Teachers (PAST)
and other requirements for regularization that the school implements to maintain
its high academic standards. The evidence is unclear on the exact terms of the
standards, although the school also admits that these were standards under the
Guidelines on the Implementation of AMACC Faculty Plantilla put in place at the
start of school year 2000-2001.

While the Court can grant that the standards were duly communicated to the
petitioners and could be applied beginning the 1st trimester of the school year
2000-2001, glaring and very basic gaps in the schools evidence still exist. The
exact terms of the standards were never introduced as evidence; neither does the
evidence show how these standards were applied to the petitioners. Without these
pieces of evidence (effectively, the finding of just cause for the non-renewal of the
petitioners contracts), the Court has nothing to consider and pass upon as valid or
invalid for each of the petitioners. Inevitably, the non-renewal (or effectively, the
termination of employment of employees on probationary status) lacks the
supporting finding of just cause that the law requires and, hence, is illegal.

PROBATIONARY PERIOD FOR TEACHERS


(Sec. 96, Manual of Regulations for Private School)

Elementary Teachers - 3 consecutive years of satisfactory service


High-School Teachers - 3 consecutive years of satisfactory service
College Teachers
Semestral - 6 consecutive semesters of satisfactory
service
Trimestral - 9 consecutive semesters of satisfactory
service

S. HOURS OF WORK
SUMMARY:

The Labor Code allows not more than 8 hrs work per day, and not more than 6 days
per week, subject to certain exemptions.

1. Hours of Work Defined

ART. 83. Labor Code. Normal hours of work. - The normal hours of work of any
employee shall not exceed eight (8) hours a day.

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

ART. 84. Labor Code. Hours worked. - Hours worked shall include:
a. all time during which an employee is required to be on duty or to be at a
prescribed workplace; and
b. all time during which an employee is suffered or permitted to work.

Rest periods of short duration during working hours shall be counted as hours
worked.

(Rule I, Book III, IRR)


SECTION 3. Hours worked. The following shall be considered as compensable
hours worked:

(a) All time during which an employee is required to be on duty or to be at the


employer's premises or to be at a prescribed work place; and
(b) All time during which an employee is suffered or permitted to work.

SECTION 4. Principles in determining hours worked. The following general


principles shall govern in determining whether the time spent by an employee is
considered hours worked for purposes of this Rule:
(a) All hours are hours worked which the employee is required to give his
employer, regardless of whether or not such hours are spent in productive labor
or involve physical or mental exertion.
(b) An employee need not leave the premises of the work place in order that his
rest period shall not be counted, it being enough that he stops working, may rest
completely and may leave his work place, to go elsewhere, whether within or
outside the premises of his work place.
(c) If the work performed was necessary, or it benefited the employer, or the
employee could not abandon his work at the end of his normal working hours
because he had no replacement, all time spent for such work shall be considered
as hours worked, if the work was with the knowledge of his employer or
immediate supervisor.
(d) The time during which an employee is inactive by reason of interruptions in
his work beyond his control shall be considered working time either if the
imminence of the resumption of work requires the employee's presence at the
place of work or if the interval is too brief to be utilized effectively and gainfully in
the employee's own interest.

NOTE:
Part-time workers are allowed because the Labor Code prescribes 8 hrs as the
MAXIMUM not the MINIMUM.

Principles and Concepts

- FAIR DAYS WAGE FOR A FAIR DAYS LABOR

The age-old rule governing the relation between labor and capital, or management
and employee, of a "Fair Day's Wage for a Fair Day's Labor" remains as the basic
factor in determining employees wages. If there is no work performed by the
employee, there can be no wage or pay - unless, of course, the laborer was able,
willing, and ready to work but was illegally locked out, suspended, or dismissed, or
otherwise illegally prevented from working. Such situation is not present here, so
respondent should be exempted from the burden of paying backwages.
(Navarro vs P.V. Pajarillo Liner Inc., GR# 164681 04/24/09)

2. Rest Period

(Art. 84, Labor Code)


Rest periods of short duration during working hours shall be counted as hours
worked.

(Sec. 7, Rule I, Book III, IRR)


Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be
considered as compensable working time.

3. Meal Break

ART. 85. Labor Code. Meal periods. - Subject to such regulations as the Secretary
of Labor may prescribe, it shall be the duty of every employer to give his employees
not less than sixty (60) minutes time-off for their regular meals.

(Rule I, Book III, IRR)


SECTION 7. Meal and Rest Periods. Every employer shall give his employees,
regardless of sex, not less than one (1) hour time-off for regular meals, except in the
following cases when a meal period of not less than twenty (20) minutes may be
given by the employer provided that such shorter meal period is credited as
compensable hours worked of the employee:

(a) Where the work is non-manual work in nature or does not involve strenuous
physical exertion;
(b) Where the establishment regularly operates not less than sixteen (16) hours a
day;
(c) In case of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss which
the employer would otherwise suffer; and
(d) Where the work is necessary to prevent serious loss of perishable goods.

- PAL vs NLRC (GR# 132805 02/02/99)

The eight-hour work period does not include the meal break. Nowhere in the law
may it be inferred that employees must take their meals within the company
premises. Employees are not prohibited from going out of the premises as long as
they return to their posts on time. Private respondents act, therefore, of going
home to take his dinner does not constitute abandonment.

4. Workweek (Case of Hospital Personnel, Art. 83)

ART. 91. Labor Code. Right to weekly rest day. - (a) It shall be the duty of every
employer, whether operating for profit or not, to provide each of his employees a rest
period of not less than twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.

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

(Art. 83, Labor Code)


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

NOTE:

Compressed Work Week (CWW)


CWW is resorted by the employer to prevent serious losses due to causes beyond his
control, such as when there is substantial slump in demand for his goods or services
or when there is lack of raw materials. To be an exception to the eight-hour a day
requirement, the workers must agree to the temporary change of work schedule and
they do not suffer any loss of overtime pay, fringe benefits or their weekly or monthly
take-home pay. (DOLE Explanatory Bulletin, July 23, 1985)

Conditions of a valid CWW scheme


(DOLE Advisory No. 02, Series of 2004)

1. It is expressly and voluntarily supported by majority of the employees affected.


2. If work is hazardous, a certification is needed from an accredited safety
organization or the firms safety committee that work beyond 8 hours is within
the limits or levels of exposure act by DOLES occupational safety and health
standards.
3. The DOLE is duly notified.

5. Overtime Pay

ART. 87. Labor Code. Overtime work. - Work may be performed beyond eight (8)
hours a day provided that the employee is paid for the overtime work, an additional
compensation equivalent to his regular wage plus at least twenty-five percent (25%)
thereof. Work performed beyond eight hours on a holiday or rest day shall be paid an
additional compensation equivalent to the rate of the first eight hours on a holiday or
rest day plus at least thirty percent (30%) thereof.

ART. 88. Labor Code. Undertime not offset by overtime. - Undertime work on any
particular day shall not be offset by overtime work on any other day. Permission
given to the employee to go on leave on some other day of the week shall not
exempt the employer from paying the additional compensation required in this
Chapter.

ART. 93. Labor Code. Compensation for rest day, Sunday or holiday work.
(a) 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.

(b) When the nature of the work of the employee is such that he has no regular
workdays and no regular rest days can be scheduled, he shall be paid an additional
compensation of at least thirty percent (30%) of his regular wage for work performed
on Sundays and holidays.

(c) Work performed on any special holiday shall be paid an additional compensation
of at least thirty percent (30%) of the regular wage of the employee. Where such
holiday work falls on the employees scheduled rest day, he shall be entitled to an
additional compensation of at least fifty per cent (50%) of his regular wage.

(d) Where the collective bargaining agreement or other applicable employment


contract stipulates the payment of a higher premium pay than that prescribed under
this Article, the employer shall pay such higher rate.

RULE I, BOOK III, IRR


SECTION 8. Overtime pay. Any employee covered by this Rule who is permitted
or required to work beyond eight (8) hours on ordinary working days shall be paid an
additional compensation for the overtime work in the amount equivalent to his
regular wage plus at least twenty-five percent (25%) thereof.

SECTION 9. Premium and overtime pay for holiday and rest day work.

(a) Except employees referred to under Section 2 of this Rule, an employee who is
permitted or suffered to work on special holidays or on his designated rest days not
falling on regular holidays, shall be paid with an additional compensation as premium
pay of not less than thirty percent (30%) of his regular wage. For work performed in
excess of eight (8) hours on special holidays and rest days not falling on regular
holidays, an employee shall be paid an additional compensation for the overtime
work equivalent to his rate for the first eight hours on a special holiday or rest day
plus at least thirty percent (30%) thereof.

(b) Employees of public utility enterprises as well as those employed in non-profit


institutions and organizations shall be entitled to the premium and overtime pay
provided herein, unless they are specifically excluded from the coverage of this Rule
as provided in Section 2 hereof.

(c) The payment of additional compensation for work performed on regular holidays
shall be governed by Rule IV, Book Three, of these Rules.

Performed in an Ordinary Day = + 25% per Hour over 8 hrs.


(Ar. 87, Labor Code)
Performed on a Rest Day or on a Special Day = 130%
(Sec. 9, Rule I, Book III, IRR)
Performed on a Rest Day which falls on a Special Day = 150%
(Art. 93(c), Labor Code)
Performed overtime work on a Regular Holiday = 260%
(Art. 87, Labor Code)
Performed on a Rest Day which falls on a Regular Holiday = 260%
(Sec. 9, Rule I, Book III, IRR)

- Damasco vs NLRC (GR# 115755 12/04/00)

Circumstances when an employee will be compelled to render


overtime and consequences of refusal

GENERAL RULE:
Employees Cannot be COMPELLED to render Overtime Work.

EXCEPTIONS:

ART. 92. Labor Code. When employer may require work on a rest day. - The
employer may require his employees to work on any day: EMAPIS

a. In case of actual or impending Emergencies caused by serious accident, fire,


flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent
loss of life and property, or imminent danger to public safety;

b. In cases of urgent work to be performed on the Machinery, equipment, or


installation, to avoid serious loss which the employer would otherwise suffer;

c. In the event of Abnormal pressure of work due to special circumstances,


where the employer cannot ordinarily be expected to resort to other
measures;

d. To Prevent loss or damage to perishable goods;

e. Where the nature of the work requires continuous operations and the
stoppage of work may result in Irreparable injury or loss to the employer; and

f. Under other circumstances analogous or similar to the foregoing as


determined by the Secretary of Labor and Employment.

(Rule I, Book III, IRR)


SEC. 10 Compulsory overtime work. In any of the following cases, an employer
may require any of his employees to work beyond eight (8) hours a day, provided
that the employee required to render overtime work is paid the additional
compensation required by these regulations: WPMLSF

a. When the country is at War or when any other national or local


emergency has been declared by Congress or the Chief Executive;
b. When overtime work is necessary to Prevent loss of life or property, or
in case of imminent danger to public safety due to actual or impending
emergency in the locality caused by serious accident, fire, floods, typhoons,
earthquake, epidemic or other disaster or calamities;
c. 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 causes of similar nature;
d. When the work is necessary to prevent Loss or damage to perishable
goods;
e. When the completion or continuation of work started before the 8th
hour is necessary to prevent Serious obstruction or prejudice to the business
or operations of the employer; or
f. When overtime work is necessary to avail of Favorable weather or
environmental conditions where performance or quality of work is dependent
thereon.

In cases not falling within any of these enumerated in this Section, no employee
may be made to work beyond eight hours a day against his will.

6. Premium Pay

Refers to additional compensation for work performed within eight (8) hours on non-
work days, such as rest days, special days, holidays, etc.

Premium pay on a Rest Day Work


Premium on Sunday when it is the Employees Rest Day
Premium Pay on Sundays and Holidays when Employee has no
Regular Workdays and No Scheduled Regular Rest Day
Premium Pay for work performed on Special Holidays (now Special
Days) which fall on an Employees Scheduled Rest Day
Premium Pay for work performed during Special Day

REGULAR HOLIDAY SPEICAL DAY


Compensable even if unworked, subject Not compensable if unworked.
to certain conditions.

Limited to 11 enumerated by the Not exclusive since a law or ordinance


Administrative Code or the Labor Code. may provide for other special days.

Rate is 200% of the regular rate if Rate is 130% of regular rate if worked.
worked.

DAY RATE OF ADDITIONAL


COMPENSATION
Premium pay on a Rest Day Work Entitled to 130% of the daily rate

Premium on Sunday when it is the Entitled to 130% of the daily rate


Employees Rest Day

Premium Pay on Sundays and Holidays Entitled to 130% of the daily rate for
when Employee has no Regular worked performed on Sundays and
Workdays and No Scheduled Regular holidays
Rest Day

Premium Pay for work performed on Entitled to 150% of the daily rate
Special Holidays (now Special Days)
which fall on an Employees Scheduled
Rest Day

Premium Pay for work performed Entitled to 130% of the daily rate
during Special Day

Premium Pay for work performed on a Entitled to 230% of the daily rate
Regular Holiday falling on a scheduled
Rest Day.

7. Holiday Pay

Definition
Eleven(12) Regular Holidays and Two (3) Special Days under R.A.
9849 (12/11/09)

Section 2. Section 26, Chapter 7 of Executive Order No 292, otherwise known as


the Revised Administrative Code of 1987 is hereby amended to read as follows:

Sec. 26. Regular Holidays and Nationwide Special Days (1) Unless otherwise
modified by law, order or proclamation, the following regular holidays and special
days shall observed in the country.

REGULAR HOLIDAYS

New Years Day - January 1

Maundy Thursday- Movable Date

Good Friday - Movable Date

Eidul Fitr - Movable Date

Eidul Adha - Movable Date

Araw ng Kagitingan - Monday nearest April 9

Labor Day - Monday nearest May 1

Independence Day - Monday nearest June 12

National Heroes Day - Last Monday of August

Bonifacio Day - Monday nearest November 30

Christmans Day - December 25

Rizal Day - Monday nearest December 30

NATIONWIDE SPECIAL DAYS/HOLIDAYS

Ninoy Aquino Day- Monday nearest August 21

All Saints Day - November 1

Last Day of the Year - December 31

Application of Principle of No Work, No Pay


Effects of Absences during successive Regular Holidays

Rule in case Two(2) Regular Holidays falling on the same day.

- Asian Transmission Corp. vs CA (GR# 144664 03/15/04)

Holiday pay is a legislated benefit enacted as part of the Constitutional


imperative that the State shall afford protection to labor. Its purpose is not
merely "to prevent diminution of the monthly income of the workers on account
of work interruptions. In other words, although the worker is forced to take a
rest, he earns what he should earn, that is, his holiday pay". It is also intended
to enable the worker to participate in that national celebrations held during the
days identified as with great historical and cultural significance.

Art. 94 of the Labor Code affords a worker the enjoyment of 10 paid regular
holidays. The provision is mandatory, regardless of whether an employee is paid
on a monthly or daily basis. Unlike a bonus, which is a management
prerogative, holiday pay is a statutory benefit demandable under the law. Since
a worker is entitled to the enjoyment of 10 paid regular holidays, the fact that 2
holidays fall on the same date should not operate to reduce to 9 the 10 holiday
pay benefits a worker is entitled to receive.

Sec. 11, Rule IV, Book III of the IRR provides that "Nothing in the law or the rules
shall justify an employer in withdrawing or reducing any benefits, supplements
or payments for unworked regular holidays as provided in existing individual or
collective agreement or employer practice or policy.

Application of Muslim Holiday to Non-Muslims

- SMC vs CA (GR# 146775 01/30/02)

Muslim holidays are provided under Art. 169 and 170, Title I, Book V, of P.D.
1083, otherwise known as the Code of Muslim Personal Laws.

P.D. 1083 provides that "the provisions of this Code shall be applicable only to
Muslims". However, there should be no distinction between Muslims and Non-
Muslims as regards payment of benefits for Muslims holidays. The CA did not err
in sustaining Undersecretary Espanol who stated: "Assuming arguendo that the
respondents position is correct, then by the same token, Muslims throughout
the Philippines are also not entitled to holiday pays on Christian holidays
declared by law as regular holidays." We must remind the respondent-appellant
that wages and other emoluments granted by law to the working man are
determined on the basis of the criteria laid down by laws and certainly not on
the basis of the workers faith or religion. At any rate, Art. 3(3) of P.D. 1083 also
declares that "nothing herein shall be construed to operate to the prejudice of a
non-Muslim."

- Trans-Asia Employees Assoc. vs NLRC (GR# 118289 12/13/99)

- Arellano Univ. EEs and Workers Union vs CA (GR# 139940 09/19/06)

As for petitioners claim of substantial diminution of their salary on account of


the divisor used by the University in its computation - 314 days, instead of 365
days, - this Court finds nothing wrong therewith. Sundays being un-worked and
considered unpaid rest days, while regular holidays as well as special holidays
considered as paid days, the factor used by the University merely complies with
the basic rule in this jurisdiction of "no work, no pay". The right to be paid for
unworked days is generally limited to the ten legal holidays in a year.

8. Service Incentive Leave

- Imbuido vs NLRC (GR# 114734 03/31/00)

- Integrated Contractor & Plumbing Works Inc. vs NLRC (GR# 152427


08/09/05)

Art. 95(a) of the Labor Code governs the award of service incentive leave. It
provides that every employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of 5 days with pay, and Sec. 3, Rule
V, Book III, IRR, defines the term "at least 1 year f service" to mean service within
12 months, whether continuous or broken reckoned from the date the employee
started working, including authorized absences and paid regular holidays, unless
the working days in the establishment as a matter of practice or policy, or that
provided in the employment contract is less than 12 months, in which case said
period shall be considered as 1 year.

Accordingly, private respondents service incentive leave credits of 5 days for every
year of service, based on the actual service rendered to the petitioner, in
accordance with each contract of employment should be computed up to the date
of reinstatement pursuant to Art. 279 of the Labor Code.

- Auto Bus Transport System Inc. vs Bautista (GR# 156367 05/16/05)

In the case of service incentive leave, the employee may choose to either use his
leave credits or commute it to its monetary equivalent if not exhausted at the end
of the year. Furthermore, if the employee entitled to service incentive leave does
not use or commute the same, he is entitled upon his resignation or separation
from work to the commutation of his accrued service incentive leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers
in all establishments, subject to a few exceptions. Sec. 2, Rule V, Book III, IRR
provides that "every employee who has rendered at least 1 year of service shall be
entitled to a yearly service incentive leave of 5 days with pay".

Service incentive leave is a right which accrues to every employee who has served
"within 12 months, whether continuous or broken reckoned from the date the
employee started working, including authorized absences and paid regular holidays
unless the working days in the establishment as a matter of practice or policy, or
that provided in the employment contracts is less than 12 months, in which case
said period shall be considered as 1 year".

Applying Art. 291 of the Labor Code in light of this peculiarity of the service
incentive leave, we can conclude that the 3-year prescriptive period commences,
not at the end of the year when the employee becomes entitled to the
commutation of his service incentive leave, but from the time when the employer
refuses to pay its monetary equivalent after demand of commutation or upon
termination of the employee's services, as the case may be.

- ARCO Metal Products vs Samahan ng Manggagawa sa ARCO (GR# 170734


05/14/08)

Service Incentive Leave Vacation Leave


Provided under the law (Article 95, Is not provided under the law.
Labor Code).
Matter of right. Not a matter of right.
Convertible to cash if not used. It is upon the employer to decide whether or
not to convert unused vacation leave of his
employees to cash. Once granted, the
employer has absolute right to regulate it with
respect to forfeiture or convertibility to cash.
Cannot be waived. It can be waived.
As a requirement, at least 1 year On the other hand, the requirements to be
of service is needed to be entitled entitled to vacation leave may differ,
to service incentive leave. depending upon the policy or practice of the
company or the employer. Usually given to
employees who have become regular or
permanently employed.
Purposes: Purpose:
(a) For the benefit and welfare To afford to a laborer a chance to get a much
of the employee (working is needed rest to replenish his worn out
always stressful, hence the energies and acquire a new vitality to enable
provision relieves the
him to efficiently perform his duties and not
worker from his job for a
maximum of 5 days upon merely to give him additional salary or
the condition that he has bounty.
worked for at least 1 year).
(b) A way of showing, on the
part of the employer, to his
workers his appreciation for
their loyalty to the company
(continued service).
9. Night-Shift Pay

Where Night Shift (10pm to 6am) Work is Regular Work


Where Night Shift (10pm to 6am) Work is Overtime Work

10. 13th Month Pay

Who are entitled to 13th Month Pay?

- Clarion Printing House Inc. vs NLRC (GR# 148372 06/27/05)

- JPL Mktg. Promotions vs CA (GR# 151966 07/08/05)

JPL cannot escape the payment of 13th month pay and service incentive leave
pay to private respondents. Said benefits are mandated by law and should be
given to employees as a matter of right. P.D. 851 as amended, requires an
employer to pay its rank and file employees a 13th month pay not later than
December 24 of every year.

However, employers not paying their employees a 13th month pay or its
equivalent are not covered by said law. The term "its equivalent" was defined
by the law's implementing guidelines as including Christmas Bonus, Mid-Year
Bonus, Cash Bonuses, and other payment amounting to not less than 1/2 of the
basic salary but shall not include cash and stock dividends, cost-of-living
allowances and all other allowances regularly enjoyed by the employee, as well
as non-monetary benefits.

The difference between the minimum wage and the actual salary received by
the employees cannot be deemed as their 13th Month Pay and Service Incentive
Leave Pay as such difference is not equivalent to or of the same import as the
said benefits contemplated by law.

While computation for the 13th Month Pay should properly begin from the first
day of employment, the Service Incentive Leave Pay should start a year after
commencement of service, for it is only then that the employee is entitled to
said benefit.

- PAL vs PALEA (GR# 142399 03/12/08)

P.D. 851 mandates that all employers must pay all their employees receiving a
basic salary of not more than P1,000 per month, regardless of the nature of the
employment, a 13th month pay not later than December 24 of every year.

Memorandum Order No. 28, dated August 18, 1986, removed the salary ceiling,
generally making all employees entitled to 13th month pay regardless of the
amount of their basic salary, designation, or employment status, and
irrespective of the method by which their wages are paid, provided that they
have worked for at least 1 month during the calendar year.

P.D. 851, as amended, does not admit of certain exceptions or exclusions from
its coverage, among which is Sec. 3(c). Employers already paying their
employees 13th month pay or more in a calendar year or its equivalent at the
time of this issuance.

Employers exempted from 13th Month Pay Law


Tax Exemption
The phrase Its Equivalent in the 13th Month Pay Law
RELEVANT CASE:

- Sevilla Trading Co. vs A.V.A. Tomas E. Semana (GR# 152456


04/28/04)

11.Service Charges
12.Exemptions

- Penaranda vs Baganga Plywood Corp. (GR# 159577 05/03/06)

Art. 82 of the Labor Code exempts MANAGERIAL EMPLOYEES from the coverage of
Labor Standards. Labor Standards provide the working conditions of employees,
including entitlement to overtime pay and premium pay for working on rest days.
Under this provision, managerial employees are "those whose primary duty consists
of the management of the establishment in which they are employed or of a
particular department or subdivision."

The Implementing Rules of the Labor Code state that managerial employees are
those who meet the following conditions:

1. Their primary duty consists of the management of the establishment in which


they are employed or of a department or subdivision thereof;

2. They customarily and regularly direct the work of two or more employees
therein;

3. They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the
promotion or any other change of status of other employees are given
particular weight.

The Court disagrees with the NLRC's finding that petitioner was a managerial
employee. However, petitioner was a member of the Managerial Staff, which also
takes him out of the coverage of Labor Standards. Like Managerial Employees,
Officers, and Members of the Managerial Staff are not entitled to the provisions of
Labor Standards Law.

Noteworthy, even petitioner admitted that he was a supervisor. In his position


paper, he stated that he was the foreman responsible for the operation of the
boiler. The term "foreman" implies that he was the representative of management
over the workers and the operation of the department.

T. JOB CONTRACTING AND LABOR-ONLY CONTRACTING

JOB CONTRACTING VS LABOR-ONLY CONTRACTING

JOB CONTRACTING LABOR-ONLY CONTRACTING


1) The employer or principal is merely 1) The employer or principal is treated
an indirect employer, by operation of as direct employer of his contractors
law, of his contractors employees; employees in all instances;
2) The law creates an employer- 2) The statute creates an employer-
employee relationship for a limited employee relationship for a
purpose, the ensure that the workers comprehensive purpose to prevent a
are paid with their wages; circumvention of labor laws;
3) The principal becomes solidarily 3) The principal becomes solidarily
liable with the contractor only when liable with the contractor not only for
latter fails to pay the employees wages unpaid wages but for all the rightful
and for the violation of labor standard claims of the employees under the
laws. The liability, however, is does not Labor Code and ancillary laws
extend to the payment of backwages or 4) Prohibited by law; and
separation pay of employees who are 5) Absence of substantial capital or
illegally dismissed; investment
4) Permissible
5) Presence of substantial capital or
investment.

JOB CONTRACTING
There is contracting or subcontracting when an employer, referred to as the principal,
farms out the performance of a part of its business to another, referred to as the
contractor or subcontractor. For the purpose of undertaking the principal's business that
is farmed out, the contractor or subcontractor then employs its own employees.

Contracting and subcontracting are synonymous under Philippine labor law. The term
that is more commonly used is subcontracting.

In subcontracting, there are three parties involved:


a. The principal which decides to farm out a job or service to a subcontractor;
b. The subcontractor which has the capacity to independently undertake the
performance of the job or service; and
c. The employees engaged by the subcontractor to accomplish the job or service.
In subcontracting, the four-fold test of employer-employee relationship should be
satisfied by the subcontractor in relation to the employees it engages to accomplish the
subcontracted job or service. In such cases, the subcontractor is also referred to as
independent contractor.

If the four-fold test is satisfied not by the subcontractor but by the principal, the principal
then becomes the employer of the employees engaged to accomplish the job or service.
What exists is not subcontracting but a direct employer-employee relationship between
the principal and the employees.

**The following are requisites of a LEGITIMATE contracting or subcontracting:


1. The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own
responsibility; according to its own manner and method, and free from the control
and directions of the principal in all matters connected with the performance of the
work, except as to the results thereof; (NO EE-ER relations exists)

2. The contractor or subcontractor has substantial capital or investment.


**shown by:
Adequacy of resources actually and directly used
May refer to subscribed capital stocks for corporations
Tools, equipments, implements, machineries, uniforms,
protective gear or safety devises
Operating costs such as training and overhead costs

3. The agreement between the principal and contractor or subcontractor assures the
contractual employees to entitlement to all labor and occupational safety standards,
free exercise of the right to self-organization, security of tenure, and social and
welfare benefits.

LABOR-ONLY CONTRACTING

Refers to an arrangement where the contractor or subcontractor merely recruits,


supplies or places workers to perform a job, work or service for a principal, and any of
the following elements are present:
The contractor or subcontractor does not have substantial capital or
investment which relates to the job, work or service to be performed and the
employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal;
or
The contractor does not exercise the right to control over the performance of
the work of the contractual employee.

It is a prohibited practice

--Scope and Nature of Liability of Principal and Contractor

In JOB CONTRACTING (first two paragraphs of Article 106)

The contractor is the employer directly responsible to the employees


The principal has limited liability. Should the contractor fail to pay the wages, the
principal is liable only to the extent of the work performed and only with respect to
the payment of wages.
the principal is jointly and severally liable with the subcontractor for payment of the
employees' wages to the extent of the work performed under the contract.
The principal cannot be accused of illegal dismissal insofar as the contractual
employees are concerned because there is no employee-employer relationship.

In LABOR-ONLY CONTRACTING (3rd and 4th paragraphs of Art 106.)

The contractor is merely an agent of the employer. The principal and contractor will
be solidarily treated as the employer.
The principals liability is comprehensive. The liability pertains not only to unpaid
wages but extends to any and all liability under the Labor laws.
The employer is deemed to have directly hired the contractual employees and is
therefore liable for any and all violations of the Labor Code.

--Duties and obligations of Principal and Contractor

UNDER A LABOR-ONLY CONTRACTING ARRANGEMENT

The following are the effects:

a. The subcontractor will be treated as the agent of the principal. Since the act
of an agent is the act of the principal, representations made by the subcontractor to
the employees will bind the principal.
b. The principal will become the employer as if it directly employed the workers
engaged to undertake the subcontracted job or service. It will be responsible to them
for all their entitlements and benefits under the labor laws.
c. The principal and the subcontractor will be solidarily treated as the
employer.
d. The employees will become employees of the principal, subject to the
classifications of employees under Article 28 of the Labor Code.

If the labor-only contracting activity is undertaken by a legitimate labor organization, a


petition for cancellation of union registration may be filed against it, pursuant to Article
239(e).

--Rights of Contractual Employees

The contractual employee shall be entitled to all the rights and privileges due a regular
employee as provided for in the Labor Code, as amended, to include the following:

(a) Safe and healthful working conditions;


(b) Labor standards such as service incentive leave, rest days, overtime pay,
holiday pay, 13th month pay and separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and peaceful concerted action; and
(e) Security of tenure.
The contractors employees tenure may end when the contract between the principal
and the contractor ends.

--INDIVIDUAL INDEPENDENT CONTRACTOR

Individuals with special skills, expertise or talent enjoy the freedom to offer their
services as independent contractors. The right to life and livelihood guarantees this
freedom to contract as independent contractors. The right of labor to security of tenure
cannot operate to deprive an individual to contract as an independent contractor.
Are those who exercise independent employment, contracting to do a piece of work
according to their own methods and without being subjected to the control of their
employer except as to the result of their work.

1. ART. 106. Labor Code.

Contractor or subcontractor. - Whenever an employer enters into a contract with


another person for the performance of the formers work, the employees of the
contractor and of the latters subcontractor, if any, shall be paid in accordance with
the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such employees to the extent of the
work performed under the contract, in the same manner and extent that he is liable
to employees directly employed by him.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or


prohibit the contracting-out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as differentiations within
these types of contracting and determine who among the parties involved shall be
considered the employer for purposes of this Code, to prevent any violation or
circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer


does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises, among others, and the workers recruited and placed by
such person are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by
him.

(Rule VIII-A, Book III, IRR)


SEC. 5 Prohibition against labor-only contracting. Labor only contracting is
hereby declared prohibited. For this purpose, Labor-Only contracting shall refer to an
arrangement where the contractor or subcontractor merely recruits, supplies, or
places workers to perform a job, work, or service for a principal, and any of the
following elements are present:

1. The contractor or subcontractor does not have substantial capital or investment


which relates to the job, work, or service to be performed and the employees
recruited, supplied, or placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the principal.
2. The contractor does not exercise the right to control over the performance of the
work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Art. 248(c) of
the Labor Code, as amended.

Substantial capital or investment refers to capital stocks and subscribed


capitalization in the case of corporations, tools, equipments, implements,
machineries, and work premises, actually and directly used by the contractor or
subcontractor in the performance or completion of the job, work, or service
contracted out.

The right to control shall refer to the right reserved to the person for whom the
services of the contractual workers are performed, to determine not only the end to
be achieved, but also the manner and means to be used in reaching that end.
SEC. 6 Prohibitions. Not withstanding Sec. 5 of these Rules, the following are
hereby declared prohibited for being contrary to law or public policy:

a. Contracting out of a job, work, or service when not done in good faith and not
justified by the exigencies of the business and the same results in the termination
of regular employees and reduction of work hours or reduction or splitting of the
bargaining unit;
b. Contracting out of work with a cabo as defined in Sec. 1(ii), Rule I, Book V of
these Rules. Cabo refers to a person or group of persons or to a labor group
which, in the guise of a labor organization, supplies workers to an employer, with
or without any monetary or other consideration whether in the capacity of an
agent of the employer or as an ostensible independent contractor;
c. Taking undue advantage of the economic situation or lack of bargaining strength
of the contractual employee, or undermining his security of tenure or basic rights,
or circumventing the provisions of regular employment, in any of the following
instances:

In addition to his assigned functions, requiring the contractual


employee to perform functions which are currently being performed by the
regular employees of the principal or the contractor or subcontractor;
Requiring him to sign, as a precondition to employment or continued
employment, an antedated resignation letter; a blank payroll; a waiver of
labor standards including minimum wages and social or welfare benefits; or a
quitclaim releasing the principal, contractor or subcontractor from any liability
as to payment of future claims; and
Requiring him to sign a contract fixing the period of employment to a
term shorter than the term of the contract between the principal and the
contractor or subcontractor, unless the latter contract is divisible into phases
for which substantially different skills are required and this is made known to
the employee at the time of engagement;

d. Contracting out of a job, work, or service through an in-house agency which refers
to a contractor or subcontractor engaged in the supply of labor which is owned,
managed, or controlled by the principal and which operates solely for the
principal;
e. Contracting out of a job, work, or service directly related to the business or
operation of the principal by reason of a strike or lockout whether actual or
imminent;
f. Contracting out of a job, work, or service being performed by union members
when such will interfere with, restrain, or coerce employees in the exercise of
their rights to self-organization as provided in Art. 248(c) of the Labor Code as
amended.

ART. 248 (C). Labor Code. Unfair labor practices of employers. - It shall be
unlawful for an employer to commit any of the following unfair labor practice:

(c) To contract out services or functions being performed by union members when
such will interfere with, restrain or coerce employees in the exercise of their rights to
self-organization;

2. ART. 109. Labor Code.

Solidary liability. - The provisions of existing laws to the contrary notwithstanding,


every employer or indirect employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For purposes of
determining the extent of their civil liability under this Chapter, they shall be
considered as direct employers.

Legitimate Job Contracting

- Aliviado vs Procter & Gamble Phils., Inc. (GR# 160506 03/09/10)

In this case, even if the element of control was missing, an employer-employee


relationship was still considered to exist.
- ELEMENTS OF INDEPENDENT CONTRACTORS

The existence of an independent and permissible contractor relationship is


generally established by considering the following determinants:

1. Whether the contractor is carrying on an independent business;


2. The nature and extent of the work;
3. The skill required;
4. The term and duration of the relationship;
5. The right to assign the performance of a specified piece of work;
6. The control and supervision of the work to another;
7. The employers power with respect to the hiring, firing, payment of the
contractors workers;
8. The control of the premises;
9. The duty to supply the premises, tools, appliances, materials, and labor;
10. And the mode, manner, and terms of payment.

On the other hand, the existence of an employer-employee relationship is


established by the presence of the following determinants:

1. The selection and engagement of the workers;


2. The power of dismissal;
3. The payment of wages by whatever means;
4. The power to control the workers conduct, with the latter assuming
primacy in the overall consideration.
(Singco vs Shangri-Las Mactan Island Resort, GR# 178827 03/04/09)

Labor-Only Contracting, Effects and DOLE D.O. No. 18-02 Series of


2002

RULES IMPLEMENTING ARTICLES 106 TO 109


OF THE LABOR CODE, AS AMENDED

By virtue of the power vested in the Secretary of Labor and Employment under
Articles 5 (Rule-making) and 106 (Contractor or Subcontractor) of the Labor Code
of the Philippines, as amended, the following regulations governing contracting
and subcontracting arrangements are hereby issued:

Section 1. Guiding principles. - Contracting and subcontracting arrangements


are expressly allowed by law and are subject to regulation for the promotion of
employment and the observance of the rights of workers to just and humane
conditions of work, security of tenure, self-organization, and collective bargaining.
Labor-only contracting as defined herein shall be prohibited.

Section 2 . Coverage. - These Rules shall apply to all parties of contracting and
subcontracting arrangements where employer-employee relationship exists.
Placement activities through private recruitment and placement agencies as
governed by Articles 25 to 39 of the Labor Code are not covered by these Rules.

Section 3. Trilateral Relationship in Contracting Arrangements. - In


legitimate contracting, there exists a trilateral relationship under which there is a
contract for a specific job, work or service between the principal and the
contractor or subcontractor, and a contract of employment between the
contractor or subcontractor and its workers. Hence, there are three parties
involved in these arrangements, the principal which decides to farm out a job or
service to a contractor or subcontractor, the contractor or subcontractor which
has the capacity to independently undertake the performance of the job, work or
service, and the contractual workers engaged by the contractor or subcontractor
to accomplish the job work or service.
Section 4. Definition of Basic Terms. - The following terms as used in these
Rules, shall mean:

(a) "Contracting" or "subcontracting" refers to an arrangement whereby a


principal agrees to put out or farm out with a contractor or subcontractor the
performance or completion of a specific job, work or service within a definite
or predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal.
(b) "Contractor or subcontractor" refers to any person or entity engaged in
a legitimate contracting or subcontracting arrangement.
(c) "Contractual employee" includes one employed by a contractor or
subcontractor to perform or complete a job, work or service pursuant to an
arrangement between the latter and a principal.
(d) "Principal" refers to any employer who puts out or farms out a job,
service or work to a contractor or subcontractor.

Section 5. Prohibition against labor-only contracting. - Labor-only


contracting is hereby declared prohibited. For this purpose, labor-only contracting
shall refer to an arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or service for a
principal, and any of the following ELEMENTS are present:

The contractor or subcontractor does not have substantial capital or


investment which relates to the job, work or service to be performed and the
employees recruited, supplied or placed by such contractor or subcontractor
are performing activities which are directly related to the main business of the
principal; or
The contractor does not exercise the right to control over the
performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article


248 (C ) of the Labor Code, as amended.

"Substantial capital or investment" refers to capital stocks and subscribed


capitalization in the case of corporations, tools, equipment, implements,
machineries and work premises, actually and directly used by the contractor or
subcontractor in the performance or completion of the job, work or service
contracted out.

The "right to control" shall refer to the right reserved to the person for whom the
services of the contractual workers are performed, to determine not only the end
to be achieved, but also the manner and means to be used in reaching that end.

Section 6. Prohibitions. - Notwithstanding Section 5 of these Rules, the


following are hereby declared prohibited for being contrary to law or public policy:

(a) Contracting out of a job, work or service when not done in good faith
and not justified by the exigencies of the business and the same results in the
termination of regular employees and reduction of work hours or reduction or
splitting of the bargaining unit;
(b) Contracting out of work with a "cabo" as defined in Section 1 (ii), Rule
I, Book V of these Rules. "Cabo" refers to a person or group of persons or to a
labor group which, in the guise of a labor organization, supplies workers to an
employer, with or without any monetary or other consideration whether in the
capacity of an agent of the employer or as an ostensible independent
contractor;
(c) Taking undue advantage of the economic situation or lack of
bargaining strength of the contractual employee, or undermining his security
of tenure or basic rights, or circumventing the provisions of regular
employment, in any of the following instances:

1. In addition to his assigned functions, requiring the contractual employee to


perform functions which are currently being performed by the regular
employees of the principal or of the contractor or subcontractor;
2. Requiring him to sign, as a precondition to employment or continued
employment, an antedated resignation letter; a blank payroll; a waiver of
labor standards including minimum wages and social or welfare benefits;
or a quitclaim releasing the principal, contractor or subcontractor from any
liability as to payment of future claims; and
3. Requiring him to sign a contract fixing the period of employment to a term
shorter than the term of the contract between the principal and the
contractor or subcontractor, unless the latter contract is divisible into
phases for which substantially different skills are required and this is made
known to the employee at the time of engagement;

(d) Contracting out of a job, work or service through an in-house agency


which refers to a contractor or subcontractor engaged in the supply of labor
which is owned, managed or controlled by the principal and which operates
solely for the principal;
(e) Contracting out of a job, work or service directly related to the
business or operation of the principal by reason of a strike or lockout whether
actual or imminent;
(f) Contracting out of a job, work or service being performed by union
members when such will interfere with, restrain or coerce employees in the
exercise of their rights to self organization as provided in Art. 248 (c) of the
Labor Code, as amended.

Section 7. Existence of an employer-employee relationship. - The


contractor or subcontractor shall be considered the employer of the contractual
employee for purposes of enforcing the provisions of the Labor Code and other
social legislation. The principal, however, shall be solidarily liable with the
contractor in the event of any violation of any provision of the Labor Code,
including the failure to pay wages.

The principal shall be deemed the employer of the contractual employee in any of
the following cases as declared by a competent authority:

(a) where there is labor-only contracting; or


(b) where the contracting arrangement falls within the prohibitions
provided in Section 6 (Prohibitions) hereof.

Section 8. Rights of Contractual Employees. - Consistent with Section 7 of


these Rules, the contractual employee shall be entitled to all the rights and
privileges due a regular employee as provided for in the Labor Code, as amended,
to include the following:

(a) Safe and healthful working conditions;


(b) Labor standards such as service incentive leave, rest days, overtime
pay, holiday pay, 13th month pay and separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and peaceful concerted action;
and
(e) Security of tenure.

Section 9. Contract between contractor or subcontractor and


contractual employee. - Notwithstanding oral or written stipulations to the
contrary, the contract between the contractor or subcontractor and the
contractual employee, which shall be in writing, shall include the following terms
and conditions:

(a) The specific description of the job, work or service to be performed by


the contractual employee;
(b) The place of work and terms and conditions of employment, including
a statement of the wage rate applicable to the individual contractual
employee; and
(c) The term or duration of employment, which shall be coextensive with
the contract of the principal and subcontractor, or with the specific phase for
which the contractual employee is engaged, as the case may be.
The contractor or subcontractor shall inform the contractual employee of the
foregoing terms and conditions on or before the first day of his employment.

Section 10. Effect of Termination of Contractual Employment. - In cases of


termination of employment prior to the expiration of the contract between the
principal and the contractor or subcontractor, the right of the contractual
employee to separation pay or other related benefits shall be governed by the
applicable laws and jurisprudence on termination of employment.

Where the termination results from the expiration of the contract between the
principal and the contractor or subcontractor, or from the completion of the phase
of the job, work or service for which the contractual employee is engaged, the
latter shall not be entitled to separation pay. However, this shall be without
prejudice to completion bonuses or other emoluments, including retirement pay
as may be provided by law or in the contract between the principal and the
contractor or subcontractor.

Section 11. Registration of Contractors or Subcontractors. - Consistent


with the authority of the Secretary of Labor and Employment to restrict or prohibit
the contracting out of labor through appropriate regulations, a registration
system to govern contracting arrangements and to be implemented by the
Regional Offices is hereby established.

The registration of contractors and subcontractors shall be necessary for


purposes of establishing an effective labor market information and monitoring.

Failure to register shall give rise to the presumption that the contractor is
engaged in labor-only contracting. (Since it is only a presumption, it can still be
rebutted by substantial evidence.)

Section 12. Requirements for registration. - A contractor or subcontractor


shall be listed in the registry of contractors and subcontractors upon completion
of an application form to be provided by the DOLE. The applicant contractor or
subcontractor shall provide in the application form the following information:

(a) The name and business address of the applicant and the area or areas
where it seeks to operate;
(b) The names and addresses of officers, if the applicant is a corporation,
partnership, cooperative or union;
(c) The nature of the applicant's business and the industry or industries
where the applicant seeks to operate;
(d) The number of regular workers; the list of clients, if any; the number of
personnel assigned to each client, if any and the services provided to the
client;
(e) The description of the phases of the contract and the number of
employees covered in each phase, where appropriate; and
(f) A copy of audited financial statements if the applicant is a corporation,
partnership, cooperative or a union, or copy of the latest ITR if the applicant is
a sole proprietorship.

The application shall be supported by:

(a) A certified copy of a certificate of registration of firm or business name


from the Securities and Exchange Commission (SEC), Department of Trade
and Industry (DTI), Cooperative Development Authority (CDA), or from the
DOLE if the applicant is a union; and
(b) A certified copy of the license or business permit issued by the local
government unit or units where the contractor or subcontractor operates.

The application shall be verified and shall include an undertaking that the
contractor or subcontractor shall abide by all applicable labor laws and
regulations.

Section 13. Filing and processing of applications. - The application and its
supporting documents shall be filed in triplicate in the Regional Offices where the
applicant principally operates. No application for registration shall be accepted
unless all the foregoing requirements are complied with. The contractor or
subcontractor shall be deemed registered upon payment of a registration fee of
P100.00 to the Regional Office.

Where all the supporting documents have been submitted, the Regional Office
shall deny or approve the application within seven (7) working days after its filing.

Upon registration, the Regional Office shall return one set of the duly-stamped
application documents to the applicant, retain one set for its file, and transmit the
remaining set to the Bureau of Local Employment. The Bureau shall devise the
necessary forms for the expeditious processing of all applications for registration.

Section 14. Duty to produce copy of contract between the principal and
the contractor or subcontractor. - The principal or the contractor or
subcontractor shall be under an obligation to produce a copy of the contract
between the principal and the contractor in the ordinary course of inspection. The
contractor shall likewise be under an obligation to produce a copy of the contract
of employment of the contractual worker when directed to do so by the Regional
Director or his authorized representative.

A copy of the contract between the contractual employee and the contractor or
subcontractor shall be furnished the certified bargaining agent, if there is any.

Section 15. Annual Reporting of Registered Contractors. - The contractor


or subcontractor shall submit in triplicate its annual report using a prescribed
form to the appropriate Regional Office not later than the 15th of January of the
following year. The report shall include:

(a) A list of contracts entered with the principal during the subject
reporting period;
(b) The number of workers covered by each contract with the principal;
(c) A sworn undertaking that the benefits from the Social Security System
(SSS), the Home Development Mutual Fund (HDMF), PhilHealth, Employees
Compensation Commission (ECC), and remittances to the Bureau of Internal
Revenue (BIR) due its contractual employees have been made during the
subject reporting period.

The Regional Office shall return one set of the duly-stamped report to the
contractor or subcontractor, retain one set for its file, and transmit the remaining
set to the Bureau of Local Employment within five (5) days from receipt thereof.

Section 16. Delisting of contractors or subcontractors. - Subject to due


process, the Regional Director shall cancel the registration of contractors or
subcontractors based on any of the following grounds:

(a) Non-submission of contracts between the principal and the contractor


or subcontractor when required to do so;
(b) Non-submission of annual report;
(c) Findings through arbitration that the contractor or subcontractor has
engaged in labor-only contracting and the prohibited activities as provided in
Section 6 (Prohibitions) hereof; and
(d) Non-compliance with labor standards and working conditions.

Section 17. Renewal of registration of contractors or subcontractors. - All


registered contractors or subcontractors may apply for renewal of registration
every three years. For this purpose, the Tripartite Industrial Peace Council (TIPC)
as created under Executive Order No. 49, shall serve as the oversight committee
to verify and monitor the following:

(a) Engaging in allowable contracting activities; and


(b) Compliance with administrative reporting requirements.

Section 18. Enforcement of Labor Standards and Working Conditions. -


Consistent with Article 128 (Visitorial and Enforcement Power) of the Labor Code,
as amended, the Regional Director through his duly authorized representatives,
including labor regulation officers shall have the authority to conduct routine
inspection of establishments engaged in contracting or subcontracting and shall
have access to employer's records and premises at any time of the day or night
whenever work is being undertaken therein, and the right to copy therefrom, to
question any employee and investigate any fact, condition or matter which may
be necessary to determine violations or which may aid in the enforcement of the
Labor Code and of any labor law, wage order, or rules and regulations issued
pursuant thereto.

The findings of the duly authorized representative shall be referred to the


Regional Director for appropriate action as provided for in Article 128, and shall
be furnished the collective bargaining agent, if any.

Based on the visitorial and enforcement power of the Secretary of Labor and
Employment in Article 128 (a), (b), (c) and (d), the Regional Director shall issue
compliance orders to give effect to the labor standards provisions of the Labor
Code, other labor legislation and these guidelines.

Section 19. Solidary liability. - The principal shall be deemed as the direct
employer of the contractual employees and therefore, solidarily liable with the
contractor or subcontractor for whatever monetary claims the contractual
employees may have against the former in the case of violations as provided for
in Sections 5 (Labor-Only contracting), 6 (Prohibitions), 8 (Rights of Contractual
Employees) and 16 (Delisting) of these Rules. In addition, the principal shall also
be solidarily liable in case the contract between the principal and contractor or
subcontractor is pre-terminated for reasons not attributable to the fault of the
contractor or subcontractor.

Section 20. Supersession. - All rules and regulations issued by the Secretary of
Labor and Employment inconsistent with the provisions of this Rule are hereby
superseded. Contracting or subcontracting arrangements in the construction
industry, under the licensing coverage of the PCAB and shall not include
shipbuilding and ship repairing works, however, shall continue to be governed by
Department Order No. 19, series of 1993.

Section 21. Effectivity. - This Order shall be effective fifteen (15) days after
completion of its publication in two (2) newspapers of general circulation.

- EFFECT OF LABOR-ONLY CONTRACTING ON THE PRINCIPAL

In a legitimate job contract, an employer enters into a contract with a job


contractor for the performance of the former's work. In legitimate job
contracting, the law creates an employer-employee relationship between the
employer and the contractors employees only for a limited purpose, ie., to
ensure that the employees are paid their wages.

Labor-only contracting is an arrangement wherein the contractor merely acts as


an agent in recruiting and supplying the principal employer with workers for the
purpose of circumventing labor law provisions setting down the rights of
employees.

A finding by appropriate authorities that a contractor is a "labor-only" contractor


establishes an employer-employee relationship between the principal employer
and the contractors employees and the former becomes solidarily liable for all
the rightful claims of the employees.
(Coca-Cola Bottlers vs Agito, GR# 179546 02/13/09)

- PURE SUPPLY OF MANPOWER TO ASSIST IN SALES AND DISTRIBUTION


OF PRODUCTS IS PROHIBITED AS LABOR-ONLY CONTRACTING

In plainer terms, the contracted personnel (acting as sales route helpers) were
only engaged in the marginal work of helping in the sale and distribution of
company products; they only provided the muscle work that sale and
distribution required and were thus necessarily under the companys control
and supervision in doing these tasks.

Still another way of putting it is that the contractors were not independently
selling and distributing company products, using their own equipment, means
and methods of selling and distribution; they only supplied the manpower that
helped the company in the handing of products for sale and distribution. In the
context of D.O. 18-02, the contracting for sale and distribution as an
independent and self-contained operation is a legitimate contract, but the pure
supply of manpower with the task of assisting in sales and distribution
controlled by a principal falls within prohibited labor-only contracting.
(Coca-Cola Bottlers vs Dela Cruz, GR# 184977 12/07/09)

- (South Davao Devt. vs Gamo, GR# 171814 05/08/09)

- LABOR-ONLY CONTRACTOR IS THE AGENT OF THE PRINCIPAL

In a labor-only contract, there are 3 parties involved:

1. The "Labor-only" contractor;


2. The employees who are ostensibly under the employ of the "labor-only"
contractor;
3. The principal who is deemed the real employer.

Under this scheme, the "labor-only" contractor is the agent of the principal. The
law makes the principal responsible to the employees of the "labor-only"
contractor as if the principal itself directly hired or employed the employees.
(Iligan Cement Corp. vs IEWU-SPFL, GR# 158956 04/24/09)

- AUTOMATIC DECLARATION OF EXISTENCE OF EMPLOYER-EMPLOYEE


RELATIONSHIP

A finding that a contractor is a "labor-only" contractor is equivalent to declaring


that there is an employer-employee relationship between the principal and the
employees of the supposed contractor and the "labor-only" contractor is
considered as a mere agent of the principal, the real employer.

The effect of this is the immediate application of Labor Standards, Security of


Tenure, etc. between the employees and the principal.
(Mandaue Galleon Trade Inc. vs Andales, GR# 159868 03/07/08)

3. In-House Agency (Sec. 6, DOLE D.O. No. 18-02 Series of 2002)

Section 6. Prohibitions. - Notwithstanding Section 5 of these Rules, the


following are hereby declared prohibited for being contrary to law or public policy:

(d) Contracting out of a job, work or service through an in-house agency


which refers to a contractor or subcontractor engaged in the supply of labor
which is owned, managed or controlled by the principal and which operates
solely for the principal;

RELEVANT CASES:

- (Filipinas vs NLRC, 18 SCRA 404)

- LIABILITY OF PRINCIPAL AND CONTRACTOR

The principal and the contractor are jointly and severally liable to the employees for
their wages.
The right of the contractor to recover from the principal arises only if he has paid
the amounts for which both of them are jointly and severally liable in-line with Art.
1217 of the Civil Code.
(Lapanday vs CA, 01/31/00)

ART. 1217 CC. Payment made by one of the solidary debtors


extinguishes the obligation. If two or more solidary debtors offer to
pay, the creditor may choose which offer to accept.

He who made the payment may claim from his co-debtors only the
share which corresponds to each, with the interest for the payment
already made. If the payment is made before the debt is due, no
interest for the intervening period may be demanded.

When one of the solidary debtors cannot, because of his insolvency,


reimburse his share to the debtor paying the obligation, such share
shall be borne by all his co-debtors, in proportion to the debt of each.

- (Security & Credit Investigation vs NLRC, 01/26/01)

- SOLIDARY LIABILITY FOR WAGE INCREASE

The security guard's immediate recourse for the payment of the increase of their
minimum wage is with their direct employer while the latter can claim
reimbursement from the principal.

For the security guards, the actual source of the payment of their wage differentials
and premium for holiday and rest day work does not matter as long as they are
paid. Solidary liability does not mean that, as between themselves, two solidary
debtors are liable for only half of the payment.
(Eparwa Security & Janitorial Services Inc. vs Liceo De Cagayan Univ., GR# 150402
11/28/06)

- NATURE OF RELATIONSHIP OF CONTRACTOR AND PRINCIPAL IS THAT OF


AGENCY, WHERE THE CONTRACTOR IS THE AGENT AND THE COMPANY IS
HIS PRINCIPAL

The labor-only contractor is considered merely as an agent of the employer, the


employer having been made, by law, responsible to the employees of the labor-
only contractor as if such employees had been directly employed by it.
(Acevedo vs Advanstar Co. Inc., GR# 157656 11/11/05)

U. PREFERENCE OF WAGES

1. In case of Bankruptcy or in Judicial Proceedings (Art. 110 Labor Code)

ART. 110. Worker preference in case of bankruptcy. - In the event of bankruptcy or


liquidation of an employers business, his workers shall enjoy first preference as
regards their wages and other monetary claims, any provisions of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be paid in full before
claims of the government and other creditors may be paid. (As amended by Section
1, Republic Act No. 6715, March 21, 1989).

(Rule VIII, Book III, IRR)


SECTION 7. Payment of wages in case of bankruptcy. Unpaid wages earned by
the employees before the declaration of bankruptcy or judicial liquidation of the
employer's business shall be given first preference and shall be paid in full before
other creditors may establish any claim to a share in the assets of the employer.
- ART. 110 ONLY CREATES A PREFERENCE OF CREDIT, NOT A LIEN OVER THE
PROPERTY OF THE EMPLOYER

Preferential right of workers and employees under Art. 110 of the Labor Code may
be invoked only during bankruptcy or liquidation proceedings. The article
establishes only a preference of credit, not a lien.

This simply means that during bankruptcy, insolvency or liquidation proceedings


involving existing properties of the employer, the employees have the advantage of
having their unpaid wages satisfied ahead of certain claims which may be proved
therein.

The preference of credits does not create a charge of proprietary interest upon the
property of the debtor.
(DBP vs Sec. of Labor, GR# 79351 11/28/89)

- ART. 110 APPLIES TO UNPAID WAGES AS WELL AS TO OTHER MONETARY


CLAIMS

Art. 110 of the Labor Code should be applied in conjunction with the pertinent
provisions of the Civil Code and the Insolvency Law to the extent that piece-meal
distribution of the assets of the debtor is avoided.

The declaration of bankruptcy or a judicial liquidation must be present before the


workers preference may be enforced. It cannot apply to extrajudicial proceedings.

The amendment of Art. 110 expanded the concept of worker preference to cover
not only unpaid wages but also other monetary claims to which even claims by the
Government must be deemed subordinate.
(DBP vs NLRC, GR# 108031 03/01/95)

- (DOLE vs Maceda, GR# 185112 01/18/10)

2. Rehabilitation, Receivership on Monetary Claims of Workers; Effects

- (DOLE vs Maceda, GR# 185112 01/18/10)

- (Tiangco vs Uniwide Sales Warehouse Club Inc., GR# 168697 12/14/09)

V. APPEARANCE OF LAWYERS AND NON-LAWYERS IN LABOR


CASES
(Rule III, NLRC Rules of Procedure, as amended by NLRC Resolution No. 01-02 of 2002)
SECTION 8. APPEARANCES. - An attorney appearing for a party is presumed to be
properly authorized for that purpose. However, he shall be required to indicate in his
pleadings his PTR and IBP numbers for the current year.

A non-lawyer may appear before the Commission or any Labor Arbiter only if:

a. he represents himself as party to the case;


b. he represents a legitimate labor organization, as defined under Article 222
and 242 of the Labor Code, as amended, or its members, provided, that he shall be
made to present a verified certification from said organization that he is properly
authorized, or;
c. he is a duly-accredited member of any legal aid office duly recognized by the
Department of Justice or Integrated Bar of the Philippines.
Appearances may be made orally or in writing. In both cases, the complete name and
office address of both parties shall be made on record and the adverse party or his
counsel/representative properly notified.

Any change in the address of counsel/representative should be filed with the records of
the case and furnished the adverse party or counsel.

Any change or withdrawal of counsel/representative shall be made in accordance with


the Rules of Court.

SECTION 9. AUTHORITY TO BIND PARTY. -Attorneys and other representatives of parties


shall have authority to bind their clients in all matters of procedure; but they cannot,
without a special power of attorney or express consent, enter into a compromise
agreement with the opposing party in full or partial discharge of a client's claim.

GENERAL RULE:
Only lawyers can appear before the NLRC or a Labor Arbiter.

EXCEPTIONS:
Non-lawyers may appear before the NLRC or a Labor Aribiter:
1. If they represent themselves;
2. If they represent their organization or members thereof; or
3. If he is duly accredited member of the legal aid office of any college of law, school or
university duly recognized by the DOJ in cases referred thereto by the latter or by the
IBP; he or she must be a 4th year student of any college of law, school or university
and must be currently enrolled

W.SPECIAL TYPES OF WORKERS

1. Apprentices

ART. 57. STATEMENT OF OBJECTIVES FOR THE TRAINING & EMPLOYMENT


OF SPECIAL WORKERS

The promotion, development, and maintenance of apprenticeship


programs shall have the following objectives:

(a) To help meet the needs or demands of the economy for trained manpower in
the widest possible range of employment;

(b) To establish a national apprenticeship program through the participation of


employers, workers, government, civic and other groups; and
(c) To establish apprenticeship standards for the protection of apprentices and
upgrading of skills.

ART. 58. DEFINITION OF TERMS

a. APPRENTICESHIP - practical training on the job supplemented by related


theoretical instruction.
b. APPRENTICE - a worker who is covered by a written apprenticeship
agreement with an individual employer or any of the entities recognized under
this chapter.
c. APPRENTICEABLE OCCUPATION - any trade, form of employment or
occupation which requires more than 3 months of practical training on the job
supplemented by related theoretical instruction.
d. APPRENTICESHIP AGREEMENT - an employment contract wherein the
employer binds himself to train the apprentice and the apprentice in turn accepts
the terms of training.
e. ON-THE-JOB TRAINING practical work experience through actual
participation in productive activities given to or acquired by an apprentice.
f. HIGHLY TECHNICAL INDUSTRIES a trade, business, enterprise, industry or
other activity, which is engaged in the application of advanced technology.
ART. 59. QUALIFICATIONS OF APPRENTICES

Qualifications of an Apprentice:
1. at least 15 years of age; [provided that those who are at least 15 years of
age but less than eighteen may be eligible for apprenticeship only in non-
hazardous occupations and the apprenticeship agreement shall be signed in his
behalf by the parent or guardian or authorized representative of DOLE]
2. possess vocational aptitude and capacity for appropriate tests; and
3. possess the ability to comprehend and follow oral and written instructions
4. The company must have an apprenticeship program duly approved by the
DOLE.

[Note: The apprenticeable age under Art. 59 LC is 14 but it is 15 under the


Implementing Rules. The question of variance is rendered moot and academic by
RA 7610 which explicitly prohibits employment of children below 15 yrs. of age. RA
7610 recognizes certain exceptions, but being an apprentice is not one of the
exceptions.]

Trade and industry associations may, recommend to the Secretary of Labor and
Employment appropriate educational qualifications for apprentices in certain
occupations. Such qualifications, if approved, shall be the educational requirements
for apprenticeship in such occupations unless waived by an employer in favor of an
applicant who has demonstrated exceptional ability.

ART. 60. EMPLOYMENT OF APPRENTICES

Qualifications for an Employer:


- Only employers in highly technical industries may employ apprentices and
only in apprenticeable occupations as determined by the Secretary of Labor.

REQUESITES FOR A VALID APPRENTICESHIP:


1. Qualifications of the apprentice
2. Qualifications of the employer
3. Apprenticeship agreement duly executed and signed which shall contain the
ff: (art.61, LC )
a. the duration of apprenticeship which shall not exceed 6 months
b. the wage rates below the legal minimum wage which in no case shall
start below 75% of the applicable minimum wage in the place where he is
working { i.e. compensation which must not be less than 75% of the
applicable minimum wage except on-the-job training (OJT)
4. Apprenticeship program duly approved by the DOLE ( Nitto Enterprises vs.
NLRC. G.R.No. 114337. Sept. 29,1995)
[otherwise, theres a possibility that apprentice may become a regular employee]
5. Period of apprenticeship shall not exceed 6 months

ART. 62. SIGNING OF APPRENTICESHIP AGREEMENT

Who shall sign the Apprenticeship Agreement:


- Every apprenticeship agreement shall be signed by the employer or
his duly authorized representative and by the apprentice.
- An apprenticeship agreement with a minor shall be signed in his
behalf by his parent or guardian, or if the latter is not available, by an
authorized representative of the DOLE.

ART. 63. VENUE OF APPRENTICESHIP PROGRAMS

ON-THE-JOB TRAINING OF APPRENTICES MAY BE UNDERTAKEN IN:


(a) the plant, shop or premises of the employer or firm concerned if the
apprenticeship program is organized by an individual employer or firm;
(b) the premises of one or several firms designated for the purpose by
the organizer of the program if such organizer is an association of
employers, civic group and the like; and
(c) DOLE Training Center or other public training institutions with which
the Bureau has made appropriate arrangements.
ARTS. 65-67. VIOLATION OF APPRENTICESHIP AGREEMENT

INVESTIGATION OF VIOLATION OF APPRENTICESHIP AGREEMENT: (Art.65,LC)


- Either party to an agreement may terminate the same after the
probationary period only for a valid cause.
- Action may be initiated upon complaint of any interested person or upon
DOLEs own initiative.

APPEAL (Art.66,LC)

decision of authorized agency of DOLE


Within 5 days fr. receipt of
decision

Secretary of DOLE
[Sec of DOLEs decision is final & executory]

EXHAUSTION OF ADMINISTRATIVE REMEDIES: (Art.67,LC)


- No person shall institute any action for the enforcement of any
apprenticeship agreement or for damages for breach thereof, unless he
has exhausted all available administrative remedies.
- The plant apprenticeship committee shall have initial responsibility
for settling differences arising out of apprenticeship agreements.

ART. 70. VOLUNTARY ORGANIZATION OF APPRENTICESHIP PROGRAM

GENERAL RULE: The organization of apprenticeship program shall be


primarily a voluntary undertaking of employers.

EXCEPTION: (Instances when organization of program is compulsory):


1. when national security or particular requirements of economic
development so demand;
2. where services of foreign technicians are utilized by private
companies in apprenticeable trades

ART. 71. DEDUCTIBILITY OF TRAINING COSTS


- An additional deduction from taxable income of of the value of labor
training expenses incurred for developing the productivity and efficiency of
apprentices shall be granted to the person or enterprise organizing an
apprenticeship program. Provided, that such program is duly recognized by the
Department of Labor: Provided, further, that such deduction shall not exceed ten
percent (10%) of direct labor wage: And provided, finally, that the person or
enterprise who wishes to avail himself or itself of this incentive should pay his
apprentices the minimum wage.

REQUISITES FOR TAX DEDUCTIONS IN CASE EMPLOYERS HAVE APPRENTICESHIP


PROGRAMS:
1. the program must be duly recognized by the Department of Labor;
2. the deduction shall not exceed 10% of direct labor wage; and
3. the employer must pay his apprentices the minimum wage.

APPRENTICESHIP LEARNERSHIP
DURATION
Not less than 3 months practical training Practical training on the job not to
on the job but not more than 6months exceed 3 months.
CONCEPT
Practical training on the job Hiring of persons as trainees in semi-
supplemented by related theoretical skilled and other industrial occupations
instruction which are non-apprenticeable and
which may be learned through practical
training on the job in a relatively short
period of time.
EMPLOYERS COMMITMENT TO HIRE
No commitment to hire With a commitment to employ the
learner as regular employee if he
desires upon completion of learnership
EFFECT OF PRETERMINATION
Worker is not considered an employee Learner is considered regular employee
after 2 months of training and dismissal
is without fault of learner
FOCUS OF TRAINING
Highly skilled or technical industries & in Semi-skilled/industrial occupation (non-
industrial occupation apprenticeable)
APPROVAL
Requires DOLE approval for validity Not required
EXHAUSTION OF ADM. REMEDIES IN CASE OF BREACH OF CONTRACT
Precondition for filing action Not required

ART. 72. APPRENTICES WITHOUT COMPENSATION


APPRENTICES MAY BE HIRED WITHOUT COMPENSATION WHERE TRAINING
ON THE JOB IS:
1. required by the school;
2. required by the Training Program Curriculum;
3. a requisite for Graduation; or
4. a requisite for Board Examination

LIABILITY OF A WORKING SCHOLAR


- Under this article the student is not considered an employee. But if he causes injury
or damage to a third person, the school may be held liable under the Civil Code.

- There is no employer-employee relationship between students on one hand, and


schools, colleges or universities agreement between them under which the former
agree to work for the latter in exchange for the privilege to study free of charge,
provided the students are given real opportunities, including such facilities as may be
reasonable and necessary to finish their chosen courses under such agreement.
(Rule X. Sec. 14, Book III, Implementing Rules)

Section 14, Rule X, Book III of the Rules implementing the Labor Code was
promulgated by the Secretary of Labor only for the purpose of administering and
enforcing the provisions of the Labor Code on conditions of employment. In other
words, Rule X is merely a guide to the enforcement of the substantive law on labor.
The Court, thus, makes the distinction and so holds that Section 14, Rule X, Book III
of the Rules is not the decisive law in a CIVIL SUIT for damages instituted by an
injured person during a vehicular accident against a working student of a school and
against the school itself. The present case does not deal with a labor dispute on
conditions of employment between an alleged employee and an alleged employer. It
invokes a claim brought by one for damages for injury caused by the patently
negligent acts of a person, against both doer-employee and his employer. Hence,
the reliance on the implementing rule on labor to disregard the primary liability of an
employer under Article 2180 of the Civil Code is misplaced. An implementing rule on
labor cannot be used by an employer as a shield to void liability under the
substantive provisions of the Civil Code.
(Filamer Christian Institute vs. IAC; [G.R. No. 75112; August 17, 1992.])

(Chapter I, Art. 57-72, Book II, Labor Code)


ART. 57. Statement of objectives. - This Title aims:

(1) To help meet the demand of the economy for trained manpower;
(2) To establish a national apprenticeship program through the participation of
employers, workers and government and non-government agencies; and
(3) To establish apprenticeship standards for the protection of apprentices.

ART. 58. Definition of Terms. - As used in this Title:

(a) "Apprenticeship" means practical training on the job supplemented by related


theoretical instruction.
(b) An "apprentice" is a worker who is covered by a written apprenticeship
agreement with an individual employer or any of the entities recognized under
this Chapter.
(c) An "apprenticeable occupation" means any trade, form of employment or
occupation which requires more than three (3) months of practical training on the
job supplemented by related theoretical instruction.
(d) "Apprenticeship agreement" is an employment contract wherein the employer
binds himself to train the apprentice and the apprentice in turn accepts the terms
of training.

ART. 59. Qualifications of apprentice. - To qualify as an apprentice, a person shall:

(a) Be at least fourteen (14) years of age;


(b) Possess vocational aptitude and capacity for appropriate tests; and
(c) Possess the ability to comprehend and follow oral and written instructions.

Trade and industry associations may recommend to the Secretary of Labor


appropriate educational requirements for different occupations.

ART. 60. Employment of apprentices. - Only employers in the highly technical


industries may employ apprentices and only in apprenticeable occupations approved
by the Secretary of Labor and Employment. (As amended by Section 1, Executive
Order No. 111, December 24, 1986).

ART. 61. Contents of apprenticeship agreements. - Apprenticeship agreements,


including the wage rates of apprentices, shall conform to the rules issued by the
Secretary of Labor and Employment. The period of apprenticeship shall not exceed
six months. Apprenticeship agreements providing for wage rates below the legal
minimum wage, which in no case shall start below 75 percent of the applicable
minimum wage, may be entered into only in accordance with apprenticeship
programs duly approved by the Secretary of Labor and Employment. The Department
shall develop standard model programs of apprenticeship. (As amended by Section 1,
Executive Order No. 111, December 24, 1986).

ART. 62. Signing of apprenticeship agreement. -Every apprenticeship agreement


shall be signed by the employer or his agent, or by an authorized representative of
any of the recognized organizations, associations or groups and by the apprentice.

An apprenticeship agreement with a minor shall be signed in his behalf by his parent
or guardian, if the latter is not available, by an authorized representative of the
Department of Labor, and the same shall be binding during its lifetime.

Every apprenticeship agreement entered into under this Title shall be ratified by the
appropriate apprenticeship committees, if any, and a copy thereof shall be furnished
both the employer and the apprentice.

ART. 63. Venue of apprenticeship programs. - Any firm, employer, group or


association, industry organization or civic group wishing to organize an
apprenticeship program may choose from any of the following apprenticeship
schemes as the training venue for apprentice:

(a) Apprenticeship conducted entirely by and within the sponsoring firm,


establishment or entity;

(b) Apprenticeship entirely within a Department of Labor and Employment


training center or other public training institution; or

(c) Initial training in trade fundamentals in a training center or other institution


with subsequent actual work participation within the sponsoring firm or entity
during the final stage of training.

ART. 64. Sponsoring of apprenticeship program. - Any of the apprenticeship


schemes recognized herein may be undertaken or sponsored by a single employer or
firm or by a group or association thereof or by a civic organization. Actual training of
apprentices may be undertaken:
(a) In the premises of the sponsoring employer in the case of individual
apprenticeship programs;

(b) In the premises of one or several designated firms in the case of programs
sponsored by a group or association of employers or by a civic organization; or

(c) In a Department of Labor and Employment training center or other public


training institution.

ART. 65. Investigation of violation of apprenticeship agreement. - Upon complaint of


any interested person or upon its own initiative, the appropriate agency of the
Department of Labor and Employment or its authorized representative shall
investigate any violation of an apprenticeship agreement pursuant to such rules and
regulations as may be prescribed by the Secretary of Labor and Employment.

ART. 66. Appeal to the Secretary of Labor and Employment. - The decision of the
authorized agency of the Department of Labor and Employment may be appealed by
any aggrieved person to the Secretary of Labor and Employment within five (5) days
from receipt of the decision. The decision of the Secretary of Labor and Employment
shall be final and executory.

ART. 67. Exhaustion of administrative remedies. - No person shall institute any


action for the enforcement of any apprenticeship agreement or damages for breach
of any such agreement, unless he has exhausted all available administrative
remedies.

ART. 68. Aptitude testing of applicants. - Consonant with the minimum qualifications
of apprentice-applicants required under this Chapter, employers or entities with duly
recognized apprenticeship programs shall have primary responsibility for providing
appropriate aptitude tests in the selection of apprentices. If they do not have
adequate facilities for the purpose, the Department of Labor and Employment shall
perform the service free of charge.

ART. 69. Responsibility for theoretical instruction. - Supplementary theoretical


instruction to apprentices in cases where the program is undertaken in the plant may
be done by the employer. If the latter is not prepared to assume the responsibility,
the same may be delegated to an appropriate government agency.

ART. 70. Voluntary organization of apprenticeship programs; exemptions.


(a) The organization of apprenticeship program shall be primarily a voluntary
undertaking by employers;

(b) When national security or particular requirements of economic development


so demand, the President of the Philippines may require compulsory training of
apprentices in certain trades, occupations, jobs or employment levels where
shortage of trained manpower is deemed critical as determined by the Secretary
of Labor and Employment. Appropriate rules in this connection shall be
promulgated by the Secretary of Labor and Employment as the need arises; and

(c) Where services of foreign technicians are utilized by private companies in


apprenticeable trades, said companies are required to set up appropriate
apprenticeship programs.

ART. 71. Deductibility of training costs. - An additional deduction from taxable


income of one-half (1/2) of the value of labor training expenses incurred for
developing the productivity and efficiency of apprentices shall be granted to the
person or enterprise organizing an apprenticeship program: Provided, That such
program is duly recognized by the Department of Labor and Employment: Provided,
further, That such deduction shall not exceed ten (10%) percent of direct labor wage:
and Provided, finally, That the person or enterprise who wishes to avail himself or
itself of this incentive should pay his apprentices the minimum wage.

ART. 72. Apprentices without compensation. - The Secretary of Labor and


Employment may authorize the hiring of apprentices without compensation whose
training on the job is required by the school or training program curriculum or as
requisite for graduation or board examination.
(Rule VI, Book II, IRR)
SECTION 1. Objectives. The promotion, development, and maintenance of
apprenticeship programs shall have the following objectives:
(a) To meet the needs of the economy for training manpower in the widest
possible range of employment;
(b) To establish a national apprenticeship program through the participation of
employers, workers, government, civic and other groups; and
(c) To establish apprenticeship standards for the protection of apprentices and
upgrading of skills.

SECTION 2. Definition of terms.


(a) "Apprenticeship" means any training on the job supplemented by related
theoretical instructions involving apprenticeable occupations and trades as may
be approved by the Secretary of Labor and Employment.
(b) "Apprentice" is a worker who is covered by a written apprenticeship
agreement with an employer.
(c) "Apprenticeship agreement" is a written employment contract wherein the
employer binds himself to train the apprentice and the latter in turn agrees to
work for the employer.
(d) "Apprenticeable occupation" means any trade, form of employment or
occupation approved for apprenticeship by the Secretary of Labor and
Employment, which requires for proficiency more than three months of practical
training on the job supplemented by related theoretical instructions.
(e) "Apprenticeship standards" means the written implementing plans and
conditions of an apprenticeship program.
(f) "Bureau" means the Bureau of Apprenticeship.
(g) "Employer" means the individual firm or any other entity qualified to hire
apprentice under the Code.
(h) "On the job training" is the practical work experience through actual
participation in productive activities given to or acquired by an apprentice.
(i) "Related theoretical instructions" means technical information based on
apprenticeship standards approved by the Bureau designed to provide the
apprentice theoretical competence in his trade.
(j) "Highly Technical Industries" means trade, business, enterprise, industry, or
other activity, which is engaged in the application of advanced technology.

SECTION 3. Voluntary nature of apprenticeship program. The organization of


apprenticeship program shall be primarily a voluntary undertaking of employers,
except as otherwise provided.

SECTION 4. Venue of on-the-job training. The practical aspect of on-the-job


training of apprentices may be undertaken:
(a) In the plant, shop or premises of the employer or firm concerned if the
apprenticeship program is organized by an individual employer or firm;
(b) In the premises of one or several firms designated for the purpose by the
organizer of the program if such organizer is an association of employers, civic
group and the like; and
(c) In a Department of Labor and Employment Training Center or other public
training institutions with which the Bureau has made appropriate arrangements.

SECTION 5. On-the-job training to be explicitly described. The manner in which


practical or on-the-job training shall be provided must be specifically described in the
apprenticeship standards of a particular program.

SECTION 6. Recognition of apprenticeship programs. To enjoy the benefits which


the Bureau or other government agencies may extend to duly recognized
apprenticeship programs, an employer shall submit in quadruplicate to the Training
Section of the appropriate Apprenticeship Division of the appropriate Regional Office
the apprenticeship standards of the proposed program prepared in accordance with
guidelines set by the Bureau.
If the apprenticeship standards are found in order, a certificate of recognition shall be
issued by the Apprenticeship Division concerned within five (5) days from receipt
thereof.

SECTION 7. Benefits accruing to recognition. An entity with a recognized


apprenticeship program shall be entitled to technical and other assistance from the
Bureau and other government agencies and to the corresponding training-expense
deduction from its income tax. The rate of such tax deduction incentive and the
procedure of availment thereof are provided in Section 42 of this Rule.

SECTION 8. Trades to be included in apprenticeship programs. Only trades and


occupations declared apprenticeable by the Secretary of Labor and Employment may
be included in apprenticeship programs.

SECTION 9. Who may establish programs. Any entity, whether or not organized
for profit may establish or sponsor apprenticeship programs and employ apprentices.

SECTION 10. Assistance by non-profit entities. In lieu of organizing programs,


non-profit entities may:
(a) Execute an agreement with firms of their choice with on-going apprenticeship
programs, directly or through the Department of Labor and Employment,
assuming responsibility for training deserving apprentices selected by an
employer who shall pay the apprentices;
(b) Give financial and other contributions for the promotion of apprenticeship
programs; or
(c) Provide other forms of assistance.

Apprentices who train under such programs shall be properly identified in


apprenticeship agreements with the employer. However, responsibility for
compliance with employees' compensation, social security, medicare and other labor
laws shall remain with the employer who benefits from the productive efforts of the
apprentices.

SECTION 11. Qualifications of apprentices. To qualify as apprentice, an applicant


shall:
(a) Be at least fifteen years of age; provided those who are at least fifteen years
of age but less than eighteen may be eligible for apprenticeship only in non-
hazardous occupations;
(b) Be physically fit for the occupation in which he desires to be trained;
(c) Possess vocational aptitude and capacity for the particular occupation as
established through appropriate tests; and
(d) Possess the ability to comprehend and follow oral and written instructions.

Trade and industry associations may, however, recommend to the Secretary of Labor
and Employment appropriate educational qualifications for apprentices in certain
occupations. Such qualifications, if approved, shall be the educational requirements
for apprenticeship in such occupations unless waived by an employer in favor of an
applicant who has demonstrated exceptional ability. A certification explaining briefly
the ground for such waiver, and signed by the person in charge of the program, shall
be attached to the apprenticeship agreement of the applicant concerned.

SECTION 12. Aptitude tests. An employer who has a recognized apprenticeship


program shall provide aptitude tests to apprentice-applicants. However, if the
employer does not have adequate facilities, the Department of Labor and
Employment may provide the service free of charge.

SECTION 13. Physical fitness. Total physical fitness need not be required of an
apprentice-applicant unless it is essential to the expeditious and effective learning of
the occupation. Only physical defects which constitute real impediments to effective
performance as determined by the plant apprenticeship committee may disqualify an
applicant.
SECTION 14. Free physical examination. Physical examination of apprentice-
applicant preparatory to employment shall be provided free of charge by the
Department of Health or any government hospital. If this is not feasible, the firm or
entity screening the applicant shall extend such service free of charge.

Any entity with an apprenticeship program may elect to assume the responsibility for
physical examination provided its facilities are adequate and all expenses are borne
exclusively by it.

SECTION 15. Apprenticeable trades. The Bureau shall evaluate crafts and
operative, technical, nautical, commercial, clerical, technological, supervisory,
service and managerial activities which may be declared apprenticeable by the
Secretary of Labor and Employment and shall have exclusive jurisdiction to formulate
model national apprenticeship standards therefor.

SECTION 16. Model standards. Model apprenticeship standards to be set by the


Bureau shall include the following:
(a) Those affecting employment of apprentices under different occupational
conditions;
(b) Those involving theoretical and proficiency tests for apprentices during their
training;
(c) Areas and duration of work and study covered by on-the-job training and
theoretical instructions of apprenticeable trades and occupations; and
(d) Those referring to the qualifications of trainers of apprentices.

SECTION 17. Participation in standards setting. The Bureau may request any
legitimate worker's and employer's organizations, civic and professional groups, and
other entities whether public or private, to assist in the formulation of national
apprenticeship standards.

SECTION 18. Contents of agreement. Every apprenticeship agreement shall


include the following:
(a) The full names and addresses of the contracting parties;
(b) Date of birth of the apprentice;
(c) Name of the trade, occupation or job in which the apprentice will be trained
and the dates on which such training will begin and will approximately end;
(d) The approximate number of hours of on-the-job training as well as of
supplementary theoretical instructions which the apprentice shall undergo during
his training;
(e) A schedule of the work processes of the trade/occupation in which the
apprentice shall be trained and the approximate time to be spent on the job in
each process;
(f) The graduated scale of wages to be paid the apprentice;
(g) The probationary period of the apprentice during which either party may
summarily terminate their agreement; and
(h) A clause that if the employer is unable to fulfill his training obligation, he may
transfer the agreement, with the consent of the apprentice, to any other
employer who is willing to assume such obligation.

SECTION 19. Apprenticeship period. The period of apprenticeship shall not


exceed six (6) months.
(a) Four hundred (400) hours or two (2) months for trades or occupations which
normally require a year or more for proficiency; and
(b) Two hundred (200) hours or one (1) month for occupations and jobs which
require more than three months but less than one year for proficiency.

At least five (5) working days before the actual date of termination, the party
terminating shall serve a written notice on the other, stating the reason for such
decision and a copy of said notice shall be furnished the Apprenticeship Division
concerned.

SECTION 20. Hours of work. Hours of work of the apprentice shall not exceed the
maximum number of hours of work prescribed by law, if any, for a worker of his age
and sex. Time spent in related theoretical instructions shall be considered as hours of
work and shall be reckoned jointly with on-the-job training time in computing in the
agreement the appropriate periods for giving wage increases to the apprentice.

An apprentice not otherwise barred by law from working eight hours a day may be
requested by his employer to work overtime and paid accordingly, provided there are
no available regular workers to do the job, and the overtime work thus rendered is
duly credited toward his training time.

SECTION 21. Previous training or experience. A prospective apprentice who has


completed or otherwise attended a vocational course in a duly recognized trade or
vocational school or training center or who has had previous experience in the trade
or occupation in which he desires to be apprenticed shall be given due credit
therefor.

Both practical and theoretical knowledge shall be evaluated and the credit shall
appear in the apprenticeship agreement which shall have the effect of shortening the
training and servicing as a basis for promoting him to a higher wage level. Such
credit shall be expressed in terms of hours.

SECTION 22. Parties to agreement. Every apprenticeship agreement shall be


signed by the employer or his duly authorized representative and by the apprentice.

An apprenticeship agreement with a minor shall be signed in his behalf by his parent
or guardian, or if the latter is not available, by an authorized representative of the
Department of Labor and Employment.

SECTION 23. Bureau and Apprenticeship Division of Regional Office concerned to be


furnished copy of agreement. The employer shall furnish a copy of the
apprenticeship agreement to the Bureau and Apprenticeship Division of Regional
Office concerned and the agency which shall provide related theoretical instructions
if the employer is not the one who will give such instructions. The copies shall be sent
by the employer within five (5) working days from the date of execution thereof. If
the agreement is found defective and serious damage would be sustained by either
party if such defect is not corrected, the Apprenticeship Division shall advise the
employer within five (5) working days not to implement the agreement pending
amendment thereof. Other defects may be correlated without suspending the
effectivity of the agreement.

SECTION 24. Enforcement of agreement. No person shall institute any action for
the enforcement of any apprenticeship agreement or for damages for breach thereof,
unless he has exhausted all available administrative remedies. The plant
apprenticeship committee shall have initial responsibility for settling differences
arising out of apprenticeship agreements.

SECTION 25. Valid cause to terminate agreement. Either party to an agreement


may terminate the same after the probationary period only for a valid cause. The
following are valid causes for termination:

By the employer

(a) Habitual absenteeism in on-the-job training and related theoretical


instructions;
(b) Willful disobedience of company rules or insubordination to lawful order of a
superior;
(c) Poor physical condition, permanent disability or prolonged illness which
incapacitates the apprentice from working;
(d) Theft or malicious destruction of company property and/or equipment;
(e) Poor efficiency or performance on the job or in the classroom for a prolonged
period despite warnings duly given to the apprentice; and
(f) Engaging in violence or other forms of gross misconduct inside the employer's
premises.

By the apprentice
(a) Substandard or deleterious working conditions within the employer's
premises:
(b) Repeated violations by the employer of the terms of the apprenticeship
agreement;
(c) Cruel or inhuman treatment by the employer or his subordinates;
(d) Personal problems which in the opinion of the apprentice shall prevent him
from a satisfactory performance of his job; and
(e) Bad health or continuing illness.

SECTION 26. Procedure of termination. The procedure for effecting termination


shall be embodied in appropriate instructions to be prepared by the Bureau and
approved by the Secretary of Labor and Employment.

SECTION 27. Theoretical instructions by employer. Related theoretical


instructions to apprentices may be undertaken by the employer himself if he has
adequate facilities and qualified instructors for the purpose. He shall indicate his
intention to assume such responsibility in the apprenticeship standard of his
program. The course outline and the bio-data of the instructors who will conduct the
course shall conform with the standards set by the Department.

SECTION 28. Ratio of theoretical instruction and on-the-job training. The normal
ratio is one hundred (100) hours of theoretical instructions for every two thousand
(2,000) hours of practical or on-the-job training. Theoretical instructions time for
occupations requiring less than two thousand hours for proficiency shall be computed
on the basis of such ratio.

SECTION 29. Wages. The wage rate of the apprentice shall start at seventy five
(75%) per cent of the statutory minimum wage for the first six (6) months; thereafter,
he shall be paid the full minimum wage, including the full cost of living allowance.

SECTION 30. Tripartite apprenticeship committees. The creation of a plant


apprenticeship committee for every apprenticeship program shall be necessary. The
Department of Labor and Employment shall encourage the organization of
apprenticeship committees at trade, industry or other levels. As much as possible
these committees shall consist of management, labor and government
representatives.

SECTION 31. Non-tripartite committees. Where tripartism is not feasible, the


apprenticeship committee may be composed of:
(a) Technical personnel in the plant, trade or industry concerned;
(b) Labor and management representatives.

Representatives of cooperative, civic and other groups may also participate in such
committees.

SECTION 32. Duties of apprenticeship committees. An apprenticeship committee


at any level shall be responsible for the following duties:
(a) Act as liaison between the apprentice and the employees;
(b) Mediate and/or settle in the first instance differences between the employer
and the apprentices arising out of an apprenticeship agreement;
(c) Maintain a constant follow-up on the technical progress of the program and of
the apprentices in particular;
(d) Recommend to the Apprenticeship Division of the Regional Office concerned
the issuance of certificates of completion to apprentices.

SECTION 33. Creation of ad hoc advisory committees. The Secretary of Labor and
Employment may create ad hoc committees consisting of representatives of
management, labor and government on the national, regional and local levels to
advise and assist him in the formulation of policy, promotion of apprenticeship and
other matters he may deem appropriate to refer to them.

SECTION 34. Use of training centers. The Department may utilize the facilities
and services of the National Manpower and Youth Council, the Department of
Education, Culture and Sports and other public training institutions for the training of
apprentices.
SECTION 35. Coordination of training activities. The apprenticeship Division shall
coordinate with the above training centers all activities relating to apprenticeship.
The Bureau, through the Apprenticeship Division, shall provide technical guidance
and advice to the centers.

SECTION 36. Priority in use of training centers. Priority in the use of training
centers shall be given to recognized apprenticeship programs in skills which are
highly in demand in specific regions or localities as determined through surveys. The
Bureau shall recommend to the Secretary of Labor and Employment the
establishment of priorities based on data supplied by the Bureau of Local
Employment, Labor Statistics Service, the National Manpower and Youth Council, and
its own fundings. The Secretary of Labor and Employment may, however, also act on
the basis of petitions presented by qualified entities which are willing to bear the
costs of training.

SECTION 37. Issuance of certificates. Upon completion of his training, the


apprentice shall be issued a certificate of completion of apprenticeship by the
Apprenticeship Division of the Regional Office concerned.

SECTION 38. Certificate of meritorious service. A certificate of meritorious service


may be awarded by the Secretary of Labor and Employment to apprenticeship
committees or other entities which have rendered outstanding service to the cause of
apprenticeship.

SECTION 39. Certificate, evidence of skills. A certificate of completion of


apprenticeship shall be evidence of the skills specified therein in accordance with
national skills standards established by the Department.

SECTION 40. Apprenticeship without compensation. The Secretary of Labor and


Employment through the Apprenticeship Division, may authorize the hiring of
apprentices without compensation whose training on the job is required by the school
curriculum as a prerequisite for graduation or for taking a government board
examination.

SECTION 41. Compulsory apprenticeship.

(a) When grave national emergencies, particularly those involving the security of
the state, arise or particular requirements of economic development so demand,
the Secretary of Labor and Employment may recommend to the President of the
Philippines the compulsory training of apprentices required in a certain trades,
occupations, jobs or employment levels where shortage of trained manpower is
deemed critical;
(b) Where services of foreign technicians are utilized by private companies in
apprenticeable trades said companies are required to set up appropriate
apprenticeship programs.

SECTION 42. Certification from Apprenticeship Division. An employer desiring to


avail of the tax deduction provided under the Code shall secure from the
Apprenticeship Division a certification that his apprenticeship program was
operational during the taxable year concerned. Such certification shall be attached to
the employer's income tax returns for the particular year. Guidelines for the issuance
of such certification shall be prepared by the Bureau and approved by the Secretary
of Labor and Employment.

What is an apprenticeship agreement?


Who is an apprentice?
Wage of an apprentice
Qualifications of an apprentice
Limitations in hiring of an apprentice
Regularization of an apprentice

2. Handicaps
ART. 78. DEFINITION

HANDICAPPED WORKERS - those whose earning capacity is impaired by age


or physical or mental deficiency or injury, disease or illness.

- There must be a link between the deficiency and the work which entitles the
employer to lessen the workers wage.

HANDICAPPED WORKER HANDICAPPED PERSON


Art. 78. LC RA 7277
(Magna Carta for Disabled
Persons)
Those whose earning capacity is Those suffering from restriction
impaired by age or physical or or different abilities, as a result
mental deficiency or injury. of a mental, physical or sensory
impairment, to perform an
activity in the manner or within
the range considered normal for
a human being.

ART. 79. WHEN EMPLOYABLE

Handicapped workers may be employed when:

1. their employment is necessary to prevent curtailment of employment


opportunities
2. it does not create unfair competition in labor costs or impair or lower working
standards.

- Subject to the provisions of the Code, handicapped workers may be hired


as regular workers, apprentices or learners IF their handicap is not such
as to effectively impede the performance of job operations in the
particular occupations for which they were hired.

EQUAL OPPORTUNITY FOR EMPLOYMENT ( SEC.5 RA 7277)

- No disabled person shall be denied access to opportunities for suitable


employment. Qualified disabled employees shall be subject to the same terms
and conditions of employment and the same compensation, privileges, benefits,
fringe benefits, incentives or allowances as a qualified able-bodied person. Even a
handicapped worker can acquire the status of a regular employee.
Duration of employment - no minimum, no maximum duration. Dependent on
agreement but it is necessary that there is a specific duration.

ART. 80. EMPLOYMENT AGREEMENT

CONTENTS OF EMPLOYMENT AGREEMENT

- An employer who hires a handicapped worker shall enter into an employment


agreement with the latter which shall include:

1. The names and addresses of the employer and the handicapped worker;
2. The rate of pay of the handicapped worker which shall not be less than
seventy-five (75%) percent of the legal minimum wage;
3. The nature of work to be performed by the handicapped worker; and
4. The duration of the employment.

Subject to the appropriate provisions of this Code, handicapped workers may be


hired as apprentices or learners, if their handicap is not such as to effectively
impede the performance of job operations in the particular occupations for which
they are hired.

(R.A. 7277)
AN ACT PROVIDING FOR THE REHABILITATION, SELF-DEVELOPMENT AND SELF-
RELIANCE OF DISABLED PERSONS AND THEIR INTEGRATION INTO THE MAINSTREAM
OF SOCIETY AND FOR OTHER PURPOSES.

TITLE I
GENERAL PROVISIONS

CHAPTER I
BASIC PRINCIPLE

Section 1. Title. This Act shall be known and cited as the "Magna Carta for
Disabled Persons."

Sec. 2. Declaration of Policy The grant of the rights and privileges for disabled
persons shall be guided by the following principles:
(a) Disabled persons are part of Philippine society, thus the State shall give full
support to the improvement of the total well-being of disabled persons and their
integration into the mainstream of society. Toward this end, the State shall adopt
policies ensuring the rehabilitation, self-development and self-reliance of disabled
persons. It shall develop their skills and potentials to enable them to compete
favorably for available opportunities.

(b) Disabled persons have the same rights as other people to take their proper
place in society. They should be able to live freely and as independently as
possible. This must be the concern of everyone the family, community and all
government and nongovernment organizations. Disabled persons' rights must
never be perceived as welfare services by the Government.
(c) The rehabilitation of the disabled persons shall be the concern of the
Government in order to foster their capacity to attain a more meaningful,
productive and satisfying life. To reach out to a greater number of disabled
persons, the rehabilitation services and benefits shall be expanded beyond the
traditional urban-based centers to community based programs, that will ensure
full participation of different sectors as supported by national and local
government agencies.
(d) The State also recognizes the role of the private sector in promoting the
welfare of disabled persons and shall encourage partnership in programs that
address their needs and concerns.
(e) To facilitate integration of disabled persons into the mainstream of society,
the State shall advocate for and encourage respect for disabled persons. The
State shall exert all efforts to remove all social, cultural, economic, environmental
and attitudinal barriers that are prejudicial to disabled persons.

Sec. 3. Coverage. This Act shall cover all disabled persons and, to the extent
herein provided, departments, offices and agencies of the National Government or
nongovernment organizations involved in the attainment of the objectives of this
Act.

Sec. 4. Definition of Terms. For purposes of this Act, these terms are defined as
follows:
(a) Disabled persons are those suffering from restriction or different abilities, as a
result of a mental, physical or sensory impairment, to perform an activity in the
manner or within the range considered normal for a human being;

(b) Impairment is any loss, diminution or aberration of psychological,


physiological, or anatomical structure or function;
(c) Disability shall mean 1) a physical or mental impairment that substantially
limits one or more psychological, physiological or anatomical function of an
individual or activities of such individual; 2) a record of such an impairment; or 3)
being regarded as having such an impairment;
(d) Handicap refers to a disadvantage for a given individual, resulting from an
impairment or a disability, that limits or prevents the function or activity, that is
considered normal given the age and sex of the individual;
(e) Rehabilitation is an integrated approach to physical, social, cultural, spiritual,
educational and vocational measures that create conditions for the individual to
attain the highest possible level of functional ability;
(f) Social Barriers refer to the characteristics of institutions, whether legal,
economic, cultural, recreational or other, any human group, community, or
society which limit the fullest possible participation of disabled persons in the life
of the group. Social barriers include negative attitudes which tend to single out
and exclude disabled persons and which distort roles and inter-personal
relationships;
(g) Auxiliary Aids and Services include:
1. qualified interpreters or other effective methods of delivering materials to
individuals with hearing impairments;

2. qualified readers, taped tests, or other effective methods of delivering


materials to individuals with visual impairments;
3. acquisition or modification of equipment or devices; and
4. other similar services and actions or all types of aids and services that
facilitate the learning process of people with mental disability.
(h) Reasonable Accommodation include 1) improvement of existing facilities used
by employees in order to render these readily accessible to and usable by
disabled persons; and 2) modification of work schedules, reassignment to a
vacant position, acquisition or modification of equipment or devices, appropriate
adjustments or modifications of examinations, training materials or company
policies, rules and regulations, the provision of auxiliary aids and services, and
other similar accommodations for disabled persons;

(i) Sheltered Employment refers to the provision of productive work for disabled
persons through workshops providing special facilities, income-producing projects
or homework schemes with a view to giving them the opportunity to earn a living
thus enabling them to acquire a working capacity required in open industry;
(j) Auxiliary Social Services are the supportive activities in the delivery of social
services to the marginalized sectors of society;
(k) Marginalized Disabled Persons refer to disabled persons who lack access to
rehabilitative services and opportunities to be able to participate fully in
socioeconomic activities and who have no means of livelihood and whose
incomes fall below the poverty threshold; chan robles virtual law library
(l) Qualified Individual with a Disability shall mean an individual with a disability
who, with or without reasonable accommodations, can perform the essential
functions of the employment position that such individual holds or desires.
However, consideration shall be given to the employer's judgment as to what
functions of a job are essential, and if an employer has prepared a written
description before advertising or interviewing applicants for the job, this
description shall be considered evidence of the essential functions of the job;
(m)Readily Achievable means a goal can be easily attained and carried out
without much difficulty or expense. In determining whether an action is readily
achievable, factors to be considered include
1. the nature and cost of the action;

2. the overall financial resources of the facility or facilities involved in the action;
the number of persons employed at such facility; the effect on expenses and
resources, or the impact otherwise of such action upon the operation of the
facility;
3. the overall financial resources of the covered entity with respect to the
number of its employees; the number, type and location of its facilities; and
4. the type of operation or operations of the covered entity, including the
composition, structure and functions of the work force of such entity; the
geographic separateness, administrative or fiscal relationship of the facility or
facilities in question to the covered entity.
(n) Public Transportation means transportation by air, land and sea that provides
the public with general or special service on a regular and continuing basis;

(o) Covered Entity means an employer, employment agency, labor organization


or joint-labor management committee; and
(p) Commerce shall be taken to mean as travel, trade, traffic, commerce,
transportation, or communication among the provinces or between any foreign
country or any territory or possession and any province.

TITLE II
RIGHTS AND PRIVILEGES OF DISABLED PERSONS
CHAPTER I
EMPLOYMENT

Sec. 5. Equal Opportunity for Employment. No disable person shall be denied


access to opportunities for suitable employment. A qualified disabled employee shall
be subject to the same terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits, incentives or allowances as a
qualified able bodied person.

Five percent (5%) of all casual emergency and contractual positions in the
Departments of Social Welfare and Development; Health; Education, Culture and
Sports; and other government agencies, offices or corporations engaged in social
development shall be reserved for disabled persons.

Sec. 6. Sheltered Employment If suitable employment for disabled persons


cannot be found through open employment as provided in the immediately preceding
Section, the State shall endeavor to provide it by means of sheltered employment. In
the placement of disabled persons in sheltered employment, it shall accord due
regard to the individual qualities, vocational goals and inclinations to ensure a good
working atmosphere and efficient production.

Sec. 7. Apprenticeship. Subject to the provisions of the Labor Code as amended,


disabled persons shall be eligible as apprentices or learners: Provided, That their
handicap is not as much as to effectively impede the performance of job operations
in the particular occupation for which they are hired; Provided, further, That after the
lapse of the period of apprenticeship, if found satisfactory in the job performance,
they shall be eligible for employment.

Sec. 8. Incentives for Employers.

(a) To encourage the active participation of the private sector in promoting the
welfare of disabled persons and to ensure gainful employment for qualified
disabled persons, adequate incentives shall be provided to private entities which
employ disabled persons.
(b) Private entities that employ disabled persons who meet the required skills or
qualifications, either as regular employee, apprentice or learner, shall be entitled
to an additional deduction, from their gross income, equivalent to twenty-five
percent (25%) of the total amount paid as salaries and wages to disabled
persons: Provided, however, That such entities present proof as certified by the
Department of Labor and Employment that disabled persons are under their
employ: Provided, further, That the disabled employee is accredited with the
Department of Labor and Employment and the Department of Health as to his
disability, skills and qualifications.
(c) Private entities that improve or modify their physical facilities in order to
provide reasonable accommodation for disabled persons shall also be entitled to
an additional deduction from their net taxable income, equivalent to fifty percent
(50%) of the direct costs of the improvements or modifications. This Section,
however, does not apply to improvements or modifications of facilities required
under Batas Pambansa Bilang 344.

Sec. 9. Vocational Rehabilitation. Consistent with the principle of equal


opportunity for disabled workers and workers in general, the State shall take
appropriate vocational rehabilitation measures that shall serve to develop the skills
and potentials of disabled persons and enable them to compete favorably for
available productive and remunerative employment opportunities in the labor
market.

The State shall also take measures to ensure the provision of vocational
rehabilitation and livelihood services for disabled persons in the rural areas. In
addition, it shall promote cooperation and coordination between the government and
nongovernmental organizations and other private entities engaged in vocational
rehabilitation activities.
The Department of Social Welfare and Development shall design and implement
training programs that will provide disabled persons with vocational skills to enable
them to engage in livelihood activities or obtain gainful employment. The
Department of Labor and Employment shall likewise design and conduct training
programs geared towards providing disabled persons with skills for livelihood.

Sec. 10. Vocational Guidance and Counseling. The Department of Social and
Welfare and Development, shall implement measures providing and evaluating
vocational guidance and counseling to enable disabled persons to secure, retain and
advance in employment. It shall ensure the availability and training of counselors and
other suitably qualified staff responsible for the vocational guidance and counseling
of disabled persons.

Sec. 11. Implementing Rules and Regulations. The Department of Labor and
Employment shall in coordination with the Department of Social Welfare and
Development (DSWD) and National Council for the Welfare of the Disabled Persons
(NCWDP) shall promulgate the rules and regulations necessary to implement the
provisions under this Chapter.

CHAPTER II
EDUCATION

Sec. 12. Access to Quality Education. The State shall ensure that disabled
persons are provided with access to quality education and ample opportunities to
develop their skills. It shall take appropriate steps to make such education accessible
to all disabled persons. It shall be unlawful for any learning institution to deny a
disabled person admission to any course it offers by reason of handicap or disability.
The State shall take into consideration the special requirements of disabled persons
in the formulation of educational policies and programs. It shall encourage learning
institutions to take into account the special needs of disabled persons with respect to
the use of school facilities, class schedules, physical education requirements, and
other pertinent consideration.

The State shall also promote the provision by learning institutions, especially higher
learning institutions of auxiliary services that will facilitate the learning process for
disabled persons.

Sec. 13. Assistance to Disabled Students. The State shall provide financial
assistance to economically marginalized but deserving disabled students pursuing
post secondary or tertiary education. Such assistance may be in the form of
scholarship grants, student loan programs, subsidies, and other incentives to
qualified disabled students in both public and private schools. At least five percent
(5%) of the allocation for the Private Education Student Financial Assistance Program
created by virtue of R.A. 6725 shall be set aside for disabled students pursuing
vocational or technical and degree courses.

Sec. 14. Special Education. The State shall establish, maintain and support
complete, adequate and integrated system of special education for the visually
impaired, hearing impaired, mentally retarded persons and other types of
exceptional children in all regions of the country. Toward this end, the Department of
Education, Culture and Sports shall establish, special education classes in public
schools in cities, or municipalities. It shall also establish, where viable, Braille and
Record Libraries in provinces, cities or municipalities.

The National Government shall allocate funds necessary for the effective
implementation of the special education program nationwide. Local government units
may likewise appropriate counterpart funds to supplement national funds.

Sec. 15. Vocational or Technical and Other Training Programs. The State shall
provide disabled persons with training in civics, vocational efficiency, sports and
physical fitness, and other skills. The Department of Education, Culture and Sports
shall establish in at least one government-owned vocational and technical school in
every province a special vocational and technical training program for disabled
persons. It shall develop and implement sports and physical fitness programs
specifically designed for disabled persons taking into consideration the nature of their
handicap.
Sec. 16. Non-Formal Education. The State shall develop non-formal education
programs intended for the total human development of disabled persons. It shall
provide adequate resources for non-formal education programs and projects that
cater to the special needs of disabled persons.

Sec. 17. State Universities and Colleges. If viable and needed, the State
University or State College in each region or province shall be responsible for (a) the
development of material appliances and technical aids for disabled persons; (b) the
development of training materials for vocational rehabilitation and special education
instructions; (c) the research on special problems, particularly of the visually-
impaired, hearing-impaired, speech-impaired, and orthopedically-impaired students,
mentally retarded, and multi-handicapped and others, and the elimination of social
barriers and discrimination against disabled persons; and (d) inclusion of the Special
Education for Disabled (SPED) course in the curriculum.

The National Government shall provide these state universities and colleges with
necessary special facilities for visually-impaired, hearing-impaired, speech-impaired,
and orthopedically-impaired students. It shall likewise allocate the necessary funds in
support of the above.

CHAPTER III
HEALTH

Sec. 18. National Health Program. The Department of Health in coordination with
the National Council for the Welfare of Disabled Persons, shall institute a national
health program which shall aim to attain the following:
(a) prevention of disability, whether occurring prenatally or postnatally;

(b) recognition and early diagnosis of disability; and


(c) early rehabilitation of the disabled.

Sec. 19. Rehabilitation Centers. The Department of Health shall establish medical
rehabilitation centers in government provincial hospitals, and shall include in its
annual appropriation the necessary funds for the operation of such centers.

The Department of Health shall formulate and implement a program to enable


marginalized disabled persons to avail of free rehabilitation services in government
hospitals.

Sec. 20. Health Services. The State shall protect and promote the right to health
of disabled persons and shall adopt an integrated and comprehensive approach to
their health development which shall make essential health services available to
them at affordable cost.

The National Government shall provide an integrated health service for disabled
persons which shall include, but not limited to, the following:
(a) prevention of disability through immunization, nutrition, environmental
protection and preservation, and genetic counseling; and early detection of
disability and timely intervention to arrest disabling condition; and

(b) medical treatment and rehabilitation.


The Department of Health shall field medical personnel specializing in the treatment
and rehabilitation of disabled persons to provincial hospitals and, when viable, to
municipal health centers. It shall also train its field health personnel in the provision
of medical attention to disabled persons. It shall further ensure that its field health
units have the necessary capabilities to fit prosthetic and orthotic appliances on
disabled persons.

CHAPTER IV
AUXILIARY SOCIAL SERVICES

Sec. 21. Auxiliary Social Services. The State shall ensure that marginalized
persons are provided with the necessary auxiliary services that will restore their
social functioning and participation in community affairs. Towards this end, the
Department of Social Welfare and Development shall develop and implement
programs on auxiliary social services that respond to the needs of marginalized
disabled persons. The components of such a program shall be as follows:
(a) assistance in the acquisition of prosthetic devices and medical intervention of
specialty services;

(b) provision of specialized training activities designed to improve functional


limitations of disabled persons related to communication skills;
(c) development among disabled persons of a positive self-image through the
provision of counseling, orientation and mobility and strengthening daily living
capability;
(d) provision of family care services geared towards developing the capability of
families to respond to the needs of the disabled members of the family;
(e) provision of substitute family care services and the facilities therefor for
abandoned, neglected, abused and unattached disabled persons who need
custodial care;
(f) provision of after care and follow-up services for the continued rehabilitation
in a community-based setting of disabled persons who were released from
residential care or rehabilitation centers; and
(g) provision of day care services for disabled children of pre-school age.

CHAPTER V
TELECOMMUNICATIONS

Sec. 22. Broadcast Media. Television stations shall be encouraged to provide a


signlanguage inset or subtitles in at least one (1) newscast program a day and
special programs covering events of national significance.

Sec. 23. Telephone Services. All telephone companies shall be encouraged to


install special telephone devices or units for the hearing-impaired and ensure that
they are commercially available to enable them to communicate through the
telephone system.

Sec. 24. Free Postal Charges for the Disabled. Postal charges shall be free on the
following:
(a) articles and literatures like books and periodicals, orthopedic and other devices,
and teaching aids for the use of the disabled sent by mail within the Philippines and
abroad; and

(b) aids and orthopedic devices for the disabled sent by abroad by mail for repair:
Provided, That the aforesaid items are for personal purposes only: Provided, further,
That the disabled person is a marginalized disabled as certified by the Social Welfare
and Development Office of the local government unit concerned or the Department
of Social Welfare and Development.

CHAPTER VI
ACCESSIBILITY

Sec. 25. Barrier-Free Environment. The State shall ensure the attainment of a
barrier-free environment that will enable disabled persons to have access in public
and private buildings and establishments and such other places mentioned in Batas
Pambansa Bilang 344, otherwise known as the "Accessibility Law".

The national and local governments shall allocate funds for the provision of
architectural facilities or structural features for disabled persons in government
buildings and facilities.

Sec. 26. Mobility. The State shall promote the mobility of disabled persons.
Disabled persons shall be allowed to drive motor vehicles, subject to the rules and
regulations issued by the Land Transportation Office pertinent to the nature of their
disability and the appropriate adaptations or modifications made on such vehicles.

Sec. 27. Access to Public Transport Facilities. The Department of Social Welfare
and Development shall develop a program to assist marginalized disabled persons
gain access in the use of public transport facilities. Such assistance may be in the
form of subsidized transportation fare.

The said department shall also allocate such funds as may be necessary for the
effective implementation of the public transport program for the disabled persons.

The "Accessibility Law", as amended, shall be made suppletory to this Act.

Sec. 28. Implementing Rules and Regulations. The Department of Transportation


and Communications shall formulate the rules and regulations necessary to
implement the provisions of this Chapter.

CHAPTER VII
POLITICAL AND CIVIL RIGHTS

Sec. 29. System of Voting. Disabled persons shall be allowed to be assisted by a


person of his choice in voting in the national or local elections. The person thus
chosen shall prepare the ballot for the disabled voter inside the voting booth. The
person assisting shall bind himself in a formal document under oath to fill out the
ballot strictly in accordance with the instructions of the voter and not to reveal the
contents of the ballot prepared by him. Violation of this provision shall constitute an
election offense.
Polling places should be made accessible to disabled persons during national or local
elections.

Sec. 30. Right to Assemble. Consistent with the provisions of the Constitution,
the State shall recognize the right of disabled persons to participate in processions,
rallies, parades, demonstrations, public meetings, and assemblages or other forms of
mass or concerned action held in public.

Sec. 31. Right to Organize. The State recognizes the right of disabled persons to
form organizations or associations that promote their welfare and advance or
safeguard their interests. The National Government, through its agencies,
instrumentalities and subdivisions, shall assist disabled persons in establishing self-
help organizations by providing them with necessary technical and financial
assistance.

Concerned government agencies and offices shall establish close linkages with
organizations of the disabled persons in order to respond expeditiously to the needs
of disabled persons. National line agencies and local government units shall assist
disabled persons in setting up specific projects that will be managed like business
propositions.

To ensure the active participation of disabled persons in the social and economic
development of the country, their organizations shall be encouraged to participate in
the planning, organization and management of government programs and projects
for disabled persons.

Organizations of disabled persons shall participate in the identification and


preparation of programs that shall serve to develop employment opportunities for the
disabled persons.

TITLE III
PROHIBITION ON DISCRIMINATION AGAINST DISABLED PERSONS

CHAPTER I
DISCRIMINATION ON EMPLOYMENT

Sec. 32. Discrimination on Employment. No entity, whether public or private,


shall discriminate against a qualified disabled person by reason of disability in regard
to job application procedures, the hiring, promotion, or discharge of employees,
employee compensation, job training, and other terms, conditions, and privileges of
employment. The following constitute acts of discrimination:
(a) Limiting, segregating or classifying a disabled job applicant in such a manner
that adversely affects his work opportunities;

(b) Using qualification standards, employment tests or other selection criteria


that screen out or tend to screen out a disabled person unless such standards,
tests or other selection criteria are shown to be job-related for the position in
question and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration that:
1. have the effect of discrimination on the basis of disability; or

2. perpetuate the discrimination of others who are subject to common


administrative control.
(d) Providing less compensation, such as salary, wage or other forms of
remuneration and fringe benefits, to a qualified disabled employee, by reason of
his disability, than the amount to which a non-disabled person performing the
same work is entitled;

(e) Favoring a non-disabled employee over a qualified disabled employee with


respect to promotion, training opportunities, study and scholarship grants, solely
on account of the latter's disability;
(f) Re-assigning or transferring a disabled employee to a job or position he
cannot perform by reason of his disability;
(g) Dismissing or terminating the services of a disabled employee by reason of his
disability unless the employer can prove that he impairs the satisfactory
performance of the work involved to the prejudice of the business entity:
Provided, however, That the employer first sought to provide reasonable
accommodations for disabled persons;
(h) Failing to select or administer in the most effective manner employment tests
which accurately reflect the skills, aptitude or other factor of the disabled
applicant or employee that such tests purports to measure, rather than the
impaired sensory, manual or speaking skills of such applicant or employee, if any;
and
(i) Excluding disabled persons from membership in labor unions or similar
organizations.

Sec. 33. Employment Entrance Examination. Upon an offer of employment, a


disabled applicant may be subjected to medical examination, on the following
occasions:
(a) all entering employees are subjected to such an examination regardless of
disability;

(b) information obtained during the medical condition or history of the applicant
is collected and maintained on separate forms and in separate medical files and is
treated as a confidential medical record; Provided, however, That:
1. supervisors and managers may be informed regarding necessary restrictions
on the work or duties of the employees and necessary accommodations;

2. first aid and safety personnel may be informed, when appropriate, if the
disability may require emergency treatment;
3. government officials investigating compliance with this Act shall be provided
relevant information on request; and
4. the results of such examination are used only in accordance with this Act.

CHAPTER II
DISCRIMINATION ON TRANSPORTATION

Sec. 34. Public Transportation. It shall be considered discrimination for the


franchisees or operators and personnel of sea, land, and air transportation facilities
to charge higher fare or to refuse to convey a passenger, his orthopedic devices,
personal effects, and merchandise by reason of his disability.

CHAPTER III
DISCRIMINATION ON THE USE OF PUBLIC ACCOMMODATIONS AND
SERVICES
Sec. 35. Public Accommodations and Services. For purposes of this Chapter,
public accommodations and services shall include the following:
(a) an inn, hotel, motel, or other place of lodging, except for an establishment
located within a building that contains not more than five (5) rooms for rent or
hire and that is actually occupied by the proprietor of such establishment as the
residence of such proprietor;

(b) a restaurant, bar, or other establishment serving food or drink;


(c) a motion picture, theater, concert hall, stadium, or other place of exhibition or
entertainment;
(d) an auditorium, convention center, lecture hall, or other place of public
gathering;
(e) a bakery, grocery store, hardware store, shopping center, or other sales or
rental establishment;
(f) a bank, barber shop, beauty shop, travel service, funeral parlor, gas station,
office of a lawyer, pharmacy, insurance office, professional office of a health care
provider, hospital or other service establishment;
(g) a terminal, depot, or other station used for specified public transportation;
(h) a museum, gallery, library or other place of public display or collection;
(i) a park, zoo, amusement park, or other place of recreation;
(j) a nursery, elementary, secondary, undergraduate, or post-graduate private
school, or other place of education;
(k) a gymnasium, health spa, bowling alley, golf course; or
(l) other place of exercise or recreation.

Sec. 36. Discrimination on the Use of Public Accommodations.


(a) No disabled person shall be discriminated on the basis of disability in the full
and equal enjoyment of the goods, services, facilities, privileges, advantages or
accommodations of any place of public accommodation by any person who owns,
leases, or operates a place of public accommodation. The following constitute
acts of discrimination:
1. denying a disabled person, directly or through contractual, licensing, or other
arrangement, the opportunity to participate in or benefit from the goods,
services, facilities, privileges, advantages, or accommodations of an entity by
reason of his disability;

2. affording a disabled person, on the basis of his disability, directly or through


contractual, licensing, or other arrangement, with the opportunity to
participate in or benefit from a good service, facility, privilege, advantage, or
accommodation that is not equal to that afforded to other able-bodied
persons; and
3. providing a disabled person, on the basis of his disability, directly or through
contractual, licensing, or other arrangement, with a good, service, facility,
advantage, privilege, or accommodation that is different or separate form that
provided to other able-bodied persons unless such action is necessary to
provide the disabled person with a good, service, facility, advantage,
privilege, or accommodation, or other opportunity that is as effective as that
provided to others;

For purposes of this Section, the term "individuals or class of individuals" refers to
the clients or customers of the covered public accommodation that enters into
the contractual, licensing or other arrangement.

(b) Integrated Settings Goods, services, facilities, privileges, advantages, and


accommodations shall be afforded to individual with a disability in the most
integrated setting appropriate to the needs of the individual.
(c) Opportunity to Participate Notwithstanding the existence of separate or
different programs or activities provided in accordance with this Section, an
individual with a disability shall not be denied the opportunity to participate in
such programs or activities that are not separate or different.
(d) Association It shall be discriminatory to exclude or otherwise deny equal
goods, services, facilities, advantages, privileges, accommodations or other
opportunities to an individual or entity because of the known disability of an
individual with whom the individual or entity is known to have a relationship or
association.
(e) Prohibitions For purposes of this Section, the following shall be considered
as discriminatory:
1. the imposition or application of eligibility criteria that screen out or tend to
screen out an individual with a disability or any class or individuals with
disabilities from fully and equally enjoying any goods, services, facilities,
privileges, advantages, or accommodations, unless such criteria can be shown
to be necessary for the provision of the goods, services, facilities, privileges,
or accommodations being offered;

2. a failure to make reasonable modifications in policies, practices, or


procedures, when such modifications are necessary to afford such goods,
services, facilities, privileges, advantages, or accommodations to individuals
with disabilities, unless the entity can demonstrate that making such
modifications would fundamentally alter the nature of the goods, facilities,
services, privileges, advantages, or accommodations;
3. failure to take such steps as may be necessary to ensure that no individual
with a disability is excluded, denied services, segregated or otherwise treated
differently than other individuals because of the absence of auxiliary aids and
services, unless the entity can demonstrate that taking such steps would
fundamentally alter the nature of the good, service, facility, privilege,
advantage or accommodation being offered or would result in undue burden;
4. a failure to remove architectural barriers, and communication barriers that are
structural in nature, in existing facilities, where such removal is readily
achievable; and
5. where an entity can demonstrate that the removal of a barrier under clause
(4) is not readily achievable, a failure to make such goods, services, facilities,
privileges, advantages, or accommodations available through alternative
methods if such methods are readily achievable.

Sec. 37. Use of Government Recreational or Sports Centers Free of Charge.


Recreational or sports centers owned or operated by the Government shall be used,
free of charge, by marginalized disabled persons during their social, sports or
recreational activities.

Sec. 38. Implementing Rules and Regulations. The Department of Public Works
and Highways shall formulate the rules and regulations necessary to implement the
provisions of this Chapter.

TITLE IV
FINAL PROVISIONS

Sec. 39. Housing Program. The National Government shall take into consideration
in its national shelter program the special housing requirements of disabled persons.

Sec. 40. Role of National Agencies and Local Government Units. Local
government units shall promote the establishment of organizations of disabled
persons in their respective territorial jurisdictions. National agencies and local
government units may enter into joint ventures with organizations or associations of
disabled persons to explore livelihood opportunities and other undertakings that shall
enhance the health, physical fitness and the economic and social well-being of
disabled persons.

Sec. 41. Support From Nongovernment Organizations. Nongovernment


organizations or private volunteer organizations dedicated to the purpose of
promoting and enhancing the welfare of disabled persons shall, as they, are hereby
encouraged, become partners of the Government in the implementation of vocational
rehabilitation measures and other related programs and projects. Accordingly, their
participation in the implementation of said measures, programs and projects is to be
extended all possible support by the Government.

The Government shall sponsor a volunteer service program which shall harness the
involvement of private individuals in the provision of assistance to disabled persons.

Sec. 42. Tax Incentives.


(a) Any donation, bequest, subsidy or financial aid which may be made to
government agencies engaged in the rehabilitation of disabled persons and
organizations of disabled persons shall be exempt from the donor's tax subject to
the provisions of Section 94 of the National Internal Revenue Code (NIRC), as
amended and shall be allowed as deductions from the donor's gross income for
purposes of computing the taxable income subject to the provisions of Section 29
(h) of the Code.
(b) Donations from foreign countries shall be exempt from taxes and duties on
importation subject to the provisions of Section 105 of the Tariff and Customs
Code of the Philippines, as amended, Section 103 of the NIRC, as amended and
other relevant laws and international agreements.
(c) Local manufacturing or technical aids and appliances used by disabled
persons shall be considered as a preferred area of investment subject to the
provisions of Executive Order No. 226 otherwise known as the "Omnibus
Investments Code of 1987" and, as such, shall enjoy the rights, privileges and
incentives as provided in said Code such as, but not limited, to the following:

(1) repatriation of investments;


(2) remittance of earnings;
(3) remittance of payments on foreign contracts;
(4) freedom from expropriations;
(5) freedom from requisition of investment;
(6) income tax holiday;
(7) additional deduction for labor expense;
(8) tax and duty exemption on imported capital equipment;
(9) tax credit on domestic capital equipment;
(10) exemption from contractor's tax;
(11) simplification of customs procedures;
(12) unrestricted use of consigned equipment;
(13) employment of foreign nationals;
(14) tax credit for taxes and duties on raw materials;
(15) access to bonded manufacturing/traded warehouse system;
(16) exemption from taxes and duties on imported spare parts; and
(17) exemption from wharfage dues and any export tax, duty, impost and
fee.

Sec. 43. Continuity Clause. Should any department or agency tasked with the
enforcement or formulation of rules and regulations and guidelines for
implementation of any provision of this Act is abolished, merged with another
department or agency or modified, such shall not affect the enforcement or
formulation of rules, regulations and guidelines for implementation of this Act to the
effect that
(a) In case of abolition, the department or agency established to replace the
abolished department or agency shall take-over the functions under this Act of
the abolished department or agency.

(b) In case the department or agency tasked with the enforcement or formulation
of rules, regulations and guidelines for implementation of this Act is merged with
another department or agency, the former shall continue the functions under this
Act of the merged department or agency.
(c) In case of modification, the department or agency modified shall continue the
functions under this Act of the department or agency that has undergone the
modification.

Sec. 44. Enforcement by the Secretary of Justice.


(a) Denial of Right
1. Duty to Investigate the Secretary of Justice shall investigate alleged
violations of this Act, and shall undertake periodic reviews of compliance of
covered entities under this Act.
(b) Potential Violations If the Secretary of Justice has reasonable cause to
believe that
1. any person or group of persons is engaged in a pattern or practice of
discrimination under this Act; or
2. any person or group or persons has been discriminated against under this Act
and such discrimination raises an issue of general public importance, the
Secretary of Justice may commence a legal action in any appropriate court.

Sec. 45. Authority of Court. The court may grant any equitable relief that such
court considers to be appropriate, including, to the extent required by this Act:
(a) granting temporary, preliminary or permanent relief;

(b) providing an auxiliary aid or service, modification of policy, practice or


procedure, or alternative method; and
(c) making facilities readily accessible to and usable by individuals with
disabilities.

Sec. 46. Penal Clause.


(a) Any person who violates any provision of this Act shall suffer the following
penalties:
1. for the first violation, a fine of not less than Fifty thousand pesos (P50,000.00)
but not exceeding One hundred thousand pesos (P100,000.00) or
imprisonment of not less than six (6) months but not more than two (2) years,
or both at the discretion of the court; and

2. for any subsequent violation, a fine of not less than One hundred thousand
pesos (P100,000.00) but not exceeding Two hundred thousand pesos
(P200,000.00) or imprisonment for not less than two (2) years but not more
than six (6) years, or both at the discretion of the court.
(b) Any person who abuses the privileges granted herein shall be punished with
imprisonment of not less than six (6) months or a fine of not less than Five
thousand pesos (P5,000.00), but not more than Fifty thousand pesos
(P50,000.00), or both, at the discretion of the court.

(c) If the violator is a corporation, organization or any similar entity, the officials
thereof directly involved shall be liable therefor.
(d) If the violator is an alien or a foreigner, he shall be deported immediately after
service of sentence without further deportation proceedings.

Sec. 47. Appropriations. The amount necessary to carry out the provisions of this
Act shall be included in the General Appropriations Act of the year following its
enactment into law and thereafter.

Sec. 48. Separability Clause. Should any provisions of this Act be found
unconstitutional by a court of law, such provisions shall be severed from the
remainder of the Act, and such action shall not affect the enforceability of the
remaining provisions of this Act.

Sec. 49. Repealing Clause. All laws, presidential decrees, executive orders and
rules and regulations inconsistent with the provisions of this Act are hereby repealed
or modified accordingly.

Sec. 50. Effectivity. This Act shall take effect fifteen (15) days after its publication
in any two (2) newspapers of general circulation.

Approved: March 24, 1992

READ ALSO B.P. 344 with its IMPLEMENTING RULES

(Chapter III, Art. 78-81, Book II, Labor Code)


ART. 78. Definition. - Handicapped workers are those whose earning capacity is
impaired by age or physical or mental deficiency or injury.

ART. 79. When employable. - Handicapped workers may be employed when their
employment is necessary to prevent curtailment of employment opportunities and
when it does not create unfair competition in labor costs or impair or lower working
standards.

ART. 80. Employment agreement. - Any employer who employs handicapped


workers shall enter into an employment agreement with them, which agreement
shall include:

1. The names and addresses of the handicapped workers to be employed;


2. The rate to be paid the handicapped workers which shall not be less than seventy
five (75%) percent of the applicable legal minimum wage;
3. The duration of employment period; and
4. The work to be performed by handicapped workers.

The employment agreement shall be subject to inspection by the Secretary of Labor


or his duly authorized representative.

ART. 81. Eligibility for apprenticeship. - Subject to the appropriate provisions of this
Code, handicapped workers may be hired as apprentices or learners if their handicap
is not such as to effectively impede the performance of job operations in the
particular occupations for which they are hired.

(Rule VIII, Book II, IRR)


SECTION 1. Definition of terms.
(a) "Handicapped workers" are those whose earning capacity is impaired by age
or physical or mental deficiency or injury.
(b) "Employment agreement" is the contract of employment entered into
between the employer and the handicapped worker.

SECTION 2. When handicapped workers may be employed. Handicapped workers


may be employed when their employment is necessary to prevent curtailment of
employment opportunities and when it does not create unfair competition in labor
costs or impair working standards.

SECTION 3. Contents of employment agreement. An employer who hires a


handicapped worker shall enter into an employment agreement with the latter which
shall include:

(a) The names and addresses of the employer and the handicapped worker;
(b) The rate of pay of the handicapped worker which shall not be less than
seventy-five (75%) percent of the legal minimum wage;
(c) The nature of work to be performed by the handicapped worker; and
(d) The duration of the employment.

SECTION 4. Copy of agreement to be furnished to Division. A copy each of the


employment agreement shall be furnished by the employer to the handicapped
worker and the Apprenticeship Division involved. The Secretary of Labor and
Employment or his duly authorized representative may inspect from time to time the
working conditions of handicapped workers to verify compliance by the parties with
their employment agreement.

SECTION 5. Eligibility for apprenticeship. Handicapped workers shall not be


precluded from employment as apprentices or learners if their handicap is not such
as to effectively impede the performance of job operations in the particular trade or
occupation which is the subject of the apprenticeship or learnership program.

Definition of Terms: Handicap, disabled and impaired


Handicapped worker and His/Her rights (Art. 80 81 Labor Code)
Handicapped vs Disabled Employees

3. Learners

ART. 73. LEARNERS DEFINED


LEARNERS - persons hired as trainees in semi-skilled and other industrial
occupations which are non-apprenticeable and which may be learned through
practical training on the job in a relatively short period of time which shall not exceed
3 months.

LEARNERSHIP AGREEMENT - refers to the employment and training contract


entered into between the employer and the learner.

ART. 74. WHEN LEARNERS MAY BE HIRED

CONDITIONS FOR HIRING LEARNERS:


- Learners may be employed when:

1. no experienced workers are available,


2. the employment of learners being necessary to prevent curtailment of
employment opportunities, and
3. such employment will not create unfair competition in terms of labor costs nor
impair working standards.

ART. 75. CONTENTS OF LEARNERSHIP AGREEMENT

AGREEMENT SHALL INCLUDE :

1. The names and addresses of the employer and the learner;


2. The occupation to be learned and the duration of the training period which
shall not exceed three (3) months;
3. The wage of learner which shall be at least 75 percent of the applicable
minimum wage; and
4. A commitment to employ the learner, if he so desires, as a regular employee
upon completion of training.

- A learner who has worked during the first two months shall be deemed a regular
employee if training is terminated by the employer before the end of the stipulated
period through no fault of the learner.

ART. 76. LEARNERS IN PIECEWORK


- Learners in piecework/incentive rate jobs are to be paid in full for the work
done during the training period.

(Chapter II, Art. 73-77, Book II, Labor Code)


ART. 73. Learners defined. - Learners are persons hired as trainees in semi-skilled
and other industrial occupations which are non-apprenticeable and which may be
learned through practical training on the job in a relatively short period of time which
shall not exceed three (3) months.

ART. 74. When learners may be hired. - Learners may be employed when no
experienced workers are available, the employment of learners is necessary to
prevent curtailment of employment opportunities, and the employment does not
create unfair competition in terms of labor costs or impair or lower working
standards.

ART. 75. Learnership agreement. - Any employer desiring to employ learners shall
enter into a learnership agreement with them, which agreement shall include:

(a) The names and addresses of the learners;


(b) The duration of the learnership period, which shall not exceed three (3)
months;
(c) The wages or salary rates of the learners which shall begin at not less than
seventy-five percent (75%) of the applicable minimum wage; and
(d) A commitment to employ the learners if they so desire, as regular employees
upon completion of the learnership. All learners who have been allowed or
suffered to work during the first two (2) months shall be deemed regular
employees if training is terminated by the employer before the end of the
stipulated period through no fault of the learners.
The learnership agreement shall be subject to inspection by the Secretary of Labor
and Employment or his duly authorized representative.

ART. 76. Learners in piecework. - Learners employed in piece or incentive-rate jobs


during the training period shall be paid in full for the work done.

ART. 77. Penalty clause. - Any violation of this Chapter or its implementing rules and
regulations shall be subject to the general penalty clause provided for in this Code.

(Rule VII, Book II, IRR)


SECTION 1. Definition of terms.
(a) "Learner" is a person hired as a trainee in industrial occupations which are
non-apprenticeable and which may be learned through practical training on the
job for a period not exceeding three (3) months, whether or not such practical
training is supplemented by theoretical instructions.
(b) "Learnership agreement" refers to the employment and training contract
entered into between the employer and the learner.

SECTION 2. When learners may be employed. Learners may be employed when


no experienced workers are available, the employment of learners being necessary
to prevent curtailment of employment opportunities, and such employment will not
create unfair competition in terms of labor costs nor impair working standards.

SECTION 3. Approval of learnership program. Any employer who intends to


employ learners shall submit in writing to the Apprenticeship Division of the Regional
Office concerned, copy furnished the Bureau, his learnership program, which the
Division shall evaluate to determine if the occupation involved is learnable and the
program is sufficient for the purpose of training. Within five (5) working days from
receipt of the program, the Division shall make known its decision to the employer
concerned. A learnership program shall be subject to periodic inspection by the
Secretary of Labor and Employment or his duly authorized representative.

SECTION 4. Contents of learnership agreement. A learnership agreement, shall


include:

(a) The names and addresses of the employer and the learner;
(b) The occupation to be learned and the duration of the training period which
shall not exceed three (3) months;
(c) The wage of learner which shall be at least 75 percent of the applicable
minimum wage; and
(d) A commitment to employ the learner, if he so desires, as a regular employee
upon completion of training.

A learner who has worked during the first two months shall be deemed a regular
employee if training is terminated by the employer before the end of the stipulated
period through no fault of the learner.

SECTION 5. Parties to learnership agreement. Every learnership agreement shall


be signed by the employer or his duly authorized agent and by the learner. A
learnership agreement with a minor shall be signed by the learner with the
conformity of his parent or guardian.

The employer shall furnish a copy each of the learnership agreement to the learner,
the Bureau, and the Apprenticeship Division of the appropriate Regional Office within
five (5) working days following its execution by the parties.

SECTION 6. Employment of minors as learners. A minor below fifteen (15) years


of age shall not be eligible for employment as a learner. Those below eighteen (18)
years of age may only be employed in non-hazardous occupations.

SECTION 7. Cancellation of learnership programs. The Secretary of Labor and


Employment may cancel any learnership program if upon inquiry it is found that the
justification for the program no longer exists.
Who is a learner?
Requisites in hiring a learner
Wage of a learner

4. Women Workers

ART. 130. Labor Code. (Nightwork Prohibition)


Exceptions to Nightwork Prohibition
Required facilities for women

Chapter I
EMPLOYMENT OF WOMEN

ART. 130. Nightwork prohibition. - No woman, regardless of age, shall be


employed or permitted or suffered to work, with or without compensation:

(a) In any industrial undertaking or branch thereof between ten oclock at


night and six oclock in the morning of the following day; or
(b) In any commercial or non-industrial undertaking or branch thereof,
other than agricultural, between midnight and six oclock in the morning of
the following day; or
(c) In any agricultural undertaking at nighttime unless she is given a
period of rest of not less than nine (9) consecutive hours.

(Rule XII, Book III, IRR)

SECTION 5. Night work of women employees. Any woman employed in


any industrial undertaking may be allowed to work beyond 10:00 o'clock at night,
or beyond 12:00 o'clock midnight in the case of women employees of commercial
or non-industrial enterprises, in any of the following cases:

(a) In cases of actual or impending emergencies caused by serious


accident, fire, flood, typhoon, earthquakes, epidemic or other disaster or
calamity, to prevent loss of life or property or in cases of force majeure or
imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment or
installation, to avoid serious loss which the employer would otherwise suffer;
(c) Where the work is necessary to prevent serious loss of perishable
goods;
(d) Where the woman employee holds a responsible position of a
managerial or technical nature, or where the woman employee has been
engaged to provide health and welfare services;
(e) Where the nature of the work requires the manual skill and dexterity of
women and the same cannot be performed with equal efficiency by male
workers or where the employment of women is the established practice in the
enterprises concerned on the date these Rules become effective; and
(f) Where the women employees are immediate members of the family
operating the establishment or undertaking.
(g) The Secretary of Labor and Employment shall from time to time
determine cases analogous to the foregoing for purposes of this Section.

SECTION 6. Agricultural work. No woman, regardless of age, shall be


permitted or suffered to work, with or without compensation, in any agricultural
undertaking at night time unless she is given a rest period of not less than nine
(9) consecutive hours, subject to the provisions of Section 5 of this Rule.

ART. 131. Exceptions. - The prohibitions prescribed by the preceding Article


shall not apply in any of the following cases:

(a) In cases of actual or impending emergencies caused by serious


accident, fire, flood, typhoon, earthquake, epidemic or other disasters or
calamity, to prevent loss of life or property, or in cases of force majeure or
imminent danger to public safety;
(b) In case of urgent work to be performed on machineries, equipment or
installation, to avoid serious loss which the employer would otherwise suffer;
(c) Where the work is necessary to prevent serious loss of perishable
goods;
(d) Where the woman employee holds a responsible position of managerial
or technical nature, or where the woman employee has been engaged to
provide health and welfare services;
(e) Where the nature of the work requires the manual skill and dexterity of
women workers and the same cannot be performed with equal efficiency by
male workers;
(f) Where the women employees are immediate members of the family
operating the establishment or undertaking; and
(g) Under other analogous cases exempted by the Secretary of Labor and
Employment in appropriate regulations.

ART. 132. Facilities for women. - The Secretary of Labor and Employment
shall establish standards that will ensure the safety and health of women
employees. In appropriate cases, he shall, by regulations, require any employer
to:

(a) Provide seats proper for women and permit them to use such seats
when they are free from work and during working hours, provided they can
perform their duties in this position without detriment to efficiency;
(b) To establish separate toilet rooms and lavatories for men and women
and provide at least a dressing room for women;
(c) To establish a nursery in a workplace for the benefit of the women
employees therein; and
(d) To determine appropriate minimum age and other standards for
retirement or termination in special occupations such as those of flight
attendants and the like.

(Rule XII, Book III, IRR)

SECTION 14. Facilities for woman employees. Subject to the approval of


the Secretary of Labor and Employment, the Bureau of Women and Young
Workers shall, within thirty (30) days from the effective date of these Rules,
determine in an appropriate issuance the work situations for which the facilities
enumerated in Article 131 of the Code shall be provided, as well as the
appropriate minimum age and other standards for retirement or termination of
employment in special occupations in which women are employed.

ART. 133. Maternity leave benefits.


(a) Every employer shall grant to any pregnant woman employee who has
rendered an aggregate service of at least six (6) months for the last twelve
(12) months, maternity leave of at least two (2) weeks prior to the expected
date of delivery and another four (4) weeks after normal delivery or abortion
with full pay based on her regular or average weekly wages. The employer
may require from any woman employee applying for maternity leave the
production of a medical certificate stating that delivery will probably take
place within two weeks.
(b) The maternity leave shall be extended without pay on account of
illness medically certified to arise out of the pregnancy, delivery, abortion or
miscarriage, which renders the woman unfit for work, unless she has earned
unused leave credits from which such extended leave may be charged.
(c) The maternity leave provided in this Article shall be paid by the
employer only for the first four (4) deliveries by a woman employee after the
effectivity of this Code.

AN ACT GRANTING PATERNITY LEAVE OF SEVEN (7) DAYS WITH


FULLPAY TO ALL MARRIED EMPLOYEES IN THE PRIVATE AND PUBLIC
SECTORS FOR THE FIRST FOUR (4) DELIVERIES OF THE LEGITIMATE
SPOUSE WITH WHOM HE IS COHABITING AND FOR OTHER PURPOSES"

Also known as: Paternity Leave Act of 1996


Signed: June 11, 1996
This Act allows every married male employee in the private and public sectors not
to work for seven days but continues to earn his compensation on the condition
that his legitimate spouse has delivered a child or suffered a miscarriage for
purposes of enabling him to effectively lend support to his wife in her period of
recovery and/or in the nursing of the newly-born child.
The period of seven days is too short a time to assist a wife and newborn child.
Besides, the law grants the benefit to married employees only. It somehow
discriminates against unmarried fathers and mothers, without impediment to
marry each other, because their choice not to be married would result to not
being able to avail of this benefit.

ART. 134. Family planning services; incentives for family planning.


(a) Establishments which are required by law to maintain a clinic or
infirmary shall provide free family planning services to their employees which
shall include, but not be limited to, the application or use of contraceptive pills
and intrauterine devices.
(b) In coordination with other agencies of the government engaged in the
promotion of family planning, the Department of Labor and Employment shall
develop and prescribe incentive bonus schemes to encourage family planning
among female workers in any establishment or enterprise.

ART. 135. Discrimination prohibited. - It shall be unlawful for any employer to


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

The following are acts of discrimination:

(a) Payment of a lesser compensation, including wage, salary or other


form of remuneration and fringe benefits, to a female employees as against a
male employee, for work of equal value; and
(b) Favoring a male employee over a female employee with respect to
promotion, training opportunities, study and scholarship grants solely on
account of their sexes.

Criminal liability for the willful commission of any unlawful act as provided in this
Article or any violation of the rules and regulations issued pursuant to Section 2
hereof shall be penalized as provided in Articles 288 and 289 of this Code:
Provided, That the institution of any criminal action under this provision shall not
bar the aggrieved employee from filing an entirely separate and distinct action for
money claims, which may include claims for damages and other affirmative
reliefs. The actions hereby authorized shall proceed independently of each other.
(As amended by Republic Act No. 6725, May 12, 1989).

ART. 136. Stipulation against marriage. - It shall be unlawful for an employer


to require as a condition of employment or continuation of employment that a
woman employee shall not get married, or to stipulate expressly or tacitly that
upon getting married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage.

ART. 137. Prohibited acts. - (a) It shall be unlawful for any employer:

(1) To deny any woman employee the benefits provided for in this Chapter or to
discharge any woman employed by him for the purpose of preventing her
from enjoying any of the benefits provided under this Code.
(2) To discharge such woman on account of her pregnancy, or while on leave or in
confinement due to her pregnancy;
(3) To discharge or refuse the admission of such woman upon returning to her
work for fear that she may again be pregnant.

ART. 138. Classification of certain women workers . - Any woman who is


permitted or suffered to work, with or without compensation, in any night club,
cocktail lounge, massage clinic, bar or similar establishments under the effective
control or supervision of the employer for a substantial period of time as
determined by the Secretary of Labor and Employment, shall be considered as an
employee of such establishment for purposes of labor and social legislation.
Acts of Discrimination against women prohibited under R.A. 6725

AN ACT STRENGTHENING THE PROHIBITION ON DISCRIMINATION


AGAINST WOMEN WITH RESPECT TO TERMS AND CONDITIONS OF
EMPLOYMENT, AMENDING FOR THE PURPOSE ARTICLE ONE HUNDRED
THIRTY-FIVE OF THE LABOR CODE, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in


Congress assembled::

SECTION 1. Article One hundred thirty-five of the Labor Code, as amended, is


hereby further amended to read as follows:

"Art. 135. Discrimination Prohibited. It shall be unlawful for any employer to


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

"The following are acts of discrimination:

"(a) Payment of a lesser compensation, including wage, salary or other form of


remuneration and fringe benefits, to a female employee as against a male
employee, for work of equal value; and

"(b) Favoring a male employee over a female employee with respect to


promotion, training opportunities, study and scholarship grants solely on account
of their sexes.

"Criminal liability for the willful commission of any unlawful act as provided in this
article or any violation of the rules and regulations issued pursuant to Section 2
hereof shall be penalized as provided in Articles 288 and 289 of this Code:
Provided, That the institution of any criminal action under this provision shall not
bar the aggrieved employee from filing an entirely separate and distinct action for
money claims, which may include claims for damages and other affirmative
reliefs. The actions hereby authorized shall proceed independently of each other."

Section 2. The Secretary of Labor and Employment is hereby authorized to


promulgate the necessary guidelines to implement this Article in accordance with
the generally accepted practices and standards here and abroad.

Section 3. This Act shall take effect fifteen (15) days from the date of its
publication in at least two (2) national newspapers of general circulation.

Approved: May 12, 1989

5. Student Workers

R.A. 7323

AN ACT TO HELP POOR BUT DESERVING STUDENTS PURSUE THEIR EDUCATION BY


ENCOURAGING THEIR EMPLOYMENT DURING SUMMER AND/OR CHRISTMAS
VACATIONS, THROUGH INCENTIVES GRANTED TO EMPLOYERS, ALLOWING THEM
TO PAY ONLY SIXTY PER CENTUM OF THEIR SALARIES OR WAGES AND THE FORTY
PER CENTUM THROUGH EDUCATION VOUCHERS TO BE PAID BY THE
GOVERNMENT, PROHIBITING AND PENALIZING THE FILING OF FRAUDULENT OR
FICTITIOUS CLAIMS, AND FOR OTHER PURPOSES.

Section 1. Any provision of law to the contrary notwithstanding, any person or


entity employing at least fifty (50) persons may during the summer and/or
Christmas vacation employ poor but deserving students fifteen (15) years of age
but not more than the minimum wage provided by law and other applicable labor
rules and regulations.

For purposes of this Act, poor but deserving students refer to those whose
parent's combined incomes, together with their income, if any, do not exceed
Thirty six thousand pesos (P36,000) per annum. Employment should be at the
Labor Exchange Center of the Department of Labor and Employment (DOLE).

Sec. 2. Sixty per centum (60%) of said salary or wage shall be paid by the
employer in cash and forty per centum (40%) by the Government in the form of a
voucher which shall be applicable in the payment for his tuition fees and books in
any educational institution for secondary, tertiary, vocational or technological
education. The amount of the education voucher shall be paid by the Government
to the educational institution concerned within thirty (30) days from its
presentation to the officer or agency designated by the Secretary of Finance.
The voucher shall not be transferable except when the payee thereof dies or for a
justifiable cause stops in his duties in which case it can be transferred to his
brothers or sisters. If there be none, the amount thereof shall be paid his heirs or
to the payee himself, as the case may be.

Sec. 3. The Secretary of Labor and Employment, the Secretary of Education,


Culture and Sports and the Secretary of Finance shall issue the corresponding
rules and regulations to carry out the purposes of this Act.
The Secretary of Labor and Employment shall be the Project Director of this
program.

Sec. 4. Any person or entity who shall make any fraudulent of fictitious claim
under this Act, regardless of whether payment has been made, shall upon
conviction be punished with imprisonment of not less than six (6) months and not
more than one (1) year and a fine of not less than Ten thousand pesos (P10,000),
without prejudice to their prosecution and punishment for any other offenses
punishable under the Revised Penal Code or any other penal statute.
In case of partnerships or corporations, the managing partner, general manager,
or chief executive officer, as the case may be, shall be criminally liable.

Sec. 5. The amount necessary to carry out the purposes of this Act is hereby
authorized to be appropriated in the General Appropriations Act for 1992 and the
subsequent annual general appropriations acts.

Sec. 6. This Act shall take effect after its publication in the Official Gazette or in
at least two (2) national newspapers of general circulation.

Approved: March 30, 1992

Sec. 14, Rule X, Book 3, IRR

SECTION 14. Working scholars. There is no employer-employee relationship


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

6. Domestic or Household Service Workers

Chapter III
EMPLOYMENT OF HOUSEHELPERS

ART. 141. Coverage. - This Chapter shall apply to all persons rendering services in
households for compensation.

"Domestic or household service" shall mean service in the employers home which is
usually necessary or desirable for the maintenance and enjoyment thereof and
includes ministering to the personal comfort and convenience of the members of the
employers household, including services of family drivers.
ART. 142. Contract of domestic service. - The original contract of domestic
service shall not last for more than two (2) years but it may be renewed for such
periods as may be agreed upon by the parties.

ART. 143. Minimum wage. - (a) Househelpers shall be paid the following minimum
wage rates:

(1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon,
Pasay, and Caloocan cities and municipalities of Makati, San Juan, Mandaluyong,
Muntinlupa, Navotas, Malabon, Paraaque, Las Pias, Pasig, Marikina, Valenzuela,
Taguig and Pateros in Metro Manila and in highly urbanized cities;

(2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities and
first-class municipalities; and

(3) Five hundred fifty pesos (P550.00) a month for those in other municipalities.

Provided, That the employers shall review the employment contracts of their
househelpers every three (3) years with the end in view of improving the terms and
conditions thereof.

Provided, further, That those househelpers who are receiving at least One thousand
pesos (P1,000.00) shall be covered by the Social Security System (SSS) and be
entitled to all the benefits provided thereunder. (As amended by Republic Act No.
7655, August 19, 1993).

ART. 144. Minimum cash wage. - The minimum wage rates prescribed under this
Chapter shall be the basic cash wages which shall be paid to the househelpers in
addition to lodging, food and medical attendance.

ART. 145. Assignment to non-household work. - No househelper shall be


assigned to work in a commercial, industrial or agricultural enterprise at a wage or
salary rate lower than that provided for agricultural or non-agricultural workers as
prescribed herein.

ART. 146. Opportunity for education. - If the househelper is under the age of
eighteen (18) years, the employer shall give him or her an opportunity for at least
elementary education. The cost of education shall be part of the househelpers
compensation, unless there is a stipulation to the contrary.

ART. 147. Treatment of househelpers. - The employer shall treat the


househelper in a just and humane manner. In no case shall physical violence be used
upon the househelper.

ART. 148. Board, lodging, and medical attendance. - The employer shall furnish
the househelper, free of charge, suitable and sanitary living quarters as well as
adequate food and medical attendance.

ART. 149. Indemnity for unjust termination of services. - If the period of


household service is fixed, neither the employer nor the househelper may terminate
the contract before the expiration of the term, except for a just cause. If the
househelper is unjustly dismissed, he or she shall be paid the compensation already
earned plus that for fifteen (15) days by way of indemnity.

If the househelper leaves without justifiable reason, he or she shall forfeit any unpaid
salary due him or her not exceeding fifteen (15) days.

ART. 150. Service of termination notice. - If the duration of the household


service is not determined either in stipulation or by the nature of the service, the
employer or the househelper may give notice to put an end to the relationship five
(5) days before the intended termination of the service.

ART. 151. Employment certification. - Upon the severance of the household


service relation, the employer shall give the househelper a written statement of the
nature and duration of the service and his or her efficiency and conduct as
househelper.
ART. 152. Employment record. - The employer may keep such records as he may
deem necessary to reflect the actual terms and conditions of employment of his
househelper, which the latter shall authenticate by signature or thumb mark upon
request of the employer.

(Rule XIII, Book III, IRR)


RULE XIII
Employment of Househelpers

SECTION 1. General statement on coverage.


(a) The provisions of this Rule shall apply to all househelpers whether employed
on full or part-time basis.
(b) The term "househelper" as used herein is synonymous to the term "domestic
servant" and shall refer to any person, whether male or female, who renders
services in and about the employer's home and which services are usually
necessary or desirable for the maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the employer's family.

SECTION 2. Method of payment not determinant. The provisions of this Rule


shall apply irrespective of the method of payment of wages agreed upon by the
employer and househelper, whether it be hourly, daily, weekly, or monthly, or by
piece or output basis.

SECTION 3. Children of househelpers. The children and relatives of a


househelper who live under the employer's roof and who share the accommodations
provided for the househelpers by the employer shall not be deemed as househelpers
if they are not otherwise engaged as such and are not required to perform any
substantial household work.

SECTION 4. Employment contract. The initial contract for household service


shall not last for more than two (2) years. However, such contract may be renewed
from year to year.

SECTION 5. Minimum monthly wage. The minimum compensation of


househelpers shall not be less than the following rates:
(a) Sixty pesos (P60.00) a month for those employed in the cities of Manila,
Quezon, Pasay and Caloocan, and in the municipalities of Makati, San Juan,
Mandaluyong, Muntinlupa, Navotas, Malabon, Paraaque, Las Pias, Pasig and
Marikina, in the Province of Rizal.
(b) Forty-five pesos (P45.00) a month for those employed in other chartered cities
and first class municipalities; and
(c) Thirty pesos (P30.00) a month for those in other municipalities.

SECTION 6. Equivalent daily rate. The equivalent minimum daily wage rate of
househelpers shall be determined by dividing the applicable minimum monthly rate
by thirty (30) days.

SECTION 7. Payment by results. Where the method of payment of wages


agreed upon by the employer and the househelper is by piece or output basis, the
piece or output rates shall be such as will assure the househelper of the minimum
monthly or the equivalent daily rate as provided in this issuance.

SECTION 8. Minimum cash wage. The minimum wage rates prescribed under
this Rule shall be basic cash wages which shall be paid to the househelpers in
addition to lodging, food and medical attendance.

SECTION 9. Time and manner of payment. Wages shall be paid directly to the
househelper to whom they are due at least once a month. No deductions therefrom
shall be made by the employer unless authorized by the househelper himself or by
existing laws.

SECTION 10. Assignment to non-household work. No househelper shall be


assigned to work in a commercial, industrial or agricultural enterprise at a wage or
salary rate lower than that provided for agricultural and non-agricultural workers.
SECTION 11. Opportunity for education. If the househelper is under the age of
eighteen (18) years, the employer shall give him or her an opportunity for at least
elementary education. The cost of such education shall be part of the househelper's
compensation, unless there is a stipulation to the contrary.

SECTION 12. Treatment of househelpers. The employer shall treat the


househelper in a just and humane manner. In no case shall physical violence be
inflicted upon the househelper.

SECTION 13. Board, lodging and medical attendance. The employer shall
furnish the househelper free suitable and sanitary living quarters as well as adequate
food and medical attendance.

SECTION 14. Indemnity for unjust termination of service. If the period for
household service is fixed, neither the employer nor the househelper may terminate
the contract before the expiration of the term, except for a just cause. If the
househelper is unjustly dismissed, he or she shall be paid the compensation already
earned plus that for fifteen (15) days by way of indemnity.
If the househelper leaves without justifiable reason, he or she shall forfeit any unpaid
salary due him or her not exceeding fifteen (15) days.

SECTION 15. Employment certification. Upon the severance of the household


service relationship, the househelper may demand from the employer a written
statement of the nature and duration of the service and his or her efficiency and
conduct as househelper.

SECTION 16. Funeral expenses. In case of death of the househelper, the


employer shall bear the funeral expenses commensurate to the standards of life of
the deceased.

SECTION 17. Disposition of the househelper's body. Unless so desired by the


househelper or by his or her guardian with court approval, the transfer or use of the
body of the deceased househelper for purposes other than burial is prohibited. When
so authorized by the househelper, the transfer, use and disposition of the body shall
be in accordance with the provisions of Republic Act No. 349.

SECTION 18. Employment records. The employer may keep such records as he
may deem necessary to reflect the actual terms and conditions of employment of his
househelper which the latter shall authenticate by signature or thumbmark upon
request of the employer.

SECTION 19. Prohibited reduction of pay. When the compensation of the


househelper before the promulgation of these regulations is higher than that
prescribed in the Code and in this issuance, the same shall not be reduced or
diminished by the employer on or after said date.

SECTION 20. Relation to other laws and agreements. Nothing in this Rule
shall deprive a househelper of the right to seek higher wages, shorter working hours
and better working conditions than those prescribed herein, nor justify an employer
in reducing any benefit or privilege granted to the househelper under existing laws,
agreements or voluntary employer practices with terms more favorable to the
househelpers than those prescribed in this Rule.

ART. 302 of the Civil Code

R.A. 7655

AN ACT INCREASING THE MINIMUM WAGE OF HOUSEHELPERS,


AMENDING FOR THE PURPOSE ARTICLE 143 OF PRESIDENTIAL DEGREE
NO. 442, AS AMENDED.
Section 1. Subparagraphs (1), (2) and (3), Article 143 of Presidential Decree No.
442, as amended, otherwise known as the "Labor Code of the Philippines" are
hereby amended to read as follows
"ART. 143. Minimum wage. (a) Househelpers shall be paid the following
minimum wage rates;

(1) Eight hundred pesos (P800.00) a month for househelpers in Manila, Quezon,
Pasay and Caloocan cities and municipalities of Makati, San Juan, Mandaluyong,
Muntinlupa, Navotas, Malabon, Paraaque, Las Pias, Pasig, Marikina, Valenzuela,
Taguig and Pateros in Metro Manila and in highly urbanized cities;
(2) Six hundred fifty pesos (P650.00) a month for those in other chartered cities
and first class municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for those in other municipalities;
Provided, That the employees shall review the employment contracts of their
househelpers every three (3) years with the end in view of improving the terms
and conditions thereof.
Provided, further, That those househelpers who are receiving at least One
thousand pesos (P1,000.00) shall be covered by the Social Security System (SSS)
and be entitled to all the benefits provided there under."

Sec. 2. Any violation of any provision of this Act shall be punished with an
imprisonment of not more than three (3) months or a fine of not more than Two
thousand pesos (P2,000.00) or both, at the discretion of the court.

Sec. 3. Any law, executive order, letter of instruction, or any part thereof, which
is inconsistent with any of the provisions of this Act is hereby repealed or
amended accordingly.

Sec. 4. This Act shall take effect fifteen (15) days after its publication in the
Official Gazette or in at least two (2) national newspapers of general circulation,
whichever comes earlier.

Approved: August 19, 1993

Rights of a Househelper (Wage, SSS, Art. 145, 147, 148, 150 Labor
Code and Art. 1694, 1698 Civil Code)

Social Security Law (R.A. 1161 as amended by R.A. 8282)


Sec. 9. Coverage.

(a) Coverage in the SSS shall be compulsory upon all employees not
over sixty (60) years of age and their employers:

Provided, That in case of domestic helpers, their monthly income shall not be
less than one thousand pesos (Php.1000.00) a month:

Provided, further, That any benefit already earned by the employees under
private benefit plans existing at the time of the approval of this Act shall not
be discontinued, reduced or otherwise impaired:

Provided, further, That private plans which are existing and in force at the
time of compulsory coverage shall be integrated with the plan of the SSS in
such a way where the employers contribution to his private plan is more than
that required of him in this Act, he shall pay to the SSS only the contribution
required of him and he shall continue his contribution to the SSS so that the
employers total contribution to his benefit plan and to the SSS shall be the
same as his contribution to his private benefit plan before the compulsory
coverage:

Provided, further, That any changes, adjustments, modifications, eliminations


or improvements in the benefits to be available under the remaining private
plan, which may be necessary to adopt by reason of the reduced contribution
thereto as a result of the integration, shall be subject to agreements between
the employers and employees concerned:
Provided, further, That the private benefit plan which the employer shall
continue for his employees shall remain under the employers management
and control unless there is an existing agreement to the contrary,

Provided, finally, That nothing in this Act shall be construed as a limitation on


the right of employers and employees to agree on and adopt benefits which
are over and above those provided under this Act.

(Labor Code)
ART. 144. Minimum cash wage. - The minimum wage rates prescribed under
this Chapter shall be the basic cash wages which shall be paid to the
househelpers in addition to lodging, food and medical attendance.

ART. 145. Assignment to non-household work. - No househelper shall be


assigned to work in a commercial, industrial or agricultural enterprise at a wage
or salary rate lower than that provided for agricultural or non-agricultural workers
as prescribed herein.

ART. 147. Treatment of househelpers. - The employer shall treat the


househelper in a just and humane manner. In no case shall physical violence be
used upon the househelper.

ART. 148. Board, lodging, and medical attendance. - The employer shall
furnish the househelper, free of charge, suitable and sanitary living quarters as
well as adequate food and medical attendance.

ART. 150. Service of termination notice. - If the duration of the household


service is not determined either in stipulation or by the nature of the service, the
employer or the househelper may give notice to put an end to the relationship
five (5) days before the intended termination of the service.

(Civil Code)
Art. 1689. Household service shall always be reasonably compensated. Any
stipulation that household service is without compensation shall be void. Such
compensation shall be in addition to the house helper's lodging, food, and
medical attendance.

Art. 1690. The head of the family shall furnish, free of charge, to the house
helper, suitable and sanitary quarters as well as adequate food and medical
attendance.

Art. 1694. The head of the family shall treat the house helper in a just and
humane manner. In no case shall physical violence be used upon the house
helper.

Art. 1698. If the duration of the household service is not determined either by
stipulation or by the nature of the service, the head of the family or the house
helper may give notice to put an end to the service relation, according to the
following rules:

(1) If the compensation is paid by the day, notice may be given on any day that
the service shall end at the close of the following day;

(2) If the compensation is paid by the week, notice may be given, at the latest on
the first business day of the week, that the service shall be terminated at the
end of the seventh day from the beginning of the week;

(3) If the compensation is paid by the month, notice may be given, at the latest,
on the fifth day of the month that the service shall cease at the end of the
month.

Employment of Minor as Househelper

(Rule XIII, Book III, IRR)


SECTION 3. Children of househelpers. The children and relatives of a
househelper who live under the employer's roof and who share the
accommodations provided for the househelpers by the employer shall not be
deemed as househelpers if they are not otherwise engaged as such and are not
required to perform any substantial household work.

SUMMARY OF RIGHTS OF HOUSEHELPERS

1. Non-Assignment to non-household work;


2. Reasonable compensation;
3. Just and humane treatment;
4. Board, lodging, and medical attendance;
5. Indemnity for unjust termination of services;
6. Contract for household service shall last for more than two years.
However, such contract may be renewed from year to year;
7. Not be required to work for more than ten hours a day;
8. Every house helper shall be allowed four days vacation each
month, with pay;
9. Right to demand employment certification from the employer;
10. Funeral expenses must be paid by the employer if the househelper
has no relatives with sufficient means in the place where the head of the family
lives;
11. termination only for just cause; and
12. If under 18 years of age, an opportunity to at least elementary
education. The cost of such education shall be a part of the house helpers
compensation, unless there is a stipulation to the contrary.

7. Alien Employees

ART. 40, 41, 42 of the Labor Code

Title II
EMPLOYMENT OF NON-RESIDENT
ALIENS

ART. 40. Employment permit of non-resident aliens. - Any alien seeking


admission to the Philippines for employment purposes and any domestic or
foreign employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the Department of Labor.

The employment permit may be issued to a non-resident alien or to the applicant


employer after a determination of the non-availability of a person in the
Philippines who is competent, able and willing at the time of application to
perform the services for which the alien is desired.

For an enterprise registered in preferred areas of investments, said employment


permit may be issued upon recommendation of the government agency charged
with the supervision of said registered enterprise.

ART. 41. Prohibition against transfer of employment. - (a) After the


issuance of an employment permit, the alien shall not transfer to another job or
change his employer without prior approval of the Secretary of Labor.

(b) Any non-resident alien who shall take up employment in violation of the
provision of this Title and its implementing rules and regulations shall be
punished in accordance with the provisions of Articles 289 and 290 of the Labor
Code.

In addition, the alien worker shall be subject to deportation after service of his
sentence.

ART. 42. Submission of list. - Any employer employing non-resident foreign


nationals on the effective date of this Code shall submit a list of such nationals to
the Secretary of Labor within thirty (30) days after such date indicating their
names, citizenship, foreign and local addresses, nature of employment and status
of stay in the country. The Secretary of Labor shall then determine if they are
entitled to an employment permit.

(Rule XIV, Book I, IRR)


RULE XIV
Employment of Aliens
SECTION 1. Coverage. This Rule shall apply to all aliens employed or seeking
employment in the Philippines, and their present or prospective employers.

SECTION 2. Submission of list. All employers employing foreign nationals,


whether resident or non-resident shall submit a list of such nationals to the
Bureau indicating their names, citizenship, foreign and local addresses; nature of
employment and status of stay in the Philippines.

SECTION 3. Registration of resident aliens. All employed resident aliens


shall register with the Bureau under such guidelines as may be issued by it.

SECTION 4. Employment permit required for entry. No alien seeking


employment, whether on resident or non-resident status, may enter the
Philippines without first securing an employment permit from the Department of
Labor and Employment. If an alien enters the country under a non-working visa
and wishes to be employed thereafter, he may only be allowed to be employed
upon presentation of a duly approved employment permit.

SECTION 5. Requirements for employment permit application. The


application for an employment permit shall be accompanied by the following:
(a) Curriculum vitae duly signed by the applicant indicating his
educational background, his work experience and other data showing that he
possesses high technical skills in his trade or profession;
(b) Contract of employment between the employer and the principal which
shall embody the following, among others:
1. That the non-resident alien worker shall comply with all applicable laws
and rules and regulations of the Philippines;
2. That the non-resident alien worker and the employer shall bind themselves
to train at least two (2) Filipino understudies for a period to be determined
by the Secretary of Labor and Employment; and
3. That he shall not engage in any gainful employment other than that for
which he was issued a permit.
(c) A designation by the employer of at least two (2) understudies for
every alien worker. Such understudies must be the most ranking regular
employees in the section or department for which the expatriates are being
hired to ensure the actual transfer of technology.

SECTION 6. Issuances of employment permit. The Secretary of Labor and


Employment may issue an employment permit to the applicant based on:
(a) Compliance by the applicant and his employer with the requirements
of Section 2 hereof;
(b) Report of the Bureau Director as to the availability or non-availability of
any person in the Philippines who is competent, able, and willing to do the job
for which the services of the applicant are desired;
(c) His assessment as to whether or not the employment of the applicant
will redound to the national interest;
(d) Admissibility of the alien as certified by the Commission on
Immigration and Deportation;
(e) The recommendation of the Board of Investments or other appropriate
government agencies if the applicant will be employed in preferred areas of
investments or in accordance with imperatives of economic developments;
and
(f) Payments of a P100.00 fee.

SECTION 7. Duration of employment permit. Subject to renewal upon


showing of good cause, the employment permit shall be valid for a minimum
period of one (1) year starting from the date of its issuance unless sooner
revoked by the Secretary of Labor and Employment for violation of any provisions
of the Code or of these Rules.
SECTION 8. Advice to Commission on Immigration and Deportation.
The Bureau shall advice the Commission on Immigration and Deportation on the
issuance of an employment permit to an applicant.

SECTION 9. Understudy Training Program. The employer shall submit a


training program for his understudies to the Bureau within thirty (30) days upon
arrival of the alien workers. The supervision of the training program shall be the
responsibility of the Bureau and shall be in accordance with standards established
by the Secretary of Labor and Employment.

Requisites in Hiring Alien Employees

DOLE Department Order No. 97-09 Series of 2009

Revised Rules for the Issuance of Employment Permits to Foreign Nationals

Pursuant to the provisions of Articles 5 and 40 of PD 442 as amended, the


provisions of Rule XIV, Book I of its Implementing Rules and Regulations, Sec.
17(5), Chapter 4, Title VII of the Administrative Code of 1987, the following Rules
are hereby promulgated:

Section 1. Coverage - All foreign nationals who intend to engage in gainful


employment in the Philippines shall apply for Alien Employment Permit (AEP).

Section 2. Exemption - The following categories of foreign nationals are exempt


from securing an employment permit:

a) All members of the diplomatic service and foreign government officials


accredited by and with reciprocity arrangement with the Philippine
Government;

b) Officers and staff of international organizations of which the Philippine


Government is a member and their legitimate spouses desiring to work in
the Philippines;

c) Foreign nationals elected as members of the Governing Board who do


not occupy any other position, but have only voting rights in the
corporation;

d) All foreign nationals granted exemption by law;

e) Owners and representatives of foreign principals whose companies are


accredited with the POEA, who come to the Philippines for a limited period
and solely for the purpose of interviewing Filipino applicants for
employment abroad;

f) Foreign nationals who come to the Philippines to teach, present and/or


conduct research studies in universities and colleges as visiting, exchange
or adjunct professors under formal agreements between universities or
colleges in the Philippines and foreign universities or colleges, or between
the Philippine Government and foreign government; provided that the
exemption is on a reciprocal basis; and

g) Permanent resident foreign nationals, probationary or temporary


resident visa holders.

Section 3. Procedure in the Processing of Applications for AEP -

a. Applications shall be filed with the Regional Office having jurisdiction


over the intended place of work.

Only applications with the following complete documentary requirements


shall be received and acted upon by the Regional Office:

- Duly accomplished Application Form;


- Photocopy of Passport, with Visa or Certificate of Recognition for
Refugees;
- Contract of Employment/Appointment or Board Secretary's
Certificate of Election;
- Photocopy of Mayor's Permit to operate business or in case of
locators in economic zones, Certification from the PEZA or the Ecozone
Authority that the company is located and operating within the
ecozone; and
- Photocopy of current AEP (if for renewal)

b. In the case of foreign nationals to be assigned in related companies,


they may file their application with any of the Regional Offices having
jurisdiction over any of the applicant's intended places of work.
c. Additional position or change in position of the foreign national in the
same company or subsequent assignment in related companies during the
validity or renewal of the AEP will be subject for publication requirement
and payment of publication fee. However, a change of employer shall
require an application for new AEP.

Section 4. Fee - Upon filing of application, the applicant shall pay a fee of
P8,000 for each application for AEP with a validity of 1 year. In case the period of
employment is more than 1 year, an additional P3,000 shall be charged for every
additional year of validity or a fraction thereof. In case of renewal, the applicant
shall pay a fee of P3,000 for each year of validity or a fraction thereof.

Replacement of AEP card shall require a fee of P750. In case of loss of AEP card,
request for replacement shall be accompanied by an Affidavit of Loss.

Section 5. Publication The Regional Office shall publish all applications for
new AEP, change or additional position in the same company or subsequent
assignment in related companies within 2 working days upon receipt of
application. Any objection or information against the employment of the foreign
national may be filed with the Regional Office anytime during the foreign
nationals period of employment.

Section 6. Processing Period Upon receipt of application the authorized


representative of the Regional Office may conduct ocular inspection within 2
working days thereof, to verify legitimacy of the employment of the foreign
national. All applications shall be processed and an AEP shall be issued within 24
hrs after publication and payment of required fees and fines, if any.

Section 7. Verification Inspection The authorized representatives of the


Regional Director may conduct verification inspection of establishments
employing foreign nationals within 30 days after the issuance of the AEP to
ensure that the foreign national is doing the job for which the AEP was issued.

Section 8. Effect of denial/cancellation or revocation of AEP - A foreign


national whose application for AEP has been denied/cancelled/revoked shall not
be allowed to reapply in any of the DOLE Regional Offices, unless said foreign
national has provided proof that the ground for denial/ cancellation/ revocation
has been corrected.

Section 9. Renewal of AEP - An application for renewal of AEP shall be filed on


or before its expiration. Application for foreign nationals with expired AEP's shall
be considered as a new application.

In case of corporate officers whose election or appointment takes place on or


before expiration of AEP, the application shall be filed not later than 10 working
days after election or appointment and before expiration of the AEP.

In case the election or appointment will take place after the expiration of the AEP,
the application for renewal shall be filed on or before the expiration of the AEP,
and shall be renewed for 1 year. In case the foreign national is not re-elected or
re-appointed, the AEP shall be automatically revoked.

Section 10. Denial of application An application for AEP may be denied by


the Regional Director based on any of the following grounds:
a. Misrepresentation of facts in the application;
b. Submission of falsified documents;
c. The foreign national has a derogatory record;
d. Availability of a Filipino who is competent, able, and willing to do the
job intended for the foreign national.

Section 11. Validity of Permit - The AEP shall be valid for a period of 1 year,
unless the employment contract, consultancy services, or other modes of
engagement provides otherwise, which in no case shall exceed 5 years.

Section 12. Suspension of AEP - The AEP may be suspended by the issuing
Regional Office, based on any of the following grounds, and after due process:

a. The continued stay of the foreign national may result in damage to the
interest of the industry or the country.
b. The employment of the foreign national is suspended by the employer
or by order of the Court.

Petitions for suspension of AEP issued shall be resolved within 30 calendar days
from receipt thereof.

Section 13. Cancellation/Revocation of AEP - The Regional Director may


cancel or revoke the AEP based on any of the following grounds, and after due
process:

a. Non-compliance with any of the requirements or conditions for which


the AEP was issued;
b. Misrepresentation of facts in the application;
c. Submission of falsified or tampered documents;
d. Meritorious objection or information against the employment of the
foreign national as determined by the Regional Director;
e. Foreign national has a derogatory record; and
f. Employer terminated the employment of the foreign national.

Section 14. Appeal Any aggrieved party may file an appeal with the Secretary
within 10 days after receipt of the copy of
denial/suspension/cancellation/revocation order.

The decision of the Secretary shall be final and executor unless a Motion for
Reconsideration is filed within 10 days after receipt of the decision of the
Secretary. No second motion for reconsideration shall be entertained.

Section 15. Fines for Working without AEP - The Regional Director shall have
the power to order and impose a fine of P10,000 for every year or a fraction
thereof on foreign nationals found working without an AEP or with an expired
AEP.

Newly hired, elected or appointed officers may file application for new AEP
without penalty within 15 working days after signing of contract, election, or
appointment, or before the start of the actual term of office.

Section 16. Miscellaneous Provisions

a. Separability Clause - If any provision or part of this Department Order


or the application thereof to any person or circumstance is held invalid by
the Courts, the remaining valid provisions of this D.O. shall not be
affected.

b. Repealing Clause - All guidelines, rules and regulations, procedures


and agreements inconsistent herewith are hereby repealed or modified
accordingly.

c. Effectivity - These Rules shall take effect 15 days after its publication in
2 newspapers of general circulation. The Records Officer of this
Department is hereby directed to file 3 certified copies thereof with the
University of the Philippines Law Center pursuant to Sec. 3, Chapter 2,
Book VII of the Administrative Code of 1987.

SUMMARY OF ALIEN EMPLOYMENT

1. What is an Alien Employment Permit (AEP)?


An Alien Employment Permit is a document issued by the Department of Labor
and Employment which authorizes a foreign national to work in the
Philippines.

2. Who are the foreign nationals required to apply for an AEP?


All foreign nationals who intend to engage in gainful employment in
the Philippines.
All foreign nationals who intend to engage in gainful employment in
the Philippines;
Foreign professionals who are allowed to practice their profession in
the Philippines under reciprocity and other international agreements and
in consultancy services pursuant to Section 7(j) of the PRC Modernization
Act of 2000.
Holders of Special Investors Resident Visa (SIRV), Special Retirees
Resident Visa (SRRV), Treaty Traders Visa (9d) or Special Non-Immigrant
Visa (47(a)2) for as long as they occupy any executive, advisory,
supervisory, or technical position in any establishment.

3. Who are exempted from securing AEP?


The following categories of foreign nationals are exempt from securing AEP:
1) Members of the diplomatic services and foreign government officials
accredited by the Philippine government;
2) Officers and staff of international organizations of which the Philippine
government is a cooperating member, and their legitimate spouses
desiring to work in the Philippines;
3) Foreign nationals elected as members of the Governing Board who do
not occupy any other position, but have only voting rights in the
corporation;
4) All foreign nationals granted exemption by special laws and all other
laws that may be promulgated by the Congress;
5) Owners and representatives of foreign principals, whose companies are
accredited by the Philippine Overseas Employment Administration (POEA),
who come to the Philippines for a limited period solely for the purpose of
interviewing Filipino applicants for employment abroad;
6) Foreign nationals who come to the Philippines to teach, present and/or
conduct research studies in universities and colleges as visiting, exchange
or adjunct professors under formal agreements between the universities or
colleges in the Philippines and foreign universities or colleges; or between
the Philippine government and foreign government; provided that the
exemption is on a reciprocal basis; and
7) Resident foreign nationals and temporary or probationary resident visa
holders employed or seeking employment in the Philippines.

1. Where shall an application for an AEP be filed?


An application for AEP shall be filed personally or through their respective
employer with the DOLE Regional Office or Field Office having jurisdiction over
the intended place of work.
In case of foreign nationals to be assigned in subsidiaries, branch offices and
joint ventures, and those assigned in the headquarters with oversight
functions in any of the branch offices, operations or projects in the country,
they may file their application in any of the DOLE Regional/Field Offices
nearest their place of work.

2. What are the requirements in the filing of application for AEP?


Documentary requirements
Duly accomplished Application Form;
Photocopy of Passport, with visa or Certificate of Recognition for
refugees;
Contract of Employment/ Appointment or Board Secretarys Certificate
of Election;
Photocopy of Mayors Permit to operate business or in case of locators
in economic zones, Certification from the PEZA or the Ecozone Authority
that the company is located and operating within the ecozone; and
Photocopy of current AEP (if for renewal)

Fees
Permit fee is P8,000 for one year validity or fraction thereof plus
P3,000.00 for every additional year of validity or a fraction thereof, which
shall not exceed five years, to be paid upon submission of application.

Penalties
If upon evaluation, a foreign national is found to have worked without
or with expired AEP prior to application, a penalty of Ten Thousand Pesos
(P10,000.00) shall be imposed for working without an AEP for one (1) year
or fraction thereof.

1. Who authorizes the issuance of an AEP?


The Secretary of Labor and Employment, through the DOLE Regional Director,
who has jurisdiction over the intended place of work of the foreign national,
authorizes the issuance of an AEP.

2. Who are covered by the publication requirement?


An application for new AEP, for additional or change in position of the foreign
national in the same company or subsequent assignment in related
companies during the validity or renewal of the AEP will be subject for
publication requirement and payment of publication fee.

3. If there is an objection/information filed with the Regional


Office regarding the application for AEP published, how will it be
resolved?
The Regional Director shall determine as to whether or not an
information/objection to the application for AEP merits the denial of the
application or cancellation of the AEP.

The Regional Director may require the appearance/s of either or both the
foreign national and the parties providing the information/objection. If the
objection is meritorious, the Regional Director will deny the application or
cancel the AEP if it has been issued. If the objection is not meritorious, the
Regional Director will grant the AEP.

4. What is the period of validity of an AEP?


The AEP shall be valid for one (1) year or co-terminus with the duration of
employment, consultancy services or other modes of employment or term of
office which in no case shall exceed five years. Said AEP is valid for the
position/s and company for which it was issued.

In case of assignment in the companys subsidiaries, branch offices and joint


ventures and those assigned in the headquarters with oversight function in
any of the branch offices, operation or projects in the country, one (1) AEP
shall be required and valid for all the said assignments irrespective of their
place/s.

5. How long is the processing period for the issuance of AEP?


If the application is filed at the Regional Office, issuance or denial of AEP shall
be within 24 hours after the publication. If the application is filed at the Field
Office, issuance or denial of AEP shall be within 5 working days from date of
filing of application.

6. What are the grounds for the denial of AEP


An application for AEP may be denied for misrepresentation of facts in the
application; submission of falsified documents; the foreign national has a
derogatory record; or availability of a Filipino who is competent, able and
willing to do the job intended for the foreign national.
7. What are the grounds for suspension of AEP?
The AEP may be suspended after due process based on the following:
The continued stay of the foreign national may result in damage to the
interest of the industry or the country;
The employment of the foreign national is suspended by the employer
or by order of the Court.

8. If an application has been denied or cancelled by the Regional


Office, can the foreign national apply for an AEP in other Regional
Offices
No, foreign nationals whose applications have been denied or whose AEPs had
been cancelled shall not be allowed to re-apply in any of the DOLE Regional
Offices, unless said foreign national has provided proof that the ground for
denial/ cancellation/ revocation has been corrected.

9. Is there a remedy for a denied/cancelled or revoked AEP?


Yes, an Appeal maybe filed by any aggrieved party with the Secretary of
Labor and Employment within 10 days after receipt of the Order of
denial/cancellation or revocation.

10. Is the decision of the Secretary final and executory?


Yes, the decision of the Secretary shall be final and executory, unless a
motion for reconsideration is filed within ten (10) days after receipt of the
decision of the Secretary. No second motion for reconsideration shall be
entertained.

11. When shall an application for renewal of AEP be filed?


An application for renewal of AEP must be filed before its expiration. For
elective and appointive positions, applications must be filed within 15 working
days after election/appointment or before expiration of AEP, if election or
appointment will take place before expiration of AEP.

In case the election or appointment will take place after the expiration of the
AEP, the application shall be filed before the expiration of the AEP, and shall
be renewed for one year.

12. What are the grounds for revocation/cancellation of AEP?


Any of the following is a ground for revocation/cancellation of an AEP:
1. Non-compliance with any of the requirements or conditions for which
the AEP was issued;
2. Misrepresentation of facts in the application;
3. Submission of falsified or tampered documents;
4. Meritorious objection or information against the employment of the
foreign national as determined by the Regional Director;
5. Foreign national has a derogatory record; or
6. Employer terminated the employment of the foreign national.

18. Are there fines and penalties relative to the filing of an


application for an AEP?
Yes, a fine of Ten Thousand Pesos (P10,000.00) for every year or a fraction
thereof shall be imposed on foreign nationals found working without an AEP or
with an expired AEP.

19. Is there a grace period in the filing of application for new AEP?
Yes, newly hired, elected or appointed officers are allowed to file application
for new AEP without penalty within fifteen (15) working days after signing of
contract, election or appointment.

However, if the appointment, election or signing of contract is more than 15


working days before the start of contract or term of office, the application may
be filed before the start of contract or term of office.

20. What is required in the replacement of an AEP Card?


Replacement of AEP card shall require a fee of Seven Hundred Fifty Pesos
(P750.00). In case of loss of AEP card, request for replacement shall be
supported by an Affidavit of loss.
Limitations in hiring of alien employees

X. QUITCLAIMS
A QUITCLAIM is a written instrument signed by the employee wherein he makes a
statement that he has received the benefits of Labor Standards, he releases any claim
against the employer, and other similar statements. A quitclaim is usually prepared by
the employer and only signed by the employee, making it a contract of adhesion.

It is generally discouraged by law because of the inherent imbalance of power between


the employer and the employee.

Q: Are Quitclaims and Compromise Agreements the same?


A: It appears from the cases that a quitclaims partakes of the nature of a compromise.
But a quitclaim is generally entered into at the start of employment, while a compromise
agreement is entered into during or pending litigation, or when the dispute arises
between the employer and the employee.

- NATURE OF QUITCLAIMS

In this jurisdiction, quitclaims, waivers, or releases are looked upon with disfavor. They
are commonly frowned upon as contrary to public policy and ineffective to bar claims
for the full measure of the workers legal rights.

"Pacta privata juri publico derogare non possunt" - Private agreements between parties
cannot derogate from public right.
(Rizada vs NLRC, GR# 96982 09/21/99)

- CONDITIONS FOR INVALID QUITCLAIMS

Not all quitclaims are per se invalid or against public policy, but those:

1. Where there is clear proof that the waver was wrangled from an unsuspecting or
gullible person, or
2. Where the terms of settlement are unconscionable on their face, are invalid.

In these cases, the law will step in to annul the questionable transaction.
(Lambo vs NLRC, GR# 111042 10/26/99)

- APPROVAL OF LABOR ARBITER REQUIRED TO MAKE A QUITCLAIM VALID

While the Labor Code encourages all efforts towards the amicable settlement of a labor
dispute, and a quitclaim partakes the nature of a compromise, the implementing rules
require that such a settlement shall be approved by the Labor Arbiter, before whom
the case is pending, the reason being that the latter would be in a better position than
just any labor arbiter to personally determine the voluntariness of the agreement and
certify its validity.

The court found no grave abuse of discretion in the Labor Arbiter's ruling rejecting the
claim of the Company that the amount of P15,000 was given to Lorna Pimentel after
the death of her husband. The Labor Arbiter upheld the version of Lorna that she said
the amount was offered to the deceased Pimentel before his death, and was angrily
refused by him, and that she was constrained to accept the said amount on October
22, 1993 when her husband was already dead and lying in state as she needed money
for his burial. Moreover, the respondent NLRC correctly ruled that the waiver executed
by the wife not having been approved by the Labor Arbiter would not amount to
estoppel and would not divest an employee of his right to pursue his claim against the
employer. In labor jurisprudence, it is well settled that quitclaims are against public
policy. This court held that while the Labor Code encourages all efforts towards the
amicable settlement of a labor dispute, and a quitclaim partakes the nature of a
compromise, the implementing rules require that such a settlement shall be approved
by the Labor Arbiter, before whom the case is pending, after being satisfied that it was
voluntarily entered into by the parties and after having explained to them the terms
and consequences thereof. The reason for the rule is not hard to find. It is for the
employee's protection for the Labor Arbiter before whom the case is pending would be
in a better position than just any other labor arbiter to personally determine the
voluntariness of the agreement and certify its veracity.
(C & A Construction Co., Inc. vs NLRC, GR# 122279 11/22/99)

- A COMPROMISE AGREEMENT/QUITCLAIM MUST NOT BE UNCONSCIONABLE TO


THE MIND.

The compromise agreement/quitclaim purportedly entered into by the parties is


unconscionable and contrary to public policy. The settlement of P20,000 instead of the
Labor Arbiter's award of P174,379.52 is shocking to the mind. This court has ruled that
"Pacta privata juri publico derogare non possunct" or private agreements cannot
derogate from public right.
(Malinaw vs NLRC, GR# 119492 11/24/99)

- ACCEPTANCE OF THE AMOUNT IN A QUITCLAIM DOES NOT ESTOPPE AN


EMPLOYEE FROM RECOVERING THE PROPER AWARD

There is no tenability in petitioners contention that the private respondent is estopped


from claiming separation benefits. In line with the policy of the state to promote
welfare of workers, this court takes note of the low regard for quitclaims executed by
laborers which are often frowned upon as contrary to public policy. This doctrine is
consistent with Sec. 18, Art. II of the 1987 Constitution which states: "The State affirms
labor as the primary social economic force. It shall protect the rights of workers and
promote their welfare." Time honored is the precept that quitclaims are ineffective in
barring recovery for the full measure of the workers rights and that acceptance of
benefits therefrom does not amount to estoppel.
(PNCC vs NLRC, GR# 100353 10/22/99)

- VALIDITY OF QUITCLAIMS

The validity of quitclaims executed by laborers has long been recognized in this
jurisdiction. This court has ruled that not all waivers and quitclaims are invalid as
against public policy. If the agreement was voluntarily entered into and represents a
reasonable settlement of the claims of the employee, it is binding on the parties and
may not later be disowned simply because of a change of mind. Such legitimate
waivers resulting from voluntary settlements of laborers claims should be treated and
upheld as the law between the parties. However, when in this case, the voluntariness
of the execution of the quitclaim or release is put into issue, then the claim of the
employee may still be given due course. The law looks with disfavor upon quitclaims
and releases by employees pressured into signing the same by unscrupulous
employers minded to evade legal responsibilities.
(Phil. Carpet Exporters Assoc. vs PCMC, GR# 140269-70 09/14/00)

GENERAL RULE:
Quitclaims are presumed to be invalid

EXCEPT:
When the quitclaim;
1. Was voluntarily entered into
2. Represents a reasonable settlement of the claims of the employee
3. There is no proof that the consent of the employee was taken by fraud,
intimidation, etc.

CONSENT IN QUITCLAIMS

Contrary to the assumption of both the CA and the VA, the mere fact that Barquin was
not physically coerced or intimidated does not necessarily imply that he freely or
voluntarily consented to the terms of the quitclaim. Under Art. 1330 of the Civil Code,
consent may be vitiated not only through intimidation or violence but also by mistake,
undue influence, or fraud. Mistake may invalidate consent when it refers to the
substance of the thing which is the object of the contract or to those conditions which
have principally moved one or both parties to enter into a contract. There is fraud
when, through insidious words or machinations of one of the contracting parties, the
other is induced to enter into a contract which, without them, he would not have
agreed to.
(Phil. Carpet Exporters Assoc. vs PCMC, GR# 140269-70 09/14/00)

BURDEN OF PROOF IN QUITCLAIMS

It is the employer and not the employee who has the burden of proving that the
quitclaim was voluntarily entered into by him.
(Phil. Carpet Exporters Assoc. vs PCMC, GR# 140269-70 09/14/00)

- (ACD Investigation Security Agency vs Daquera, GR# 147473 03/30/04)

- (R & E Transport Inc. vs Latag, GR# 155214 02/13/04)


Unconscionable on its face

- COMPROMISE AGREEMENTS

A compromise agreement is a contract whereby the parties make reciprocal


concessions in order to resolve their differences and thus avoid or put an end to a
lawsuit. They adjust their difficulties in the manner they have agreed upon,
disregarding the possible gain in litigation and keeping in mind that such gain is
balanced by the danger of losing. Verily, the compromise may be either extrajudicial
(to prevent litigation) or judicial (to end litigation). A compromise must not be contrary
to law, morals, good customs, and public policy; and must have been freely and
intelligently executed by and between the parties, it must comply with the requisites
and principles of contracts. Upon the parties, it has the effect and authority of res
judicata, once entered into.
(Magbanua vs UY, GR# 161003 05/06/05)

EFFECTIVITY OF A COMPROMISE AGREEMENT;

When a compromise agreement is given judicial approval, it becomes more than a


contract binding upon the parties. Having been sanctioned by the court, it is entered as
a determination of a controversy and has the force and effect of a judgment. It is
immediately executory and not appealable, except for vices of consent or forgery. The
non-fulfillment of its terms and conditions justifies the issuance of a writ of execution;
in such an instance, execution becomes a ministerial duty of the court.
(Magbanua vs UY, GR# 161003 05/06/05)

COMPROMISE OF CASES PENDING TRIAL, APPEAL AND WITH FINAL


JUDGMENT;

The court upheld a compromise agreement that covered cases pending trial, on
appeal, and with final judgments. The court noted that Art. 2040 of the Civil Code
impliedly allowed such agreements. There was a limitation as to when these should be
entered into.

Palanca vs CIR sustained a compromise agreement, notwithstanding a final judgment


in which only the amount of back-wages was left to be determined. The court found no
evidence of fraud or of any showing that the agreement was contrary to law, morals,
good customs, public order, or public policy.

Gatchalian vs Arlegui upheld the right to compromise prior to the execution of a final
judgment. The Court ruled that the final judgment had been novated and supreseded
by a compromise agreement.

Also, Northern Lines vs CTA recognized the right to compromise final and executory
judgments, as long as such right was exercised by the proper party litigants.
(Magbanua vs UY, GR# 161003 05/06/05)
ELEMENTS OF A VALID COMPROMISE AGREEMENT;

There is no justification to disallow a compromise agreement solely because it was


entered into after final judgment. The validity of the agreement is determined by
compliance with the requisites and principles of contracts, not by when it was entered
into. As provided by the law on contracts, a valid compromise must have the following
elements:

1. The consent of the parties to the compromise,


2. An object certain that is the subject matter of the compromise,
3. The cause of the obligation that is established.
(Magbanua vs UY, GR# 161003 05/06/05)

COMPROMISE AGREEMENTS ARE RECOGNIZED BY THE NLRC RULES OF


PROCEDURE;

The advantages of a compromise agreement appear to be recognized by the NLRC in


its Rules of Procedure. As part of the proceedings in executing a final judgment,
litigants are required to attend a pre-execution conference to thresh out matters
relevant to the execution. In the conference, any agreement that would settle the final
judgment in a particular manner is necessarily a compromise.

NLRC RULES OF PROCEDURE


RULE VIII
EXECUTION PROCEEDINGS

SECTION 1. PRE-EXECUTION CONFERENCE. - Within two


(2) working days from receipt of the motion for the issuance of
a writ of execution and subject to Section 2, paragraph b, the
Labor Arbiter shall schedule a pre-execution conference/hearing
to thresh out matters relevant to execution.

(Magbanua vs UY, GR# 161003 05/06/05)

NOVATION;

The principle of novation supports the validity of a compromise after final judgment.
Novation, a mode of extinguishing an obligation, is done by changing the object or
principal condition of an obligation, substituting the person of the debtor, or
surrogating a third person in the exercise of the rights of the creditor.
(Magbanua vs UY, GR# 161003 05/06/05)

- (Catholic Vicariate vs Sto. Tomas, GR# 167334 03/07/08)


Even if witnessed by the DOLE, it may still be held invalid.

Y. SECURITY OF TENURE
(Art. XIII, 1987 Constitution)
Section 3. The State shall afford full protection to labor, local and overseas, organized
and unorganized, and promote full employment and equality of employment
opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions of
work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in settling disputes, including
conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace.
The State shall regulate the relations between workers and employers, recognizing the
right of labor to its just share in the fruits of production and the right of enterprises to
reasonable returns to investments, and to expansion and growth.

Security of tenure does not exclusively apply to regular employment only. It also applies
to probationary, seasonal, project and other forms of employment during the effectivity
thereof.

(Labor Code)
ART. 279. Security of tenure. - In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized by
this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715,
March 21, 1989).

(Sec. 2-4, Rule I, Book VI, IRR)

1. Scope

- SECURITY OF TENURE APPLIES TO MANAGERIAL EMPLOYEES AS WELL AS


TO RANK AND FILE EMPLOYEES

The right of the management to dismiss must be balanced against the managerial
employee's right to security of tenure which is not one of the guarantees he gives
up. This court has consistently ruled that managerial employees enjoy security of
tenure and, although the standards for their dismissal are less stringent, the loss of
trust and confidence must be substantial and founded on clearly established facts
sufficient to warrant the managerial employee's separation from the company.
Substantial evidence is of critical importance and the burden rests on the employer
to prove it. Due to its subjective nature, it can easily be concocted by an abusive
employer and used as a subterfuge for causes which are improper, illegal or
unjustified.
(PLDT vs Tolentino, GR# 143171 09/21/04)

- MANAGERIAL EMPLOYEES ARE PROTECTED BY SECURITY OF TENURE

The fact that one is a managerial employee does not by itself exclude him from the
protection of the constitutional guarantee of security of tenure.
(Fujitsu vs CA, GR# 158232 04/08/05)

- Condo Suite Club Travel Inc. vs NLRC

2. Constructive Dismissal vs Illegal Dismissal

Constructive Dismissal concept


Constructive dismissal is an employers act amounting to dismissal but made to
appear as if it were not a dismissal in disguise. In most cases of constructive
dismissal, the employee is allowed to continue to work, but is simply reassigned, or
demoted, or his pay diminished without a valid reason to do so.
Constructive dismissal does not always involve forthright dismissal or diminution in
rank, compensation, benefit and privileges. There may be constructive dismissal if an
act of clear discrimination, insensibility or disdain by an employer becomes so
unbearable on the part or the employee that it could foreclose any choice by him
except to forego his continued employment. (See Hyatt Taxi Services case, G.R. No.
143204, June 26, 2001.)

Constructive Dismissal and Involuntary Resignation


Constructive dismissal is an involuntary resignation resulting in cessation of work
resorted to when continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to an
employee.

In Globe Telecom, Inc. v. Florendo-Flores, it was held that where an employee ceases
to work due to a demotion of rank or a diminution of pay, an unreasonable situation
arises which creates an adverse working environment rendering it impossible for
such employee to continue working for her employer. Hence, her severance from the
company was not of her own making and therefore amounted to an illegal
termination of employment. (Cited in Francisco vs. NLRC, G.R. No. 170087, August
21, 2006.)

Cases
1. Diminution of pay. A diminution of pay is prejudicial to the employee and
amounts to constructive dismissal. (Francisco vs. NLRC)
2. Transfer of employee not amounting to constructive dismissal. Transfer of an
employee from one area of operation to another is a management prerogative
and is not constitutive of constructive dismissal, when the transfer is based on
sound business judgment, unattended by a demotion in rank or a diminution of
pay or bad faith. (Tan vs. NLRC, G.R. No. 128290, November 24, 1998.)
3. Transfer of employee amounting to constructive dismissal. A transfer amounts
to constructive dismissal when the transfer is unreasonable, unlikely,
inconvenient, impossible, or prejudicial to the employee. (Phil. Industrial Security
Agency Corp. vs. Aguinaldo, G.R. No. 149974, June 15, 2005.)

- WHEN IS THERE CONSTRUCTIVE DISMISSAL

Constructive dismissal exists where there is a cessation of work because continued


employment is rendered impossible, unreasonable, or unlikely. It is present when
an employee's functions, which were originally supervisory in nature, were reduced,
and such reduction is not grounded on valid grounds such as genuine business
necessity.
(Fernando Go vs CA, GR# 158922 05/28/04)

CONSTRUCTIVE DISMISSAL; BARE ALLEGATIONS;

The failure of petitioner to fully substantiate his claim that the respondent stripped
him of his duties and functions is fatal to his present petition. Except for the sworn
statements previously discussed, which we have found to be lacking in probative
value, petitioner did not present any other proof of the alleged stripping of his
functions by the respondent. Petitioners bare allegations of constructive dismissal,
when not corroborated by the evidence on record, cannot be given credence.
(Fernando Go vs CA, GR# 158922 05/28/04)

- OTHER INSTANCES OF CONSTRUCTIVE DISMISSAL

Constructive dismissal or a constructive discharge has been defined as quitting


because continued employment is rendered impossible, unreasonable, or unlikely,
as an offer involving a demotion in rank and a diminution in pay. Constructive
dismissal, however, does not always take the form of a diminution. In several cases,
we have ruled that an act of clear discrimination, insensibility, or disdain by an
employer may become so unbearable on the part of the employee so as to
foreclose any choice on his part except to resign from such employment. This
constitutes constructive dismissal.
(Unicorn Safety Glass Inc. vs Basarte, GR# 154689 11/25/04)

- (Artiaga vs Siliman University, GR# 178453 04/16/09)

- WHEN TRANSFER OF EMPLOYEE IS TANTAMOUNT TO CONSTRUCTIVE


DISMISSAL
The employer must demonstrate that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee and that the transfer does not involve
a demotion in rank or a diminution of salary and other benefits. If the employer fails
to overcome this burden of proof, the employees transfer is tantamount to
unlawful constructive dismissal.
(Merck Sharp and Dohme vs Robles, GR# 176506 11/25/09)

- BURDEN OF PROOF

It is a settled rule that in employee termination disputes, the employer bears the
burden of proving that the employees dismissal was for just and valid cause.
That petitioner did indeed file a letter of resignation does not help the companys
case as, other than the fact of resignation, the company must still prove that the
employee voluntarily resigned. There can be no valid resignation where the act
was made under compulsion or under circumstances approximating compulsion,
such as when an employees act of handing in his resignation was a reaction to
circumstances leaving him no alternative but to resign. In this case, the Court held
that petitioner had been constructively dismissed as his resignation was a response
to the unacceptable appointment of another person to a position he still
occupied. In sum, the evidence does not support the existence of voluntariness
in petitioners resignation.
(Penaflor vs Outdoor Clothing Mfg. Corp., GR# 177114 01/21/10)

3. Preventive Suspension

What is preventive suspension?

Preventive suspension may be defined as the temporary removal of an employee


charged for violation of company rules from his present status or position. Preventive
suspension is usually imposed against subject employee while the company is
conducting an investigation for his alleged violation in order to prevent him from
causing further harm or damage to the company or his co-employees.
Preventive suspension is not a disciplinary measure, and should not be confused with
suspension imposed as a penalty.

a. Legal basis.

The right of employer to impose preventive suspension is not found in the Labor
Code itself.
The oft-cited legal basis for imposition of preventive suspension is Section 8 and
Section 9 of Rule XXIII, Book V, of the Omnibus Rules Implementing the Labor Code,
as amended by Department Order No. 9, Series of 1997, which read as follows:

Section 8. Preventive suspension. The employer may place the worker concerned
under preventive suspension only if his continued employment poses a serious and
imminent threat to the life or property of the employer or of his co-workers.

Section 9. Period of suspension. No preventive suspension shall last longer than thirty
(30) days. The employer shall thereafter reinstate the worker in his former or in a
substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.

Interestingly, the above-quoted provisions are no longer reproduced in the present


Omnibus Rules, as amended by Department Order No. 40, Series of 2003, which
supersedes Department Order 9-97.
It is opined, however, that the removal of said provisions from the omnibus rules did
not diminish the right of the employer to impose preventive suspension, considering
that the justification for upholding the right is necessity itself, i.e., when continued
employment poses threats to the life of the employer or his co-worker.

b. Justification for imposition of preventive suspension (not a penalty); period.


The employer may place the worker concerned under preventive suspension for a
period of 30 days if his continued employment poses a serious and imminent threat
to the life or property of the employer or of his co-workers. During the said period,
the employee is not entitled to his wages. But if the 30-day period is extended
because the employer has not finished its investigation of the case, the employee
should be paid his wages during the period of extension.

Period of preventive suspension must be definite.


Extension of period must be justified.
Preventive suspension of workers in the construction industry, only 15 days.

(Sec. 3-4, Rule 14, Book V, OLD IRR)


SECTION 3. Preventive suspension. The employer may place the worker
concerned under preventive suspension if his continued employment poses a serious
and imminent threat to the life or property of the employer or of his co-workers.

SECTION 4. Period of suspension. No preventive suspension shall last longer


than 30 days. The employer shall thereafter reinstate the worker in his former or in a
substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.

The right to impose preventive suspension is a management prerogative although it


is not found in the LC. It is found in its implementing and regulations.

Grounds
Valid Suspension:
If the employees continued employment poses a serious and imminent threat to
the life and or property of the employer or of his co-workers. (Sec. 3, Rule 14,
Book V, OLD IRR)

It is not a form of penalty; it is more of a protective measure undertaken by the


employer. One cannot impose a penalty because the employee cannot be
punished without due process. In practice, preventive suspension notice should
be in writing.

Duration and Extension


Maximum Period: 30 days
The employer shall thereafter: Reinstate the worker in his former or in a
substantially equivalent position; or The employer may extend the period of
suspension, provided that during the period of extension, he pays the wages and
other benefits due to the worker concerned. In such a case, the worker shall not
be bound to reimburse the amount paid to him during the extension if the
employer decides, after completion of the hearing, to dismiss the worker.

Payment of Wages during Preventive Suspension


The employee placed under preventive suspension is not entitled to payment of
wages. This rule, however, presupposes that the suspension is valid. If the
suspension is invalid or illegal, the employee shall be entitled to payment of wages
during the entire period of illegal suspension. (See Gatbonton vs. NLRC, G.R. NO.
146779, January 23, 2006.)

Likewise, if the suspension is extended beyond the 30-day limit, the employee shall
be entitled to wages and other benefits for the period of the extension.

When Preventive Suspension amounts to Constructive Dismissal


When preventive suspension exceeds the maximum period allowed without
reinstating the employee either by actual or payroll reinstatement (see Hyatt Taxi
Services Inc. vs. Rustom M. Catinoy, G.R. No. 143204, June 26, 2001), or when
preventive suspension is for indefinite period (see Pido vs. National Labor Relations
Commission, G.R. No. 169812, Feb. 27, 2007), constructive dismissal will set in.
SUSPENSION OF BUSINESS OPERATIONS

BASIS
Article 286 Labor Code: Employment is deemed not terminated when there is:
Bona-fide suspension by the employer of the operation of his business or undertaking
for a period not exceeding six (6) months;
Fulfillment by the employee of a military duty; or
Fulfillment by the employee of a civic duty.

Sec .12, Rule, Book VI:


The employer-employee relationship shall be deemed suspended in case of
suspension of operation of the business or undertaking of the employer for a period
not exceeding six (6) months, unless the suspension is for the purpose of defeating
the rights of the employees under the Code, and in case of mandatory fulfillment by
the employee of a military or civic duty.

The payment of wages of the employee as well as the grant of other benefits and
privileges while he is on a military or civic duty shall be subject to special laws and
decrees and to the applicable individual or collective bargaining agreement and
voluntary employer practice or policy.

EFFECT ON EMPLOYMENT STATUS

Compensation of Employees during the Six-month Suspension


Employees are not entitled to their wages and benefits during the 6-month period.
The reason is, within the said period, the employer-employee relationship is deemed
suspended. The employment relationship being suspended, both the employer and
the employees cease to be bound, at least temporarily, by the basic terms and
conditions of their employment contract - the employer regarding his obligation to
provide salary to his workers; and on the part of the workers, to provide their
services to the former.

Effect of Suspension of Work Exceeding 6 Months


In the 2005 case of Mayon Hotel & Restaurant vs. Adana, [G. R. No. 157634, May 16,
2005], the High Court declared that Article 286 is clear - there is termination of
employment when an otherwise bona fide suspension of work exceeds six (6)
months. Moreover, even assuming arguendo that the cessation of employment on
April 1997 was merely temporary when hotel operations were suspended due to the
termination of the lease of the old premises, it became dismissal by operation of law
when petitioners failed to reinstate respondents after the lapse of six (6) months,
pursuant to Article 286. And even assuming that the closure was due to a reason
beyond the control of the employer, it still has to accord its employees some relief in
the form of severance pay.

Effect of Employment of the Employee in Other Establishments during 6-Month Period

In the 2005 case of JPL Marketing Promotions vs. CA, [G. R. No. 151966, July 8, 2005],
it was established that private respondent-employees sought employment from other
establishments even before the expiration of the six (6)-month period provided by
law. They admitted that all three of them applied for and were employed by another
establishment after they received the notice from JPL. Consequently, it was held that
petitioner JPL cannot be said to have terminated their employment for it was they
themselves who severed their relations with JPL. Thus, they are not entitled to
separation pay, even on the ground of compassionate justice. Clearly, the principle in
the law which grants separation pay applies only when the employee is dismissed by
the employer, which is not the case in this instance. In seeking and obtaining
employment elsewhere, private respondents effectively terminated their employment
with JPL.

ANALOGOUS SITUATION
There is no law on temporary retrenchment or lay-off, Article 286 applies only by
analogy.
Suspension of operation may involve only a section or department of the company
and not necessarily the entire operations.
The burden to prove bona-fide suspension of operation is on the employer.
DISTINGUISH from STOPPAGE of WORK OR SUSPENSION of OPERATION
Art. 128(c) Labor Code:
The Secretary of Labor and Employment may likewise order stoppage of work or
suspension of operations of any unit or department of an establishment when there is
non-compliance with the law or implementing rules and regulations poses grave and
imminent danger to the health and safety of workers in the workplace.

Within twenty-four hours, a hearing shall be conducted to determine whether an


order for the stoppage of work or suspension of operations shall be lifted or not.

In case the violation is attributable to the fault of the employer, he shall pay the
employees concerned their salaries or wages during the period of such stoppage of
work or suspension of operation.

- SANCTION FOR VIOLATING THE MAXIMUM PERIOD FOR PREVENTIVE


SUSPENSION

Petitioner, having violated the maximum 30-day preventive suspension under


Sec. 4, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code, a
sanction is imposed on him in, and he must indemnify private respondent in the
amount of P1,000.
(JRS Business Corp. vs NLRC, GR# 108891 07/17/95)

- PREVENTIVE SUSPENSION BEYOND THE PERIOD ALLOWED BY THE


RULES MAY CONSTITUTE CONSTRUCTIVE DISMISSAL

After a careful study, and a thorough examination of the pleadings and


supporting documents, it appears decisively clear that private respondent
Silvestre Germano was illegally dismissed. While a prolonged absence without
leave may constitute a just cause for dismissal, its illegality stems from the non-
observance of due process. Applying the WenPhil Doctrine by analogy, where
dismissal was not preceded by the twin requirement of notice and hearing, the
legality of the dismissal in question, is under heavy clouds and therefore illegal.
While it cannot be deduced unerringly from the records on hand that private
respondent was really dismissed, there is no clear indication that the latter was
to be reinstated. In fact, since the inception of the case, what petitioner merely
endeavored was to compromise for a measly sum of P5,000, and no mention of
taking respondent back his job was ever offered as part of the deal to end the
controversy. What can be surmised from petitioner's offer to re-admit the
private respondent, was nothing but a polite gesture couched in words intended
to make the impact of his so-called suspension less severe. Invoking the plight
of a working man, where "no work, no pay" is the rule of thumb, the court
cannot sanction an over extended suspension. The Labor Code explicitly
provides that:

"No preventive suspension shall last longer than 30 days. The employer shall
thereafter reinstate the worker to his former or substantially equivalent position
of the employer may extend the period of suspension provided that during the
period of extension, he pays the wages and other benefits due to the worker. In
such case, the worker shall not be bound to reimburse the amount paid to him
during the extension if the employer decides after completion of the hearing to
dismiss the worker."

In this case, the supposed suspension was expected to last for more than the
period allowed by law, thus making the suspension constitutive of illegal
dismissal.
(Gandara Supply vs NLRC, GR# 126703 12/29/98)

- SUSPENSION NEED NOT BE BASED ON SPECIFIC FINDINGS

Preventive suspension is a disciplinary measure for the protection of the


company's property pending investigation of any alleged malfeasance or
misfeasance committed by the employee. Sec. 3, Rule XIV, Book V of the
Omnibus Rules Implementing the Labor Code provides: "The employer may
place the worker concerned under preventive suspension if his continued
employment poses a serious threat to the life of property of the employer or of
his co-workers.

Nothing in this rule requires that the report upon which the preventive
suspension was based should make a specific finding that the employee's
continued employment poses an imminent threat to the property of the
employer. It is enough that such fact can be gleaned from the circumstances of
the case.

The private respondents preventive suspension was necessary for the


protection of petitioners assets and operations pending investigation of the
alleged irregularities committed by them.
(Atlas Fertilizer Corp. vs NLRC, GR# 120030 06/17/97)

- (Chona Torres vs NLRC, GR#

Z. TERMINATION OF EMPLOYMENT

1. Requisites for a Valid Dismissal

THERE MUST BE DUE PROCESS

(Sec. 1, Art. III, Constitution)


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.

IT MUST BE BASED ON JUST OR AUTHORIZED CAUSE

(Art. 277(b) Labor Code)


ART. 277. Miscellaneous provisions.
(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause and
without prejudice to the requirement of notice under Article 283 of this Code, the
employer shall furnish the worker whose employment is sought to be terminated
a written notice containing a statement of the causes for termination and shall
afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in accordance with company rules
and regulations promulgated pursuant to guidelines set by the Department of
Labor and Employment. Any decision taken by the employer shall be without
prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the regional branch of the National Labor
Relations Commission. The burden of proving that the termination was for a valid
or authorized cause shall rest on the employer. The Secretary of the Department
of Labor and Employment may suspend the effects of the termination pending
resolution of the dispute in the event of a prima facie finding by the appropriate
official of the Department of Labor and Employment before whom such dispute is
pending that the termination may cause a serious labor dispute or is in
implementation of a mass lay-off. (As amended by Section 33, Republic Act No.
6715, March 21, 1989).

a. Substantial Evidence

- WHAT IS SUBSTANTIAL EVIDENCE; QUANTUM OF PROOF NECESSARY IN


LABOR CASES

Substantial evidence is that amount of relevant evidence which a reasonable


mind might accept to justify a conclusion.

It is basic that the findings of fact by the CA, when supported by substantial
evidence, are conclusive and binding upon the parties and are not reviewable
by the SC, unless the case falls under any of the exceptions to the rule, such as
when the findings by the CA are not supported by evidence.
(Philtread Tire & Rubber Corp. vs Alberto Vicente, GR# 142759 11/10/04)

- (Salvador vs Phil. Mining Services Corp., GR#

- HEARSAY DOCUMENTS MAY BE CONSIDERED IN LABOR CASES SINCE


ONLY SUBSTANTIAL EVIDENCE IS REQUIRED; BURDEN OF PROOF THAT
THE DISMISSAL WAS VALID RESTS ON THE EMPLOYER

The fact alone that most of the documents submitted in evidence by an


employee were prepared by him does not make them self-serving where they
have been offered in the proceedings before the Labor Arbiter and that ample
opportunity was given to the employer to rebut their veracity and authenticity.
It is grave abuse of discretion on the part of the NLRC to ignore or simply sweep
under hte rug an employees complaint-affidavit and conclude that it is mere
hearsay evidence without finding that there was adequate reason not to beleive
the allegations contained therein.

When the NLRC declared that the burden of proof in dismissal cases shifts to
the employer only when the latter admits such dismissal, the NLRC ruled
erroneously in disregard of the law and prevailing jurisprudence on the matter.
As correctly articulated by the SolGen in his Comment to this petition, thus -
"Art. 277(b) of the Labor Code puts the burden of proving that the dismissal of
an employee was for a valid or authorized cause on the employer. It should be
noted that the said provision of law does not distinguish whether the employer
admits or does not admit the dismissal."

Time and again we have ruled that where there is no showing of a clear, valid
and legal cause for termination of employment, the law considers the case a
matter of illegal dismissal. The burden is on the employer to prove that the
termination of employment was for a valid and legal cause. For an employee's
dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the
employee must be afforded due process.

As a general rule, one who pleads payment has the burden of proving it, and
even where the plaintiff must allege non-payment, the general rule is that the
burden rests on the defendant to prove payment, rather than on the plaintiff to
prove non-payment. The debtor has the burden of showing with legal certainty
that the obligation has been discharged by payment.
(Sevillana vs I.T. Ints Corp, GR# 99047 04/16/01)

- SUBSTANTIAL PROOF MAY ALSO BE SUFFICIENT GROUND FOR


DISCIPLINARY ACTION

Well-entrenched is the rule that substantial proof is sufficient as basis for the
imposition of any disciplinary action upon the employee. The standard of
substantial evidence is satisfied where the employer has reasonable ground to
believe that the employee is responsible for the misconduct and his
participation therein renders him unworthy of trust and confidence demanded
by his position. That petitioner violated respondents rules and regulations and
committed serious misconduct in the performance of his duties, have been
proved. Respondent thus lost its trust and confidence in petitioner. Under Art.
282 of the Labor Code, as amended, these are just causes for dismissing him
from the service.
(Millares vs PLDT, GR# 154078 05/06/05)

b. Due Process (Notice Requirement)

- HEARING NOT REQUIRED TO SATISFY DUE PROCESS REQUIREMENT

Pursuant to Sec. 5, Rule V, of the New Rules of the NLRC, the Labor Arbiter has
the authority to determine whether or not there is a necessity to conduct formal
hearings in cases brought before him for adjudication. The holding of a formal
hearing or trial is discretionary with the labor arbiter and is something that the
parties cannot demand as a matter of right. It is entirely within his authority to
decide a labor case before him, based on the position papers and supporting
documents of the parties, without trial or formal hearing. The requirements of
due process are satisfied when the parties are given the opportunity to submit
position papers wherein they are supposed to attach all the documents that
would prove their claim in case it be decided that no hearing should be
conducted or was necessary.
(Shoppes Manila Inc. vs NLRC, GR# 147125 01/14/04)

(Rule V, NLRC Rules of Procedure, 2002)


SECTION 5. DETERMINATION OF NECESSITY OF HEARING. -
Immediately after the submission by the parties of their position
papers/memoranda, the Labor Arbiter shall, motu proprio,
determine whether there is a need for a formal trial or hearing. At
this stage, he may, at his discretion and for the purpose of making
such determination, ask clarificatory questions to further elicit facts
or information, including but not limited to the subpoena of
relevant documentary evidence, if any, from any party or witness.

- OPPORTUNITY TO BE HEARD OR EXPLAIN IS ALL THAT IS NECESSARY IN


DUE PROCESS, NOT THAT THE PARTIES ARE ACTUALLY HEARD OR THEY
EXPLAIN

At any rate, petitioner was given enough opportunity to be heard, and his
dismissal was based on valid grounds. The essence of due process is simply an
opportunity to be heard, or as applied to administrative proceedings, an
opportunity to explain one's side or an opportunity to seek a reconsideration of
the action or ruling complained of. A formal or trial-type hearing is not at all
times and in all instances essential, as the due process requirements are
satisfied where the parties are afforded their fair and reasonable opportunity to
explain their side of the controversy at hand. What is frowned upon is the
absolute lack of notice and hearing.
(Valiao vs CA, GR# 146621 07/30/04)

- 2 ASPECTS OF DUE PROCESS IN LABOR LAW

Due process under the Labor Code involves 2 aspects: first, SUBSTANTIVE -
the valid and authorized causes of termination of employment under the Labor
Code; and second, PROCEDURAL - the manner of dismissal.

In the present case, the CA affirmed the findings of the labor arbiter and the
NLRC that the termination of employment of respondent was based on a just
cause. This ruling is not at issue in this case. The question to be determined is
whether the procedural requirements were complied with.

5 days is given as ample opportunity to respond from the receipt of notice.


(King of Kings Transport vs Mamac, GR# 166208 06/29/07)

- ALLEGATIONS OF CONSTRUCTIVE DISMISSAL AS A REASON FOR NO


GIVING AN EXPLANATION WHEN AN OPPORTUNITY TO EXPLAIN IS
INSUFFICIENT TO COUNTER THE FACT THAT NO EXPLANATION WAS
GIVEN DESPITE THE OPPORTUNITY TO BE HEARD

The essence of due process is simply an opportunity to be heard, or as applied


to administrative proceedings, a fair and reasonable opportunity to explain
one's side. It is not the denial of the right to be heard but denial of the
opportunity to be heard that constitutes violation of due process law. In the
instant case, private respondent was again notified of the August 12, 1998
hearing through a letter dated August 8, 1998 which was received by private
respondent herself. Clearly, private respondent chose not to attend the
scheduled hearing because of her mistaken belief that she had already been
constructively dismissed.
(Uniwide Sales Warehouse Club vs NLRC, GR# 154503 02/29/08)

- (Placido vs NLRC, GR#


- PRE-EMPTING AN INVESTIGATION BY FILING A CASE FOR ILLEGAL
DISMISSAL CONSTITUTES VALID COMPLIANCE WITH DUE PROCESS

The records belie Amulars claim of denial of procedural due process. He chose
not to present his side at the administrative hearing. In fact, he avoided the
investigation into the charges against him by filing his illegal dismissal
complaint ahead of the scheduled investigation. These facts show that the
employee was given the opportunity to be heard and he cannot now come to
the Court protesting that he was denied this opportunity. To belabor a point the
Court has repeatedly made in employee dismissal cases, the essence of due
process is simply an opportunity to be heard; it is the denial of this opportunity
that constitutes violation of due process of law.
(Technol Eight Phils. Corp. vs NLRC, GR# 187605 04/13/10)

- FAILING TO RECEIVE A COPY OF THE EVIDENCE WILL NOT AFFECT THE


VALIDITY OF COMPLIANCE WITH DUE PROCESS

Petitioners complain that they were denied due process when they were not
furnished a copy of the evidence against them or the minutes of the
investigation. It is oft repeated that in administrative proceedings, due process
is served by the mere fact that each party is afforded an opportunity to air its
side, not necessarily through verbal argumentation, but also through pleadings
in which the parties may explain their side of the controversy. It is of record that
petitioners were informed of the charges against them and were given the
opportunity to present their defense, not just in the administrative investigation,
but also in the proceedings before the Labor Arbiter and NLRC. The
requirements of due process were more than adequately satisfied.
(Oscar Garcia vs NLRC, GR# 160339 03/14/08)

- (Bacolod-Talisay Realty & Devt Corp. vs Dela Cruz, GR#

- DUE PROCESS CANNOT BE DISPENSED WITH DESPITE WIDER


DISCRETION IN TERMINATING MANAGERIAL AND CONFIDENTIAL
EMPLOYEES.

Although employers have wider latitude of discretion in terminating a


managerial employee, it is nonetheless settled that confidential and managerial
employees cannot be arbitrarily dismissed at any time, and without cause as
reasonably established in an appropriate investigation. Such employees, too,
are entitled to security of tenure, fair standards of employment and the
protection of labor laws. Managerial employees, no less than rank-and-file
laborers are entitled to due process.
Resignation; Definition. Resignation is the voluntary act of employees who
are compelled by personal reasons to disassociate themselves from their
employment. It must be done with the intention of relinquishing an office,
accompanied by the act of abandonment.
(Casa Cebuana Incorporada, et al. vs. Leuterio, GR# 176040 09/0409)

c. Burden of Proof

- (Mantle Trading Services Inc. vs NLRC, GR#

- BURDEN OF PROOF IN DISMISSAL CASES IS WITH THE EMPLOYER

In constructive dismissal cases, the employer has the burden of proving that its
conduct and action or the transfer of an employee are for valid and legitimate
grounds such as genuine business necessity. Particularly, for a transfer not to
be considered a constructive dismissal, the employer must be able to show that
such transfer is not unreasonable, inconvenient, or prejudicial to the employee.
Failure of the employer to overcome this burden of proof taints the employees
transfer as a constructive dismissal.

In the present case, the employer failed to discharge this burden. The
combination of harsh actions taken by the bank rendered the employment
condition of the employee hostile and unbearable for the following reasons:

First, there is no showing of any urgency or genuine business necessity to


transfer the employee to the Makati Head Office. The banks stated reason that
the employee had to undergo branch head training because of his gross
inefficiency was not supported by any proof that the employee had a record of
gross inefficiency.

Second, the employees transfer from Dumaguete to Makati City is clearly


unreasonable, inconvenient and oppressive, since the respondent and his family
are residents of Dumaguete City.

Third, the employer failed to present any valid reason why it had to require the
employee to go to the Makati Head Office to undergo branch head training
when it could have just easily required the latter to undertake the same training
in the VISMIN area.

Finally, there was nothing in the order of transfer indicating the position which
the employee would occupy after his training; thus, the employee was
effectively placed in a floating status. The banks contention that the
employee was assigned to a sensitive position in the DUHO Task Force is
suspect when considered with the fact that he was made to undergo branch
head training which is totally different from a position that entails reconciling
book entries of all branches of the former. Reconciling book entries is
essentially an accounting task.
(Phil. Veterans Bank vs NLRC , GR# 188882 03/30/10)

d. Principle of Discretionary Justice

- WHAT IS DISCRETIONARY JUSTICE?

It would imply at the very least that where a penalty less punitive would suffice,
whatever missteps may be committed by labor ought not to be visited with a
consequence so severe. It is not only because of the law's concern for the
workingman. There is, in addition, his family to consider.
(Almira vs BF Goodrich, GR# L-34974 07/25/74)

- NATURE OF DISCRETIONARY JUSTICE

Private respondent was employed in petitioners business of manufacturing


liquefied petroleum gas (LPG) cylinders. He served as a quality control inspector
with the principal duty of inspecting LPG cylinders for any possible defects and
earning P155.00 a day. His service with the company was abruptly interrupted
on February 14, 1995, when he was served a notice of termination of his
employment.

The dismissal is invalid.

First. Basically, the reason cited for the dismissal of private respondent is
sleeping on the job in violation of Company Rule 15-b. Was the private
respondent sleeping on the job or was he merely idle and, as he claimed,
waiting for the next cylinder to be checked? Evidence on this score is material,
for it is the be-all and end-all of petitioners cause, in view of the gravity of the
penalty of separation, as provided by the Company Rules and Regulation. In
termination disputes, the burden of proof is always on the employer to prove
that the dismissal was for a just and valid cause. What is at stake here is not
only the job itself of the employee but also his regular income therefrom which
is the means of livelihood of his family.
A thorough review of the record discloses that, contrary to the findings of the
Labor Arbiter, petitioners claim that private respondent slept on the job on
February 10, 1995 was not substantiated by any convincing evidence other
than the bare allegation of petitioner. The report of Ronaldo M. Alvarez, Acting
Quality Control Department Head of petitioner corporation, on the
circumstances which ultimately served as basis for the termination of private
respondents employment, did not confirm the alleged violation by private
respondent of the pertinent Company Rule 15-b. The report merely stated
private respondents denial and response to petitioners allegation which he
reiterated in his written reply.

Second. Petitioners reliance on the authorities it cited that sleeping on the job
is always a valid ground for dismissal, is misplaced. The authorities cited
involved security guards whose duty necessitates that they be awake and
watchful at all times inasmuch as their function, to use the words in Luzon
Stevedoring Corp. v. Court of Industrial Relations, is "to protect the company
from pilferage or loss." Accordingly, the doctrine laid down in those cases is not
applicable to the case at bar.

Third. While an employer enjoys a wide latitude of discretion in the


promulgation of policies, rules and regulations on work-related activities of the
employees, those directives, however, must always be fair and reasonable, and
the corresponding penalties, when prescribed, must be commensurate to the
offense involved and to the degree of the infraction. In the case at bar, the
dismissal meted out on private respondent for allegedly sleeping on the job,
under the attendant circumstances, appears to be too harsh a penalty,
considering that he was being held liable for first time, after nine (9) long years
of unblemished service, for an alleged offense which caused no prejudice to the
employer, aside from absence of substantiation of the alleged offense. The
authorities cited by petitioner are also irrelevant for the reason that there is no
evidence on the depravity of conduct, willfulness of the disobedience, or
conclusiveness of guilt on the part of private respondent. Neither was it shown
that private respondents alleged negligence or neglect of duty, if any, was
gross and habitual. Thus, reinstatement is just and proper.
(VH Mfg. Inc. vs NLRC, 01/19/00)

- (Tipteo vs CA, GR# 156703 06/26/09)


Discretionary Justice was not applied here, where a teacher was terminated for
selling test papers. It was not applied despite the fact that it was the first time
he committed the offense because teachers are regarded as role models.

NOTE:

COMPASSIONATE JUSTICE DISCRETIONARY JUSTICE


Even if the dismissal is for just cause, Even if termination is a valid action
financial assistance may still be based on the act/fault of the employee,
awarded based on the merits of the if a less severe penalty can be
case. imposed, such lesser penalty should be
imposed.

2. Just Causes for Termination of Employment (Art. 282 Labor Code)

ART. 282. Termination by employer. - An employer may terminate an


employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful


orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(d) 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; and

(e) Other causes analogous to the foregoing.

(Rule I, Book VI, IRR)


SECTION 7. Termination of employment by employer. The just causes for
terminating the services of an employee shall be those provided in Article 283 of the
Code. The separation from work of an employee for a just cause does not entitle him
to the termination pay provided in the Code, without prejudice, however, to whatever
rights, benefits, and privileges he may have under the applicable individual or
collective agreement with the employer or voluntary employer policy or practice.

NOTE:

The just causes enumerated in this article are acts of omission or commission by
the employee. Because they are his faults, they justify certain action against him,
possibly dismissal. But it does not always have to be dismissal. The penalty has to be
proportionate to the offense. Furthermore, discharge based on a just cause does not
entitle the employee to any separation pay. But court rulings have recognized some
exceptions, particularly if the employees offense does not amount to serious
misconduct or does not reflect on the employees moral character. In such situation,
if the employees long years of service are otherwise satisfactory, the court may
grant financial assistance.

In every case of dismissal, the employee, under Art. 277(b), is entitled to ample
opportunity to explain his side. If this right is denied, the dismissal is defective. The
Court calls it ineffectual. This means that the dismissal will be upheld because the
employee by his act deserves to be dismissed but the employer, because he
disregarded the proper procedure, will be ordered to pay the employees full
backwages from the time of his dismissal to the time the Court finds that the
dismissal is for a just cause. In short, both the employer and the employee are
penalized: the employee loses his job, the employer pays full backwages.
(Serrano vs NLRC, GR# 117040 01/27/00)

Definition
Just causes for dismissal of employee may be defined as those lawful or valid
grounds for termination of employment which arise from causes directly attributable
to the fault or negligence of the erring employee.Just causes are usually serious or
grave in nature and attended by willful or wrongful intent or they reflected adversely
on the moral character of the employees.
As opposed to authorized causes under Article 283 wherein the termination of
employment is dictated by necessity of the business, the dismissal under just causes
is imposed by the employer to the erring employee as a punishment for the latters
acts or omission.

Just Causes Under the Labor Code


Just causes for termination under the Labor Code is found in Article 282 and
enumerated here as follows:
1. Serious misconduct. Serious misconduct is an improper conduct willful in
character and of such grave nature that transgressed some established and
definite rule of action in relation to the employees work.
2. Willful disobedience to lawful orders. The employees are bound to follow
reasonable and lawful orders of the employer which are in connection with their
work. Failure to do so may be a ground for dismissal or other disciplinary action.
3. Gross and habitual neglect of duties. Gross negligence has been defined
as the want or absence of or failure to exercise slight care or diligence, or the
entire absence of care. It evinces a thoughtless disregard of consequences
without exerting any effort to avoid them.
4. Fraud or willful breach of trust. Fraud is any act, omission, or
concealment which involves a breach of legal duty, trust, or confidence justly
reposed and is injurious to another.
5. Commission of a crime or offense. Commission of a crime or offense by
the employee against his employer or any immediate member of his family or his
duly authorized representative, is a just cause for termination of employment.
6. Analogous causes. Other causes analogous to the above grounds may also
be a just cause for termination of employment.

Examples of Analogous Causes


1. Abandonment. Abandonment of job is a form of neglect of duty. There is
abandonment when the employee leave his job or position with a clear and
deliberate intent to discontinue his employment without any intention of
returning back. (NOTE: Atty. Chezie Demegillo considers abandonment as Gross
and Habitual Neglect of duties.)
2. Gross inefficiency. Gross inefficiency is analogous to and closely related to
gross neglect for both involve acts or omissions on the part of the employee
resulting in damage to the employer or to his business. (See Lim vs. NLRC, G.R.
No. 118434, July 26, 1996.)
3. Disloyalty/conflict of interest. Disloyalty exists when one asserts an
interest, or performs acts adverse to ones employer, such as secretly engaging
in a business which renders him a competitor and rival of his employer. It
constitutes a breach of an implied condition of the contract of employment.
(See Elizalde International vs. Court of Appeals, G.R. No. L40553 February 26,
1981.)
4. Dishonesty. Acts of dishonesty deemed to be patently inimical to the
employer is analogous to breach of trust and is a valid cause for termination of
employment.

No Separation Pay
An employee who is terminated from employment for a just cause is not entitled to
payment of separation benefits. Section 7, Rule I, Book VI, of the Omnibus Rules
Implementing the Labor Code provides:

Sec. 7. Termination of employment by employer. The just causes for


terminating the services of an employee shall be those provided in Article 282 of the
Code. The separation from work of an employee for a just cause does not entitle him
to the termination pay provided in Code, without prejudice, however, to whatever
rights, benefits and privileges he may have under the applicable individual or
collective bargaining agreement with the employer or voluntary employer policy or
practice.

JUST CAUSES (TERMINATION PROCESS)

Procedural Due Process.


For termination of employment based on just causes, procedural due process
requires that the employee be given the benefit of the so-called twin-notice and
hearing, as follows:

1. First notice: Notice to Explain (NTE) or order to show cause. A written notice
served on the employee specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within which to explain his side.
2. Hearing or formal investigation. A hearing or conference during which the
employee concerned, with the assistance of counsel if the employee so desires, is
given opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him.
3. Second notice: Notice of decision. A written notice of termination served on
the employee indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination. (See Art. 277[b] and Sec
2, Rule I, Book VI, IRR)

Service of Notices.
In case of termination, the employee must be personally served with notices (notice
to show cause and notice of termination). Ideally, this should be done by personally
handing a copy of the notice to the employee concerned. However, if this is not
possible, the notices may be served on the employees last known address either by
ordinary or registered mail (from legal viewpoint, registered mail is preferred).
The mere posting of the notice on the bulletin board is not sufficient compliance.
(Shoppers Gain Supermart, 1996)
If the employee refused to receive notice, the employer must serve the same by
registered mail at his last known address. (See Nueva Ecija Electric Coop case, 2005)

Opportunity to Respond.
The very purpose of requiring the employer to observe proper termination process is
to give the employee ample opportunity to respond to the charges against him or to
defend himself. What the law require is ample opportunity.
Ample opportunity means every kind of assistance that management must accord
the employee to enable him to prepare adequately for his defense including legal
representation.

Requirements for First Notice (NTE).


The first notice informing the employee of the charges against him should set out
clearly what he is being held liable for. It should neither be pro-forma nor vague. This
is consistent with the requirement that the employee should be afforded ample
opportunity to be heard and not mere opportunity.
Moreover, the dismissal, if necessary, must be based on the same grounds cited in
the NTE. If the dismissal is based on grounds other than those specified in the notice,
he is deemed to have been deprived of due process. (Glaxo Wellcome vs. NEW-DFA,
2005.)

Effect of Refusal of Employee to Participate in Investigation.


By the refusal of employee to participate in the investigation, he is deemed to have
waived his right to defend himself. (Leonardo vs. NLRC, 2000.)

Effects or Consequences of Termination.


1. If dismissal is for just cause and with prior notice and hearing, the dismissal
is valid.
2. If the dismissal is for just cause but without prior notice and hearing, the
dismissal is valid but the employer may be required to pay nominal damages to
the dismissed employee.
3. If there is no just cause for dismissal, whether or not there is prior notice and
hearing, the dismissal is illegal. The employee is entitled to reinstatement,
backwages and damages.

Cases
1. The employee refused to participate in the investigation being conducted by
the personnel management. The Court ruled that by refusing to participate, he
cannot claim that he was denied due process. (Leonardo vs. NLRC, 2000.)
2. The employment contract contains stipulation that the employment may be
terminated by either party after one month notice or one month salary in lieu
of notice. The stipulation was held to be illegal. The requirement of prior notice
and opportunity to be heard cannot be substituted by mere payment of salary.
(PNB vs. Cabansag, 2005.)

a. Serious Misconduct or Willful Disobedience of a lawful order in


connection with his work

Serious Misconduct concept


Serious misconduct is one of the just causes for termination of
employee under Article 282 of the Labor Code.

Misconduct has been defined as improper or wrong conduct. It is the


transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment. (Austria vs. NLRC, G.R. No. 124382, August 16, 1999.)

Elements of Serious Misconduct


To be a valid ground for termination of employment, the following elements must
be present:
1. The misconduct must be serious;
2. It must relate to the performance of the employees duties; and,
3. Must show that the employee has become unfit to continue working for
the employer.

Mere Error in Judgment is not Misconduct


Misconduct is a transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful
intent and not mere error in judgment. (Colegio de San Juan de Letran-Calamba
vs. Villas, G.R. No. 137795, March 26, 2003)
Mere error in judgment cannot qualify as misconduct (much less a serious one)
because of lack wrongful intent. As held in NLRC vs. Salgarino, G.R. No. 164376,
July 31, 2006, it is not sufficient that the act or conduct complained of has
violated some established rules or policies. It is equally important and required
that the act or conduct must have been performed with wrongful intent.

Misconduct must be Serious


The misconduct to be serious must be of such grave and aggravated character
and not merely trivial and unimportant.

Misconduct must be in Relation to Employees Work


Misconduct, however serious, must, nevertheless, be in connection with the
employees work to constitute just cause for his separation.

Cases
1. The employees (an accounting manager) act of willfully understating
the companys profits or financial position, committed as it was in order to
save costs, which to her warped mind, was supposed to benefit her
employer, partakes serious misconduct. It was not merely a violation of
company policy, but of the law itself, and put the employer at risk of being
made legally liable. The dismissal in this case is warranted. An employer
cannot be compelled to retain in its employ someone whose services is
inimical to its interests. (Llamas vs. Ocean Gateway, G.R. No. 179293, August
14, 2009.)
2. Two traffic operators who placed free long distance calls was dismissed
by PLDT. The dismissal was upheld as valid. The dishonesty committed by the
erring employee qualifies as serious misconduct especially that it goes to the
very heart and essence of the company. Long distance call is the lifeblood of
PLDT. (PLDT vs. Montemayor, G.R. No. 88626, October 12, 1990.)
3. A ticket freight clerk was dismissed for dishonesty for charging to his
VISA credit card some plane tickets in spite of the cash payment made by
passengers. The dismissal was for a just cause. (PAL vs. NLRC, G.R. No.
117038. September 25, 1997.)
4. The case involved toll guards assigned at the North Luzon Tollway,
Bulacan interchange, who were caught accepting bribe in the form of cash
and a dog from a motorist who was suspected of illegally transporting dogs.
The dismissal was upheld as for just cause. Bribery constitutes serious
misconduct. (Phil. National Construction vs. NLRC, G.R. No. 128345, May 18,
1999.)

DISOBEDIENCE AS A GROUND FOR DISMISSAL

Employees Duty of Obedience


The employees are bound to follow reasonable and lawful orders of
the employer which are in connection with their work. Failure to do so may be a
ground for dismissal or other disciplinary actions.
Under Article 282 of the Labor Code of the Philippines, willful disobedience to
lawful orders by the employeeis one of the just causes for termination of
employment by employer.

Requirements of Willful Disobedience as a Ground for Termination


The Court has set the guidelines for the dismissal based on disobedience.
In Gold City Integrated Port Services, Inc. v. NLRC, G.R. No. 86000, 21 September
1990, the Court explained that willful disobedience of the employers lawful
orders, as a just cause for dismissal of an employee, envisages the concurrence
of at least two requisites:
1. the employees assailed conduct must have been willful or intentional,
the willfulness being characterized by a wrongful and perverse attitude; and
2. the order violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he had been engaged to
discharge.

In Maebo v. NLRC, G.R. No. 107721, 10 January 1994, the court reiterated that in
order that an employer may terminate an employee on the ground of willful
disobedience to the employers orders, regulations or instructions, it must be
established that the said orders, regulations or instructions are:
1. reasonable and lawful;
2. sufficiently known to the employee; and,
3. in connection with the duties which the employee has been engaged to
discharge. (See AHS/Philippines, Inc. vs. CA, G.R. No. 111807, June 14, 1996.)

Policy must be Strictly Adhered to


In addition to the above requirements, in Permex, Inc. vs. NLRC, G.R. No. 125031,
January 24, 2000, the Court held that where a violation of company policy or
breach of company rules and regulations was found to have been tolerated by
management, then the same could not serve as a basis for termination.
(Citing Tide Water Associated Oil Co. vs. Victory Employees and Laborers
Association, 85 Phil. 166 [1949].)
In Conti vs. NLRC, G.R. No. 119253, April 10, 1997, it was ruled that the dismissal
of an employee due to an alleged violation of a company policy, where it was
found that the violation was acquiesced in by said employees immediate
superiors and the policy violated had not always been adhered to by the
management, is an act not amounting to a breach of trust. Therefore, it is not a
justification for said employees dismissal.

Damage to Employer is not Important


Damage to employer is not important in dismissal based on willful disobedience.
(See Nuez vs. NLRC, infra.)

Disobedience Need not be Habitual


Habituality is not an element of willful disobedience. The law warrants the
dismissal of an employee without making any distinction between a first offender
and a habitual delinquent where the totality of the evidence was sufficient to
warrant his dismissal. In protecting the rights of the laborer, the law authorizes
neither oppression nor self-destruction of the employer. (See Aparente vs. NLRC,
G.R. No. 117652, April 27, 2000.)

Cases
1. The formal challenge brought by employee of the reasonableness or
the motives of a companys policy is not an excuse for the employee not to
obey said policy. (GTE Directories Corp. vs. Sanchez, May 27, 1991.)
2. Damage to employer is not important. Although there was no damage
to the employer, the dismissal of the driver for insubordination was upheld.
The lack of resulting damage is unimportant when the heart of the charge is
the crooked and anarchic attitude of the employee towards his employer.
(Nuez vs. NLRC, G.R. No. 107574 December 28, 1994.)

What are the requisites to validly invoke willful disobedience of lawful


orders as a just ground to terminate employment?

In order that the willful disobedience by the employee of the orders, regulations
or instructions of the employer may constitute a just cause for terminating his
employment, said orders, regulations, or instructions must be:

1. lawful and reasonable;


2. sufficiently known to the employee; and
3. in connection with the duties which the employee has been engaged to
discharge.

Requisites of lawful dismissal on the ground of willful disobedience. - For the


ground of willful disobedience to be considered a just cause for termination of
employment, the following requisites must concur, namely:
1. the employees assailed conduct must have been willful or intentional, the
willfulness being characterized by a wrongful and perverse attitude; and

2. the order violated must have been reasonable and lawful and made known to
the employee and must pertain to the duties which he had been engaged to
discharge.

Rule where violation of the rules was tolerated by employer.

Where a violation of company policy or breach of company rules and regulations


was found to have been tolerated by management, the same could not serve as a
basis for termination.

As held in the 2004 case of Coca-Cola Bottlers Philippines, Inc. vs. Vital, [G. R. No.
154384, Sept. 13, 2004], if an employee was merely following the instructions of
his supervisor, his act should be deemed in good faith. Clearly, his dismissal from
the service on the ground of willful disobedience or violation of company rules
and regulations is not justified.

What is serious misconduct?

Requisites.- For misconduct or improper behavior to be a just cause for dismissal:

(a) it must be serious;

(b) it must relate to the performance of the employees duties; and

(c) it must show that the employee has become unfit to continue working for the
employer.

In the 2005 case of Fujitsu Computer Products Corporation of the Philippines vs.
CA, [G. R. No. 158232, April 8, 2005], the respondents act of sending an e-mail
message as an expression of sympathy for the plight of a superior can hardly be
characterized as serious misconduct as to merit the penalty of dismissal. There is
no showing that the sending of such e-mail message had any bearing or relation
on respondents competence and proficiency in his job. To reiterate, in order to
consider it a serious misconduct that would justify dismissal under the law, the
act must have been done in relation to the performance of his duties as would
show him to be unfit to continue working for his employer.

Series of irregularities, when put together, may constitute serious


misconduct.

An employees fitness for continued employment cannot be compartmentalized or


taken in isolation from one act to another. A series of irregularities, when
considered together or in their entirety, may constitute serious misconduct, a
valid ground to terminate employment. (Piedad vs. Lanao del Norte Electric
Cooperative, Inc., G. R. No. 73735, Aug. 31, 1987, 153 SCRA 500).

In a 2004 case where the employee was shown to have committed various
violations of the companys rules and regulations, the Supreme Court ruled that
his dismissal from the service is in order. Indeed, a series of irregularities when
put together may constitute serious misconduct. (Gustilo vs. Wyeth Phils., Inc., G.
R. No. 149629, Oct. 4, 2004).

Throwing a stapler and uttering invectives against a plant manager.

Applying the foregoing standards, the Supreme Court ruled in a 2000 case that
the act of the employee in throwing a stapler and uttering abusive language upon
the person of the plant manager may be considered from a laymans perspective
as a serious misconduct. However, in order to consider it a serious misconduct
that would justify dismissal under the law, it must have been done in relation to
the performance of her duties as would show her to be unfit to continue working
for her employer. The acts complained of, under the circumstances they were
done, did not in any way pertain to her duties as a nurse. Her employment
identification card discloses the nature of her employment as a nurse and no
other. Also, the memorandum informing her that she was being preventively
suspended pending investigation of her case was addressed to her as a nurse.
Hence, she cannot be held in violation therefor. (Philippine Aeolus Automotive
United Corporation vs. NLRC, G. R. No. 124617, April 28, 2000).

Use of shabu, valid ground to terminate employment.

There is no question that the possession and use by an employee of


methampethamine hydrochloride or shabu is a just cause to terminate
employment as it constitutes serious misconduct under Article 282 of the Labor
Code.

In the 2003 case of Roquero vs. Philippine Air Lines, Inc., [G. R. No. 152329, April
22, 2003], the Supreme Court affirmed the validity of the dismissal of petitioner
who was caught red-handed possessing and using methampethamine
hydrochloride or shabu in a raid conducted inside the company premises by PAL
security officers and NARCOM personnel. Said the Supreme Court: It is of public
knowledge that drugs can damage the mental faculties of the user. Roquero was
tasked with the repair and maintenance of PALs airplanes. He cannot discharge
that duty if he is a drug user. His failure to do his job can mean great loss of lives
and properties. Hence, even if he was instigated to take drugs he has no right to
be reinstated to his position. He took the drugs fully knowing that he was on duty
and more so that it is prohibited by company rules. Instigation is only a defense
against criminal liability. It cannot be used as a shield against dismissal from
employment especially when the position involves the safety of human lives.

Immorality.

As a general rule, immorality is not a just ground to terminate employment. The


exception is when such immoral conduct is prejudicial or detrimental to the
interest of the employer.

The standard to be used to determine whether the immoral conduct adversely


affects the interest of the employer is whether the immoral act is of such nature
which may be considered calculated to undermine or injure such interest or which
would make the worker incapable of performing his work.

For instance, in a case involving a teacher, immorality was defined as a course of


conduct which offends the morals of the community and is a bad example to the
youth whose ideals a teacher is supposed to foster and to elevate, the same
including sexual misconduct. Thus, the gravity and seriousness of the charges
against the teacher stem from his being a married man and at the same time a
teacher. Therefore, when a teacher engages in extra-marital relationship,
especially when the parties are both married, such behavior amounts to
immorality, justifying his termination from employment. (Santos, Jr. vs. NLRC, G.
R. No. 115795, March 6, 1998, 287 SCRA 117).

In another case, the dismissal of the supervisor who maintained a concubine and
practically drove his family away because of his illicit relationship was held legal.
As supervisor, he failed to set a good example to the several personnel under
him. (Sanchez vs. Ang Tibay, 54 O. G. 4515). chanrobles virtual law library

Immoral act committed beyond office hours.

The act of sexually harassing a co-employee within the company premises


(ladies dormitory) even after office hours is a work-related matter considering
that the peace of the company is thereby affected. The Code of Employee
Discipline is very clear that immoral conduct within the company premises
regardless of whether or not [it is] committed during working time is punishable.
(Navarro III vs. Damasco, G. R. No. 101875, July 14, 1995).

Sexual intercourse inside company premises constitutes serious


misconduct.

A security coordinator committed serious breaches of company rules when he


caused the introduction of intoxicating liquor into the premises which he drank
with another guard on duty, and allowed two female security guards to come
inside the Security Office and had sexual intercourse with one of them on top of
the desk of the Security Head, while the other guard pretended to be asleep
during all the time that the lustful act was commenced until consummated.
(Stanford Microsystems, Inc. vs. NLRC, G. R. No. L-74187, Jan. 28, 1988).

The act of a lady teacher in falling in love with a student, not immoral.

The act of a 30-year old lady teacher, of falling in love with her student whose
age is 16, is not an immoral act which would justify the termination of her
employment. The school utterly failed to show that petitioner took advantage of
her position to court her student. If the two eventually fell in love despite the
disparity of their ages and academic levels, this only lends substance to the
truism that the heart has reasons of its own which reason does not know. But,
definitely, yielding to this gentle and universal emotion is not to be so casually
equated with immorality. The deviation of the circumstances of their marriage
from the usual societal pattern cannot be considered as a defiance of
contemporary social mores. (Chua-Qua vs. Clave, G. R. No. L-49549, Aug. 30,
1990).

Fighting as ground for termination.

Fighting within work premises may be deemed a valid ground for the dismissal of
an employee. Such act adversely affects the employers interests for it distracts
employees, disrupts operations and creates a hostile work atmosphere. (Solvic
Industrial Corp. vs. NLRC, G. R. No. 125548, Sept. 25, 1998).

Not every fight, however, within company premises in which an employee is


involved would warrant his dismissal. This is especially true when the employee
concerned did not instigate the fight and was in fact the victim who was
constrained to defend himself. (Garcia vs. NLRC, G. R. No. 116568, Sept. 3, 1999).

The fact that an employee filed a criminal case against the other employee
involved in a fight while the latter did not, does not necessarily mean that the
former was the aggrieved party. (Flores vs. NLRC, G. R. No. 109362, May 15,
1996, 256 SCRA 735).

In one case where the fisticuffs between an employee and a security guard
occurred in a store within the company auxiliary compound, about 15 meters
from the gate, the Supreme Court ruled that the penalty of dismissal was not
commensurate with the misconduct, considering the length of service and the
surrounding circumstances of the incident. (North Camarines Lumber Co., Inc. vs.
Barreda, G. R. No. 75436, Aug. 21, 1987).

And in another case where the fight occurred outside the work premises and did
not lead to any disruption of work or any hostile environment in the work
premises, the dismissal of the employee who figured in the fight was considered
too harsh a penalty. (Solvic Industrial Corp. vs. NLRC, G. R. No. 125548, Sept. 25,
1998; 296 SCRA 432, 441).

Utterance of obscene, insulting or offensive words constitutes serious


misconduct.

The act of an employee in hurling obscene, insulting or offensive language


against his superior is not only destructive of the morale of his co-employees and
a violation of the company rules and regulations, but also constitutes gross
misconduct which is one of the grounds provided for by law to terminate the
services of an employee. This attitude towards a supervisor amounted to
insubordination and conduct unbecoming of an employee which should merit the
penalty of dismissal. (Autobus Workers Union vs. NLRC, G. R. No. 117453, June
26, 1998, 291 SCRA 219, 228).

In Reynolds Philippine Corporation vs. Eslava, [137 SCRA 259 (1985)], the
dismissed employee circulated several letters to the members of the companys
board of directors calling the executive vice-president and general manager a
big fool, anti-Filipino, and accusing him of mismanagement, inefficiency, lack
of planning and foresight, petty favoritism, dictatorial policies, one-man rule,
contemptuous attitude to labor, anti-Filipino utterances and activities. As a result
of this, said employees dismissal was held legal in view of these utterances.

In Asian Design and Manufacturing Corporation vs. Deputy Minister of Labor, [142
SCRA 79 (1986)], the dismissed employee made false and malicious statements
against the foreman (his superior) by telling his co-employees: If you dont give
a goat to the foreman, you will be terminated. If you want to remain in this
company, you have to give a goat. Further, the dismissed employee therein
likewise posted a notice in the comfort room of the company premises which
read: Notice to all Sander Those who want to remain in this company, you
must give anything to your foreman. Failure to do so will be terminated Alice
80. The Supreme Court declared the dismissal of said employee based on these
malicious statements valid and legal.

In De la Cruz vs. NLRC, [G. R. No. 82703, September 15, 1989, 177 SCRA 626],
the act of an employee in hurling invectives at a company physician such as
sayang ang pagka-professional mo and putang ina mo, was held to constitute
insubordination and conduct unbecoming an employee which should warrant his
dismissal.

In Bondoc vs. NLRC, [G. R. No. 103209, July 28, 1997, 276 SCRA 288], utterances
on different occasions towards a co-employee of the following: -Di bale bilang na
naman ang araw mo. Sige lang, patawa tawa ka pa, eh bilang na bilang na
ang araw mo. Matakot ka sa Diyos, bilang na ang araw mo; Mag-ingat ka sa
paglabas mo sa Silahis Hotel. - Unggoy xxx ulol were held unquestionably as
partaking the form of grave threat or coercion which justified the dismissal of the
offender.

In Autobus Workers Union vs. NLRC, [G. R. No. 117453, June 26, 1998, 291 SCRA
219, 228], the act of the employee in calling his supervisor gago ka and
taunting the latter by saying bakit anong gusto mo, tang ina mo was held
sufficient ground to dismiss the former.

But in Samson vs. NLRC, [G. R. No. 121035, April 12, 2000], the following
utterances: Si EDT (referring to Epitacio D. Titong, General Manager and
President of the company), bullshit yan, sabihin mo kay EDT yan, and sabihin
mo kay EDT, bullshit yan while making the dirty finger gesture, were not held
to be sufficient to merit the dismissal of the employee. The Supreme Court
justified said finding by distinguishing this case from the De la Cruz, Autobus,
Asian Design and Reynolds cases [supra], in that the said offensive utterances
were not made in the presence of the employees superior; that the companys
rules and regulations merely provide for verbal reminder for first offenders; and
that the penalty of dismissal was unduly harsh considering his 11 years of service
to the company.

Gambling within company premises, a serious misconduct.

In one case, an employee was validly terminated when he was caught gambling
within the company premises, it being a prohibited act carrying the penalty of
termination under the Company Rules. (Dimalanta vs. Secretary of Labor, G. R.
No. 83854, May 24, 1989). chanrobles virtual law library

Intoxication as ground for termination.

As a general rule, intoxication of an employee which interferes with his work,


constitutes serious misconduct. It is well-settled by jurisprudence that serious
misconduct in the form of drunkenness and disorderly or violent behavior is a just
cause for the dismissal of an employee. (Sanyo Travel Corporation vs. NLRC, G. R.
No. 121449, Oct. 2, 1997; Club Filipino, Inc. vs. Sebastian, G. R. No. 85490, July
23, 1992, 211 SCRA 717).

However, the nature of the employees work, the dignity of his position and the
surrounding circumstances of the intoxication, must be taken into account.

For instance, the act of a managerial employee of reporting for work under the
influence of liquor and sleeping while on duty reflect his unworthiness of the trust
and confidence reposed on him. (Del Val vs. NLRC, G. R. No. 121806, Sept. 25,
1998, 296 SCRA 283).
The act of a pilot with the rank of captain, of forcing two co-pilots with the rank of
First Officers, to drink one evening at the coffee shop of a hotel in Cebu City, six
bottles of beer each, within thirty minutes, failing which, he ordered them to
stand erect and were hit on the stomach, was held as constitutive of serious
misconduct. The incident occurred with his full knowledge that his co-pilots have
flight duties as early as 7:10 a.m. the next day and as late as 12:00 p.m.
(Philippine Airlines, Inc. vs. NLRC, G. R. No. L-62961, Sept. 2, 1983).

In another case involving two (2) security guards who, while off-duty, joined a
drinking spree at a birthday party of a co-guard in a sari-sari store near the FTI
security office, the lesser penalty of 30-day suspension, not dismissal, was the
penalty held to be appropriate under the circumstances. The reason cited was the
fact that the company rules and regulations merely provided for suspension for
first offenders. (Quiones vs. NLRC, G. R. No. 105763, July 14, 1995).

Pressure exerted by a teacher upon a colleague to change a failing


grade of a student.

The pressure and influence exerted by a teacher on his colleague to change a


failing grade of a student to a passing one, as well as his misrepresentation that
the student is his nephew, constitute serious misconduct, which is a valid ground
for dismissing an employee. (Padilla vs. NLRC, G. R. No. 114764, June 13, 1997,
273 SCRA 457).

Sleeping while on duty as a ground for termination.

In Luzon Stevedoring Corporation vs. CIR, [G. R. No. L-18683, Dec. 31, 1965], and
A Prime Security Services, Inc. vs. NLRC, [220 SCRA 142 (1993)], the act of an
employee of sleeping in his post, coupled with gross insubordination, dereliction
of duty and challenging superiors to a fight, was held as serious misconduct.

However, in the 2000 case of VH Manufacturing, Inc. vs. NLRC, [G. R. No. 130957,
Jan. 19, 2000], it was pronounced that to cite that sleeping on the job is always a
valid ground for dismissal is misplaced not only because the same was not
substantiated by any convincing evidence other than the bare allegation of the
employer but most significantly, because the authorities cited, Luzon Stevedoring
[supra] and A Prime [supra], are not applicable in this case since the function
involved in said cases was to protect the company from pilferage or loss.
Accordingly, the doctrine laid down in those cases is not applicable to the case at
bar.

In the 2004 case of Electruck Asia, Inc. vs. Meris, [G. R. No. 147031, July 27,
2004], where more than fifty employees were alleged to have slept at the same
time, the Supreme Court found it highly unlikely and contrary to human
experience that all fifty-five employees including respondents were at the same
time sleeping. If indeed the Night Manager chanced upon respondent-employees
sleeping on the job, why he did not at least rouse some or all of them to put them
on notice that they were caught in flagrante defies understanding.

Eating while at work.

Dismissal is too harsh a penalty for the offense of eating while at work, under the
attendant circumstances of the case. (Tanduay Distillery Labor Union vs. NLRC, G.
R. No. 73352, Dec. 06, 1995).

Urinating in the workplace.

In a 2002 case, it was held that urinating in a workplace other than the one
designated for the purpose by the employer constitutes violation of reasonable
regulations intended to promote a healthy environment under Art. 282 [1] of the
Labor Code for purposes of terminating employment, but the same must be
shown by evidence. An employee cannot be terminated based on this ground if
there is no evidence that he did urinate in a place other than a rest room in the
premises of his work. (Tan vs. Lagrama, G. R. No. 151228, Aug. 15, 2002).
- (Oscar Garcia vs Malayan Insurance, GR#

- SERIOUS MISCONDUCT AS COMPARED TO ORDINARY MISCONDUCT

The charge of drug abuse inside the company's premises and during working
hours against petitioner constitutes serious misconduct, which is one of the just
causes for termination. Misconduct is improper or wrong conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not
merely an error in judgment. The misconduct to be serious within the meaning
of the Act must be of such a grave and aggravated character and not merely
trivial or unimportant. Such misconduct, however serious, must nevertheless, in
connection with the work of the employee, constitute just cause for his
separation. This Court took judicial notice of scientific findings that drug abuse
can damage mental faculties of the user. It is beyond question therefore that
any employee under the influence of drugs cannot possibly continue doing his
duties without posing a serious threat to the lives and property of his co-
workers and even his employer.
(Bughaw vs Treasure Island, GR# 173151 03/28/08)

- SIMPLE MISCONDUCT IS NOT A JUST CAUSE FOR DISMISSAL

Simple misconduct which does not merit employees termination from his
employment. Although, an employer has the right to discipline its erring
employees, exercise of such right should be tempered with compassion and
understanding. The magnitude of the infraction committed by an employee
must be weighed and equated with the penalty prescribed and must be
commensurate thereto, in view of the gravity of the penalty of dismissal or
termination from the service. The employer should bear in mind that in
termination cases, what is at stake is not simply the employees job or position
but his very livelihood.
(PLDT vs Berbano, GR# 165199 11/27/09)

- A SERIES OF ORDINARY MISCONDUCTS MAY CONSTITUTE SERIOUS


MISCONDUCT

It bears noting that petitioner cited Cathedral School of Technology in its


Comment/Rely to Complainant-Appellant's Appeal Memorandum precisely to
show that its dismissal of complainant on the ground of "gross inefficiency and
unreasonable behavior", was correctly upheld by the labor arbiter. When an
employee, despite repeated warnings from the employer, obstinately refuses to
curtail a bellicose (war like) inclination such that it erodes the morale of co-
employees, the same may be a ground for dismissal for serious misconduct. As
this court said, a series of irregularities when put together may constitute
serious misconduct, which under Art. 283 of the Labor Code, is a just cause for
termination." Likewise, acts destructive of the morale of one's co-employees
may be considered serious misconduct.
(Citibank vs NLRC, GR# 159302 02/06/08)

- SLEEPING ON DUTY AND LEAVING WORK AREA AS SERIOUS


MISCONDUCT

Sleeping on the job without prior authorization was held to constitute serious
misconduct and is a valid ground for dismissal. The court considered that the
employee in this case (Tomada) was directly responsible for a significant
portion of his employers property. Tomadas act was not merely a disregard
company rules, but in effect an open invitation for others to violate those same
company rules.

Court denies financial assistance despite employees long years of service;

Although his nearly two decades of service might generally be considered for
some form of financial assistance to shield him from the effects of his
termination, Tomadas acts reflect a regrettable lack of concern for his
employer. If length of service justifies the mitigation of the penalty of dismissal,
then this Court would be awarding disloyalty, distorting in the process the
meaning of social justice and undermining the efforts of labor to cleanse its
ranks of undesirables.
(Tomada Sr. vs RFM Corp, GR# 163270 09/11/09)

- CONVICTION IN A CRIMINAL CASE AS SERIOUS MISCONDUCT;


DISMISSAL/AQUITTAL OF THE EMPLOYEE IN THE CRIMINAL CASE WILL
NOT BAR HIS DISMISSAL

Conviction in a criminal case is not necessary to find just cause for termination
of employment. Criminal cases require proof beyond reasonable doubt while
labor disputes require only substantial evidence, which means such relevant
evidence as a reasonable mind might accept as adequate to justify a
conclusion. The evidence in this case was reviewed by the appellate court and
two labor tribunals endowed with expertise on the matter the Labor Arbiter
and the NLRC. They all found substantial evidence to conclude that Capor had
been validly dismissed for dishonesty or serious misconduct.
(Reno Foods Inc. vs NLM-Katipunan, GR# 164016 03/15/10)

- CONFIRMATORY TEST AFTER DRUG TEST IS REQUIRED

The importance of the confirmatory test is underscored in Plantation Bays own


Policy and Procedures, in compliance with Republic Act No. 9165, requiring
that a confirmatory test must be conducted if an employee is found positive for
drugs in the Employees Prior Screening Test, and that both tests must arrive at
the same positive result.
But where the confirmatory test results were released earlier than those of the
drug test, the veracity of the confirmatory results is put to doubt.
(Plantation Bay Resort vs Dubrico, GR# 182216 12/04/09)

- FRAUD CONSTITUTES SERIOUS MISCONDUCT

Misconduct has been defined as improper or wrong conduct. It is the


transgression of some established and definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere
error of judgment. The misconduct to be serious must be of such grave and
aggravated character and not merely trivial and unimportant. Such
misconduct, however serious, must nevertheless be in connection with the
employees work to constitute just cause for his separation.

In the present case, the Court found substantial evidence to prove that a
serious misconduct has been committed to justify termination from
employment. The Certified Public Accountant and Corporate Finance Manager
of the company submitted a report dated February 19, 2000 stating that in spite
of managements memorandum, the keys to the office and filing cabinets were
not surrendered. It was likewise stated in the report that petitioner Wilfredo
Baron pulled out some records without allowing a representative from the
internal audit team to inspect them. He noticed Wilfredo Baron deleting some
files from the computer, which could no longer be retrieved. Moreover, a
member of the audit team saw Cynthia Junatas (another petitioner) carrying
some documents, including a Daily Collection Report. When asked to present
the documents for inspection, Junatas refused and tore the document.

In addition, the audit team discovered that MSI incurred an inventory shortage
of One Million Thirty Thousand Two Hundred Fifty-Eight Pesos and Twenty-One
Centavos (P1,030,258.21). It found that Wilfredo Baron, the operations
manager, in conspiracy with the other petitioners, orchestrated massive
irregularities and grand scale fraud, which could no longer be documented
because of theft of company documents and deletion of computer files.
Unmistakably, the unauthorized taking of company documents and files, failure
to pay unremitted collections, failure to surrender keys to the filing cabinets
despite earlier instructions, concealment of shortages, and failure to record
inventory transactions pursuant to a fraudulent scheme are acts of grave
misconduct, which are sufficient causes for dismissal from employment.
(Baron vs NLRC, GR# 182299 02/22/10)
b. Gross and Habitual Neglect

Gross Negligence Meaning.


Gross negligence is a just cause for termination of employment
by employer under Article 282 of the Labor Code of the Philippines.
Gross negligence has been defined as the want or absence of or failure to
exercise slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them.

Negligence must be Habitual.


In order to constitute a just cause for the employees dismissal, the neglect of
duties must not only be gross but also habitual. Habitual neglect implies repeated
failure to perform ones duties for a period of time, depending upon the
circumstances.

Single isolated acts of negligence do not constitute a just cause for the dismissal
of the employee.
However, in a number of cases, the SC upheld the validity of dismissal on the
ground of gross negligence even if the act complained of was not habitual. Thus,
a bank employee was found grossly negligent when she delivered newly
approved credit cards to a person she had not even seen before and she did not
even ask for receipts, thereby enabling fictitious persons to use these cards,
causing P740,000.00 loss to the bank. (SeeCitibank vs. Gatchalian, G.R. No.
111222, January 18, 1995.)

Habitual Absenteeism and Tardiness.


Habitual absenteeism and tardiness constitute gross and habitual neglect of duty.
Repeated acts of absences without leave and frequent tardiness reflect
indifferent attitude to and lack of motivation in his work. (Valiao vs. CA, G.R. No.
146621, July 30, 2004.)

What constitutes the ground of gross and habitual neglect of duties?


Element of habituality may be disregarded where loss is substantial.
Element of habituality may be disregarded if totality of evidence
justifies dismissal.
Element of actual loss or damage, not an essential requisite.
Habitual tardiness or habitual absenteeism may be a ground for
termination.

What are the requisites to validly invoke abandonment of work?

Requisites. - Abandonment of work is a valid ground to terminate an


employment. To constitute abandonment, two (2) elements must concur,
namely:

1. The failure to report for work or absence without valid or justifiable reason;
and
2. A clear intention to sever the employer-employee relationship. This is the
more determinative factor being manifested by some overt acts.

Requirement of notice before declaring abandonment. - The notice required


consists of two (2) parts to be separately served on the employee in his last
known address, to wit:

1. notice to apprise the employee of the particular acts or omissions for which
his dismissal is sought; and
2. subsequent notice to inform him of the employers decision to dismiss him.

This notice requirement is not a mere technicality but a requirement of due


process to which every employee is entitled to insure that the employers
prerogative to dismiss or lay-off is not abused or exercised in an arbitrary
manner.

Notices in abandonment cases, where sent.


In case of abandonment of work, the notices should be served at the workers last
known address. (Icawat vs. NLRC, G. R. No. 133573, June 20, 2000).

In the 2004 case of Agabon vs. NLRC, [G.R. No. 158693, Nov. 17, 2004], while the
validity of the dismissal based on abandonment was upheld, however, the
employer was deemed to have violated due process when it did not follow the
notice requirements and instead argued that sending notices to the last known
addresses would have been useless because they did not reside there anymore.
Unfortunately for the employer, this is not a valid excuse because the law
mandates the twin notice requirements be sent to the employees last known
address. Thus, it should be held liable for non-compliance with the procedural
requirements of due process.

Immediate filing of complaint negates abandonment.

In a 2004 case, it was ruled that the immediate filing of complaint for illegal
dismissal by the employees praying for their reinstatement, negates the finding
of abandonment. They cannot, by any reasoning, be said to have abandoned their
work, for as the Supreme Court had consistently ruled, the filing by an employee
of a complaint for illegal dismissal is proof enough of his desire to return to work,
thus negating the employers charge of abandonment. (Unicorn Safety Glass, Inc.
vs. Basarte, G. R. No. 154689, Nov. 25, 2004).

An employee who had truly forsaken his job would not have bothered to file a
complaint for illegal dismissal. (Hodieng Concrete Products vs. Dante Emilia, G. R.
No. 149180, Feb. 14, 2005).

For instance, the filing of such complaint the very next day after the employee
was removed (Anflo Management & Investment Corp. vs. Bolanio, G. R. No.
141608, Oct. 4, 2002) or two (2) days after receiving the termination letter
(EgyptAir, vs. NLRC, G. R. No. 63185, Feb. 27, 1989) or six (6) days (Masagana
Concrete Products vs. NLRC, G. R. No. 106916, Sept. 3, 1999) or four (4) days
from the time the employees were prevented from entering their workplace, is an
indication that they have not abandoned their work. (Artemio Labor vs. NLRC, G.
R. No. 110388, Sept. 14, 1995).

The Supreme Court did not likewise consider the lapse of nine (9) months
(Kingsize Manufacturing Corp. vs. NLRC, G. R. Nos. 110452-54, Nov. 24, 1994) or
six (6) months before filing the complaints for illegal dismissal as an indication of
abandonment. Under the law, the employee has four (4) years within which to
institute his action for illegal dismissal. (Pare vs. NLRC, G. R. No. 128957, Nov. 16,
1999).

When filing of complaint does not negate abandonment; consequence of


failure to pray for reinstatement.

The rule that abandonment of work is inconsistent with the filing of a complaint
for illegal dismissal is not applicable to a case where the complainant does not
pray for reinstatement and just asks for separation pay instead. It goes without
saying that the prayer for separation pay, being the alternative remedy to
reinstatement, contradicts private respondent-employees stance. That he was
illegally dismissed is belied by his own pleadings as well as contemporaneous
conduct. (Jo vs. NLRC, G. R. No. 121605, Feb. 2, 2000).

But in Sentinel Security Agency, Inc. vs. NLRC, [G. R. No. 122468, Sept. 3, 1998],
the fact that complainants did not pray for reinstatement was considered by the
Supreme Court as not sufficient proof of abandonment. A strong indication of the
intention of the complainants to resume work is their allegation that on several
dates, they reported to the Security Agency for reassignment, but were not given
any. In fact, the contention of complainants was that the Agency constructively
dismissed them. Abandonment has recently been ruled to be incompatible with
constructive dismissal.

When refusal to return to work does not constitute abandonment.

In the 2004 case of The Philippine American Life and General Insurance Co. vs.
Gramaje, [G. R. No. 156963, Nov. 11, 2004], the Assistant Vice-President was
directed to report to her new assignment and submit to a medical examination.
She did not comply leading to her being declared as having abandoned her work.
However, the Supreme Court ruled that the there could not have been an
abandonment since at the time she was being asked to report to her new
assignment, she had already filed a case for illegal dismissal against her
employer. For the employer to anticipate the employee to report for work after
the latter already filed a case for illegal dismissal before the NLRC, would be
absurd. The two requisites for abandonment are not present here. There was no
abandonment as the latter is not compatible with constructive dismissal.

Offer of reinstatement during proceedings before Labor Arbiter, effect.

The respondent-employee in the 2002 case of Hantex Trading Co., Inc. vs. CA,
[G. R. No. 148241, September 27, 2002], accused of abandoning his work, filed a
complaint and prayed therein, among others, for reinstatement. However, during
the initial hearing before the Labor Arbiter, the petitioners made an offer to
reinstate him to his former position, but he defiantly refused the offer despite
the fact that in his complaint, he was asking for reinstatement. Again, the
petitioners extended the offer in its position paper filed with the Labor Arbiter but
was likewise rejected by the respondent. The petitioners consequently asserted
that these circumstances are clear indications of respondents lack of further
interest to work and effectively negate his claim of illegal dismissal.

The Supreme Court, however, ruled otherwise. It considered the refusal to be


reinstated as more of a symptom of strained relations between the parties, rather
than an indicium of abandonment of work as obstinately insisted by petitioners.
While the respondent desires to have his job back, it must have later dawned on
him that the filing of the complaint for illegal dismissal and the bitter incidents
that followed have sundered the erstwhile harmonious relationship between the
parties. He must have surely realized that even if reinstated, he will find it
uncomfortable to continue working under the hostile eyes of the petitioners who
had been forced to reinstate him. He had every reason to fear that if he accepted
petitioners offer, their watchful eyes would thereafter be focused on him, to
detect every small shortcoming of his as a ground for vindictive disciplinary
action. In such instance, reinstatement would no longer be beneficial to him.

Neither does the fact that petitioners made offers to reinstate respondent legally
disproves illegal dismissal. As observed by the Court of Appeals, to which the
Supreme Court was in full agreement, the offer may very well be a tacit
admission of petitioners that they erred in dismissing him verbally and without
observance of both substantive and procedural due process. Curiously,
petitioners offer of reinstatement was made only after more than one (1) month
from the date of the filing of the illegal dismissal case. Their belated gesture of
goodwill is highly suspect. If petitioners were indeed sincere in inviting
respondent back to work in the company, they could have made the offer much
sooner. In any case, their intentions in making the offer are immaterial, for the
offer to re-employ respondent could not have the effect of validating an otherwise
arbitrary dismissal.

In Ranara vs. NLRC, [212 SCRA 631], where the employer offered to re-employ
the illegally dismissed employee, the Supreme Court stated:
The fact that his employer later made an offer to re-employ him did not cure the
vice of his early arbitrary dismissal. The wrong had been committed and the
wrong done. Notably, it was only after the complaint had been filed that it
occurred to Chang, in a belated gesture of good will, to invite Ranara back to
work in his store. Changs sincerity is suspect. We doubt if his offer would have
been made if Ranara had not complained against him. At any rate, sincere or not,
the offer of reinstatement could not correct the earlier illegal dismissal of the
petitioner. The private respondents incurred liability under the Labor Code from
the moment Ranara was illegally dismissed and the liability did not abate as a
result of Changs repentance.

In the 2001 case of Suan vs. NLRC, [G. R. No. 141441, June 19, 2001], a letter was
sent to the petitioner almost one (1) month after the filing of the complaint for
illegal dismissal which required him to explain his absence without leave (AWOL).
He found refuge in the above case of Ranara. The Supreme Court, however, did
not find any analogy between the two cases as the factual backdrop of Ranara
[supra] is not the same as Suan. In contrast, petitioner Jose Suan in the latter
case who suffered a stroke, was not dismissed but was only asked to go on
extended leave from July 10 to August 10, 1997 because when petitioner reported
for work on July 10, 1997, after more than six months of sick leave, respondent
Oripaypay noticed that petitioners left arm down to his left limb was paralyzed,
thus Oripaypay could readily see that petitioner was not yet ready and physically
well to perform his usual assignment as master fisherman. However, after
petitioners extended leave expired, he did not return to work which prompted
private respondent Oripaypay to send him a letter dated August 16, 1997
requiring him to explain why no disciplinary action should be taken against him
for his absence without official leave. The said letter clearly shows that
respondent Oripaypay was waiting for the return of petitioner unlike in Ranara,
wherein petitioner Ranara, a driver, upon reporting for work, was surprised to find
some other person who replaced him in handling the vehicle previously assigned
to him, thus confirming his dismissal without proper notice.

Subcontracting for another company indicates abandonment.

In Agabon vs. NLRC, [G.R. No. 158693, November 17, 2004], the Supreme Court
held that the act of the petitioners who were frequently absent to engage in
subcontracting work for another company clearly shows the intention to sever the
employer-employee relationship with their employer. Hence, they are guilty of
abandonment.

- WHAT IS GROSS NEGLIGENCE; HOW TO DETERMINE ITS EXSISTENCE;

Under the Labor Code, gross negligence is a valid ground for an employer to
terminate an employee. Gross negligence is negligence characterized by want
of even slight care, acting or omitting to act in a situation where there is a duty
to act, not inadvertently but willfully and intentionally with a conscious
indifference to consequences insofar as other persons may be affected. In this
case, however, there is no substantial basis to support a finding that petitioner
committed gross negligence.

The test to determine the existence of negligence is as follows:

Did petitioner in doing the alleged act use that reasonable care and
caution which an ordinarily prudent person would use in the same
situation?

It is not disputed that petitioner tried to turn left to avoid a collision. To put it
otherwise, petitioner did not insist on his right of way, notwithstanding the
green light in his lane. Still, the collision took place as the ten-wheeler careened
on the wrong lane. Clearly, petitioner exerted reasonable effort under the
circumstances to avoid injury not only to himself but also to his passengers and
the van he was driving. To hold that petitioner was grossly negligent under the
circumstances goes against the factual circumstances shown. It appears to us
he was more a victim of a vehicular accident rather than its cause.
(Tres Reyes vs Maxims Tea House, GR# 140853 02/27/03)

- (Golden Thread Knitting vs NLRC, GR# 119157 03/11/99)

- ABANDONMENT AS JUST CAUSE FOR DISMISSAL; ELEMENTS

To constitute abandonment, two elements must concur:

(1) The failure to report for work or absence without valid or justifiable reason,
and
(2) A clear intention to sever the employer-employee relationship.

The second element is the more determinative factor and should be manifested
by some overt acts. Mere absence is not sufficient. To prove abandonment, the
employer must show that the employee deliberately and unjustifiably refused to
resume his employment without any intention of returning. It is the employer
who has the burden of proof to show abandonment.
(Icawat vs NLRC, GR# 133573 06/20/00) &
(R. Transport Corp. vs Ejandra, GR# 148508 05/20/04)

- IMMEDIATE FILING OF COMPLAINT NEGATES ABANDONMENT

Private respondent, after his vacation leave, immediately reported back for
work but was not allowed by the petitioners on the ground that he was already
replaced by regular drivers. After he was notified, of his termination, private
respondent lost no time in filing the case for illegal dismissal against petitioners.
He cannot therefore, by any reasoning, be said to have abandoned his work or
had no intention of going back to work. It would be illogical for him to have left
his job and later on file said complaint. We have consistently ruled that a charge
of abandonment is totally inconsistent with the immediate filing of a complaint
for illegal dismissal.
(Icawat vs NLRC, GR# 133573 06/20/00)

- EXCEPTION TO THE RULE THAT FILING OF COMPLAINT NEGATES


ABANDONMENT

The rule that abandonment of work is inconsistent with the filing of a complaint
for illegal dismissal does not apply where the complainant does not pray for
reinstatement and just asks for separation pay instead. Public respondents
assertion that the institution of the complaint for illegal dismissal manifests
private respondents lack of intention to abandon his job is untenable. Such rule
applies where the complainant seeks reinstatement as a relief. Corollary, it has
no application where the complainant does not pray for reinstatement and just
asks for separation pay instead as in the present case. It goes without saying
that the prayer for separation pay, being the alternative remedy to
reinstatement, contradicts private respondents stance. That he was illegally
dismissed is belied by his own pleadings as well as contemporaneous conduct.
(Jo vs NLRC, GR# 121605 02/02/00)

- WHAT IS GROSS NEGLIGENCE

To warrant removal from service, the negligence should not merely be gross,
but also habitual. Gross negligence implies a want or absence of, or failure to
exercise slight care or diligence, or the enitre absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them.
(Union Motor Corp. vs NLRC, GR# 159738 12/09/04)

- (RP Dinglasan Construction Inc. vs Atienza, GR# 156104 06/29/04)

NOTE:

(RevisedINSUBORDINATION;
- GROSS Penal Code) REQUISITES
Chapter Three
DISCOVERY
For AND REVELATION
gross insubordination, alsoOF SECRETS
called willful disobedience of a lawful order, to
lie, two requisites are also necessary:
Art. 290. Discovering secrets through seizure of correspondence.
The
(1) Thepenalty
assailedofconduct
prision correccional in itsintentional
must have been minimum and characterized
medium periods by a
and a fineand
wrongful notperverse
exceeding 500 pesos shall be imposed upon any private
attitude.
individual
(2) whoviolated
The order in ordermust
to discover the secrets
have been of another,
reasonable, lawful, shall seize known
and made his to
papers or letters and reveal the contents thereof.
the employee and should pertain to the duties which he has been engaged to
discharge.
If the offender
(Cosmos shall
Bottling not vs
Corp. reveal such secrets,
Nagrama, GR# 164403the penalty shall be arresto
03/04/08)
mayor and a fine not exceeding 500 pesos.

The provision shall not be applicable to parents, guardians, or persons


entrusted with the custody of minors with respect to the papers or letters
of the children or minors placed under their care or study, nor to spouses
c.with respect
Fraud to the papers
or Willful Breachorofletters of either
Trust/Loss ofof them.
Confidence

Art. 291. Revealing secrets with abuse of office. The penalty of


arresto mayor and a fine not exceeding 500 pesos shall be imposed upon
any manager, employee, or servant who, in such capacity, shall learn the
secrets of his principal or master and shall reveal such secrets.

Art. 292. Revelation of industrial secrets. The penalty of prision


correccional in its minimum and medium periods and a fine not exceeding
500 pesos shall be imposed upon the person in charge, employee or
workman of any manufacturing or industrial establishment who, to the
LOSS OF CONFIDENCE

Loss of confidence arising from fraud or willful breach of trust by employee of the
trust reposed in him by his employer or his duly authorized representative is a
just cause for termination of employment under Article 282 of the Labor Code of
the Philippines.

Fraud Meaning.
Fraud is any act, omission, or concealment which involves a breach of legal duty,
trust, or confidence justly reposed and is injurious to another.

Breach of Trust Meaning.


Breach of trust refers to the violation by the employee of the trust and confidence
reposed in him by his employer or duly authorized representative.

Elements of Loss of Confidence.


To determine whether the termination of employment based on loss of confidence
is justified, the following elements are generally considered:
1. Whether the fraud or breach of trust is in connection to the employees work;
and
2. Whether the employee concerned is holding a position of trust and
confidence.

Fraud or Breach must be in Connection to Employees Work.


To constitute just cause, fraud or breach of trust must be committed in
connection with the employees work or related to the performance of the
employees functions.

Employee must Hold Position of Trust and Confidence.


The basic premise for dismissal on the ground of loss of confidence is that the
employee concerned holds a position of trust and confidence. It is the breach of
this trust that results in the employers loss of confidence in the employee.
(See Natl Sugar Refineries Corp. vs. NLRC, G.R. No. 122277 February 24, 1998.)

Thus, loss of confidence ideally applies only to cases involving employee


occupying positions of trust and confidence, e.g., managerial employees, and
those situations where the employee is routinely charged with the care and
custody of the employers money or property, e.g., cashiers, auditors, property
custodian, etc.
Title not Conclusive Indicator of Trust and Confidence.
However, the title or appellation of the employees position is not a conclusive
indicator as to whether or not an employee holds a position of trust and
confidence. The determination should hinge on the authority actually possessed
by employee.

Breach of Trust must be Willful.


Ordinary breach will not suffice. It must be willful and without justifiable excuse,
there must be basis therefor, and it must be supported by substantial evidence
and not merely by the whims or caprice of the employer. (See Falguera vs.
Linsangan, G.R. No. 114848 December 14, 1995.)

What are the requisites for the ground of willful breach of trust?

In the 2004 case of Charles Joseph U. Ramos vs. The Honorable Court of Appeals
and Union Bank of the Philippines, [G.R. No. 145405, June 29, 2004], the Supreme
Court held that, in order to validly dismiss an employee on the ground of loss of
trust and confidence under Article 282, the following guidelines must be followed:
1. The loss of confidence must not be simulated;

2. It should not be used as a subterfuge for causes which are illegal, improper or
unjustified;

3. It may not be arbitrarily asserted in the face of overwhelming evidence to the


contrary;

4. It must be genuine, not a mere afterthought, to justify earlier action taken in


bad faith; and

5. The employee involved holds a position of trust and confidence. (Tolentino vs.
PLDT, G. R. No. 160404, June 8, 2005).

Breach must be work-related.

In order to constitute a just cause for dismissal, the act complained of should be
work-related and must show that the employee concerned is unfit to continue
to work for the employer. (Sulpicio Lines, Inc. vs. Gulde, G. R. No. 149930, Feb.
22, 2002).

For instance, in the 2005 case of Philippine National Construction Corporation vs.
Matias, [G. R. No. 156283, May 6, 2005], undeniably, the position of project
controller - the position of respondent at the time of his dismissal - required trust
and confidence, for it related to the handling of business expenditures or
finances. However, his act allegedly constituting breach of trust and confidence
(referring to the unlawful scheme by PNCC of using its employees as dummies
for the acquisition of vast tract of land in Bukidnon and thereafter compelling
them to assign all rights over same properties in favor of PNCC a scheme by
PNCC which is a flagrant violation of the Constitution as regards the maximum
area of real property which a corporation can acquire under the CARP Law) was
not in any way related to his official functions and responsibilities as controller. In
fact, the questioned act pertained to an unlawful scheme deliberately engaged in
by petitioner in order to evade a constitutional and legal mandate.

Breach must be willful and without justifiable excuse.

Loss of trust and confidence must be based on a willful breach and founded on
clearly established facts. (Asia Pacific Chartering [Phils.], Inc. vs. Farolan, G. R.
No. 151370, Dec. 4, 2002).

It must rest on substantial grounds and not on the employers arbitrariness,


whims, caprices or suspicion; otherwise, the employee would eternally remain at
the mercy of the employer. It should be genuine and not simulated; nor should it
appear as a mere afterthought to justify earlier action taken in bad faith or a
subterfuge for causes which are improper, illegal or unjustified. It has never been
intended to afford an occasion for abuse because of its subjective nature. (Atlas
Consolidated Mining & Development Corporation vs. NLRC, G. R. No. 122033, May
21, 1998).

Employees position must be reposed with trust and confidence.

As firmly entrenched in our jurisprudence, loss of trust and confidence as a just


cause for termination of employment is premised on the fact that an employee
concerned holds a position where greater trust is placed by management and
from whom greater fidelity to duty is correspondingly expected. This includes
managerial personnel entrusted with confidence on delicate matters, such as the
custody, handling, or care and protection of the employers property. (Caingat
vs. NLRC, G. R. No. 154308, March 10, 2005).

This situation also holds in the case of supervisory personnel occupying positions
of responsibility. (Cruz vs. Coca-Cola Bottlers Phils., Inc., G. R. No. 165586, June
15, 2005).

The betrayal of this trust is the essence of the offense for which an employee is
penalized. (Santos vs. San Miguel Corporation, G. R. No. 149416, March 14,
2003).

There must be some basis for the loss of trust and confidence.

While it is true that loss of trust and confidence is one of the just causes for
termination, such loss of trust and confidence must, however, have some basis.
Proof beyond reasonable doubt is not required. It is sufficient that there must
only be some basis for such loss of confidence or that there is reasonable ground
to believe if not to entertain the moral conviction that the concerned employee is
responsible for the misconduct and that the nature of his participation therein
rendered him absolutely unworthy of trust and confidence demanded by his
position. (Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg, G. R. No.
145800, Jan. 22, 2003).

In Limketkai Sons Milling, Inc. vs. Llamera, [G. R. No. 152514, July 12, 2005],
petitioners simply allege that respondents failure to report to the quality control
head the batch that did not meet the minimum standard showed connivance to
sabotage petitioners business. The Supreme Court ruled that not only is
petitioners logic flawed, it is an instance of arguing non sequitur. Said allegation
alone, without proven facts to back it up, could not and did not suffice as a basis
for a finding of willful breach of trust. Petitioners failed to prove the existence of a
valid cause for the dismissal of respondent. Therefore, the dismissal must be
deemed contrary to the provisions of the Labor Code, hence illegal.

Prolonged practice, not an excuse for wrongful act.

In Santos vs. San Miguel Corporation, [G. R. No. 149416, March 14, 2003], it was
held that prolonged practice of encashing personal checks among payroll
personnel does not excuse or justify petitioners misdeeds. Petitioners willful and
deliberate acts were in gross violation of respondent companys policy against
encashment of personal checks of its personnel. She, as Finance Director, cannot
feign ignorance of such policy as she is duty-bound to keep abreast of company
policies related to financial matters within the corporation.

Grant of promotions and bonuses negates loss of trust and confidence.

In Norkis Distributors, Inc. vs. NLRC, [G. R. No. 112230, July 17, 1995], where the
employer alleged inefficiency and loss of trust and confidence as grounds for
termination of employment, the High Tribunal said that these are negated by the
fact that the evidence shows that the employee received several promotions
since his employment in 1986 and was given bonuses for his collection efforts
and a compensation adjustment for his excellent performance.

Long years of service, absence of derogatory record and small amount


involved, when deemed inconsequential.

In Etcuban, Jr. vs. Sulpicio Lines, Inc., [G. R. No. 148410, January 17, 2005], the
petitioner theorizes that even assuming that there was evidence to support the
charges against him, his dismissal from the service is unwarranted, harsh and is
not commensurate to his misdeeds, considering the following: first, his 16 long
years of service with the company; second, no loss or damages was suffered by
the company since the tickets were unissued; third, he had no previous
derogatory record; and, lastly, the amount involved is miniscule. Citing
jurisprudence, he appeals for compassion and requests that he be merely
suspended, or at the very least, given separation pay for his length of service.
The Supreme Court, however, found no merit in the petitioners contention:
We are not unmindful of the foregoing doctrine, but after a careful scrutiny of
the cited cases, the Court is convinced that the petitioners reliance thereon is
misplaced. It must be stressed that in all of the cases cited, the employees
involved were all rank-and-file or ordinary workers. As pointed out earlier, the
rules on termination of employment, penalties for infractions, insofar as fiduciary
employees are concerned, are not necessarily the same as those applicable to
the termination of employment of ordinary employees. Employers, generally, are
allowed a wider latitude of discretion in terminating the employment of
managerial personnel or those of similar rank performing functions which by their
nature require the employers trust and confidence, than in the case of ordinary
rank-and-file employees. (Citing Gonzales vs. NLRC, 355 SCRA 195 [2001]).
The fact that the petitioner has worked with the respondent for more than 16
years, if it is to be considered at all, should be taken against him. The infraction
that he committed, vis--vis his long years of service with the company, reflects a
regrettable lack of loyalty. Loyalty that he should have strengthened instead of
betrayed. If an employees length of service is to be regarded as a justification for
moderating the penalty of dismissal, it will actually become a prize for disloyalty,
perverting the meaning of social justice and undermining the efforts of labor to
cleanse its ranks of all undesirables. (Citing Flores vs. NLRC, 219 SCRA 350
[1993]).

xxx

It cannot be over-emphasized that there is no substitute for honesty for sensitive


positions which call for utmost trust. Fairness dictates that the respondent should
not be allowed to continue with the employment of the petitioner who has
breached the confidence reposed on him. Unlike other just causes for dismissal,
trust in an employee, once lost, is difficult, if not impossible, to regain. (Citing
Salvador vs. Philippine Mining Service Corporation, 395 SCRA 729 [2003]). There
can be no doubt that the petitioners continuance in the extremely sensitive
fiduciary position of Chief Purser would be patently inimical to the respondents
interests. It would be oppressive and unjust to order the respondent to take him
back, for the law, in protecting the rights of the employee, authorizes neither
oppression nor self-destruction of the employer. (San Miguel Corporation vs.
NLRC, 115 SCRA 329 [1982]).

In another case, Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg, [G.
R. No. 145800, January 22, 2003], the teller and cashier (who were charged and
dismissed for unauthorized encashments of checks) have been employed with the
petitioner-electric cooperative for 22 and 19 years of continuous service,
respectively, and this is the first time that either of them has been
administratively charged. Nonetheless, their dismissal was held justified
considering the breach of trust they have committed. Well to emphasize, the
longer an employee stays in the service of the company, the greater is his
responsibility for knowledge and compliance with the norms of conduct and the
code of discipline in the company. Considering that they have mishandled the
funds of the cooperative and the danger they have posed to its members, their
reinstatement is neither sound in reason nor just in principle. It is irreconcilable
with trust and confidence that has been irretrievably lost.

In Salvador vs. Philippine Mining Service Corporation, [G. R. No. 148766, January
22, 2003], petitioner argues that assuming there was evidence to support the
charges against him, his dismissal from service is unwarranted, harsh and grossly
disproportionate to his act, considering his long years of service with the
company. The Supreme Court, however, disagreed, thusly:
To be sure, length of service is taken into consideration in imposing the penalty
to be meted an erring employee. However, the case at bar involves dishonesty
and pilferage by petitioner which resulted in respondents loss of confidence in
him. Unlike other just causes for dismissal, trust in an employee, once lost is
difficult, if not impossible, to regain. Moreover, petitioner was not an ordinary
rank-and-file employee. He occupied a high position of responsibility. As foreman
and shift boss, he had over-all control of the care, supervision and operations of
respondents entire plant. It cannot be over-emphasized that there is no
substitute for honesty for sensitive positions which call for utmost trust. Fairness
dictates that respondent should not be allowed to continue with the employment
of petitioner who has breached the confidence reposed on him. (Citing Galsim vs.
Philippine National Bank, 29 SCRA 293 [1969]). As a general rule, employers are
allowed wider latitude of discretion in terminating the employment of managerial
employees as they perform functions which require the employers full trust and
confidence. (Citing Gonzales vs. NLRC, 355 SCRA 195 [2001]).

In the case at bar, respondent has every right to dismiss petitioner, a managerial
employee, for breach of trust and loss of confidence as a measure of self-
preservation against acts patently inimical to its interests. Indeed, in cases of
this nature, the fact that petitioner has been employed with the respondent for a
long time, if to be considered at all, should be taken against him, (Citing Flores
vs. NLRC, 219 SCRA 350 [1993]). as his act of pilferage reflects a regrettable lack
of loyalty which he should have strengthened, instead of betrayed.

In Cruz vs. Coca-Cola Bottlers Phils., Inc., [G. R. No. 165586, June 15, 2005],
involving the spiriting out of thirty (30) cases of canned soft drinks loaded on
petitioners truck without the required documentation, the Supreme Court took
his long years of service as militating against his claim of good faith. Petitioners
length of service (as driver/helper), which spans almost fifteen (15) years, works
against his favor in this case. The reason is, it has long been held that the longer
an employee stays in the service of the company, the greater is his responsibility
for knowledge and compliance with the norms of conduct and the code of
discipline in the company.

Rules on termination of managerial employee, different from rank-and-


file.

The rules on termination of managerial employees are different from those


applicable to rank-and-file employees. Obviously, a managerial employee is
tasked to perform key and sensitive functions, and thus he is bound by more
exacting work ethics. (Gonzales vs. NLRC and Pepsi-Cola Products, Phils., Inc., G.
R. No. 131653, March 26, 2001).

This distinction has been underscored by the Supreme Court in recent decisions
involving the application of the doctrine of loss of trust and confidence. Thus, with
respect to rank-and-file personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in question, and that
mere uncorroborated assertions and accusations by the employer will not be
sufficient. But as regards a managerial employee, the mere existence of a basis
for believing that such employee has breached the trust of his employer would
suffice for his dismissal. Hence, in the case of managerial employees, proof
beyond reasonable doubt is not required, it being sufficient that there is some
basis for such loss of confidence, such as when the employer has reasonable
ground to believe that the employee concerned is responsible for the purported
misconduct, and the nature of his participation therein renders him unworthy of
the trust and confidence demanded by his position. (Etcuban, Jr. vs. Sulpicio
Lines, Inc., G. R. No. 148410, Jan. 17, 2005).

It is thus important that in termination based on this ground, it must be shown


that the employee is a managerial employee since the term trust and
confidence is restricted to said class of employees. As a managerial employee,
any transgression on her part gives the employer a wider latitude of discretion in
terminating her services. (Deles, Jr. vs. NLRC, G. R. No. 121348, March 9, 2000).

If what is involved in a case is a rank-and-file employee, the doctrine of loss of


trust and confidence may not be appropriately applied. For instance, the task of
a janitor, said the Supreme Court, does not fall squarely under this category. (De
los Santos vs. NLRC, G. R. No. 121327, Dec. 20, 2001).

When rank-and-file employees may be dismissed based on loss of trust


and confidence.
While generally, the doctrine of loss of trust and confidence may only be invoked
against managerial employees, there are instances when the doctrine may also
be successfully invoked against rank-and-file employees who, by reason of the
nature of their positions, are reposed with trust and confidence.

For example, as held in Coca-Cola Bottlers Philippines, Inc. vs. NLRC, [172 SCRA
751 (1989)], route salesmen are rank-and-file employees but they are highly
individualistic personnel who roam around selling products, deal with customers
and are entrusted with large assets and funds and property of the employer.
There is a high degree of trust and confidence reposed on them, and when such
confidence is breached, the employer may take proper disciplinary action on
them.

In holding that the dismissal of the food attendant was valid, the Supreme Court,
in Philippine Pizza, Inc. vs. Bungabong, [G. R. No. 154315, May 9, 2005], ruled
that where the employee has access to the employers property in the form of
merchandise and articles for sale, the relationship of the employer and the
employee necessarily involves trust and confidence. Hence, when respondent
drank stolen beer from the dispenser of Pizza Hut-Ermita on December 6, 1997,
he gave cause for his termination and his termination was within the ambit of
Article 282 of the Labor Code.

Examples of cases where rank-and-file employees may not be dismissed


based on loss of trust and confidence.

But in another case involving the same company, Coca-Cola Bottlers, Phils., Inc.
vs. Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW, [G. R. No. 148205,
Feb. 28, 2005], it was pronounced that the temporary assignment as route
salesman for a period of three (3) days of an employee who was employed as
driver-helper does not automatically make him an employee on whom his
employer reposed trust and confidence, for breach of which he shall be meted the
penalty of dismissal. The assumption by said employee, for only three days, of
some of the duties of a route salesman on orders of his employer, did not
automatically make him an employee holding a position of trust and confidence.
Despite his additional duties, said employee remained a driver-helper of the
petitioner. Thus, he cannot be dismissed based on loss of trust and confidence.

In Vallacar Transit, Inc. vs. NLRC, [G. R. No. 109809, July 17, 1995], it was held
that a non-managerial position such as a bus driver does not hold a position of
trust and confidence. That he figured in several accidents prejudicial to petitioner
cannot serve as basis for the loss of trust and confidence.

What constitutes the ground of fraud?

Commission of fraud by an employee against the employer will necessarily result


in the latter's loss of trust and confidence in the former. Proof of loss is not
required under this ground.

Commission of fraud or deceit leading to loss of trust and confidence.

In the 2003 case of De la Cruz, Jr. vs. NLRC, G. R. No. 145417, [December 11,
2003], the petitioner was holding a managerial position in which he was tasked to
perform key functions in accordance with an exacting work ethic. His position
required the full trust and confidence of his employer. While petitioner could
exercise some discretion, this obviously did not cover acts for his own personal
benefit. As found by the court a quo, he committed a transgression that betrayed
the trust and confidence of his employer - reimbursing his familys personal travel
expenses out of company funds. Petitioner failed to present any persuasive
evidence or argument to prove otherwise. His act amounted to fraud or deceit
which led to the loss of trust and confidence of his employer.

Lack of damage or losses not necessary in fraud cases.

The fact that the employer did not suffer losses from the dishonesty of the
dismissed employee because of its timely discovery does not excuse the latter
from any culpability. (Villanueva vs. NLRC, G. R. No. 129413, July 27, 1998).

In Diamond Motors Corporation vs. CA, [G. R. No. 151981, Dec. 1, 2003] and in
the earlier case of Philippine Airlines, Inc. vs. NLRC, [G. R. No. 126805, March 16,
2000] involving the commission of fraud against the company, it was ruled that
the fact that the employer failed to show it suffered losses in revenue as a
consequence of the employees act is immaterial. It must be stressed that actual
defraudation is not necessary in order that an employee may be held liable under
the company rule against fraud. That the dismissed employee attempted to
deprive the employer of its lawful revenue is already tantamount to fraud against
the company which warrants dismissal from the service.

Restitution does not have absolutory effect.

In Gonzales vs. NLRC and Pepsi-Cola Products, Phils., Inc., [G. R. No. 131653,
March 26, 2001], it was held that the fact that the employer ultimately suffered
no monetary damage as the employee subsequently settled his account is of no
moment. This was not the reason for the termination of his employment in the
company but the anomalous scheme he engineered to cover up his past due
account which constitutes a clear betrayal of trust and confidence.

The Supreme Court has reiterated this rule in Santos vs. San Miguel Corporation,
[G. R. No. 149416, March 14, 2003]. Hence, even if the shortages have been fully
restituted, the fact that the employee has misappropriated company funds is a
valid ground to terminate the services of an employee of the company for loss of
trust and confidence. (See also San Miguel Corporation vs. Deputy Minister of
Labor and Employment, 145 SCRA 196, 203-204 [1986]).

Lack of misappropriation or shortage, immaterial.

Where there was a series of unauthorized encashments of personal checks, the


Supreme Court in Central Pangasinan Electric Cooperative, Inc. vs. Macaraeg, [G.
R. No. 145800, January 22, 2003], ruled that it is not material that the teller and
cashier did not misappropriate any amount of money, nor incur any shortage
relative to the funds in their possession. The basic premise for dismissal on the
ground of loss of confidence is that the employees concerned hold positions of
trust. The betrayal of this trust is the essence of the offence for which an
employee is penalized. The respondents here held positions of utmost trust and
confidence. As teller and cashier, they are expected to possess a high degree of
fidelity. They are entrusted with a considerable amount of cash. Respondent de
Vera accepted payments from petitioners consumers while respondent Macaraeg
received remittances for deposit at petitioners bank. They did not live up to their
duties and obligations.

- LOSS OF CONFIDENCE; GUIDELINES

The guidelines for the application of the doctrine of loss of confidence are:

(1) Loss of confidence should not be simulated.


(2) It should not be used as a subterfuge for causes which are improper, illegal,
or unjustified.
(3) It may not be arbitrarily asserted in the face of overwhelming evidence to
the contrary.
(4) It must be genuine, not a mere afterthought to justify earlier action taken in
bad faith.
(Nokom vs NLRC, GR# 140043 07/18/00)

To validly dismiss an employee on the ground of loss of trust and confidence,


the following guidelines must be followed:

(1) The loss of confidence must not be simulated.


(2) It should not be used as a subterfuge for causes which are illegal, improper,
or unjustified.
(3) It may not be arbitrarily asserted in the face of overwhelming evidence to
the contrary.
(4) It must be genuine, not a mere afterthought, to justify earlier action taken in
bad faith.
(5) The employee involved holds a position of trust and confidence.
(Charles Ramos vs CA, GR# 145405 06/29/04)

- FOR LOSS OF TRUST AND CONFIDENCE TO BE A JUST CAUSE, THE


EMPLOYEE MUST HOLD A POSITION WHICH REQUIRES TRUST AND
CONFIDENCE

Of course, it must be stressed that loss of confidence as a just cause for the
termination of employment is based on the premise that the employee holds a
position of trust and confidence, as when he is entrusted with responsibility
involving delicate matters, and the task of a janitor does not fall squarely under
this category.
(Delos Santos vs NLRC, GR# 121327 12/20/01)

- PROOF REQUIRED IN LOSS OF TRUST AND CONFIDENCE

There is no dispute over the fact that respondent was a managerial employee
and therefore loss of trust and confidence was a ground for his valid dismissal.
The mere existence of a basis for the loss of trust and confidence justifies the
dismissal of the employee.

Proof beyond reasonable doubt is not required provided there is a valid reason
for the loss of trust and confidence, such as when the employer has a
reasonable ground to believe that the managerial employee concerned is
responsible for the purported misconduct and the nature of his participation
renders him unworthy of the trust and confidence demanded by his position.
(PLDT vs Tolentino, GR# 143171 09/21/04)

- BURDEN OF PROVING LOSS OF CONFIDENCE

The burden of establishing facts as bases for an employer's loss of confidence in


an employee - facts which reasonably generate belief by the employer that the
employee was connected with some misconduct and the nature of his
participation therein is such as to render him unworthy of trust and confidence
demanded of his position - is on the employer. Should the employer fail in
discharging his onus, the dismissal of the employee cannot be sustained. This is
consonant with the constitutional guarantee of security of tenure, as
implemented in what is now Sec. 279 of the Labor Code.
(Adelino Felix vs NLRC, GR# 148256 11/17/04)

- WHO MAY BE DISMISSED FOR LOSS OF CONFIDENCE

Loss of trust and confidence, as a ground for dismissal, is premised on the fact
that the employee concerned holds a position of responsibility or of trust and
confidence. As such, the employee must be invested confidence on delicate
matters, such as the custody, handling, or care of the employer's money and
other assets. Loss of confidence as a just cause for dismissal was never
intended to provide employer's with a blank check for terminating their
employees. Such a vague, all-encompassing pretext as loss of confidence, if
unqualifiedly given the seal of approval by this court, could readily reduce to
barren form the words of the constitutional guarantee of security of tenure.
Having this in mind, loss of confidence should ideally apply only to cases
involving employees occupying positions of trust and confidence or to those
situations where the employee is routinely charged with the care and custody of
the employer's money or property. To the first class belong managerial
employee, i.e., those vested with the powers or prerogatives to lay down
management policies, effect personnel movements, or effectively recommend
such managerial actions; and to the second class belong cashiers, auditors,
property custodians, etc., or those who, in the normal and routine exercise of
their functions, regularly handle significant amounts of money or property.
(Rolando Aromin vs NLRC, GR# 164824 04/30/08)
d. Commission of a Crime or Offense against Employer

Crime - Punished under the Revised Penal Code.


- Involves Mala in Se
- Good Faith is a defense

Offense - Punished under Special Penal Laws.


- Involves Mala Prohibita
- Good Faith is not a Defense

What constitutes the ground of commission of crime or offense?

The commission of a crime or offense by the employee may justify the


termination of his employment, if such crime or offense is committed against any
of the following persons:

1. His employer;
2. Any immediate member of his employers family; or
3. His employers duly authorized representative.

Q: Who are Immediate Family Members?


A: Spouse, ascendants, descendants, or legitimate, natural, or adopted brothers
or sisters of the employer or of his relative by affinity in the same degrees, and
those by consanguinity within the fourth civil degree. (Art. 11 (2) RPC)

Q: Does the Crime/Offense have to be committed within the work place?


A: No. It may also be done outside.

Q: What crimes/offenses are involved?


A: Those against the Person of the offended party.

Refers to an offense by the employee against the person of his employer or any
immediate member if his family or his duly authorized representative and thus,
the conviction of a crime involving moral turpitude is not analogous thereto as the
element of relation to his work or to his employer is lacking.

NOTE: The CONVICTION of an employee in a criminal case is NOT necessary to


warrant his dismissal by his employer.

e. Other Analogous Cases

DOCTRINE OF INCOMPATIBILITY

Where the employee has done something that is contrary or incompatible with
the faithful performance of his duties, his employer has a just cause for
terminating his employment.
(Manila Chauffers League vs Bachrach Motor Co., 40 O.G. 159)

Instances considered analogous causes.

1. The ground of inefficiency.


2. Violation of safety rules.
3. Ban on ones employees imposed by another company.
4. Violation of the company code of conduct or company rules and
regulations.

- UNREASONABLE BEHAVIOR MAY BE A JUST CAUSE FOR DISMISSAL

An evaluative review of the records of this case nonetheless supports a finding


of a just cause for termination. The reason for which private respondent's
services were terminated, namely, her unreasonable behavior and unpleasant
deportment in dealing with the people she closely works with in the course of
her employment, is analogous to the other "just causes" enumerated under the
Labor Code.
(Cathedral School of Technology vs NLRC, GR# 101438 10/13/92)

- GROSS INEFFICIENCY IS ANALOGOUS TO GROSS NEGLIGENCE

We cannot but agree with PEPSI that gross inefficiency falls within the purview
of other analogous causes to the foregoing, and constitutes, therefore, a just
cause to terminate an employee under Art. 282 of the Labor Code. One is
analogous to another if it is susceptible of comparison with the latter either in
general or in some specific detail; or has a close relationship with the latter.
Gross Inefficiency is closely related to Gross Neglect, for both involve specific
acts of omission on the part of the employee resulting in damage to the
employer or to his business. In Buiser vs Leogardo, this Court ruled that failure
to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal.
(Lim vs NLRC, GR# 118434 07/26/96)

3. Authorized Causes

(Labor Code)
ART. 283. Closure of establishment and reduction of personnel. - The
employer may also terminate the employment of any employee due to:

1. The installation of labor-saving devices,


2. Redundancy,
3. Retrenchment to prevent losses or
4. The closing or cessation of operation of the establishment or undertaking

Unless the closing is for the purpose of circumventing the provisions of this Title,

By serving a written notice on the workers and the Ministry of Labor and Employment
at least one (1) month before the intended date thereof.

In case of termination due to the installation of labor-saving devices or redundancy,


the worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall be equivalent
to one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year.

(Rule I, Book VI, IRR)


SECTION 9. Termination pay.
(a) An employee shall be entitled to termination pay equivalent to at least one
month's salary for every year of service a fraction of at least six (6) months being
considered as one whole year, in case of termination of his employment due to
the installation of labor-saving devices or redundancy.
(b) Where the termination of employment is due to retrenchment to prevent
losses and in case of closure or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, or where the
employment is prohibited by law or is prejudicial to his health or to the health of
his co-employees, the employee shall be entitled to termination pay equivalent to
at least one-half month's pay for every year of service, a fraction of at least six
months being considered as one whole year.
(c) The termination pay provided in the Section shall in no case be less than the
employee's one month pay.

SECTION 10. Basis of termination pay. The computation of the termination


pay of an employee as provided herein shall be based on his latest salary rate, unless
the same was reduced by the employer to defeat the intention of the Code, in which
case the basis of computation shall be the rate before its deduction.
NOTE:

Unlike the just causes, the authorized causes under this article are not faults of
the employee, they are concomitants [accompanying thing or circumstance] of
business needs or business fate. The business situation makes the employment
termination necessary. Ironically, some employees have to lose their jobs to
strengthen or save the business. In the worse situation the business itself may be
terminated. In any case, the law gives the separated employees separation pay
whose amount varies according to the cause of the separation. But separation pay is
not required if business closure or cessation is due to serious losses.

Similar to the just causes, the authorized causes are coupled with proper
procedure. The process is not by way of investigation and hearing but by a 30-day
notice to the employee and to the DOLE. If this procedure is not observed, the
employer, as in Art. 282 will have to pay full backwages in addition to the statutory
severance pay. This ruling is found in Serrano vs NLRC (GR# 117040 01/27/00)
which modifies the Wenphil Doctrine which imposes only indemnity of an uncertain
amount.

AUTHORIZED CAUSES FOR TERMINATION OF EMPLOYEES

The two most commonly used grounds for termination of employee are the
Authorized Causes under Article 283 and 284 of the Labor Code, and the Just Causes
under Article 282. Below are the authorized causes for termination of employment.

Definition
As maybe broadly defined, authorized causes for dismissal of employee refer to those
lawful grounds for termination which in general do not arise from fault or negligence
of the employee. Authorized causes are distinguished from just causes
under Article 282 in that the latter are always based on acts attributable to the
employees own fault or negligence.

Authorized causes
The authorized causes for termination of employee are enumerated under Article 283
and 284 of the Labor Code, as follows:

1. Installation of labor-saving devices. The installation of labor-saving


devices contemplates the installation of machinery to effect economy and
efficiency in the method of production[1].
2. Redundancy. Redundancy exists where the services of an employee are in
excess of what is reasonably demanded by the actual requirements of the
enterprise. A position is redundant where it superfluous, and superfluity of a
position or positions may be the outcome of a number of factors, such as over
hiring of workers, decreased of volume business, or dropping of a particular
product line or service activity previously manufactured or undertaken by the
enterprise[2].
3. Retrenchment to prevent losses. Retrenchment is an economic ground to
reduce the number of employees. Retrenchment is the reduction of personnel for
the purpose of cutting down on costs of operations in terms of salaries and wages
resorted to by an employer because of losses in operation of a business
occasioned by lack of work and considerable reduction in the volume of
business[3]. It is sometimes also referred to as downsizing. It is aimed at saving a
financially ailing business establishment from eventually collapsing.
4. Closure or cessation of operation. The closure of a business establishment
is a ground for the termination of the services of an employee unless the closing
is for the purpose of circumventing pertinent provisions of the Labor Code.
5. Disease. An employer may terminate the services of an employee who has
been found to be suffering from any disease and whose continued employment is
prohibited by law or is prejudicial to his health as well as the health of his co-
employees.

It should be noted though that the above enumeration is not an exhaustive list of
authorized causes of termination of employment. Valid application of union
security clause, relocation of business, among others, may also considered
authorized causes of termination.
Footnotes
1. Edge Apparel, Inc. vs. NLRC, G.R. No. 121314, February 12, 1998.
2. Tierra International Construction Corporation vs. NLRC, G.R. No. 88912, July 3,
1992.
3. Alabang Country Club vs. NLRC, G.R. No. 157611, August 9, 2005.

AUTHORIZED CAUSES (TERMINATION PROCESS)

Requirements of Procedural Due Process.


For valid termination based on authorized causes such as installation of labor-saving
devices, redundancy, retrenchment to prevent losses, and closure or cessation of
operation, the employer must serve written notice to the individual employee
concerned and to the appropriate Regional Office of DOLE at least 30 days before the
effectivity of the termination.
Also, the employer must observe the following requirements as part of the process of
termination:
1. Good faith in the termination of employee, i.e., the implementation of the
company program resulting to termination of employees must be for a valid
cause and not merely a tool to circumvent the law on employees security of
tenure;
2. The employer must adopt a fair and reasonable criteria in the selection of
employee to be dismissed; and,
3. The employee must be paid separation pay not less than the amount fixed by
law.

Criteria in Selection of Employee to be Dismissed.


In the selection of the employee to be dismissed, the employer must adopt of a fair
and reasonable criteria which must be applied in good faith, such as:
1. Less preferred status of employee;
2. Efficiency rating; and
3. Seniority.

Payment of Separation Pay.


In termination of employment due to authorized causes, the employer is required to
give separation pay to the employee concerned. The amount of separation pay
depends on the specified cause of termination.
1. In case of termination due to the installation of labor-saving devices or
redundancy at least one month pay or to at least one month pay for every year
of service, whichever is higher.
2. In case of (a) retrenchment to prevent losses and (b) closures not due to
serious financial reverses one month pay or at least one-half month pay for
every year of service, whichever is higher.
3. No separation pay for closure due to serious business losses.
4. No separation pay is required when the closure of business is due to serious
business losses or financial reverses. (North Davao Mining, 1996.)
5. When closure of the business establishment is forced upon the employer and
ultimately for the benefit of the employees. The closure contemplated under
Article 283 of the Labor Code is a unilateral and voluntary act on the part of the
employer to close the business establishment. (National Federation of Labor vs.
NLRC, 2000.)

Effects of Termination.
1. If the termination is for authorized cause and the employee is given 30-day
prior notice, the dismissal is valid.
2. If the termination is for authorized cause but the employee was not given 30-
day prior notice, the dismissal is valid but the employer may be ordered to pay
nominal damages to dismissed employee. In Jaka Food Processing vs. Pacot,
2005, the amount of nominal damages is P50,000.00.
3. If the dismissal is not for a valid authorized cause, the dismissal is illegal,
whether or not there is 30-day prior notice. Consequently the employee shall be
entitled to reinstatement and backwages, and damages if warranted.

a. Installation of Labor Saving Devices


Replacement of workers with machinery or job contractors with the aim of
increasing efficiency in the company.

REQUISITES TO EFFECT DISMISSAL:

Notice to the employees at least 30 days prior to the dismissal


Notice to the DOLE at least 30 days prior to the dismissal

Installation of Labor-Saving Devices Concept


The law authorizes an employer to terminate the employment of
any employee due to the installation of labor saving devices. The installation of
these devices is a management prerogative, and the courts will not interfere with
its exercise in the absence of abuse of discretion, arbitrariness, or maliciousness
on the part of management. (See Magnolia Dairy Products Corporation vs. NLRC,
G.R. No. 114952, January 29, 1996.)

The installation of labor-saving devices contemplates the installation of


machinery to effect economy and efficiency in the method of production.

Distinguished from Retrenchment


The institution of new methods or more efficient machinery, or of automation is
technically a ground for termination of employment by reason of installation of
labor-saving devices but where the introduction of these methods is resorted to
not merely to effect greater efficiency in the operations of the business but
principally because of serious business reverses and to avert further losses, the
device could then verily be considered one of retrenchment. (Edge Apparel vs.
NLRC, G.R. No. 121314, February 12, 1998; See alsoRetrenchment.)

Separation Pay
In case of termination due to the installation of labor saving devices, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his
one month pay or to at least one month pay for every year of service, whichever
is higher. (Article 283, Labor Code.)

Case
1. An employee was terminated after the company instituted a modernization
program. Under said program, the operations of the quality control unit, to which
said employee was assigned, were all automated. The dismissal was upheld as
valid. (Agustilo vs. Court of Appeals, G.R. No. 142875, September 7, 2001.)

- INDEPENDENT CONTRACTING QUALIFIES AS LABOR SAVING DEVICES

In any event, we have held that an employer's good faith in implementing a


redundancy program is not necessarily destroyed by availment of the services
of an independent contractor to replace the services of the terminated
employee's. We have previously ruled that the reduction of the number of
workers in a company made necessary by the introduction of the services of an
independent contractor is justified when the latter is undertaken in order to
effectuate more economic and efficient methods of production. In the case at
bar, private respondents failed to proffer any proof that the management acted
in a malicious or arbitrary manner in engaging the services of an independent
contractor to operate the Laura wells. Absent such proof, the Court has no basis
to interfere with the bona fide decision of management to effect more economic
and efficient methods of production.
(Asian Alchohol Corp. vs NLRC, GR# 131108 03/25/99)

- VALIDITY OF LABOR SAVING DEVICE

Private respondents harp on the fact that petitioner's desire to save on labor
costs was the motivation for the redundancy program. The law, however, does
not prevent employers from saving on labor costs. This Court has recognized
such right. In International Macleod, Inc. vs IAC, this Court found that the
appointment by the company to the International Heavy Equipment Corporation
as its dealer with the government rendered redundant the position of
Government Relations Officer held by the private respondent therein. It was
held that the determination of the need for the phasing out of a department as
a labor and cost saving device because it was no longer economical to retain
said department is a management prerogative, with which the courts will not
interfere.

So long as the undertaking to save on labor costs is not attended by malice,


arbitrariness, or intent on the part of the employer to circumvent the law, the
Court will not interfere with such endeavor.
(Dole Phils. Vs NLRC, GR# 120009 09/13/01)

- IMPLEMENTATION OF LABOR SAVING DEVICES IS A BUSINESS DECISION


NOT SUBJECT TO REVIEW OF THE LABOR ARBITER OR NLRC

As we pointed out in another case, the management of a company cannot be


denied the faculty of promoting efficiency and attaining economy by a study of
what units are essential for its operation. To it belongs the ultimate
determination of whether services should be performed by its personnel or
contracted to outside agencies. While there should be mutual consultation,
eventually deference is to be paid to what management decides. Consequently,
absent proof that management acted in a malicious or arbitrary manner, the
court will not interfere with the exercise of judgment by an employer.

The hiring of an independent security agency is a business decision properly


within the exercise of management prerogative. The wisdom or soundness of
the management decision is not subject to the discretionary review of the Labor
Arbiter nor of the NLRC.
(Serrano vs NLRC, GR# 117040 01/27/00)

b. Redundancy

Redundancy Concept
Redundancy is one of the authorized causes for termination of employment
under Article 283 of the Labor Code of the Philippines.

Redundancy exists where the services of an employee are in excess of what is


reasonably demanded by the actual requirements of the enterprise. A position is
redundant where it superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as over hiring of workers, decreased of
volume business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.

In Wiltshire, the Court held that an employer has no legal obligation to keep on
the payroll employees more than the number needed for the operation of the
business. (See Wiltshire File Co., v. NLRC, 1991; Coats Manila Bay vs. Ortega,
2009)

Adequate Proof of Redundancy


It is the employers burden to show that redundancy exists. It is not enough for a
company to merely declare that it has become overmanned. It must produce
adequate proof of such redundancy to justify the dismissal of the affected
employees (Asufrin vs. San Miguel Corporation, 2004).

Evidence must be presented to substantiate redundancy such as but not limited


to the new staffing pattern, feasibility studies/proposal, on the viability of the
newly created positions, job description and the approval by the management of
the restructuring (Panlilio vs. NLRC, 1997).

Requirements of a Valid Redundancy Program


The employer must comply with the following requisites to ensure the validity of
the implementation of a redundancy program:
1. A written notice served on both the employees and the Department of
Labor and Employment (DOLE) at least one month prior to the intended date
of retrenchment as required by the Labor Code;
2. Payment of separation pay equivalent to at least one month pay or at
least one month pay for every year of service, whichever is higher;
3. Good faith in abolishing the redundant positions; and
4. Fair and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished. (See Caltex vs. NLRC, 2007, )

Separation Pay
In case of termination due to redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least one (1) month pay or to at least
one (1) month pay for every year of service, whichever is higher.

Proof of Losses Not Required


Redundancy does not require the exhibition of proof of losses or imminent losses.
In fact, of all the statutory grounds provided in Article 283 of the Labor Code, it is
only retrenchment which requires proof of losses or possible losses as justification
for termination of employment. (See Coats Manila Bay case.)

Duplication of Work Not Necessary.


Redundancy does not necessarily refer to duplication of work. That no other
person was holding the same position prior to the termination of the employees
services does not mean that his position had not become redundant. Indeed, in
any well-organized business enterprise, it would be surprising to find duplication
of work and two or more people doing the work of one person.
(See Wiltshire case.)

In redundancy, what is looked into is the position itself, the nature of the services
performed by the employee and the necessity of such position. (Tierra
International Construction Corp. vs. NLRC, 1992)

Redundancy Arising from Contracting Out of Labor


In several cases, the court upheld the dismissal on ground of redundancy even
when the employer contracts out the services of another company to perform the
same task as the redundant positions. Contracting out of labor has been held as a
valid management prerogative. (See De Ocampo vs. NLRC, 1992; Serrano vs.
NLRC, 2000.)

Cases
1. The employer was engaged in the production of wooden doors and
furniture. The complainants who were hired as mechanics were terminated by
the employer when their positions were abolished, and contracted out to
Gemac Machineries. The dismissal is proper. In contracting the services of
Gemac, which the company has the right to do, the services rendered by the
mechanics became redundant and superfluous, and therefore properly
terminable. (De Ocampo vs. NLRC, G.R. No. 101539 September 4, 1992.)
2. As a result of the phasing-out of the companys security section, and
contracting out the same with an independent contractor, the services of the
complainant as head of the security checkers section, was terminated. The
termination was for an authorized cause, i.e., redundancy. (Serrano vs. NLRC,
G.R. No. 117040. January 27, 2000.)

- WHAT IS MEANT BY REDUNDANCY

The characterization of an employee's services as no longer necessary or


sustainable, and therefore properly terminable, is an exercise of business
judgment on the part of the employer. It is not enough for a company to merely
declare that it has become overmanned -- it must produce adequate proof that
such is the actual situation in order to justify the dismissal of the affected
employees for redundancy.

In selecting the employees to be dismissed, a fair and reasonable criteria must


be used, such as but not limited to: a) less preferred status, b) efficiency, and c)
seniority
(Golden Thread Knitting vs NLRC, GR# 119157 03/11/99)

- WHEN IS THERE REDUNDANCY


Redundancy exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirement of the enterprise.

The appropriate forum to contest the legality or good faith of the retrenchment
or redundancy is the Department of Labor and Employment, not an
investigation or hearing to be held by the employer itself.
(Witshire File Co. Inc. vs NLRC, 193 SCRA 665)

- REQUISITES FOR A VALID REDUNDANCY PROGRAM

In case of redundancy, the employer must prove that:


(1) a written notice was served on both the employees and the DOLE at least
one month prior to the intended date of retrenchment;
(2) separation pay equivalent to at least one month pay or at least one month
pay for every year of service, whichever is higher, has been paid;
(3) good faith in abolishing the redundant positions; and
(4) adoption of fair and reasonable criteria in ascertaining which positions are to
be declared redundant and accordingly abolished.

It is the employer who bears the onus of proving compliance with these
requirements, retrenchment and redundancy being in the nature of affirmative
defenses.
(Dole Phils. vs NLRC, GR# 120009 09/13/01)

NOTE:

The reason for including the 4th requisite is based on the principle of security of
tenure. Just because you have a valid ground for dismissal, it should be based
on clear criteria.

- ABSENT BAD FAITH, A REDUNDANCY PROGRAM WILL BE HELD AS VAILD

Dole's redundancy program does not appear to be tainted with bad faith. The
petition alleges that the redundancy program is part of a wide-scale
restructuring of the company. This purported restructuring is supported by the
company's undisputed history towards these ends, which culminated in the
abolition of certain positions and the Voluntary Resignation Program in 1990-
1991. Among the avowed goals of such restructuring is the reduction of
absenteeism in the company. The harsh economic and political climate then
prevailing in the country also emphasized the need for cost-saving measures.
Reorganization as a cost-saving device is acknowledged by jurisprudence. An
employer is not precluded from adopting a new policy conducive to a more
economical and effective management, and the law does not require that the
employer should be suffering financial losses before he can terminate the
services of the employee on the ground of redundancy.
(Dole Phils. vs NLRC, GR# 120009 09/13/01)

- ADEQUATE PROOF IS NEEDED FOR THERE TO BE REDUNDANCY

Determination that employee's services are no longer necessary or sustainable


and, therefore, properly terminable is an exercise of business judgment of the
employer. It is not enough for a company to merely declare that it has become
overmanned. It must produce adequate proof that such is the actual situation to
justify the dismissal of affected employees for redundancy.

Whether it be by redundancy or retrenchment or any of the other authorized


causes, no employee may be dismissed without the observance of the
fundamentals of good faith.
(Bonifacio Asufrin vs CA, GR# 156658 03/10/04)

c. Retrenchment to Prevent Losses

Retrenchment Concept
Retrenchment is an economic ground to reduce the number of employees. It is
the reduction of personnel for the purpose of cutting down on costs of operations
in terms of salaries and wages resorted to by an employer because of losses in
operation of a business occasioned by lack of work and considerable reduction in
the volume of business (See Alabang Country Club vs. NLRC, G.R. No. 157611,
August 9, 2005 ).

Retrenchment is sometimes also referred to as downsizing. It is aimed at saving a


financially ailing business establishment from eventually collapsing.

Basic Requisites of Valid Retrenchment


To justify retrenchment, the following requisites must be complied with:
1. The retrenchment must be necessary to prevent business losses; and
2. The business losses sought to be prevented are serious, actual and real.

Meaning of To Prevent Losses


The phrase to prevent losses means that retrenchment is authorized to be
undertaken by the employer sometime before the losses anticipated are actually
sustained or realized. Actual losses need not set in prior to retrenchment. (Lopez
Sugar Corporation vs. Federation of Free Workers, G.R. Nos. 75700-01, August 30,
1990.)

Meaning of Serious, Actual and Real


In order to be justified, the termination of employment by reason of retrenchment
must be due to business losses or reverses which are serious, actual and real.

Not every loss incurred or expected to be incurred by the employer will justify
retrenchment, since, in the nature of things, the possibility of incurring losses is
constantly present, in greater or lesser degree, in carrying on the business
operations. (See Edge Apparel Inc. vs. NLRC, G.R. No. 121314, February 12,
1998 .)

The following are the general standards to determine whether the business losses
sought to be prevented are serious, actual and real, and sufficient to justify
retrenchment of employees:
1. The losses expected should be substantial and not merely de
minimis in extent;
2. The losses apprehended must be reasonably imminent;
3. The alleged losses if already realized, and the expected imminent
losses sought to be forestalled, must be proven by sufficient and convincing
evidence. (See Lopez Sugar Corporation case.)

Separation Pay
In case of retrenchment to prevent losses, the separation pay shall be equivalent
to one month pay or at least one-half month pay for every year of service,
whichever is higher. A fraction of at least six months shall be considered one
whole year. (Article 283, LC.)

Temporary Retrenchment or Lay-Off


Article 283 of the Labor Code of the Philippines speaks only of permanent
retrenchment or lay-off. There is no specific provision in the Labor Code that
governs temporary retrenchment, particularly the requisites for its
implementation and maximum duration.

To remedy this situation, the Court has applied by analogy Art. 286 to set a
specific period that employees may remain temporarily laid, or, sometimes
referred to as in floating status. (See Sebuguero vs. NLRC, G.R. No. 115394
September 27, 1995.) Article 286 provides:

Article 286. When employment not deemed terminated. The bonafide suspension
of the operation of a business or undertaking for a period not exceeding six
months, or the fulfillment by theemployee of a military or civic duty shall not
terminate employment. In all such cases, the employer shall reinstate the
employee to his former position without loss of seniority rights if he indicates his
desire to resume his work not later than one month from the resumption of
operations of his employer or from his relief from the military or civic duty.

Applying the above provision in the case of temporary retrenchment, an


employee who has been temporarily laid-off should be recalled or otherwise
permanently retrenched after the lapse of six months. Failing this would be
tantamount to illegal dismissal.

- CONDITIONS FOR A VALID RETRENCHMENT

Retrenchment is one of the authorized causes for the dismissal of employees.


Resorted to by employers to avoid or minimize business losses, it is recognized
under Art. 283 of the Labor Code. The "loss" referred to in this provision cannot
be of just any kind or amount, otherwise, a company could easily feign excuses
to suit its whims and prejudices or to rid itself of unwanted employees. The
Court has laid down the following standards that a company must meet to
justify retrenchment and to guard against abuse:

Firstly, the losses expected should be substantial and not merely de minimis in
extent. If the loss purportedly sought to be forestalled by retrenchment is
clearly shown to be insubstantial and inconsequential in character, the bona
fide nature of the retrenchment would appear to be seriously in question.

Secondly, the substantial loss apprehended must be reasonably imminent, as


such imminence can be perceived objectively and in good faith by the
employer. There should, in other words, be a certain degree of urgency for the
retrenchment, which is after all a drastic recourse with serious consequences
for the livelihood of the employees retired or otherwise laid-off.

Thirdly, because of the consequential nature of retrenchment, it must be


reasonably necessary and likely to effectively prevent the expected losses. The
employer should have taken other measures prior or parallels to retrenchment
to forestall losses, i.e., cut other costs other than labor costs. An employer who,
for instance, lays off substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or so-called "golden
parachutes", can scarcely claim to be retrenching in good faith to avoid losses.

To impart operational meaning to the constitutional policy of providing "full


protection to labor", the employer's prerogative to bring down labor costs by
retrenching must be exercised essentially as a measure of last resort, after less
drastic means - e.g., reduction of both management and rank-and-file bonuses
and salaries, going on reduced time, improving manufacturing efficiencies,
trimming or marketing and advertising costs, etc. - have been tried and found
wanting.

Lastly, but certainly not the least important, alleged losses if already realized,
and the expected imminent losses sought to be forestalled, must be proved by
sufficient and convincing evidence. The reason for requiring this quantum of
proof is readily apparent: any less exacting standard of proof would render too
easy the abuse of this ground for termination of services of employees.
(EMCO Plywood Corp. vs Ablegas, GR# 04/14/04)

- CONDITIONS FOR A VALID RETRENCHMENT

The CA committed no reversible error in affirming the NLRC ruling that Talam
was validly dismissed on the ground of retrenchment. The Supreme Court came
to this conclusion based on the following considerations:

First, the decision to retrench had a basis; it was not simulated nor resorted to
for the purpose of getting rid of employees. The decision was upon the
recommendation of the companys external auditor.

Second, the cost-cutting measure recommended involved reduction of TSFIs


payroll expense account which, as the auditor found, makes up 41% of the
companys total operating expenses.

Third, Talam was dismissed due to a cause authorized by law retrenchment


to prevent losses. At the time of Talams dismissal, TSFIs financial condition, as
found by the external auditor, showed that it was not just expecting losses, it
already suffered a net income loss of P2,474,418.00 and retained earnings
deficit of P7,424,250.00 for the period ending December 31, 2002.

Fourth, TSFI resorted to other measures to abate its losses. It claimed that
during the crises period, it used as an office a small-room (a mere cubicle) with
only a two-person support staff in the persons of Grapilon and Hermle; it
reduced the salaries of its employees by as much as 30%. This submission by
the company is substantiated by the schedule of Operating Expenses for the
year ended December 31, 2002 and September 30, 2002. A quick glance at the
schedule readily shows a reduction of TSFIs operating expenses across the
board. The schedule indicates a substantial decrease in operating expenses,
from P5,733,735.00 in September 2002 to P1,698,552.36 as of the end of
December 2002.
(Talam vs NLRC, GR# 175040 04/06/10)

- REQUISITES TO EFFECT A VALID RETRENCHMENT

Retrenchment has been defined as the termination of employment initiated by


the employer through no fault of the employees and without prejudice to the
latter, resorted by management during periods of business recession, industrial
depression, or seasonal fluctuations, or during lulls occasioned by lack of
orders, shortage of materials, conversion of the plant for a new production
program or the introduction of new methods or more efficient machinery, or of
automation. It is a management prerogative resorted to by an employer to
avoid or minimize business losses which is consistently recognized by the Court.

In order that retrenchment due to serious business losses may be validly


exercised, the following requisites must occur:

(a) Necessity of the retrenchment to prevent losses, and proof of such


losses;
(b) Written notice to the employees and to the DOLE at least 1 month prior
to the intended date of retrenchment;
(c) Payment of separation pay equivalent to 1 month pay or at least 1/2
month pay for every year of service, whichever is higher.
(PLDT vs NLRC, GR# 147002 04/15/05)

- ACTUAL LOSSES NEED NOT SET IN PRIOR TO RETRENCHMENT

For his part, petitioner insists that actual, not probable losses, justify
retrenchment. Art. 283 of the Labor Code entails, among others, only a situation
where there is "retrenchment to prevent losses". The phrase "to prevent losses"
means that retrenchment or termination from the service of some employees is
authorized to be undertaken by the employer sometime before the losses
anticipated are actually sustained or realized. This is the situation in the case at
bar. Evidently, actual losses need not set in prior to retrenchment.
(Cajucom VII vs TPI Phils. Cement Corp., GR# 149090 02/11/05)

- THE LOSSES NEED NOT BE IN ONE PARTICULAR BRANCH/DEPARTMENT


BUT IN THE COMPANY AS A WHOLE

Even if we take into consideration the figures submitted by petitioner and


accede to her position that respondent was gaining substantial profits from its
Central Visayas office, the said numbers, nonetheless, do not bespeak
respondents overall financial standing in light of the fact that respondent is
operating nationwide and the Central Visayas office is only one of its many
branches. Losses or gains of a business entity cannot be fully assessed by
isolating or selecting only particular branches or offices. There are recognized
accounting principles and methods by which the business firm's performance
can be objectively and thoroughly evaluated at the end of every fiscal year, and
the assessment accurately reported in the company's financial statement.
(Manatad vs PT&T, GR# 172363 03/07/08)

- (Brizuela vs Dingle, GR# 175371 04/30/08)


- ELEMENTS FOR A VALID RETRENCHMENT

To effect a valid retrenchment, the following elements must be present:

(1) the retrenchment is reasonably necessary and likely to prevent business


losses which, if already incurred, are not merely de minimis, but substantial,
serious, and real, or only if expected, are reasonably imminent as perceived
objectively and in good faith by the employer;

(2) the employer serves written notice both to the employee/s concerned and
the Department of Labor and Employment at least a month before the
intended date of retrenchment;

(3) the employer pays the retrenched employee separation pay in an amount
prescribed by the Code;

(4) the employer exercises its prerogative to retrench in good faith; and

(5) the employer uses fair and reasonable criteria in ascertaining who would be
retrenched or retained.

The losses must be supported by sufficient and convincing evidence, the normal
method of discharging which is the submission of financial statements duly
audited by independent external auditors.

For failure then of Asiakonstrukt to clearly and satisfactorily substantiate its


financial losses, the dismissal of petitioner on account of retrenchment is
unjustified. Petitioner is thus entitled to the twin reliefs of payment of
backwages and other benefits from the time of his dismissal up to the finality of
this Courts Decision, and reinstatement without loss of seniority rights or, in
lieu thereof, payment of separation pay.
(Anabe vs Asiakonstukt., GR# 183233 12/23/09)

- THE FINANCIAL STATUS OF A COMPANY MUST BE VIEWED IN ITS


ENTIRETY, AND NOT IN ISOLATION

In the case at bar, petitioner justifies the downsizing scheme on the ground of
serious business losses it suffered in 2001. Some positions had to be declared
redundant to cut losses. In this context, what may technically be considered as
redundancy may verily be considered as a retrenchment measure.

Losses or gains of a business entity cannot be fully and satisfactorily assessed


by isolating or highlighting only a particular part of its financial report. There are
recognized accounting principles and methods by which a companys
performance can be objectively and thoroughly evaluated at the end of every
fiscal or calendar year. What is important is that the assessment is accurately
reported, free from any manipulation of figures to suit the companys needs, so
that the companys actual financial condition may be impartially and accurately
gauged.

The audit of financial reports by independent external auditors is strictly


governed by national and international standards and regulations for the
accounting profession. It bears emphasis that the financial statements
submitted by petitioner were audited by a reputable auditing firm and are clear
and substantial enough to prove that the company was in a precarious financial
condition.
(Hotel Enterprises of the Phils. Inc. vs SAMASAH-NUWHRAIN, GR# 165756
06/05/09)

- THE DOWNSIZING PROGRAM OF A COMPANY DOES NOT PRECLUED THE


HIRING OF CONTRACTUAL OR AGENCY-HIRED EMPLOYEES

We have held that an employers good faith in implementing a redundancy


program is not necessarily destroyed by availment of the services of an
independent contractor to replace the services of the terminated employees.
We have previously ruled that the reduction of the number of workers in a
company made necessary by the introduction of the services of an independent
contractor is justified when the latter is undertaken in order to effectuate more
economic and efficient methods of production. In the case at bar, private
respondent failed to proffer any proof that the management acted in a
malicious or arbitrary manner in engaging the services of an independent
contractor to operate the Laura wells. Absent such proof, the Court has no basis
to interfere with thebona fide decision of management to effect more economic
and efficient methods of production.
(Hotel Enterprises of the Phils. Inc. vs SAMASAH-NUWHRAIN, GR# 165756
06/05/09)

- (Mendros vs Mitsubishi Motors Phils. Corp., GR# 169760 - 02/16/09)

PRINCIPLE OF LAST RESORT

Good faith in retrenchment, can be shown through the financial statements, and
also by showing that other cost saving measures have been availed of first
before retrenchment can be allowed.

- (FASAP vs PAL, GR# 178083 10/02/09)

- (Mobilia Products Inc. vs Demecillo, GR# 170669 02/04/09)

d. Closure or Cessation of Operation due to Serious Business Losses

Closure of Business Concept


Closure or cessation of operation of the establishment or undertaking is another
authorized cause for termination of employment under Article 283 of the Labor
Code. (See Authorized Causes for Dismissal of Employee.)

Closure of business is the reversal of fortune of the employer whereby there is a


complete cessation of business operations and/or an actual locking-up of the
doors of establishment, usually due to financial losses. Closure of business as an
authorized cause for termination of employment aims to prevent further financial
drain upon an employer who cannot pay anymore his employees since business
has already stopped. (See JAT General Services vs. NLRC, G.R. No. 148340,
January 26, 2004.)

Total or Partial Closure of Business


Closure or cessation of business may mean either total closure or partial closure,
as in the case of abolition of only a department or section of the establishment or
of only a part of company activities. In either case, the right of the employer to
terminate employee affected by the closure has been recognized. (See Dangan
vs. NLRC, G.R. No. 63127-28, February 20, 1984; Also, La Union Cement Workers
Union vs. NLRC, G.R. No. 174621, January 30, 2009.)

Closure of Business Distinguished from Retrenchment


While closure of business and retrenchment are often used interchangeably and
are interrelated, they are actually two separate and independent authorized
causes for termination of employment. Termination of an employment may be
predicated on one without need of resorting to the other. (Read more about
Retrenchment.)

Closure of business, on one hand, is the reversal of fortune of the employer


whereby there is a complete cessation of business operations and/or an actual
locking-up of the doors of establishment, usually due to financial losses. Closure
of business as an authorized cause for termination of employment aims to
prevent further financial drain upon an employer who cannot pay anymore his
employees since business has already stopped. On the other hand, retrenchment
is reduction of personnel usually due to poor financial returns so as to cut down
on costs of operations in terms of salaries and wages to prevent bankruptcy of
the company. It is sometimes also referred to as down-sizing. Retrenchment is an
authorized cause for termination of employment which the law accords an
employer who is not making good in its operations in order to cut back on
expenses for salaries and wages by laying off some employees. The purpose of
retrenchment is to save a financially ailing business establishment from
eventually collapsing. (See JAT General Services case.)

Cessation Strictly Management Prerogative


Cessation of business is strictly management prerogative. No law can compel a
company to continue operation. The management may decide to cease operation
for whatever reason it deems proper, as long as it is done in good faith.

In Mac Adams Metal case, the court reiterated viz. Just as no law forces anyone
to go into business, no law can compel anybody to continue in it. It would indeed
be stretching the intent and spirit of the law if we were to unjustly interfere with
the managements prerogative to close or cease its business operations just
because said business operation or undertaking is not suffering from any loss or
simply to provide the workers continued employment.

Cessation Need not be Due to Financial Losses


The reason for cessation need not be financial losses or drain, as long as it is
done in good faith and not for the purpose of defeating or circumventing the
rights of employees under the law or a valid agreement. Article 283 of the Labor
Code does not require that the cessation be due to serious business reverses.

The cause of cessation, whether it is due to financial losses or not, is material


only in the determination of entitlement to separation pay.

In Maya Farms Employees Organization vs. NLRC, 1994, the Court held that even
if the employer is not suffering from business losses, it can still resort to closure
of business as long as the companys exercise of the same is done in good faith
to advance its interest and not for the purpose of defeating or circumventing the
rights of employees under the law or a valid agreement such exercise will be
upheld.

Separation Pay
In case of retrenchment and closures not due to serious financial reverses, the
employee shall be entitled to separation pay equivalent to one month pay or at
least one-half month pay for every year of service, whichever is higher.

If the closure is due to business losses, there is no obligation on the part of the
employer to pay separation benefits to employees.

Cases
1. The company terminated its employees when its plant was relocated
from Makati to Batangas. The relocation was in view of the expiration of the
lease contract on the premises it occupied in Makati and the refusal of the
lessor to renew the same. The termination was for authorized cause as there
was cessation of the companys operations in Makati. (Cheniver Deco vs.
NLRC, G.R. No. 122876, February 17, 2000.)
2. The closure of business by the owner after she became sickly and her
health did not improve despite proper medical attention, was affirmed as valid
as it was done in good faith although the business was not undergoing
economic losses. (Mac Adams Union vs. Mac Adams, G.R. No. 141615, October
24, 2003.)

- NO SEPARATION PAY IN SERIOUS BUSINESS LOSSES

Article 283 of the Labor Code does not obligate an employer to pay separation
benefits when the closure is due to losses.

Reasons behind closure of business:


1. Serious Business Losses
2. Management Prerogative (Owner simply chooses to close the business)

What is contemplated in Art. 283 is closure due to serious losses, and not
closure due to management prerogative.
If the closure is due to Management Prerogative, then separation pay should be
awarded.
(North Davao Mining vs NLRC, 254 SCRA 721)

- TEST OF LIQUIDITY; DISMISSAL DUE TO SERIOUS BUSINESS LOSSES


DOES NOT ENTITLE THE EMPLOYEE TO SEPARATION PAY

To test the liquidity of an employer company for the periods under


consideration, working capital ratio is used. This ratio, also known as the current
ratio, measures the number of times that the current liabilities could be paid
with the current assets.

The Constitution, while affording full protection to labor, nonetheless,


recognizes "the right of enterprises to reasonable returns on investments, and
to expansion and growth". It is only in instance of "retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses" that
employees whose employment has been terminated as a result are entitled to
separation pay. To require an employer to be generous when it is no longer in a
position to do so would be unduly oppressive, unjust, and unfair to the
employer.
(Cama vs Jonis Food Services Inc., GR# 153021 03/10/04)

- MONETARY AWARD

The Research and Information Unit of National Labor Relations Commission


(NLRC), the government's accountant in labor cases, is responsible for
computing monetary awards in accordance with official guidelines. The
Supreme Court has time and again frowned on the practice of a party's
submitting his case for decision and then accepting the verdict only if favorable,
while attacking it for lack of jurisdiction if it is not.
(CBL Transit Inc. vs NLRC, GR# 128425 03/11/04)

- BURDEN OF PROOF THAT THE CLOSURE IS BONA FIDE IS WITH THE


EMPLOYER

Closure or suspension of business operations for economic reasons is


recognized as a valid exercise of management prerogative, but the burden of
proving, with sufficient and convincing evidence, that such closure or
suspension is bona fide falls upon the employer.
(Nasipit Lumber Co. vs NLRC, GR# 146225 11/25/04)

- LIABILITY FOR CLOSURE IS SOLIDARY

Corporate directors and officers are solidarily liable with the corporation for the
termination of employees done with malice or bad faith.
(Mandaue Dinhow Dimsum House vs NLRC, GR# 161134 03/03/08)

- FINANCIAL ASSISTANCE IN CLOSURE OF BUSINESS OPERATIONS

Based on Article 283, in case of cessation of operations, the employer is only


required to pay his employees a separation pay of one month pay or at least
one-half month pay for every year of service, whichever is higher. That is all
that the law requires.

In the case at bar, petitioner paid respondents the following: (a) separation pay
computed at 150% of their gross monthly pay per year of service; and (b) cash
equivalent of earned and accrued vacation and sick leaves. Clearly, petitioner
had gone over and above the requirements of the law. Despite this, however,
the Labor Arbiter ordered petitioner to pay respondents an additional amount,
equivalent to one months salary, as a form of financial assistance.

The award of financial assistance is bereft of legal basis and serves to penalize
petitioner who had complied with the requirements of the law. The Court also
point out that petitioner may, as it has done, grant on a voluntary and ex gratia
basis, any amount more than what is required by the law, but to insist that
more financial assistance be given is certainly something that the Court cannot
countenance. Moreover, any award of additional financial assistance to
respondents would put them at an advantage and in a better position than the
rest of their co-employees who similarly lost their employment because of
petitioners decision to cease its operations.
(Solidbank Corp. vs NLRC, GR# 165951 03/30/10)

e. Criteria in Termination of Employees under Authorized Causes


(except Closure)

- SENIORITY IS GIVEN PREFERENCE IN RETENTION

It is not disputed that the LIFO rule applies to termination of employment in the
line of work. Verily, what is contemplated in the LIFO rule is that when there are
two or more employees occupying the same position in the company affected
by the retrenchment program, the last one employed will necessarily be the
first to go.
(Maya Farms vs NLRC, GR# 106256 12/28/94)

- CRITERIA IN SELECTING WHICH EMPLOYEES TO BE DISMISSED FIRST

In selecting the employees to be dismissed, a fair and reasonable criteria must


be used, such as but not limited to: a) less preferred status, b) efficiency and c)
seniority
(Capitol Wireless vs Confessor, 264 SCRA 68)

f. Procedural Requirement under Art. 283 Labor Code

ART. 283. Closure of establishment and reduction of personnel. - The


employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent losses
or the closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of this Title,
by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.

(Rule 1, Book VI, IRR)


SECTION 9. Termination pay.
(a) An employee shall be entitled to termination pay equivalent to at least
one month's salary for every year of service a fraction of at least six (6)
months being considered as one whole year, in case of termination of his
employment due to the installation of labor-saving devices or redundancy.
(b) Where the termination of employment is due to retrenchment to
prevent losses and in case of closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial
reverses, or where the employment is prohibited by law or is prejudicial to his
health or to the health of his co-employees, the employee shall be entitled to
termination pay equivalent to at least one-half month's pay for every year of
service, a fraction of at least six months being considered as one whole year.
(c) The termination pay provided in the Section shall in no case be less
than the employee's one month pay.

SECTION 10. Basis of termination pay. The computation of the termination


pay of an employee as provided herein shall be based on his latest salary rate,
unless the same was reduced by the employer to defeat the intention of the
Code, in which case the basis of computation shall be the rate before its
deduction.

- Sec. 2, Rule 1(d), Book VI, IRR

In all cases of termination of employment, the following standards of due


process shall be substantially observed:

For termination of employment based on just causes as defined in Art. 282 of


the Labor Code:

a) A written notice served on the employee specifying the ground or


grounds for termination, and giving said employee reasonable opportunity
within which to explain his side.
b) A hearing or conference during which the employee concerned, with
the assistance of counsel if he so desires is given opportunity to respond
to the charge, present his evidence, or rebut the evidence presented
against him.
c) A written notice of termination served on the employee, indicating that
upon due consideration of all the circumstances, grounds have been
established to justify his termination.

For termination of employment as defined in Art. 283 of the Labor Code, the
requirement of due process shall be deemed complied with upon service of a
written notice to the employee and the appropriate Regional Office of the
Department of Labor and Employment at least 30 days before effectivity of
the termination, specifying the ground or grounds for termination.

If the termination is brought about by the completion of a contract or phase


thereof, or by failure of an employee to meet the standards of the employer in
case of probationary employment, it shall be sufficient that a written notice is
served the employee within a reasonable time from the effective date of
termination. (D.O. No. 10 series of 1997)

- Twin Notice Requirement

4. Disease

(Labor Code)
ART. 284. Disease as ground for termination. - An employer may terminate the
services of an employee who has been found to be suffering from any disease and
whose continued employment is prohibited by law or is prejudicial to his health as
well as to the health of his co-employees: Provided, That he is paid separation pay
equivalent to at least one (1) month salary or to one-half (1/2) month salary for every
year of service, whichever is greater, a fraction of at least six (6) months being
considered as one (1) whole year.

(Rule 1, Book VI, IRR)


SECTION 8. Disease as a ground for dismissal. Where the employee suffers
from a disease and his continued employment is prohibited by law or prejudicial to
his health or to the health of his co-employees, the employer shall not terminate his
employment unless there is a certification by competent public health authority that
the disease is of such nature of at such a stage that it cannot be cured within a
period of six (6) months even with proper medical treatment. If the disease or
ailment can be cured within the period, the employee shall not terminate the
employee but shall ask the employee to take a leave of absence. The employer shall
reinstate such employee to his former position immediately upon the restoration of
his normal health.

Requisites:
1) The disease is incurable within 6 months and the continued employment of
the employee is prohibited by law or prejudicial to his health as well as to the
health of his co-employee;
2) With a certification from a competent authority (such as public health officer)
that the disease is incurable within 6 months despite due medication and
treatment.

Nota Bene:
Termination of services must be effected only upon compliance
with the above requisite; otherwise, in the absence of the required certification by
a competent public health officer, the court will rule against the validity of the
employees dismissal.
(Viola Cruz vs. NLRC, GR# 116384 02/07/00)
The requirement for a medical certificate under Article 284 of
the Labor Code cannot be dispensed with, otherwise, it would sanction the
unilateral and arbitrary determination by the employer of the gravity or extent of
the employees illness and thus defeat the public policy in the protection of labor.
(Sy, et al vs. CA, February 27, 2003)
Discrimination in any form from pre-employment to post-
employment, including hiring, promotion or assignment, based on the actual,
perceived or suspected HIV status of an individual is prohibited. Termination from
work on the sole basis of actual, perceived or suspected HIV status is deemed
unlawful.
(Sec.35, R.A. 8504, HIV/AIDS LAW)
Certification in Cebu is issued by the Department of Health and
other government hospitals such as the Vicente Sotto Memorial Hospital, CCMC,
etc.
The certification is to be secured by the employer. The burden
rests upon the employer to secure a certification.
(Tan vs. NLRC)

- THE DISEASE MUST BE PREJUDICIAL TO THE HEALTH OF THE EMPLOYEE


AND HIS CO-WORKERS TO BE A GROUND FOR DISMISSAL

An employer may terminate the services of his employees who has been found to
be suffering from a disease when the latter's continued employment is prohibited
by law or is prejudicial to his health as well as to the health of his co-employees.
However, the dismissal may not be summarily carried out. The employer must
comply with certain prerequisites contained in Sec. 8, Rule I, Book VI, of the
Omnibus Rules Implementing the Labor Code, which states -- Where the employee
suffers from a disease and his continued employment is prohibited by law or
prejudicial to his health or to the health of his co-employees, the employer shall not
terminate his employment unless there is certification by a competent public health
authority that the disease is of such nature or at such a stage that it cannot be
cured within a period of six (6) months even with proper medical treatment. If the
disease or ailment can be cured within the period, the employer shall not terminate
the employee but shall ask the employee to take a leave. The employer shall
reinstate such employee to his former position immediately upon the restoration of
his normal health.
(ATCI Overseas Corp. vs CA, GR# 143949 08/09/01)

5. Retirement

(Labor Code)
ART. 287. Retirement. - Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other applicable
employment contract.

In case of retirement, the employee shall be entitled to receive such retirement


benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements: Provided, however, That an employees retirement
benefits under any collective bargaining and other agreements shall not be less than
those provided therein.
In the absence of a retirement plan or agreement providing for retirement benefits of
employees in the establishment, an employee upon reaching the age of sixty (60)
years or more, but not beyond sixty-five (65) years which is hereby declared the
compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at
least one-half (1/2) month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay
and the cash equivalent of not more than five (5) days of service incentive leaves.

An underground mining employee upon reaching the age of fifty (50) years or more,
but not beyond sixty (60) years which is hereby declared the compulsory retirement
age for underground mine workers, who has served at least five (5) years as
underground mine worker, may retire and shall be entitled to all the retirement
benefits provided for in this Article.

Retail, service and agricultural establishments or operations employing not more


than ten (10) employees or workers are exempted from the coverage of this
provision.
Violation of this provision is hereby declared unlawful and subject to the penal
provisions under Article 288 of this Code.

Nothing in this Article shall deprive any employee of benefits to which he be entitled
under existing laws or company policies or practices. (As amended by RA 7641, and
RA 8553, February 26, 1998)

(Rule II, II-A, Book VI, IRR)

NOTE:

What is the coverage of the Retirement Pay Law?

The Retirement Pay Law applies to all employees in the private sector, regardless of
their position, designation or status and irrespective of the method by which their
wages are paid, except those specifically exempted. It also includes and covers part-
time employees, employees of service and other job contractors and domestic
helpers or persons in the personal service of another. chanrobles virtual law library

Who are the employees not covered by the Retirement Pay Law?

The Retirement Pay Law does not apply to the following employees:
1. Employees of the National Government and its political subdivisions, including
government-owned and/or controlled corporations, if they are covered by the Civil
Service Law and its regulations.

2. Employees of retail, service and agricultural establishments or operations


regularly employing not more than ten (10) employees. As used in this sub-section:
Retail establishment is one principally engaged in the sale of goods to end-users
for personal or household use. It shall lose its retail character qualified for exemption
if it is engaged in both retail and wholesale of goods.

Service establishment is one principally engaged in the sale of service to


individuals for their own or household use and is generally recognized as such.

Agricultural establishment/operation refers to an employer which is engaged in


agriculture. This term refers to all farming activities in all branches and includes,
among others, the cultivation and tillage of soil, production, cultivation, growing and
harvesting of any agricultural or horticultural commodities, dairying, raising of
livestock or poultry, the culture of fish and other aquatic products in farms or ponds,
and any activities performed by a farmer or on a farm as an incident to, or in
conjunction with, such farming operations, but does not include the manufacture
and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm
products.

May an employee retire under the CBA or employment contract?

Any employee may retire or be retired by his employer upon reaching the retirement
age established in the CBA or other applicable employment contract and he shall be
entitled to the benefits thereunder. If the amount is less than those provided under
the law, the employer shall pay the difference.

What is the distinction between optional and compulsory retirement?

Article 287 of the Labor Code, as amended by Republic Act No. 7641, provides for
two (2) types of retirement: (a) optional; and (b) compulsory.

1. Optional retirement. - In the absence of a retirement plan or other applicable


agreement providing for retirement benefits of employees in an establishment, an
employee may retire upon reaching the age of sixty (60) years or more if he has
served for at least five (5) years in said establishment.

2. Compulsory retirement. - Where there is no such retirement plan or other


applicable agreement providing for retirement benefits of employees in an
establishment, an employee shall be retired upon reaching the age of sixty-five (65)
years.

Is the option granted to the employer to retire an employee valid?

Yes. The decision of the Supreme Court in the case of PAL vs. ALPAP. (G.R.
No.143686, January 15, 2002), is instructive:
Finally, on the issue of whether petitioner should consult the pilot concerned before
exercising its option to retire pilots, we rule that this added requirement, in effect,
amended the terms of Article VII, Section 2 of the 1976 PAL-ALPAP Retirement Plan.
The option of an employer to retire its employees is recognized as valid.

Surely, the requirement to consult the pilots prior to their retirement defeats the
exercise by management of its option to retire the said employees. It gives the pilot
concerned an undue prerogative to assail the decision of management. Due process
only requires that notice be given to the pilot of petitioner's decision to retire him.
Hence, the Secretary of Labor overstepped the boundaries of reason and fairness
when he imposed on petitioner the additional requirement of consulting each pilot
prior to retiring him.

Furthermore, when the Secretary of Labor and Employment imposed the added
requirement that petitioner should consult its pilots prior to retirement, he resolved a
question which was outside of the issues raised, thereby depriving petitioner an
opportunity to be heard on this point.

May an employee retire at an earlier or older age?

The law recognizes as valid any retirement plan, agreement or management policy
regarding retirement at an earlier or older age.

What are included in the minimum 5-year service requirement?

The minimum 5-year service requirement includes the following.


1. Authorized absences, vacations, regular holidays, included.

2. Only actual service included.

What are included in the retirement benefits under the Retirement Pay
Law?

Retirement benefits.

1. One-half (1/2) month salary.

In the absence of an applicable employment contract, an employee who retires shall


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

2. One-half (1/2) month salary, components. - For the purpose of determining the
minimum retirement pay due an employee, the term one-half month salary shall
include all the following:
(a) fifteen (15) days salary of the employee based on his latest salary rate.

(b) the cash equivalent of five (5) days of service incentive leave;

(c) one-twelfth (1/12) of the 13th month pay due the employee; and

(d) all other benefits that the employer and employee may agree upon that should be
included in the computation of the employees retirement pay.

3. One-half monthly salary of employees who are paid by results. - For covered
workers who are paid by results and do not have a fixed monthly rate, the basis for
determination of the salary for fifteen (15) days shall be their average daily salary
(ADS).

Does the Retirement Pay Law have any retroactive effect?

Yes. R. A. 7641 (Retirement Pay Law) is applicable to services rendered prior to


January 7, 1993. Consequently, in reckoning the length of service, the period of
employment with the same employer before the effectivity date of the law (Republic
Act No. 7641) shall be included.

May Pag-IBIG be considered as substitute retirement plan?

As provided in R. A. No. 7742, a private employer shall have the option to treat the
coverage of the Pag-IBIG Fund as a substitute retirement benefit for the employee
concerned within the purview of the Labor Code as amended; provided such option
does not in any way contravene an existing collective bargaining agreement or other
employment agreement.

Thus, the Pag-IBIG Fund can be considered as a substitute retirement plan of the
company for its employees provided that such scheme offers benefits which are more
than or at least equal to the benefits under Republic Act No. 7641. If said scheme
provides for less than what the employee is entitled to under Republic Act No. 7641,
the employer is liable to pay the difference.

What is the latest amendment to the Retirement Pay Law (Article 287 of
the Labor Code)?

The latest amendment to Article 287 of the Labor Code was introduced by Republic
Act No. 8558 [An Act Amending Article 287 of Presidential Decree No. 442, as
Amended, Otherwise Known as the Labor Code of the Philippines by Reducing the
Retirement Age of Underground Mine Workers from Sixty (60) to Fifty (50)] which was
approved on February 26, 1998.

Who is an underground mine employee?

An underground mine employee is a person employed to extract mineral deposits


underground or to work in excavations or workings such as shafts, winzes, tunnels,
drifts, crosscuts, raises, working places whether abandoned or in use beneath the
earth's surface for the purpose of searching for and extracting mineral deposits.

What is the distinction between retirement and dismissal?

Retirement is the result of a bilateral act of the parties, a voluntary agreement


between the employer and the employee whereby the latter, after reaching a certain
age, agrees or consents to sever his employment with the former.

Dismissal, on the other hand, refers to the unilateral act of the employer in
terminating the services of an employee with or without cause. (Gamogamo vs. PNOC
Shipping and Transport Corp., G. R. No. 141707, May 7, 2002).
Dismissal for cause, effect on entitlement to retirement benefits.

Management discretion may not be exercised arbitrarily or capriciously especially


with regards to the implementation of the retirement plan. As held in Razon, Jr. vs.
NLRC, [G. R. No. 80502, May 7, 1990, 185 SCRA 44], upon acceptance of
employment, a contractual relationship is established giving the employee an
enforceable vested interest in the retirement fund. Hence, the dismissed employee is
entitled to the retirement benefits provided thereunder. chanrobles virtual law library

However, in the 2002 case of San Miguel Corporation vs. Lao, [G. R. No. 143136-37,
July 11, 2002], an employee who was dismissed for cause was held not entitled to the
retirement benefits under the companys retirement plan which concededly prohibits
the award of retirement benefits to an employee dismissed for a just cause, a
proscription that binds the parties to it.

Distinguishing Razon from San Miguel, the Supreme Court ruled that in Razon, the
employers refusal to give the employee his retirement benefits is based on the
provision of the retirement plan giving management wide discretion to grant or not to
grant retirement benefits, a prerogative that obviously cannot be exercised arbitrarily
or whimsically. But in San Miguel, the retirement plan expressly prohibits the grant of
retirement benefits in case of dismissal for cause. Hence, the employee is bound by
such prohibition.

What is the distinction between retirement pay and separation pay?

1. Retirement pay differs from separation pay in that the former is paid by reason of
retirement; while the latter is required in the cases enumerated in Articles 283 and
284 of the Labor Code.

2. The purpose for the grant of retirement pay is to help the employee enjoy the
remaining years of his life thereby lessening the burden of worrying for his financial
support. It is also a form of reward for the employees loyalty and service to the
employer. Separation pay, on the other hand, is designed as a wherewithal during
the period that an employee is looking for another employment after his termination.

As a general rule, retiring employees are entitled only to retirement benefits. But
there are instances when separation pay and retirement pay must both be paid to
the employee. The reason is, the separation pay is mandated by law; while
retirement pay is required by contract.

Cases where both separation pay and retirement pay must be paid.

In the case of University of the East vs. Hon. Minister of Labor, [G. R. No. 74007, July
31, 1987], the school claimed that teachers who were terminated because of phased-
out units cannot be considered retired and, therefore, entitled to retirement benefits
and, at the same time, retrenched, which would entitle them to separation pay. This
would be tantamount to enriching them at the expense of the school. The Supreme
Court, however, ruled that separation pay arising from a forced termination of
employment and retirement benefits given as a contractual right to the teachers for
many years of faithful service, are not necessarily antagonistic to each other.
Moreover, the retirement scheme has become part of the schools policy and,
therefore, it should be enforced separately from the provision of the Labor Code.
Consequently, the teachers were ordered paid for both retirement pay and
separation pay.

In another case, Aquino vs. NLRC, [G. R. No. 87653, February 11, 1992; See also BLTB
vs. CA, 71 SCRA 470 (1976)], the Supreme Court ordered the payment of both the
separation pay for retrenchment embodied in the CBA as well as the retirement pay
provided under a separate Retirement Plan to the retrenched employees. The
argument of the company that it has more than complied with the mandate of the
law on retrenchment by paying separation pay double that required by the Labor
Code (at the rate of one month pay instead of the one-half month pay per year of
service) was not favorably taken into account by the Supreme Court because the
employees were not pleading for generosity but demanding their rights embodied in
the CBA which was the result of negotiations between the company and the
employees.
On the issue of mutual exclusivity of the CBA-mandated separation pay in case of
retrenchment, on the one hand, and the retirement benefits provided in the
Retirement Plan, on the other, the Supreme Court in this case of Aquino opined that:
The Court feels that if the private respondent (company) really intended to make
the separation pay and the retirement benefits mutually exclusive, it should have
sought inclusion of the corresponding provision in the Retirement Plan and the
Collective Bargaining Agreement so as to remove all possible ambiguity regarding
this matter.

We may presume that the counsel of the respondent company was aware of the
prevailing doctrine embodied in the cases earlier cited. Knowing this, he should have
made it a point to categorically provide in the Retirement Plan and the CBA that an
employee who had received separation pay would no longer be entitled to retirement
benefits. Or to put it more plainly, collection of retirement benefits was prohibited if
the employee had already received separation pay. (See also Batangas Laguna
Tayabas Bus Co. vs. Court of Appeals, G.R. No L-38482, June 18, 1976, 71 SCRA 470).

In Bongar vs. NLRC, [G. R. No. 107234, August 24, 1998], the Supreme Court ordered
the payment not only of separation pay and backwages to an illegally dismissed
teacher but additionally, of the retirement benefits pursuant to any collective
bargaining agreement in the workplace or, in the absence thereof, as provided in
Section 14 [Retirement Benefits], Book VI of the Implementing Rules of the Labor
Code.

Case where separation pay was charged to retirement pay.

In Ford Philippines Salaried Employees Association vs. NLRC, [G. R. No. 75347, Dec.
11, 1987], a case decided before the advent of Republic Act No. 7641, the Supreme
Court ruled that if it is provided in the Retirement Plan of the company that the
retirement, death and disability benefits paid in the plan are considered integrated
with and in lieu of termination benefits under the Labor Code, then the retirement
fund may be validly used to pay such termination or separation pay because of
closure of business.

Cases where employees are entitled only to one form of benefit.

In Cipriano vs. San Miguel Corporation, [G. R. No. L-24774, August 21, 1968], it was
ruled that in case the Retirement Plan of the company provides that the employee
shall be entitled to either the retirement benefit provided therein or to the separation
pay provided by law, whichever is higher, the employee cannot be entitled to both
benefits. Article X of said Retirement Plan reads:
Regular employees who are separated from the service of the company for any
reason other than misconduct or voluntary resignation shall be entitled to either
100% of the benefits provided in Section 2, Article VIII hereof, regardless of their
length of service in the company or to the severance pay provided by law, whichever
is the greater amount.

In the 2004 case of Cruz vs. Philippine Global Communications, Inc., [G. R. No.
141868, May 28, 2004], the Supreme Court reiterated the said rule in Cipriano
[supra] under the following provision in the Retirement Plan which states:
b)Adjustment of Benefits Payments.- x x x, in the event the Company is required
under the law or by lawful order of competent authority to pay to the Member
benefits or emoluments similar or analogous to those already provided in the Plan,
the Member concerned shall not be entitled to both what the law or the lawful order
of competent authority requires the Company to give and the benefits provided by
the Plan, but shall only be entitled to whichever is the greatest among them, x x x.
(Section 6 (b), Article XI of the Retirement Plan).

The employees in this case who were terminated due to closure of the companys
branches, are entitled only to either the separation pay provided under Article 283 of
the Labor Code, as amended, or retirement benefits prescribed by the Retirement
Plan, whichever is higher. Consequently, they were paid separation benefits
computed under the Retirement Plan, the same being higher than what Article 283
provides.

In the 2005 case of Salomon vs. Association of International Shipping Lines, Inc., [G.
R. No. 156317, April 26, 2005], petitioners who were duly paid separation pay when
they were retrenched, claimed that they are, in addition, entitled to retirement
benefits under the CBA citing the Aquino case [supra] as basis. Said CBA provides,
thus:
Section 1. In case of termination due to redundancy, retrenchment, dissolution of
a department/ conference/section and/or the whole ASSOCIATION, sickness or
physical disability, a regular employee shall be entitled to a separation pay
equivalent to his one (1) month basic pay for every year of service. A fraction of at
least six (6) months shall be considered as one (1) whole year and less than six (6)
months shall be prorated accordingly.

xxx xxx xxx

Section 3. Optional Retirement An employee shall have the option to retire


regardless of age provided he/she has rendered at least 15 years of continuous
service to the ASSOCIATION. An employee shall be entitled to the following benefits.

a. 15 to less than 20 years of service 50% of the monthly basic salary for every year
of service.

b. 20 years of service 100% of the monthly basic salary for every year of service.

According to the Supreme Court, it is obvious that petitioners, as prescribed by the


parties CBA quoted above, are entitled only to either the separation pay, if they are
terminated for cause, or optional retirement benefits, if they rendered at least fifteen
(15) years of continuous services. Here, petitioners were separated from the service
for cause. Accordingly, pursuant to the CBA, what each actually received is a
separation pay. Hence, considering their Releases and Quitclaims, they are no longer
entitled to retirement benefits.

The provisions of the retirement plan are controlling.

As held in Cipriano [supra] and Aquino [supra], the employees right to payment of
retirement benefits and/or separation pay is governed by the Retirement Plan of the
parties. The provisions of the Retirement Plan are controlling in determining such
entitlement. (Cruz vs. Philippine Global Communications, Inc., supra).

In other words, if the Retirement Plan mandates that the employees who are
separated under any of the authorized causes under Article 283 of the Labor Code
are entitled to both the separation pay provided therein as well as the retirement
benefits under the Retirement Plan, then, they shall be so paid. Otherwise, if the
Retirement Plan says that the employees shall be entitled to either the separation
pay under the said provision of the law or the retirement benefits under the
Retirement Plan, whichever is higher, then, they should not be allowed to claim both.

Clearly, under the above cases, the right of the concerned employees to receive both
retirement benefits and separation pay depends upon the provisions in the
Retirement Plan. (Ibid.).

Forced retirement.

If the intention to retire is not clearly established or if the retirement is involuntary, it


is to be treated as a discharge. (De Leon vs. NLRC, 100 SCRA 691 [1980]).

In San Miguel Corporation vs. NLRC, [G. R. No. 107693, July 23, 1998], the employees
were given the option to retire, be retrenched or dismissed but they were made to
understand that they had no choice but to leave the company. It was in reality a
Hobsons choice which means that they have no choice at all. All that the private
respondents were offered was a choice on the means or method of terminating their
services but never as to the status of their employment. In short, they were never
asked if they still wanted to work for petitioner. The mere absence of actual physical
force to compel private respondents to ink an application for retirement did not make
their retirement voluntary. Confronted with the danger of being jobless, unable to
provide their families even with the basic needs or necessities of life, the private
respondents had no choice but to sign the documents proffered to them. But neither
their receipt of separation pay nor their negotiating for more monetary benefits
estopped private respondents from questioning and challenging the legality of the
nature or cause of their separation from the service.

In Villena vs. NLRC, [G. R. No. 90664, Feb. 7, 1991], an employee whose age was 57
when he was illegally singled out for retirement, after serving the bus company since
he was 25 years old, was declared to be entitled to his full backwages, allowances
and other benefits for a period of three (3) years after his illegal dismissal from the
service until he reached the compulsory retirement age, plus his retirement benefits
equivalent to his gross monthly pay, allowances and other benefits for every year of
service up to age sixty (60) which is the normal retirement age for him.

Case of non-entitlement to retirement pay due to termination for cause.

In the 2004 case of Piero vs. NLRC, [G. R. NO. 149610, August 20, 2004], the
petitioner employee who turned 60 years old and retired on March 1, 1996 after 29
years of service was declared not entitled to the payment of retirement benefits
because he lost his employment status effective as of the date of the decision of the
Labor Arbiter on October 28, 2004 which declared as legal the termination of his
employment as a consequence of an illegal strike. At that time, his employer refused
to pay his retirement benefits pending the final resolution of the case. Instead, the
Supreme Court, on ground of equity for his long years of service without any
derogatory record, awarded him financial assistance equivalent to one-half ()
months pay for every year of service computed from his date of employment up to
October 28, 1994 when he was declared to have lost his employment status.

Is the retirement pay under the SSS similar to or may be a substitute for
the retirement pay under the Labor Code?

The employees retirement pay under Article 287 of the Labor Code or under a
unilaterally promulgated retirement policy or plan of the employer or under a
Collective Bargaining Agreement, is separate and distinct from the retirement
benefits granted under Republic Act No. 8282, otherwise known as the Social
Security Act of 1997.

Other latest cases on retirement.

Concept of retirement under Article 287.

The opening paragraph of Article 287 clearly enunciates the intent and application of
the law. It conveys in clear and unmistakable terms that once an employee retires, it
is not Article 287 that is controlling but the retirement plan under the CBA or other
applicable employment contract. Article 287 becomes relevant only in the matter of
ensuring that the retirement benefits are not less than those provided therein.

This explains why, in the third paragraph of Article 287, it is further underscored that
the retirement package provided therein is made applicable only in the absence of a
retirement plan or agreement providing for retirement benefits of employees in the
establishment.

In case of retirement under the CBA or other applicable employment contract, the
employee is entitled to receive such retirement benefits as he may have earned
under existing laws, the CBA and other agreements; provided that such retirement
benefits under the CBA or other agreements should not, in any way, be less than
those provided under the law. In the event that such benefits are less, the employer
is obligated to pay the difference between the amount due the employee under the
law and that provided under the CBA or other applicable employment contract.
(Sections 3.1 and 3.2, Rule II, Ibid.).

This is best illustrated in the 2001 case of Manuel L. Quezon University vs. NLRC, [G.
R. No. 141673, October 17, 2001]. the issue raised is whether respondent-teachers
are entitled to the retirement benefits provided for under Republic Act No. 7641,
even if the petitioner has an existing valid retirement plan. The Supreme Court ruled
that they are so entitled. Republic Act No. 7641 intends to give the minimum
retirement benefits to employees not entitled thereto under collective bargaining and
other agreements. Its coverage applies to establishments with existing collective
bargaining or other agreements or voluntary retirement plans whose benefits are less
than those prescribed under the proviso in question. Consequently, petitioner
University was ordered to pay the teachers their retirement differential pay (i.e., the
difference between the retirement pay under R. A. No. 7641 and the MLQU
Retirement Plan) plus legal interest of six percent (6%) per annum from the date of
filing of their complaints on March 27, 1997 up to actual payment.

If after applying Article 287, however, it is clear that the retirement plan under the
CBA or other agreements, company policy or practice provides for retirement
benefits which are equal or superior to that which is provided in said law, then, such
retirement plan and not Article 287, should prevail and thus govern the computation
of the benefits to be awarded. (Labor Advisory on Retirement Pay Law dated Oct. 24,
1996, issued by Secretary Leonardo A. Quisumbing).

The best case to exemplify this point is the 2002 case of Philippine Airlines, Inc. vs.
Airline Pilots Association of the Philippines, [G. R. No. 143686, January 15, 2002],
where the Supreme Court had occasion to comment on the following pertinent
provision of the 1967 PAL-ALPAP Retirement Plan:
SECTION 1. Normal Retirement. (a) Any member who completed twenty (20) years
of service as a pilot for PAL or has flown 20,000 hours for PAL shall be eligible for
normal retirement. The normal retirement date is the date on which he completes
twenty (20) years of service, or on which he logs his 20,000 hours as a pilot for PAL.
The member who retires on his normal retirement shall be entitled to either (a) a
lump sum payment of P100,000.00 or (b) to such termination pay benefits to which
he may be entitled to under existing laws, whichever is the greater amount.

A pilot who retires after twenty years of service or after flying 20,000 hours would
still be in the prime of his life and at the peak of his career, compared to one who
retires at the age of 60 years old. Based on this peculiar circumstance that PAL pilots
are in, the parties provided for a special scheme of retirement different from that
contemplated in the Labor Code. Conversely, the provisions of Article 287 of the
Labor Code could not have contemplated the situation of PALs pilots. Rather, it was
intended for those who have no more plans of employment after retirement, and are
thus in need of financial assistance and reward for the years that they have rendered
service.

In any event, petitioner contends that its pilots who retire below the retirement age
of 60 years not only receive the benefits under the 1967 PAL-ALPAP Retirement Plan
but also an equity of the retirement fund under the PAL Pilots Retirement Benefit
Plan, entered into between petitioner and respondent on May 30, 1972.

The PAL Pilots Retirement Benefit Plan is a retirement fund raised from contributions
exclusively from petitioner of amounts equivalent to 20% of each pilots gross
monthly pay. Upon retirement, each pilot stands to receive the full amount of the
contribution. In sum, therefore, the pilot gets an amount equivalent to 240% of his
gross monthly income for every year of service he rendered to petitioner. This is in
addition to the amount of not less than P100,000.00 that he shall receive under the
1967 Retirement Plan. In short, the retirement benefits that a pilot would get under
the provisions of Article 287 of the Labor Code are less than those that he would get
under the applicable retirement plans of petitioner. (Ibid.).

Indeed, Article 287 makes clear the intention and spirit of the law to give employers
and employees a free hand to determine and agree upon the terms and conditions of
retirement. The law presumes that employees know what they want and what is
good for them absent any showing that fraud or intimidation was employed to secure
their consent thereto. (Pantranco North Express, Inc. vs. NLRC, G. R. No. 95940, July
24, 1996, 259 SCRA 161).

Who should exercise the option to retire?

Compulsory retirement takes place at age 65, while optional retirement is primarily
determined by the CBA or other employment contract or employers retirement plan.
In the absence of any provision on optional retirement in a CBA, other employment
contract, or employers retirement plan, an employee may optionally retire upon
reaching the age of 60 years or more, but not beyond 65 years, provided he has
served at least five (5) years in the establishment concerned. That prerogative is
exclusively lodged in the employee.

Thus, in Capili vs. NLRC, [G. R. No. 120802, June 17, 1997, 273 SCRA 576], it was
held that the act of accepting the retirement benefits is deemed an exercise of the
option to retire under the third paragraph of Article 287, as amended by Republic Act
No. 7641. Thereunder, he could choose to retire upon reaching the age of 60 years,
provided it is before reaching 65 years which is the compulsory age of retirement.
(Capili vs. NLRC, G. R. No. 120802, June 17, 1997, 273 SCRA 576).

May employers exercise the option to retire?

The answer to this query is, of course, in the affirmative. If there is a provision on
retirement in a CBA or any other agreement or if the employer has a retirement plan,
the option may be exercised by the employer in accordance therewith. Article 287 is
clear: (a)ny employee may be retired upon reaching the retirement age established
in the collective bargaining agreement or other applicable employment contract.

In Philippine Airlines, Inc. vs. Airline Pilots Association of the Philippines, [G. R. No.
143686, January 15, 2002], an issue was raised on whether petitioner should consult
the pilot concerned before exercising its option to retire pilots. The Supreme Court
ruled in the negative. It held that this constitutes an added requirement which, in
effect, amended the terms of Article VII, Section 2 of the 1976 PAL-ALPAP Retirement
Plan which states:
SECTION 2. Late Retirement. Any member who remains in the service of the
Company after his normal retirement date may retire either at his option or at the
option of the Company and when so retired he shall be entitled either (a) to a lump
sum payment of P5,000.00 for each completed year of service rendered as a pilot, or
(b) to such termination pay benefits to which he may be entitled under existing laws,
whichever is the greater amount.

Surely, the requirement to consult the pilots prior to their retirement defeats the
exercise by management of its option to retire the said employees. It gives the pilot
concerned an undue prerogative to assail the decision of management. Due process
only requires that notice be given to the pilot of petitioners decision to retire him.

In the 2000 case of Progressive Development Corporation vs. NLRC, [G. R. No.
138826, October 30, 2000], the optional retirement provision of the Employees Non-
Contributory Retirement Plan states:
Section 3. Optional Retirement. - Any participant with twenty (20) years of service,
regardless of age, may be retired at his option or at the option of the Company and
shall be entitled to the following benefits x x x.

In upholding the validity of the decision of management to retire employees in


accordance with the afore-quoted provision, the Supreme Court ruled that the said
retirement plan is valid for it forms part of the employment contract of petitioner
company. The following pronouncement made by no less than the DOLE was given
substantial weight, to wit:
Considering therefore the fact that your clients retirement plan now forms part of
the employment contract since it is made known to the employees and accepted by
them, and such plan has an express provision that the company has the choice to
retire an employee regardless of age, with twenty (20) years of service, said policy is
within the bounds contemplated by the Labor Code. Moreover, the manner of
computation of retirement benefits depends on the stipulation provided in the
company retirement plan. (Opinion of Director Augusto G. Sanchez of the Bureau of
Working Conditions, Department of Labor and Employment, Oct. 8, 1990, confirming
the validity of The Plan, particularly its provision on optional retirement).

Moreover, the undisputed fact that a number of employees of petitioner company


had availed of The Plan since its effectivity only confirms that The Plan has already
been part of the employment contract of petitioner company for a long time. (Ibid.).

In Pantranco North Express, Inc. vs. NLRC, [G. R. No. 95940, July 24, 1996, 259 SCRA
161], it was ruled that an employee who was compulsorily retired after rendering 25
years of service in accordance with the provision of the CBA cannot claim that he was
illegally dismissed. Providing in a CBA for compulsory retirement of employees after
25 years of service is legal and enforceable so long as the parties agree to be
governed by such CBA.

In the earlier case of Bulletin Publishing Corp. vs. Sanchez, [144 SCRA 628 (1986)],
the Supreme Court held:
The aforestated sections explicitly declare, in no uncertain terms, that retirement of
an employee may be done upon initiative and option of the management. And where
there are cases of voluntary retirement, the same is effective only upon the approval
of management. The fact that there are some supervisory employees who have not
yet been retired after 25 years with the company or have reached the age of sixty
merely confirms that it is the singular prerogative of management, at its option, to
retire supervisors or rank-and-file members when it deems fit. There should be no
unfair labor practice committed by management if the retirement of private
respondents were made in accord with the agreed option. That there were numerous
instances wherein management exercised its option to retire employees pursuant to
the aforementioned provisions, appears to be a fact which private respondents have
not controverted. It seems only now when the question of the legality of a
supervisors union has arisen that private respondents attempt to inject the dubious
theory that the private respondents are entitled to form a union or go on strike
because there is allegedly no retirement policy provided for their benefit. As above
noted, this assertion does not appear to have any factual basis.

Interruption in the service, effect.

The decision of the Supreme Court in the 2003 case of Sta. Catalina College vs.
NLRC, [G. R. No. 144483, November 19, 2003] is instructive on the issue of
interruption in the service. In this case, the teacher was hired by the Sta. Catalina
College in June 1955 as an elementary school teacher. In 1970, she applied for and
was granted a one-year leave of absence without pay on account of the illness of her
mother. After the expiration in 1971 of her leave of absence, she had not been heard
from by petitioner school. In the meantime, she was employed as a teacher in
another school - the San Pedro Parochial School during school year 1980-1981 and
later, at the Liceo de San Pedro, Bian, Laguna during school year 1981-1982. In
1982, she applied anew at petitioner school which hired her. In 1997, the teacher
reached compulsory retirement age. The threshold issue is whether the teachers
services for petitioner school during the period from 1955 to 1970 should be factored
in the computation of her retirement benefits

The Supreme Court ruled that she cannot be credited for her services in 1955-1970 in
the determination of her retirement benefits. For, after her one year leave of
absence expired in 1971 without her requesting for extension thereof as in fact she
had not been heard from until she resurfaced in 1982 when she reapplied with
petitioner school, she abandoned her teaching position as in fact she was employed
elsewhere in the interim and effectively relinquished the retirement benefits
accumulated during the said period. As the teacher was considered a new employee
when she rejoined petitioner school upon re-applying in 1982, her retirement benefits
should thus be computed only on the basis of her years of service from 1982 to
1997.

Service in another firm, excluded in the computation of retirement benefits.

In the 2002 case of Gamogamo vs. PNOC Shipping and Transport Corp., [G. R. No.
141707, May 7, 2002], it was held that since the retirement pay solely comes from
respondent companys funds, it is but natural that respondent should disregard
petitioner-employees length of service in another company for the computation of
his retirement benefits.

Petitioner in Gamogamo was first employed with the Department of Health (DOH)
and remained employed as dentist at the DOH for fourteen (14) years until he
resigned on November 2, 1977. On November 9, 1977, petitioner was hired as
company dentist by Luzon Stevedoring Corporation (LUSTEVECO), a private domestic
corporation. Subsequently, respondent PNOC Shipping and Transport Corporation
(hereafter respondent) acquired and took over the shipping business of LUSTEVECO,
and on August 1, 1979, petitioner was among those who opted to be absorbed by the
respondent. Thus, he continued to work as company dentist. Ordinarily, his creditable
service should be reckoned from such date. However, since respondent took over the
shipping business of LUSTEVECO and agreed to assume without interruption all the
service credits of petitioner with LUSTEVECO, petitioners creditable service must
start from November 9, 1977 when he started working with LUSTEVECO until his day
of retirement on April 1, 1995. Thus, petitioners creditable service is 17.3333 years.

Petitioners contention cannot be upheld that his fourteen (14) years of service with
the DOH should be considered because his last two employers were government-
owned and controlled corporations, and fall under the Civil Service Law.

It is not at all disputed that while respondent and LUSTEVECO are government-owned
and controlled corporations, they have no original charters; hence they are not under
the Civil Service Law. In any case, petitioners fourteen years of service with the
DOH may not remain uncompensated because it may be recognized by the GSIS
pursuant to Section 12 of Presidential Decree No, 1146, as amended, otherwise
known as the Government Service Insurance Act of 1977, as may be determined by
the GSIS.

One-half () month salary means 22.5 days.

To dispel any further confusion on the meaning of one-half [] month salary in the
law, the Supreme Court, in the case of Capitol Wireless, Inc. vs. Confesor, [G. R. No.
117174, November 13, 1996, 264 SCRA 68, 77], simplified its computation by
declaring that it means the total of 22.5 days arrived at after adding 15 days plus
2.5 days representing one-twelfth [1/12] of the 13th month pay plus 5 days of service
incentive leave.

Should 1/12 of 13th month pay and 5 days of service incentive leave be
included if the employees are not entitled thereto?

A question may be posed. Supposing the retiring employee, by reason of the nature
of his work, was not entitled to 13th month pay or to the service incentive leave pay
pursuant to the exceptions mentioned in the 13th-Month Pay Law and the Labor
Code, should he be paid upon retirement, in addition to the salary equivalent to
fifteen (15) days, the additional 2.5 days representing one-twelfth [1/12] of the 13th
month pay as well as the five (5) days representing the service incentive leave for a
total of 22.5 days?

This question was answered in the negative in the 2004 case of R & E Transport, Inc.
vs. Latag, [G. R. No. 155214, February 13, 2004]. The Supreme Court ruled that
employees who are not entitled to 13th month pay and service incentive leave pay
while still working should not be paid the entire 22.5 days but only the fifteen (15)
days salary. In other words, the additional 2.5 days representing one-twelfth [1/12]
of the 13th month pay and the five (5) days of service incentive leave should not be
included as part of the retirement benefits.

The employee in the said case was a taxi driver who was being paid on the
boundary system basis. It was undisputed that he was entitled to retirement
benefits after working for 14 years with R & E Transport, Inc. On the question of how
much he should receive as and by way of retirement benefits, the Supreme Court
pronounced:
The rules implementing the New Retirement Law similarly provide the above-
mentioned formula for computing the one-half month salary. (Section 5, Rule II of the
Rules Implementing RA 7641 or the New Retirement Law). Since Pedro was paid
according to the boundary system, he is not entitled to the 13th month in
accordance with Section 3 of the Rules and Regulations Implementing P. D. No. 851
[which exempts from its coverage employers of those who are paid on purely
boundary basis], and the service incentive leave pay pursuant to Section 1 of Rule V,
Book III of the Rules to Implement the Labor Code [which expressly excepts field
personnel and other employees whose performance is unsupervised by the employer,
including those who are engaged on task or contract basis, purely commission basis,
or those who are paid a fixed amount for performing work irrespective of the time
consumed in the performance]. Hence, his retirement pay should be computed on
the sole basis of his salary.

It is accepted that taxi drivers do not receive fixed wages, but retain only those
sums in excess of the boundary or fee they pay to the owners or operators of their
vehicles. Thus, the basis for computing their benefits should be the average daily
income. In this case, the CA found that Pedro was earning an average of five
hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500
x 15 days x 14 years of service equals P105,000. Compared with this amount, the
P38,850 he received, which represented just over one third of what was legally due
him, was unconscionable. (Underscoring supplied)
Liberal interpretation of retirement laws; exception.

It is axiomatic that retirement laws are liberally construed and administered in favor
of the persons intended to be benefited. All doubts as to the intent of the law should
be resolved in favor of the retiree to achieve its humanitarian purposes. The intention
is to provide for the retirees sustenance and hopefully even comfort, when he no
longer has the stamina to continue earning his livelihood.

While it is axiomatic that retirement laws are liberally construed in favor of the
persons intended to be benefited, however, such interpretation cannot be made in
the event there is clear lack of consensual and statutory basis of the grant of
retirement benefits to the claimant-employee.

For instance, in the 2004 case of Lopez vs. National Steel Corporation, [G. R. No.
149674, February 16, 2004], the Labor Arbiter, the NLRC and the Court of Appeals
were one in saying that there is no provision in the parties CBA authorizing the
payment to petitioner-employee of retirement benefits in addition to her
retrenchment pay; and that there is no indication that she was forced or duped by
respondent-employer to sign the Release and Quitclaim. The Court of Appeals also
ruled that petitioner, not having reached the retirement age, is not entitled to
retirement benefits under Article 287 of the Labor Code. In justifying her claim for
retirement benefits, petitioner contends that respondents September 20, 1994
termination letter declares in unequivocal terms that (Y)ou will receive a separation
package in accordance with the program and existing policies, including benefits you
may be entitled to, if any, under the Companys Retirement Plan. According to her,
the quoted statement expressly guarantees the grant of retirement benefits. Suffice
it to reiterate that the respondents retirement plan precludes employees whose
services were terminated for cause, from availing retirement benefits.

- LIBERAL INTERPRETATION OF RETIREMENT LAWS; NOT APPLIED IF THERE


IS NO CLEAR CONSENSUAL AND STATUTORY BASIS FOR THE BENEFIT

The interpretation that retirement laws are liberally construed in favor of the
persons intended to be benefited cannot be made in this case in light of the clear
lack of consensual and statutory basis of the grant of retirement benefits to
petitioner.
(Divina Lopez vs Natl Steel Corp., GR# 149674 02/16/04)

- RETIREMENT BENEFITS CANNOT INCLUDE THE YEARS OF SERVICE FROM A


PREVIOUS COMPANY

In this case, respondent was employed in a previous taxi company but it closed and
was later employed by herein respondent. When he was asked to retire, he sought
retirement pay for his time with the previous taxi company and with petitioner,
invoking the doctrine of piercing the corporate veil. The Supreme Court denied this
contention, saying that an application of the doctrine in this case is not proper
since the requisite elements were not present to show that both companies were
one and the same. These elements are; (1) Control; (2) Such control was used to
commit fraud or unlawful activity; (3) Such control is the proximate cause of the
injury.

There was a failure to establish that the element of control existed between the 2
companies, considering the fact that petitioner was only established 7 years after
the closure of the previous company.
(R&E Transport vs Latag, GR# 155214 02/13/04)

- NO RETIREMENT PAY FOR CONTRACTUAL EMPLOYEES

The age of retirement is primarily determined by the existing agreement or


employment contract. In the absence of such agreement, the retirement age shall
be fixed by law.

Seafarers are considered contractual employees. They cannot be considered as


regular employees under Article 280 of the Labor Code. Their employment is
governed by the contracts they sign every time they are rehired and their
employment is terminated when the contract expires. Their employment is
contractually fixed for a certain period of time. They fall under the exception of
Article 280 whose employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of
engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

Seafarers employment automatically ceased upon the expiration of their contracts


of enlistment (COE). Since there was no dismissal to speak of, it follows that they
are not entitled to reinstatement or payment of separation pay or backwages, as
provided by law.
(Eastern Shipping Lines Inc. vs Antonio, GR# 171587 10/13/09)

- FINANCIAL ASSISTANCE MAY BE AWARDED INSTEAD OF RETIREMENT OR


SEPARATION PAY IN THE INTEREST OF SOCIAL AND COMPASSIONATE
JUSTICE

The instant case equally calls for balancing the interests of the employer
with those of the worker, if only to approximate what Justice Laurel calls
justice in its secular sense.

In this instance, our attention has been called to the following


circumstances: that private respondent joined the company when he was a
young man of 25 years and stayed on until he was 48 years old; that he had
given to the company the best years of his youth, working on board ship for
almost 24 years; that in those years there was not a single report of him
transgressing any of the company rules and regulations; that he applied for
optional retirement under the companys non-contributory plan when his
daughter died and for his own health reasons; and that it would appear that
he had served the company well, since even the company said that the
reason it refused his application for optional retirement was that it still
needed his services; that he denies receiving the telegram asking him to
report back to work; but that considering his age and health, he preferred to
stay home rather than risk further working in a ship at sea.

In our view, with these special circumstances, we can call upon the same social
and compassionate justice cited in several cases allowing financial assistance.
These circumstances indubitably merit equitable concessions, via the principle of
compassionate justice for the working class.
(Eastern Shipping Lines Inc. vs Antonio, GR# 171587 10/13/09)

- PREVIOUSLY RESIGNED EMPLOYEES ARE NOT ENTITLED TO NEW


RETIREMENT BENEFITS; RETIREMENT BENEFITS ARE NOT RETROACTIVE

Entitlement of employees to retirement benefits must specifically be granted under


existing laws, a collective bargaining agreement or employment contract, or an
established employer policy. In this case, no law or collective bargaining agreement
or other applicable contract, or an established company policy was existing during
the employees (respondents) employment entitling them to the P200,000 lump-
sum retirement pay. The company (petitioner) was not thus obliged to grant them
such pay.
(Kimberly-Clark Phils. Inc. vs Dimayuga, GR# 1777705 09/18/09)

- (Januaria Rivera vs United Laboratories Inc. , GR# 155639 04/22/09)

6. Resignation

(Labor Code)
ART. 285. Termination by employee.
(a) An employee may terminate without just cause the employee-employer
relationship by serving a written notice on the employer at least one (1) month in
advance. The employer upon whom no such notice was served may hold the
employee liable for damages.
(b) An employee may put an end to the relationship without serving any notice on
the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor and
person of the employee;

2. Inhuman and unbearable treatment accorded the employee by the


employer or his representative;

3. Commission of a crime or offense by the employer or his


representative against the person of the employee or any of the immediate
members of his family; and

4. Other causes analogous to any of the foregoing.

(Rule 1, Book VI, IRR)


SECTION 11. Termination of employment by employee. The just causes for
putting an end to the employer-employee relationship by the employee shall be
those provided in Article 286 of the Labor Code.

- GENERALLY, RESIGNATION PRECLUDES SEPARATION PAY, UNLESS THERE


IS AN AGREEMENT

Generally, an employee who voluntarily resigns from employment is not entitled to


separation pay. In the present case, however, upon the request of petitioner,
private respondent agreed to a scheme whereby the former would receive
separation pay despite having voluntarily resigned. Thus, the terms and conditions
they both agreed upon constituted a contract freely entered into, which should be
performed in good faith, as it constituted the law between the parties.
(Alfaro vs CA, GR# 140812 08/28/01)

- CONDITIONS FOR VALID RESIGNATION

To constitute a resignation, it must be unconditional and with the intent to operate


as such. There must be an intention to relinquish a portion of the term of office
accompanied by an act of relinquishment.

Having introduced the resignation letters in evidence, it was incumbent upon


petitioners to prove clearly and convincingly their genuiness and due execution,
especially considering the serious doubts on their authenticity.
(Azcor Mfg. Inc. vs NLRC, GR# 117963 02/11/99)

- FILING OF A COMPLAINT FOR ILLEGAL DISMISSAL IS NOT IN CONSONANCE


WITH RESIGNATION

When a first resignation letter was a pro forma one, entirely drafted by the
employer for the employee to merely affix his signature, and the second one
entirely copied by the employee with his own hand from the first resignation letter,
voluntariness is not attendant.

It is a rule that resignation is difficult to reconcile with the filing of a complaint for
illegal dismissal.
(Mobile Protective & Detective Agency vs Ompad, GR# 159195 05/09/05)

AA. CONSEQUENCES OF ILLEGAL DISMISSAL

1. Reinstatement

(Labor Code)
ART. 279. Security of tenure. - In cases of regular employment, the employer shall
not terminate the services of an employee except for a just cause or when authorized
by this Title. An employee who is unjustly dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. (As amended by Section 34, Republic Act No.
6715, March 21, 1989).

(Rule I, Book VI, IRR)


Sec. 2. Security of Tenure. - In cases of regular employment, the employer
shall not terminate the services of an employee, except for a just cause as
provided in the Labor Code or when authorized by existing laws.
Sec. 3. Reinstatement. - An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority
rights and to backwages.

(Labor Code)
ART. 223. Appeal. - Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including
graft and corruption;

(c) If made purely on questions of law; and

(d) If serious errors in the findings of facts are raised which would cause grave or
irreparable damage or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may


be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to
the monetary award in the judgment appealed from.

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement provided herein.

To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall
impose reasonable penalty, including fines or censures, upon the erring parties.

In all cases, the appellant shall furnish a copy of the memorandum of appeal to the
other party who shall file an answer not later than ten (10) calendar days from
receipt thereof.

The Commission shall decide all cases within twenty (20) calendar days from receipt
of the answer of the appellee. The decision of the Commission shall be final and
executory after ten (10) calendar days from receipt thereof by the parties.

Any law enforcement agency may be deputized by the Secretary of Labor and
Employment or the Commission in the enforcement of decisions, awards or orders.
(As amended by Section 12, Republic Act No. 6715, March 21, 1989).

ART. 224. Execution of decisions, orders or awards. - (a) The Secretary of


Labor and Employment or any Regional Director, the Commission or any Labor
Arbiter, or Med-Arbiter or Voluntary Arbitrator may, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment within five (5) years from
the date it becomes final and executory, requiring a sheriff or a duly deputized officer
to execute or enforce final decisions, orders or awards of the Secretary of Labor and
Employment or regional director, the Commission, the Labor Arbiter or med-arbiter,
or voluntary arbitrators. In any case, it shall be the duty of the responsible officer to
separately furnish immediately the counsels of record and the parties with copies of
said decisions, orders or awards. Failure to comply with the duty prescribed herein
shall subject such responsible officer to appropriate administrative sanctions.

(b) The Secretary of Labor and Employment, and the Chairman of the Commission
may designate special sheriffs and take any measure under existing laws to ensure
compliance with their decisions, orders or awards and those of the Labor Arbiters and
voluntary arbitrators, including the imposition of administrative fines which shall not
be less than P500.00 nor more than P10,000.00. (As amended by Section 13,
Republic Act No. 6715, March 21, 1989).

(Rule VI, 2005 NLRC Rules of Procedure)


APPEALS

Section 1. Periods of Appeal. - Decisions, resolutions or orders of the Labor Arbiter


shall be final and executory unless appealed to the Commission by any or both
parties within ten (10) calendar days from receipt thereof; and in case of decisions,
resolutions or orders of the Regional Director of the Department of Labor and
Employment pursuant to Article 129 of the Labor Code, within five (5) calendar days
from receipt thereof. If the 10th or 5th day, as the case may be, falls on a Saturday,
Sunday or holiday, the last day to perfect the appeal shall be the first working day
following such Saturday, Sunday or holiday.

No motion or request for extension of the period within which to perfect an appeal
shall be allowed.

Section 2. Grounds. - The appeal may be entertained only on any of the following
grounds:
a) If there is prima facie evidence of abuse of discretion on the part of the Labor
Arbiter or Regional Director;
b) If the decision, resolution or order was secured through fraud or coercion,
including graft and corruption;
c) If made purely on questions of law; and/or
d) If serious errors in the findings of facts are raised which, if not corrected,
would cause grave or irreparable damage or injury to the appellant.

Section 3. Where Filed. - The appeal shall be filed with the Regional Arbitration
Branch or Regional Office where the case was heard and decided.

Section 4. requisites For Perfection Of Appeal.


a) The appeal shall be:
1) filed within the reglementary period provided in Section 1 of this Rule;
2) verified by the appellant himself in accordance with Section 4, Rule 7 of the
Rules of Court, as amended;
3) in the form of a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof, the relief prayed for, and with a
statement of the date the appellant received the appealed decision, resolution
or order;
4) in three (3) legibly typewritten or printed copies; and
5) accompanied by:
i. proof of payment of the required appeal fee;
ii. posting of a cash or surety bond as provided in Section 6 of this Rule;
iii. a certificate of non-forum shopping; and iv) proof of service upon the other
parties.
b) A mere notice of appeal without complying with the other requisites
aforestated shall not stop the running of the period for perfecting an appeal.
c) The appellee may file with the Regional Arbitration Branch or Regional Office
where the appeal was filed, his answer or reply to appellant's memorandum of
appeal, not later than ten (10) calendar days from receipt thereof. Failure on the
part of the appellee who was properly furnished with a copy of the appeal to file
his answer or reply within the said period may be construed as a waiver on his
part to file the same.
d) Subject to the provisions of Article 218 of the Labor Code, once the appeal is
perfected in accordance with these Rules, the Commission shall limit itself to
reviewing and deciding only the specific issues that were elevated on appeal.

Section 5. Appeal Fee. - The appellant shall pay an appeal fee of One Hundred Fifty
Pesos (P150.00) to the Regional Arbitration Branch or Regional Office of origin, and
the official receipt of such payment shall form part of the records of the case.

Section 6. Bond. - In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a bond, which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of damages and attorney's
fees.

In case of surety bond, the same shall be issued by a reputable bonding company
duly accredited by the Commission or the Supreme Court, and shall be accompanied
by original or certified true copies of the following:

a) a joint declaration under oath by the employer, his counsel, and the bonding
company, attesting that the bond posted is genuine, and shall be in effect until
final disposition of the case.
b) an indemnity agreement between the employer-appellant and bonding
company;
c) proof of security deposit or collateral securing the bond: provided, that a
check shall not be considered as an acceptable security;
d) a certificate of authority from the Insurance Commission;
e) certificate of registration from the Securities and Exchange Commission;
f) certificate of authority to transact surety business from the Office of the
President;
g) certificate of accreditation and authority from the Supreme Court; and
h) notarized board resolution or secretary's certificate from the bonding
company showing its authorized signatories and their specimen signatures.

A cash or surety bond shall be valid and effective from the date of deposit or posting,
until the case is finally decided, resolved or terminated, or the award satisfied. This
condition shall be deemed incorporated in the terms and conditions of the surety
bond, and shall be binding on the appellants and the bonding company.

The appellant shall furnish the appellee with a certified true copy of the said surety
bond with all the above-mentioned supporting documents. The appellee shall verify
the regularity and genuineness thereof and immediately report any irregularity to the
Commission.

Upon verification by the Commission that the bond is irregular or not genuine, the
Commission shall cause the immediate dismissal of the appeal, and censure or cite in
contempt the responsible parties and their counsels, or subject them to reasonable
fine or penalty.

No motion to reduce bond shall be entertained except on meritorious grounds, and


only upon the posting of a bond in a reasonable amount in relation to the monetary
award.

The mere filing of a motion to reduce bond without complying with the requisites in
the preceding paragraphs shall not stop the running of the period to perfect an
appeal.

Section 7. Records of Case on Appeal. - The records of a case shall have a


corresponding index of its contents which shall include the following: a) the original
copy of the complaint; b) other pleadings and motions; c) minutes of the
proceedings, notices, transcripts of stenographic notes, if any; d) decisions, orders,
and resolutions as well as proof of service thereof, if available; e) the computation of
the award; f) memorandum of appeal and the reply or answer thereto, if any, and
proof of service, if available; g) official receipt of the appeal fee; and h) the appeal
bond, if any.
The records shall be chronologically arranged and paged prominently.
Section 8. Transmittal Of Records Of Case On Appeal. - Within forty-eight (48) hours
after the filing of the appeal, the records of the case shall be transmitted by the
Regional Arbitration Branch or office of origin to the Commission.

Section 9. Perfection Of Appeal; Effect. - Without prejudice to immediate


reinstatement pending appeal under Section 6 of Rule XI, once an appeal is filed, the
Labor Arbiter loses jurisdiction over the case. All pleadings and motions pertaining to
the appealed case shall thereafter be addressed to and filed with the Commission.

Section 10. Frivolous or Dilatory Appeals. - No appeal from an interlocutory order


shall be entertained. To discourage frivolous or dilatory appeals, including those
taken from interlocutory orders, the Commission may censure or cite in contempt the
erring parties and their counsels, or subject them to reasonable fine or penalty.

Section 11. Appeals from Decision of Other Agencies. - The Rules provided herein
governing appeals from the decisions or orders of Labor Arbiters shall apply to
appeals to the Commission from decisions or orders of the other offices or agencies
appealable to the Commission according to law.

What is reinstatement?

a. Reinstatement under Articles 279 and 223 of the Labor Code, distinguished.

Reinstatement under Article 279 presupposes that the judgment has already become
final and executory. Consequently, there is nothing left to be done except the
execution thereof. Reinstatement under Article 223 of the Labor Code, however, may
be availed of as soon as the Labor Arbiter renders a judgment declaring that the
dismissal of the employee is illegal and ordering said reinstatement. It may be
availed of even pending appeal.
In case of illegal dismissal - The consequence of illegality thereof is reinstatement
without loss of seniority rights and with full backwages (inclusive of allowances and
other benefits computed from the time his compensation was withheld up to the time
of his actual reinstatement).

Reinstatement when not prayed for, effect.

The failure to allege reinstatement as one of the reliefs in the complaint for illegal
dismissal is not fatal. In the interest of justice, according to Manipon vs. NLRC, [G. R.
No. 105338, Dec. 27, 1994], although the issue of the grant of separation pay was
never contested even at the level of the Labor Arbiter nor assigned as error at the
NLRC level, the Labor Arbiters ruling where he granted petitioner separation pay
instead of ordering his reinstatement should be corrected. Reinstatement should be
granted although he failed to specifically pray for the same in his complaint. (See
also General Baptist Bible College vs. NLRC, 219 SCRA 549 [1993]).

In Pheschem Industrial Corporation vs. Moldez, [G. R. No. 161158, May 9, 2005],
respondents omission to pray for reinstatement in his position paper before the
Labor Arbiter was not considered as an implied waiver to be reinstated. It was
considered a mere procedural lapse which should not affect his substantive right to
reinstatement. It is a settled principle that technicalities have no place in labor cases
as rules of procedure are designed primarily to give substance and meaning to the
objectives of the Labor Code to accord protection to labor.

Reinstatement when what is prayed for is separation pay.

A different rule, however, applies in a case where reinstatement was not prayed for
in the complaint but the payment of separation pay in lieu thereof. As pronounced in
Dela Cruz vs. NLRC, [G. R. No. 121288, Nov. 20, 1998, 299 SCRA 1, 13], the petitioner
therein would have been entitled to reinstatement as a consequence of his illegal
dismissal from employment. However, by expressly asking for separation pay, he is
deemed to have opted for separation pay in lieu of reinstatement. This is the tenor
of the holding in Reformist Union vs. NLRC, [266 SCRA 713, 728-729 (1997)] to the
effect that separation pay is awarded as an alternative to reinstatement.

In the 2003 case of Solidbank Corporation vs. CA, [G. R. No. 151026, Aug. 25, 2003],
where the employee explicitly prayed for an award of separation pay in lieu of
reinstatement, the Supreme Court said that by so doing, he forecloses reinstatement
as a relief by implication. Consequently, he is entitled to separation pay equivalent to
one month pay for every year of service, from the time of his illegal dismissal up to
the finality of this judgment, as an alternative to reinstatement.

Employee ordered reinstated may, at the end of the proceeding, opt for
separation pay instead.

The employee who files an illegal dismissal case may choose between reinstatement
and payment of separation pay in lieu of reinstatement. He is bound by the relief he
prayed for in his complaint. If ordered reinstated later on after the end of the
proceedings, he has no other option but to abide thereby.

However, the Supreme Court recognizes an exception. In the 2004 case of Procter
and Gamble Philippines vs. Bondesto, [G. R. No. 139847, March 5, 2004], after more
than a year after the respondent was placed on payroll reinstatement, the companys
Tondo Plant, where the respondent was assigned, was shut down. Since the
respondents employment could not be maintained at the Tondo Plant, so the
petitioner maintains, it was constrained to discontinue the respondents payroll
reinstatement. Clearly, the respondent is entitled to reinstatement, without loss of
seniority rights to another position of similar nature in the company. It should be
stressed that while the petitioner manifested the closure of the Tondo Plant, it failed
to indicate the absence of an unfilled position more or less of a similar nature as the
one previously occupied by the respondent at its other plant/s. However, if the
respondent no longer desires to be reinstated, he should be awarded separation pay
at the rate of one (1) month for every year of service as an alternative, following
settled jurisprudence.

Reinstatement not possible due to old age.

While reinstatement is a relief mandated in illegal dismissal cases, the same cannot
be awarded in instances where it is no longer feasible as in a case where private
respondent is already over-aged. In such a case, the proper remedy is to award
separation pay in lieu of reinstatement. (Benguet Corporation vs. NLRC and Felizardo
A. Guianan, G. R. No. 124166, Nov. 16, 1999; Espejo vs. NLRC, G. R. No. 112678,
March 29, 1996, 255 SCRA 430, 435).

Reinstatement when position no longer exists.

An illegally dismissed employee is entitled to be reinstated to his former position,


unless such position no longer exists at the time of his reinstatement, in which case,
he should be given a substantially equivalent position in the same establishment
without loss of seniority rights. (Section 4, Rule I, Book VI, Rules to Implement the
Labor Code; Pedroso vs. Castro, G. R. No. 70361, Jan. 30, 1986).

However, as held in Tanduay Distillery Labor Union vs. NLRC, [G. R. No. 73352, Dec.
06, 1994], in the event that the previous positions of petitioners may no longer be
open or available, considering that more than ten (10) years have since elapsed from
the date of their dismissal, private respondent-employer has to pay, in lieu of
reinstatement and in addition to the three-year back salaries, separation pay
equivalent to at least one (1) month pay for every year of service. (See also RCPI vs.
NLRC, 210 SCRA 222; Torillo vs. Leogardo, Jr., 197 SCRA 471).

Reinstatement rendered moot and academic by supervening events.

Reinstatement should no longer be ordered when it is rendered moot and academic


by reason of supervening events such as:

1. Declaration of insolvency by the court. (Electruck Asia, Inc. vs. Meris, G. R. No.
147031, July 27, 2004).
2. Fire which gutted the hotel and resulted in its total destruction. (Bagong Bayan
Corporation vs. Ople, G. R. No. 73334, Dec. 8, 1986).
3. Closure of the business of the employer. (Section 4[b], Rule I, Book VI, Rules to
Implement the Labor Code; Philtread Tire & Rubber Corporation vs. Vicente, G. R.
No. 142759, Nov. 10, 2004).
4. Non-existence of the employees former position at the time of reinstatement for
reasons not attributable to the fault of the employer. (Section 4[b], Rule I, Book
VI, Rules to Implement the Labor Code; Pizza Inn vs. NLRC, G. R. No. 74531, June
28, 1988).
5. Take over of the business of the employer by another company and there is no
agreement regarding assumption of liability by the acquiring company. (Callanta
vs. Carnation Philippines, G. R. No. 70615, Oct. 28, 1986).

Payroll reinstatement meaning


There is payroll reinstatement when the employer, instead of physically reinstating
the employee to his former or substantially equivalent position, chooses to reinstate
the employee in the payroll only by paying him wages and other benefits without
however allowing or requiring him to actually report for work.

Instances when payroll reinstatement may be allowed


There are two instances when the employer may exercise the option of payroll
reinstatement:

1. In case of preventive suspension pending termination/disciplinary proceeding


under Sections 9, Department Order No. 9, Series of 1997.

Section 9. Period of suspension. No preventive suspension shall last longer than


thirty (30) days. The employer shall thereafter reinstate the worker in his former or in
a substantially equivalent position or the employer may extend the period of
suspension provided that during the period of extension, he pays the wages and
other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after
completion of the hearing, to dismiss the worker.

2. Another instance of payroll reinstatement is found in Article 223 of the Labor Code,
after the Labor Arbiter ordered the reinstatement of the employee pending appeal to
NLRC, employer has the option to reinstate the employee concerned only on payroll.
The provision states:

Article 223. Appeal.


xxx
In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated in the payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement provided
herein.
xxx

Instances when payroll reinstatement is not allowed


In assumption or certification cases under Article 263 (g), Labor Code, the employer
is not given the option to reinstate the employee in the payroll only. Actual
reinstatement is required.

Article 263 (g). When, in his opinion, there exists a labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national interest, the
Secretary of Labor and Employment may assume jurisdiction over the dispute and
decide it or certify the same to the Commission for compulsory arbitration. Such
assumption or certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or certification
order. If one has already taken place at the time of assumption or certification, all
striking or locked out employees shall immediately return to work and the employer
shall immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout. x x x

Under the said provision, all workers must immediately return to work and all
employers must readmit all of them under the same terms and conditions prevailing
before the strike or lockout. (See Manila Diamond Hotel case, compare with
University of Santo Tomas case.)
Effect of failure of employer to exercise the option
Under Article 223, the option whether to actually reinstate the employee, or to
reinstate him only in the payroll belongs to the employer. Thus, the employer may
either re-admit the employee to work under the same terms and conditions
prevailing prior to their dismissal, or to reinstate him in the payroll. Failing to exercise
the options in the alternative, employer must pay the employees salaries.

Refund/reimbursement of salary paid


In payroll reinstatement pending termination/disciplinary proceedings against
employee, the rule is explicit that the employee is not bound to reimbursed the
salary already paid to him by reason of the exercise by employer of the option. The
salary paid to the employee during the period of suspension serves as the price that
employer must pay for opting for payroll reinstatement instead of actual
reinstatement.

The same thing may be said in payroll reinstatement under Article 223, although the
article does not expressly so states.

However, there was an authority supporting the opposite view that the employee
may be required to refund the employer for salary paid. This view was articulated in
Genuino v. National Labor Relations Commission as follows:

If the decision of the labor arbiter is later reversed on appeal upon the finding that
the ground for dismissal is valid, then the employer has the right to require the
dismissed employee on payroll reinstatement to refund the salaries s/he received
while the case was pending appeal, or it can be deducted from the accrued benefits
that the dismissed employee was entitled to receive from his/her employer under
existing laws, collective bargaining agreement provisions, and company practices.
However, if the employee was reinstated to work during the pendency of the appeal,
then the employee is entitled to the compensation received for actual services
rendered without need of refund.

The above view, however, does not appear to be the prevailing principle on the
matter, and was played down as a mere stray posture in a subsequent case (See
Garcia vs. Philippine Airlines).

References
1. Manila Diamond Hotel vs. Court of Appeals, G.R. No. 140518, December 16, 2004.
2. University of Santo Tomas (UST) vs. NLRC, G.R. No. 89920, October 18, 1990.
3. Genuino v. NLRC, G.R. Nos. 142732-33, December 4, 2007.
4. Garcia vs. Philippine Airlines, G.R. No. 164856, January 20, 2009.

OBLIGATIONS OF THE EMPLOYER

1. Actual Reinstatement
2. Payroll Reinstatement

A. Nature

- REINSTATEMENT IS A MATTER OF RIGHT, ONLY IN EXCEPTIONAL CASES


WILL IT BE DENIED

Under the law and prevailing jurisprudence, an illegally dismissed employee is


entitled to reinstatement as a matter of right. However, if reinstatement would
only exacerbate the tension and strained relations between the parties, or
where the relationship between the employer and the employee has been
unduly strained by reason of their irreconcilable differences, particularly where
the illegally dismissed employee held a managerial or key position in the
company, it would be more prudent to order payment of separation pay instead
of reinstatement.

In order for the doctrine of strained relations to apply, it should be proved that
the employee concerned occupies a position where he enjoys the trust and
confidence of his employer and that it is likely that if reinstated, an atmosphere
of antipathy and antagonism may be generated as to adversely affect the
efficiency and productivity of the employee concerned.

It bears to stress that reinstatement is the rule and, for the exception of
strained relations to apply, it should be proved that it is likely that if reinstated,
an atmosphere of antipathy and antagonism would be generated as to
adversely affect the efficiency and productivity of the employee concerned.
However, both the LA and the CA failed to state the basis for their finding that a
strained relationship exists.

In conclusion, it bears to stress that it is human nature that some hostility will
inevitably arise between parties as a result of litigation, but the same does not
always constitute strained relations in the absence of proof or explanation that
such indeed exists.
(Cabigting vs San Miguel Foods Inc., GR# 167706 11/05/09)

- (Dumago vs PAL, GR# 164856 01/20/09)

B. Instances when Reinstatement is not Possible

Strained Relations
Old Age of the Employee
Ill-health of the Employee
The position is no longer available
Closure of the company

- (Manila Diamond Hotel EU vs CA, GR# 140518 12/16/04)

- DOCTRINE OF STRAINED RELATIONS

Under the doctrine of strained relations, the payment of separation pay is


considered an acceptable alternative to reinstatement when the latter option is
no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however, to be adequately


supported by evidence substantial evidence to show that the relationship
between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy.

In the present case, the Labor Arbiter found that actual animosity existed
between petitioner Azul and respondent as a result of the filing of the illegal
dismissal case. Such finding, especially when affirmed by the appellate court as
in the case at bar, is binding upon the Court, consistent with the prevailing rules
that the Court will not try facts anew and that findings of facts of quasi-judicial
bodies are accorded great respect, even finality.
(Golden Ace Builders vs Talde, GR# 187200 05/05/10)

2. Backwages

- (Jenny Agabon vs NLRC, GR# 158693 11/17/04)


- (Chronicles Securities Corp. vs NLRC, GR#

- (Phil. Journalist Inc. vs Mosqueda, GR#

- PROBATIONARY EMPLOYEES MAY ALSO BE AWARDED BACKWAGES IF THE


REASON THEY WERE NOT REGULARIZED WAS NOT JUSTIFIED

In this case, private respondent was hired as a probationary employee of petitioner,


but he was not regularized because of his alleged unsatisfactory performance.
Under Art. 282 of the Labor Code, an unsatisfactory rating can be a just cause for
dismissal only if it amounts to gross and habitual neglect of duties. Gross
negligence has been defined to be the want or absence of even slight care or
diligence as to amount to a reckless disregard of the safety of person or property. It
evinces a thoughtless disregard of consequences without exerting any effort to
avoid them. A careful perusal of the records of this case does not show that private
respondent Paras was grossly negligent of his duties.

The normal consequences of illegal dismissal are reinstatement without loss of


seniority rights and the payment of backwages computed from the time the
employees compensation was withheld from him. Since respondents dismissal from
employment is illegal, he is entitled to reinstatement and t be paid backwages from
the time of his dismissal up to the time of his actual reinstatement.
(Mitsubishi Motors Phils. Corp. vs Chrysler Phils Labor Union, GR# 148738
06/29/04)

- (Sime Darby Pilipinas Inc. vs Arguilla, GR# 143542 06/08/06)

- IF REINSTATEMENT IS NOT POSSIBLE, BACKWAGES SHALL BE COMPUTED


FROM THE DISMISSAL UP TO THE DATE THE DECISION BECOMES FINAL

Clearly, the law intends the award of backwages and similar benefits to accumulate
past the date of the Labor Arbiters decision until the dismissed employee is
actually reinstated. But if, as in this case, reinstatement is no longer possible, this
Court has consistently ruled that backwages shall be computed from the time of
illegal dismissal until the date the decision becomes final.

Separation pay, on the other hand, is equivalent to one month pay for every year of
service, a fraction of six months to be considered as one whole year. Here that
would begin from January 31, 1994 when petitioner Belen began his service.
Technically the computation of his separation pay would end on the day he was
dismissed on August 20, 1999 when he supposedly ceased to render service and
his wages ended. But, since Belen was entitled to collect backwages until the
judgment for illegal dismissal in his favor became final, here on September 22,
2008, the computation of his separation pay should also end on that date.

Further, since the monetary awards remained unpaid even after it became final on
September 22, 2008 because of issues raised respecting the correct computation of
such awards, it is but fair that respondent Javellana be required to pay 12% interest
per annum on those awards from September 22, 2008 until they are paid. The 12%
interest is proper because the Court treats monetary claims in labor cases the
equivalent of a forbearance of credit. It matters not that the amounts of the claims
were still in question on September 22, 2008. What is decisive is that the order to
pay the monetary awards had long become final.
(Javellana, Jr. vs Belen, GR# 181913 03/05/10)

- THE ALTERNATIVE REMEDY TO REINSTATEMENT WITH BACKWAGES IS FULL


SEPARATION PAY OF ONE MONTH SALARY FOR EVERY YEAR OF SERVICE
OR ONE MONTH SALARY WHICH EVER IS HIGHER

Abandonment as a just ground for dismissal thus requires clear, willful, deliberate,
and unjustified refusal of the employee to resume employment. Mere absence or
failure to report for work, even after notice to return, is not tantamount to
abandonment.

Hence they are entitled to reinstatement with full backwages or in the alternative
to full separation pay of one month per year of service.
(Fe La Rosa vs Ambasador Hotel, GR# 177059 03/13/09)

DAMAGES

(Civil Code)
Title XVIII. - DAMAGES

CHAPTER 1
GENERAL PROVISIONS

Art. 2195. The provisions of this Title shall be respectively applicable to all
obligations mentioned in Article 1157.

Art. 2196. The rules under this Title are without prejudice to special provisions on
damages formulated elsewhere in this Code. Compensation for workmen and other
employees in case of death, injury or illness is regulated by special laws. Rules
governing damages laid down in other laws shall be observed insofar as they are not
in conflict with this Code.

Art. 2197. Damages may be:

(1) Actual or compensatory;

(2) Moral;

(3) Nominal;

(4) Temperate or moderate;

(5) Liquidated; or

(6) Exemplary or corrective.

Art. 2198. The principles of the general law on damages are hereby adopted insofar
as they are not inconsistent with this Code.

CHAPTER 2
ACTUAL OR COMPENSATORY DAMAGES

Art. 2199. Except as provided by law or by stipulation, one is entitled to an


adequate compensation only for such pecuniary loss suffered by him as he has duly
proved. Such compensation is referred to as actual or compensatory damages.

Art. 2200. Indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obligee failed to obtain. (1106)

Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation. (1107a)

Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages
which are the natural and probable consequences of the act or omission complained
of. It is not necessary that such damages have been foreseen or could have
reasonably been foreseen by the defendant.
Art. 2203. The party suffering loss or injury must exercise the diligence of a good
father of a family to minimize the damages resulting from the act or omission in
question.

Art. 2204. In crimes, the damages to be adjudicated may be respectively increased


or lessened according to the aggravating or mitigating circumstances.

Art. 2205. Damages may be recovered:

(1) For loss or impairment of earning capacity in cases of temporary or


permanent personal injury;

(2) For injury to the plaintiff's business standing or commercial credit.

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall
be at least three thousand pesos, even though there may have been mitigating
circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the
deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity
shall in every case be assessed and awarded by the court, unless the deceased on
account of permanent physical disability not caused by the defendant, had no
earning capacity at the time of his death;

(2) If the deceased was obliged to give support according to the provisions of
Article 291, the recipient who is not an heir called to the decedent's inheritance by
the law of testate or intestate succession, may demand support from the person
causing the death, for a period not exceeding five years, the exact duration to be
fixed by the court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the
deceased may demand moral damages for mental anguish by reason of the death of
the deceased.

Art. 2207. If the plaintiff's property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach
of contract complained of, the insurance company shall be subrogated to the rights
of the insured against the wrongdoer or the person who has violated the contract. If
the amount paid by the insurance company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the deficiency from the person causing
the loss or injury.

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff's plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;

(8) In actions for indemnity under workmen's compensation and employer's


liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

Art. 2209. If the obligation consists in the payment of a sum of money, and the
debtor incurs in delay, the indemnity for damages, there being no stipulation to the
contrary, shall be the payment of the interest agreed upon, and in the absence of
stipulation, the legal interest, which is six per cent per annum. (1108)

Art. 2210. Interest may, in the discretion of the court, be allowed upon damages
awarded for breach of contract.

Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a
proper case, be adjudicated in the discretion of the court.

Art. 2212. Interest due shall earn legal interest from the time it is judicially
demanded, although the obligation may be silent upon this point. (1109a)

Art. 2213. Interest cannot be recovered upon unliquidated claims or damages,


except when the demand can be established with reasonably certainty.

Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce
the damages that he may recover.

Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may equitably
mitigate the damages under circumstances other than the case referred to in the
preceding article, as in the following instances:

(1) That the plaintiff himself has contravened the terms of the contract;

(2) That the plaintiff has derived some benefit as a result of the contract;

(3) In cases where exemplary damages are to be awarded, that the defendant
acted upon the advice of counsel;

(4) That the loss would have resulted in any event;

(5) That since the filing of the action, the defendant has done his best to lessen
the plaintiff's loss or injury.

CHAPTER 3
OTHER KINDS OF DAMAGES

Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal,
temperate, liquidated or exemplary damages, may be adjudicated. The assessment
of such damages, except liquidated ones, is left to the discretion of the court,
according to the circumstances of each case.

SECTION 1. - Moral Damages

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation,
and similar injury. Though incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the defendant's wrongful act for
omission.

Art. 2218. In the adjudication of moral damages, the sentimental value of property,
real or personal, may be considered.

Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;


(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in Article 309;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3
of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action
mentioned in No. 9 of this article, in the order named.

Art. 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.

SECTION 2. - Nominal Damages

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him.

Art. 2222. The court may award nominal damages in every obligation arising from
any source enumerated in Article 1157, or in every case where any property right has
been invaded.

Art. 2223. The adjudication of nominal damages shall preclude further contest upon
the right involved and all accessory questions, as between the parties to the suit, or
their respective heirs and assigns.

SECTION 3. - Temperate or Moderate Damages

Art. 2224. Temperate or moderate damages, which are more than nominal but less
than compensatory damages, may be recovered when the court finds that some
pecuniary loss has been suffered but its amount can not, from the nature of the case,
be provided with certainty.

Art. 2225. Temperate damages must be reasonable under the circumstances.

SECTION 4. - Liquidated Damages

Art. 2226. Liquidated damages are those agreed upon by the parties to a contract,
to be paid in case of breach thereof.

Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty,


shall be equitably reduced if they are iniquitous or unconscionable.

Art. 2228. When the breach of the contract committed by the defendant is not the
one contemplated by the parties in agreeing upon the liquidated damages, the law
shall determine the measure of damages, and not the stipulation.

SECTION 5. - Exemplary or Corrective Damages


Art. 2229. Exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to the moral, temperate, liquidated or
compensatory damages.

Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability
may be imposed when the crime was committed with one or more aggravating
circumstances. Such damages are separate and distinct from fines and shall be paid
to the offended party.

Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant


acted with gross negligence.

Art. 2232. In contracts and quasi-contracts, the court may award exemplary
damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner.

Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court
will decide whether or not they should be adjudicated.

Art. 2234. While the amount of the exemplary damages need not be proved, the
plaintiff must show that he is entitled to moral, temperate or compensatory damages
before the court may consider the question of whether or not exemplary damages
should be awarded. In case liquidated damages have been agreed upon, although no
proof of loss is necessary in order that such liquidated damages may be recovered,
nevertheless, before the court may consider the question of granting exemplary in
addition to the liquidated damages, the plaintiff must show that he would be entitled
to moral, temperate or compensatory damages were it not for the stipulation for
liquidated damages.

Art. 2235. A stipulation whereby exemplary damages are renounced in advance


shall be null and void.

- (Colegio de San Juan vs Villas, GR#

- WHEN ARE MORAL AND EXEMPLARY DAMAGES ALLOWED TO BE


RECOVERED/AWARDED

There is merit in petitioners submission that the award of moral and exemplary
damages in her favor is warranted by her unjustified dismissal. Award of moral and
exemplary damages for an illegally dismissed employee is proper where the
employee had been harassed and arbitrarily terminated by the employer. Moral
damages may be awarded to compensate one for diverse injuries such as mental
anguish, besmirched reputation, wounded feelings, and social humiliation
occasioned by the employers unreasonable dismissal of the employee. This Court
has consistently accorded the working class a right to recover damages for unjust
dismissals tainted with bad faith; where the motive of the employer in dismissing
the employee is far from noble. The award of such damages is based not on the
Labor Code but on Art. 220(???) of the Civil Code. However, under the attendant
facts and circumstances, the Court is of the sense that the amount of P120,000
awarded by the Labor Arbiter for moral and exemplary damages is too much.
P50,000 of moral damages and P10,000 of exemplary damages should suffice.

Moral damages are recoverable when the dismissal of an employee is attended by


bad faith or fraud or constitutes an act oppressive to labor, or is done in a manner
contrary to good morals, good customs, or public policy.
(Cruz vs NLRC, GR# 116384 02/07/00)

- SOURCE OF MORAL DAMAGES

Under these circumstances, the award of damages was proper. As a rule, moral
damages are recoverable when the dismissal of the employee was attended by bad
faith or fraud or constituted an act oppressive to labor, or was done in a manner
contrary to morals, good customs or public policy. We believe that the dismissal of
the respondents was attended with bad faith and meant to evade the lawful
obligations imposed upon an employer. To rule otherwise would lead to the
anomaly of respondents being terminated from employment in 1997 as a matter of
fact, but without legal redress. This runs counter to the notions of fair play,
substantial justice and the constitutional mandate that labor rights should be
respected. If doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter - the employer
must affirmatively show rationally adequate evidence that the dismissal was for
justifiable cause. It is a time-honored rule that in controversies between a laborer
and his master, doubts reasonably arising from the evidence, or in the
interpretation of agreements and writing should be resolved in the formers favor.
The policy is to extend the doctrine to a greater number of employees who can
avail of the benefits under the law, which is in consonance with the avowed policy
of the State to give maximum aid and protection of labor.

While it is true that other forms of damages under the Civil Code may be awarded
to illegally dismissed employees, any award of moral damages by the Labor Arbiter
cannot be based on the Labor Code but should be grounded on the Civil Code.
(Mayon & Hotel Restaurant, GR# 157634 05/16/05)

- (Phil. Employ Services & Resources Inc. vs Paramlo, GR# 144786


04/15/04)

- (Armando David vs Natl Fed. Of Labor Union, GR# 148263 & 148271-72
04/21/09)

- (Virgilio Sapio vs Undaloc Construction, GR# 155034 05/22/06)

- (Celebes Japan Foods Corp. vs Yermo, GR# 175855 10/02/09)

Nominal damages awarded was P50,000. This was a retrenchment case, but no
notice was given.

- NOMINAL DAMAGES MAY BE AWARDED FOR DISMISSAL WITH VALID CAUSE


BUT WITHOUT COMPLIANCE OF PROCEDURAL DUE PROCESS (Agabon
Doctrine)

The propriety of employee's dismissal is not affected by the lack of written notices.
When the dismissal is for just cause, the lack of due process does not render the
dismissal ineffectual but merely gives rise to the payment of P30,000 in nominal
damages.
(Bernardo Jose, Jr. vs Michaelmar Phils. Inc. , GR# 169605 11/27/09)

- (Genesis Transport Services Inc. vs UMMGT, GR# 182114 04/05/10)

- PURPOSE OF THE NOMINAL DAMAGES BASED ON THE AGABON DOCTRINE

In an unlawful dismissal case, the employer has the burden of proving the lawful
cause sustaining the dismissal of the employee. The employer must affirmatively
show rationally adequate evidence that the dismissal was for a justifiable cause.
The employees behavior constituted just cause. However, the company cannot
deny that it failed to observe due process.

The law requires that the employer must furnish the worker sought to be dismissed
with two written notices before termination of employment can be legally effected:

(1) notice which apprises the employee of the particular acts or omissions for which
his dismissal is sought; and
(2) the subsequent notice which informs the employee of the employers decision
to dismiss him.
Violation of the employees right to statutory due process, even if the dismissal was
for a just cause, warrants the payment of indemnity in the form of nominal
damages. This indemnity is not intended to penalize the employer but to vindicate
or recognize the employees right to statutory due process, which was violated by
the employer in the present case.

In this case, the amount of nominal damages was P120,000 because it was the
company that offered the amount.
(Hilton Heavy Equipment Corp. vs Ananias Dy, GR# 164860 02/02/10)

3. Separation Pay

- GENERALLY, IF THE DISMISSAL IF FOR A JUST/AUTHORIZED CAUSE, THERE


IS NO SEPARATION PAY. EXCEPT WHEN THE CAUSE FOR THE DISMISSAL
DOES NOT REFLECT ON THE CHARACTER OF THE EMPLOYEE - (Discerning
Compassion Doctrine)

The rule embodied in the Labor Code is that a person dismissed for cause as
defined therein is not entitled to separation pay. The cases cited above constitute
the exception, based upon considerations of equity. Equity has been defined as
justice outside law, being ethical rather than jural and belonging to the sphere of
morals than of law. It is grounded on the precepts of conscience and not on any
sanction of positive law. Hence, it cannot prevail against the expressed provision of
the labor laws allowing dismissal of employees for cause and without any provision
for separation pay.

Strictly speaking, however, it is not correct to say that there is no express


justification for the grant of separation pay to lawfully dismissed employees other
than the abstract consideration of equity. The reason is that our Constitution is
replete with positive commands for the promotion of social justice, and particularly
the protection of the rights of the workers. The enhancement of their welfare is one
of the primary concerns of the present charter. In fact, instead of confining itself to
the general commitment to the cause of labor in Article II on the Declaration of
Principles of State Policies, the new Constitution contains a separate article devoted
to the promotion of social justice and human rights with a separate sub-topic for
labor. Article XIII expressly recognizes the vital role of labor, hand in hand with
management, in the advancement of the national economy and the welfare of the
people in general. The categorical mandates in the Constitution for the
improvement of the lot of workers are more than sufficient basis to justify the
award of separation pay in proper cases even if the dismissal be for cause.

Grant of separation pay to the dismissed employee is just where the separation was
due to valid but iniquitous causes as failure to comply with work standards. Grant
of award is based on the social justice policy even if separation is for cause.

Where the cause of separation is more serious than mere inefficiency, the award is
not justified.

Henceforth, separation pay shall be allowed only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those
reflecting on his moral character. Where the reason for the valid dismissal is
habitual insubordination or an offense involving moral turpitude, the employer may
not be required to give the dismissed employee separation pay or financial
assistance.

A contrary rule would have the effect of rewarding rather than punishing the erring
employee for his offense.

If found to be due under the circumstances of each case, the separation pay should
be computed at the rate of 1 month salary for every year of service.
(PLDT vs NLRC, GR# 80609 08/23/88)

- CONDITIONS FOR THE AWARD OF SEPARATION PAY EVEN THOUGH THE


DISMISSAL IS VALID
An employee dismissed for any of the just causes enumerated under Art. 282 of the
Labor Code is not, as a rule, entitled to separation pay, though, as an exception,
allowing the grant of separation pay or some other financial assistance to an
employee dismissed for just causes is based on equity.

Notwithstanding the valid dismissal, an employees lack of moral depravity could


evoke compassion and thereby compel an award of separation pay.

Separation pay may be awarded provided that the dismissal does not fall under
either of the 2 circumstances:

1. There was serious misconduct


2. The dismissal reflected on the employees moral character

An employees employment of 25 years with only 1 other infraction that petitioner


has failed to elaborate on, supports the award of separation pay.
(PCI Bank vs Abad, GR# 158045 02/28/05)

- (Phil. Commercial Intl Bank vs Abad, GR#

- (Diversified Sec. Inc. vs Alicia Bautista, GR#

- (Sagrasso Construction & Devt Corp. vs NLRC, GR#

4. Attorneys Fees (Art. 111 Labor Code)

(Labor Code)
ART. 111. Attorneys fees. - (a) In cases of unlawful withholding of wages, the
culpable party may be assessed attorneys fees equivalent to ten percent of the
amount of wages recovered.

(b) It shall be unlawful for any person to demand or accept, in any judicial or
administrative proceedings for the recovery of wages, attorneys fees which exceed
ten percent of the amount of wages recovered.

ART. 222. Appearances and Fees. - (a) Non-lawyers may appear before the
Commission or any Labor Arbiter only:

1. If they represent themselves; or 2. If they represent their organization or members


thereof.

(b) No attorneys fees, negotiation fees or similar charges of any kind arising from
any collective bargaining agreement shall be imposed on any individual member of
the contracting union: Provided, However, that attorneys fees may be charged
against union funds in an amount to be agreed upon by the parties. Any contract,
agreement or arrangement of any sort to the contrary shall be null and void. (As
amended by Presidential Decree No. 1691, May 1, 1980).

(Rule VIII, Book III, IRR)


SECTION 8. Attorney's fees. Attorney's fees in any judicial or administrative
proceedings for the recovery of wages shall not exceed 10 percent of the amount
awarded. The fees may be deducted from the total amount due the winning party.

BB. PRESCRIPTIVE PERIOD


1. For Illegal Dismissal (Art. 1146 Civil Code) - 4 yrs from Cause
of Action Accrued
2. Unfair Labor Practice - 1 yr from Cause of
Action Accrued
3. Money Claims - 3 yrs from Cause of
Action Accrued

- (Kar Asia Inc. vs Corona, GR#


- (Texon Mfg. vs Millena, GR#

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