Labor Code

Labor Law I Atty. C.A.
Azucena
Finals Reviewer

Jojo Baetiong, Gel Baniqued, Elvira Castro, Denise Dy, Sheryl Harina, Giselle Remulla Page 1 of 103
3B 2006-2007

PRELIMINARY TITLE

Chapter I
GENERAL PROVISIONS

Article 1: NAME OF DECREE
Article 2: DATE OF EFFECTIVITY

COMMENTS AND CASES

1. LABOR LEGISLATION; DEFINITIONS
Broadly divided into labor standards and labor
relations
Labor standards law is that which sets out the
minimum terms, conditions, and benefits of
employment that employers must provide and
comply with and to which employees are
entitled to as a matter of right.
Labor relations law is that which defines the
status, rights and duties, and the institutional
mechanisms, that govern the individual and
collective interactions of employers,
employees or their representatives.
Labor is understood as physical toil, although
it does not necessarily involve the application
of skill. Skill, by dictionary definition, is the
familiar knowledge of any art or science,
united with readiness and dexterity in
execution or performance or in the
application of the science or art to practical
purposes.
Work is broader than labor as work covers
all forms of physical or mental exertion, or
both combined, for the attainment of some
object other than recreation or amusement
per se.
2. LABOR LAW AND SOCIAL LEGISLATION
Social legislation includes laws that provide
particular kinds of protection or benefits to
society or segments thereof in furtherance of
social justice. In that sense, labor laws are
necessarily social legislation.
3. SOCIAL JUSTICE AS THE AIM
The aim, reason, and justification for labor
laws is social justice.
Section 3 of Article XIII says that 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.
This is because without the improvement of
economic conditions, there can be no real
enhancement of the political rights of the
people.
4. CONSTITUTIONAL RIGHTS AND MADNESS
The basic rights of workers guaranteed by the
Constitution are: the rights to organize
themselves, to conduct collective bargaining
or negotiation with management, to engage in
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peaceful concerted activities, including to
strike in accordance with law, to enjoy
security of tenure, to work under humane
conditions, to receive a living wage, to
participate in policy and decision making
processes affecting their rights and benefits
as may be provided by law.
4.1. Balancing of Rights; the Constitutional Principle
of Shared Responsibility
While labor is entitled to a just share in
the fruits of production, the enterprise
has an equally important right not only
to reasonable returns in investment but
also to expansion and growth. The
Constitution commands the State to
promote the principle of shared
responsibility between employers and
workers and the preferential use of
voluntary modes of settling disputes,
including conciliation, and to enforce
their mutual compliance therewith to
foster industrial peace.
Constitutional outlook suggests a
balanced treatment.
5. POLICE POWER AS THE BASIS
The right of every person to pursue a
business, occupation or profession is subject
to the paramount right of the government as a
part of its police power to impose such
restrictions and regulations as the protection
of the public may require.
6. BIRTH OF THE LABOR CODE
Writing began under Blas Ople, Father of the
Labor Code
The objective was not merely to consolidate
the then existing pieces of social legislation,
but also to reorient them to the needs of
economic development and justice.
7. PRINCIPLES UNDERLYING THE CODE
Must be both responsive and responsible to
national development
Must substitute rationality for confrontation in
times of national emergencies
Must be made expeditious without sacrificing
due process
Manpower development and employment must
be regarded as a major dimension of labor
policy
Availability of a global labor market to
qualified Filipinos
Must command adequate resources and
acquire capable machinery for effective and
sustained implementation
There should be popular participation in
national policy making through what is now
called tripartism
8. SOME LABOR LAWS BEFORE THE PASSAGE OF THE
CODE
Act 1874 or the Employers Liability Act
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Act 2549 which prohibited payment of wages
in non-cash form
RA 1054 which required emergency medical
treatment for employees
CA 444 or the Eight Hour Labor Law
CA 103 which created the Court of Industrial
Relations (pre-NLRC)
PD 21 which created the NLRC
RA 875 or the Industrial Peace Act/ Magna
Carta of Labor
RA 946 Blue Sunday Law
RA 1052 or the Termination Pay Law
9. SIGNIFICANCE OF FOREGOING DECISIONS
Where are labor statutes are based upon or
patterned after statutes in foreign
jurisdiction, the decisions of high courts in
those jurisdictions should receive the
careful attention of the SC in the application
of our own law.
10. RELATED LAWS
10.1. The Civil Code
Labor relations not merely contractual, but
must yield to the common good.
Prohibition against involuntary servitude (Art.
1703)
Also contains provisions regarding wages,
househelpers and liabilities of employers.
10.2. The Revised Penal Code
Punishes the use of violence or threats by
either employer or employee (Art. 289)
10.3. Special Laws
SSS law, GSIS law, Agrarian Reform Law, 13
th

month Pay Law, etc.
11. INTERNATIONAL ASPECT
On June 15, 1948, the Philippines became a
member of the International Labor
Organization (ILO), which is the UN
specialized agency which seeks the promotion
of social justice and internationally
recognized human and labor rights.
The ILO formulates international labor
standards in the form of Conventions and
Recommendations setting minimum standards
of basic labor rights.
An essential characteristic of ILO is
tripartism, that is, it is composed not onl of
government representatives but also of
employers and workers organizations.
11.1. International Commitments
By being an ILO member, the country thereby
subscribes t the fundamental principles on
which the ILO is based. Also, as an ILO
member, the Philippines imbibes the
obligation of the ILO to further programs that
will achieve ILO objectives.
11.2. ILO Core Conventions
The eight core conventions are as follows:
Forced Labor Convention (1930); Freedom of
Association and Protection of the Right to
Organize Convention (1948); Freedom to
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Organize and Collective Bargaining Convention
(1949); equal remuneration Convention
(1951); Abolition of Forced Labor Convention
(1957); Discrimination (Employment and
Occupation) Convention (1958); Minimum Age
Convention (1973); and Worst Forms of Child
Labor Convention (1999).
11.3. Ratification Generally Needed; Exception
In 1999, the ILO adopted a Declaration on
Fundamental Principles and Right at Work
concerning an obligation of all ILO members
to respect and promote the fundamental
rights even if they have not ratified the
conventions.
11.4. Ratified ILO Conventions
As of the end of 2000, the Philippines has
ratified thirty ILO Conventions, including
significantly, the core conventions on
freedom of association, on abolition of forced
labor, on abolition of child labor, and on non-
discrimination.
A labor law expert asserts that the Philippines
can claim with some pride that it belongs to
the upper 25% of the ILO members on the
basis of efforts taken to approximate labor
standards.

Article 3: DECLARATION OF BASIC POLICY

COMMENTS

1. LABOR LAWS AND SOCIAL-ECONOMIC GOALS
Labor laws are devices for social equity. The may,
depending on their provisions, make the rich richer
and the poor poorer.
The value of labor laws is in their contribution to
national growth in the context of social justice.
The true task of a student of labor law is to examine
how those laws hinder or help the attainment of the
countrys socio-economic goals.
2. INTERDEPENDENCE
It should not be deduced that the basic policy is to
favor labor to prejudice capital. The plain reality is
that both sectors need each other. They are
interdependent- one is inutile without the other.
The better understanding is that the basic policy is
to balance or coordinate the rights and interests of
both workers and the employers.

Article 4: CONSTRUCTION IN FAOVR OF LABOR

COMMENTS AND CASES

1. INTERPRETATION AND CONSTRUCTION
1.1. Laborers Welfare; Liberal Approach
The working mans welfare should be the
primordial and paramount consideration. The
policy is to extend the Decrees applicability
to a greater number of employees to enable
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them to avail of the benefits under the law, in
consonance with the States avowed policy to
give maximum aid and protection to labor.
1.2. Concern for Lowly Worker
The Sc reaffirms its concern for the lowly
worker who, often at his employers mercy,
must look up to the law for protection.
1.3. Reason for According Greater Protection to
Employees
In the matter of employment bargaining,
there is no doubt that the employer stands on
higher footing than the employee.
This is because there is a greater supply than
demand for labor. Also, the need for
employment comes from vital, even
desperate, necessity.
2. MANAGEMENT RIGHTS
Management also has its own rights which are
entitled to respect and enforcement in the interest
of simple fair play.
2.1. Right to ROI
The employer has the right to recover his
investments and make profits. There is
nothing dirty about profit per se it is profit
that creates jobs and improves the workers
lot.
2.2. Rights to Prescribe Rules
Employers have the right to make reasonable
rules and regulations for the government of
their employees, and when employees, with
knowledge of an established rule, enter the
service, the rule becomes a part of the
contract of employment.
2.3. Right to Select Employees
An employer has the right to select his
employees and to decide when to engage
them. He has the right, under the law, to full
freedom in employing any person free to
accept employment from him, and this,
except as restricted by valid statute and valid
contract, at a wage and under conditions
agreeable to them.
State cannot interfere with the liberty to
contract with respect to labor, except in the
exercise of police power.
The right of a laborer to sell his labor to such
person as he may choose is, in its essence, the
same as the right of an employer to purchase
labor from any person whom it chooses.
2.4. Right to Transfer or Discharge Employees
The employer has the perfect right to
transfer, reduce, or lay off personnel in order
to minimize expenses and to insure the
stability of the business, and even to close the
business, and this right has been consistently
upheld, provided the transfer or dismissal is
not abused but is done in good faith and is
due to causes beyond control.

Article 5: RULES AND REGULATIONS
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COMMENTS AND CASES

1. RULES AND REGULATIONS TO IMPLEMENT THE CODE
1.1. When Invalid
If promulgated in excess of its rule making
power, the resulting rule or regulation is void.

Article 6: APPLICABILITY

COMMENTS AND CASES

1. APPLICABILITY TO GOVERNMENT CORPORATIONS
The ruling now is that the Labor Code applies
to a corporation incorporated under the
Corporation Code.
Government corporations created by special
charter from Congress are subject to civil
service rules, while those incorporated under
the Corporation Code are covered by the
Labor code.
1.1. PNOC-EDC, FTI, NHA
2. NON-APPLICABILITY TO GOVERNMENT AGENCIES
The terms governmental agency or
instrumentality are synonymous in the
sense that either of them is a means by which
a government acts, or by which a certain
government act or function is performed. The
word instrumentality with respect to the
state, contemplates an authority to which the
state delegates government power for the
performance of a state function.
Example: The National Parks Development
Committee is an agency of the government,
not a government-owned or controlled
corporation. Its employees are covered by
civil service rules and regulations, since they
are civil service employees.
But if function is proprietary in nature, its
employees are governed by the Labor Code.
3. APPLICABILITY WITHOUT EMPLOYER-EMPLOYEE
RELATIONSHIP
The Labor Code may apply even if the parties
are not employers and employees of each
other.
The Labor Code applies with or without
employment relationships between the
disputants, depending on the kind of issue
involved.
For example, when one speaks of employment
benefits, then surely, employment
relationship is an essential element. But when
the issue, for instance, is an indirect
employers liability, there is no employer-
employee relationship and yet the pertinent
Labor Code provisions find application.

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Chapter II
EMANCIPATION OF TENANTS
1

Article 7: STATEMENT OF OBJECTIVES
Article 8: TRANFER OF LANDS TO TENTN-WORKERS
Article 9: DETERMINATION OF LAND VALUE
Article 10: CONDITION OF OWNERSHIP
Article 11: IMPMENTING AGENCY

COMMENTS AND CASES

1. LEGISLATIVE HISTORY
There is an acute imbalance in the distribution of
land among our people. Hence, the Constitution of
1987 adopted a whole article containing provisions
for the uplift of the common people, thus: The
State shall, by law, undertake an agrarian reform
program founded on the right of farmers and regular
farmworkers, who are landless, to own directly or
collectively the land they till or, in the case of other
farmworkers, to receive a just share of the fruits
thereof.
2. SHARE TENANCY ABOLISHED
RA 3844 abolished and outlawed share tenancy and
put in its stead the agricultural leasehold system.
RA 6389, amending RA 3844, declared share tenancy
as contrary to law and public policy.
The phasing out of share tenancy was the first step
towards the ultimate status of owner-cultivator, a

1
Amended by R.A. No. 6657, June 10, 1988
goal sought to be achieved by the government
program of agrarian reform.
3. CONSTITUTIONAL PROVISIONS
4. COMPENSATION SCHEME
Title to all expropriated properties shall be
transferred to the State only upon full payment of
compensation of the respective owners.
5. RETENTION LIMITS
in no case shall retention by the landowner exceed
5 hectares.
6. LANDS NOT COVERED
6.1. Lands Obtained Through Homestead Patent
The Philippine Constitution respects the
superiority of the homesteaders rights over
the rights of the tenants.
Homestead Act has been enacted for the
welfare and protection of the poor. The law
gives a needy citizen a piece of land where he
may build a modest house for himself and his
family and plant what is necessary for
subsistence and for the satisfaction of lifes
other needs.
6.2. Residential Subdivisions
An agricultural leasehold cannot be
established on land which has ceased to be
devoted to cultivation or farming because of
its conversion to a residential subdivision.
(Gonzales vs. CA)
6.3. Livestock, Poultry and Swine Raising Lands
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There is simply no reason to include livestock
and poultry lands in the coverage of agrarian
reform.

BOOK ONE
PRE-EMPLOYMENT

Article 12: STATEMENT OF OBJECTIVES

COMMENTS

1. THE UNEMPLOYMENT PROBLEM
In a list of 18 countries, the Philippines
unemployment rate is the highest, at 10.2%,
meaning more than three million jobless.
The unemployment problem is exacerbated by
population growth that appears unchecked.
2. THE DOLE: ITS RESPONSIBILITY
The Administrative Code mandates the DOLE to
assume primary responsibility for:
a. The promotion of gainful employment
opportunities and the optimization of the
development and utilization of the countrys
manpower resources;
b. The advancement of workers welfare by
providing for just and humane working
conditions and terms of employment;
c. The maintenance of industrial peace by
promoting harmonious, equitable and
employment relations that assure protection
for the rights of all concerned parties.

Title I
RECRUITMENT AND PLACEMENT OF WORKERS

Chapter I
GENERAL PROVISIONS

Article 13: DEFINITIONS

COMMENTS

ARTICLE 13 (B) CONSTRUED; WHAT CONSTITUTES
RECRUITMENT AND PLACEMENT
The number of persons is not an essential ingredient
of the act of recruitment and placement of workers.
Any of the acts mentioned in the basic rule in Article
13 (b) will constitute recruitment and placement
even if only one prospective worker is involved.
(People vs. Panis)
It must be shown that the accused gave the
complainant the distinct impression that she had the
power or the ability to send the complainant abroad
for work, such that the latter was convinced to part
with her money to be so employed. Where such an
act or representation is not proven, there is not
recruitment activity and conviction for illegal
recruitment has no basis. (People vs. Goce)
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By themselves, procuring a passport, airline tickets
and foreign visa for another individual, without
more, can hardly qualify as recruitment activities.
(Darvin vs. CA)

Article 14: EMPLOYMENT PROMOTION

COMMENTS

EMPLOYMENT PROMOTION
To pursue its responsibility to promote employment
opportunities, the DOLE carries out programs for
local and overseas employment.

Article 15: BUREAU OF EMPLOYMENT SERVICES

COMMENTS
1. LOCAL EMPLOYMENT
The Bureau of Employment Services has been
replaced by the Bureau of Local Employment (BLE)
through EO 797 (May 1, 1982)

1.1. The PESO
Public Employment Service Office
Intended to serve as employment service
and information center in its area of
operation. It regularly obtains a list of job
vacancies from employers, publicizes them,
invites and evaluates applicants, and refers
them for probable hiring.
Also holds special services for the public
such as employment bazaars, etc.

Article 16: PRIVATE RECRUITMENT

COMMENTS
AUTHORIZED ENTITIES
Based on the Rules Implementing the Code, the
following entities are authorized to recruit and place
workers for local or overseas employment:
a. public employment offices
b. Private recruitment entities
c. Private employment agencies
d. Shipping or manning agents or
representatives
e. POEA
f. Construction contractors if authorized
to operate by DOLE and the
Construction Industry Authority
g. Members of the diplomatic corps
although hirings done by them have
to be processed through the POEA
h. Other persons or entities as may be
authorized by the DOLE Secretary.

Article 17: OVERSEAS EMPLOYMENT DEVELOPMENT
BOARD

COMMENTS AND CASES

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1. OVERSEAS EMPLOYMENT, A BRIEF HISTORY
Labor migration in the Philippines began in the 1900s
when Hawaii experienced severe manpower
shortage. The 200 Filipinos that initially went there
were followed by many more until they formed
about 70% of Hawaiis plantation labor.
Other countries such as the US, Canada, Australia,
Japan and Saudi Arabia eventuall followed suit.
2. LEGISLATIVE BACKGROUND OF OVERSEAS EMPLOYMENT
Act 2486: first law passed by Philippine Congress
relating to overseas employment
PD 442: Labor code, paved the way for stricter
government regulation of the overseas employment
industry.
PD 1412: revived private sector participation in the
recruitment and placement of Filipino migrant
workers.
EO 797: Enacted to streamline operations in the
overseas employment program.
EO 247: Reorganization Act of the POEA
RA 8042: Migrant Workers and Overseas Filipinos Act
of 1995
3. OVERSEAS EMPLOYMENT POLICY
3.1. R.A. No. 8042
The State does not promote overseas
employment as a means to sustain economic
growth and achieve national development.
The existence of 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.
3.2. Selective Deployment
RA 8042 requires certain guarantee of
protection for the overseas worker before
they are deployed in countries that meet
some criteria:
o It has existing labor and social laws
protecting the rights of migrant
workers;
o It is a signatory to multilateral
conventions, declarations or resolutions
relating to the protection of migrant
workers;
o It has concluded a bilateral agreement or
arrangement with the government
protecting the rights of Filipino migrant
workers;
o It is taking positive, concrete measures
to protect the rights of migrant
workers.
Notwithstanding this the government, in
pursuit of national interest or when public
welfare so requires, may, at any time,
terminate or impose a ban on the deployment
of migrant workers.

4. THE POEA: OVERVIEW OF ITS FUNCTIONS AND POWERS
Among the principal functions of the POEA are the
formulation, implementation, and monitoring of the
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overseas employment of the Filipino workers and the
protection of their rights to fair and equitable
employment practices.
Overseas Filipino Worker (OFW) is understood as a
Filipino worker who is to be engaged, is engaged, or
has been engaged in a remunerated activity in a
country of which he/she is not a legal resident.
OFWs are classified by DOLE as either land-based or
sea-based.
4.1. POEA Rules (2002)
5. REGULATORY FNCTION OF POEA
POEA regulates the private sector participation in
the recruitment and overseas placement of workers
through its licensing ad registration system.
6. ADJUDICATORY FUNCTIONS OF POEA
Before the passage of RA 8042, POEA had original
and exclusive jurisdiction to hear and decide the ff
cases:
a. Recruitment violation and related
cases consisting of all preemployment
cases which are administrative in
character, involving or arising out of
recruitment laws, rules and
regulations, including money claims
therefrom or violations of the
conditions for issuance of license to
recruit workers.
b. Employer-emploee relations cases
consisting of all claims arising out of
an employer-employee relationship or
b virtue of any law or contract
involving Filipino workers in overseas
employment.
c. Disciplinary action cases consisting of
all complaints against a contract
worker for breach of discipline.
6.1. Jurisdiction Transferred to NLRC
RA 8042 transferred to the NLRC the
jurisdiction over employer-employee
relations cases.
Section 10 of the said law provides
that Labor Arbiters shall have the
exclusive and original jurisdiction to
hear and decide claims arising out of
an employer-employee relationship or
by virtue of any law or contract
involving Filipino workers for overseas
employment including claims for
actual, moral, exemplary and other
forms of damages.
RA 8042 not only transferred from
POEA to NLRC the jurisdiction over
money claims of OFWs, it even
expanded the scope of such money
claim. When the jurisdiction was still
with the POEA, the jurisdiction
covered only money claims involving
Filipino workers for overseas
employment. Now the NLRC
jurisdiction is over money claims
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involving Filipino workers for overseas
deployment.
RA 8042 allows for claims for money
or damages sustained during the
period of deployment or before
departure for abroad.
6.2. Jurisdiction Retained With POEA
POEA retains the jurisdiction to
decide all cases which are
administrative in character and
disciplinary action cases.
6.3. Compromise Agreement
RA 8042 allows also resolution by
compromise.
6.4. Mandatory Principle
Non-compliance with the periods
provided for under the law will
subject the responsible officials to
penalties such as withholding of
salaries until compliance, suspension,
or dismissal from service.
7. EMPLOYER-EMPLOYEE RELATIONS CASES: TERMINATION
OF EMPLOYMENT
7.1. Contractual Employees
Sea farers are contractual employees.
(Millares and Lagda vs. NLRC)
7.2. Premature Termination of Contract
Where the workers employment
contract is terminated before its
agreed termination date, and the
termination is not shown to be based
on lawful or valid grounds, the
employer will be ordered to pay the
workers their salaries corresponding
to the unexpired portion of their
employment contract. (Tierra
Construction vs. NLRC)
7.3. Pretermination Under R.A. No. 8042; July 15,
1995 Onward
The date of the employment
termination is material. If it occurred
on or after July 15, 1995, the law to
apply is RA 8042.
Under Section 10, a worker dismissed
from overseas employment without
just, valid or authorized cause as
defined by law or contract, is entitled
to a full reimbursement of his
placement fee with interest at 12%
per annum, plus his salary for the
unexpired portion of his employment
contract or for 3 months for every
year of the unexpired term,
whichever is less.
8. EMPLOYER-EMPLOYEE RELATIONS CASES: MONEY CLAIMS;
EMPLOYERS NATIONALITY IMMATERIAL
Statutes and regulations do not limit the coverage to
non-Filipino employers. Filipinos working overseas
share the same risks and burdens whether their
employers be Filipino or foreign.
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8.1. Death and Other Benefits, Basis of Compensation
The standard contract for employment for
Filipino seamen allows the payment of death
benefit pension, funeral benefit, and burial
gratuity for the private respondent.
These claims arose from the responsibility of
the foreign employer together with the local
agency for the safety of the employee
during his repatriation and until his arrival in
this country, i.e. the point of hire. (Inter-
Orient Maritime Enterprises vs. NLRC)
8.2. Illustrative Case: Death Benefit Under the
Standard Contract
In order to evade liability for death benefit
under the standard contract, it must be
sufficiently shown that the deaths of the
seamen were caused by their own willful and
deliberate act. In this case, the evidence does
not substantially prove that the seamen
contracted tetanus as a result of the
unsanitary surgical procedures they performed
on themselves. Hence, the death benefits
under the employment contract must be paid.
(NFD International Manning Agents vs. NLRC)
8.3. Overseas Compensation Benefits in Dollars
While it is true that RA 529 makes it unlawful
to require payment of domestic obligations in
foreign currency, this particular statute is not
applicable in the case at bar. The fixing of the
award in dollars was based on the parties
employment contract, stipulating that wages
and benefits in dollars, since private
respondent was engaged as an overseas
seaman on board petitioners foreign vessel.
(Philippine International Shipping Corp. vs.
NLRC)
9. DISCIPLINARY ACTION CASES
The POEA may motu propio undertake a
disciplinary action against a worker for breach
of discipline. It shall also establish a system of
watching and blacklisting OCWs.
9.1. Grounds for Disciplinary Action
a. Commission of a felony punishable by
Philippine laws or laws of host
country;
b. Drug addiction or possession or
trafficking of prohibited drugs;
c. Desertion or abandonment;
d. Gambling;
e. Initiating or joining a strike, where
prohibited;
f. Creating trouble at the work site;
g. Embezzlement of company funds or
other properties;
h. Theft or robbery;
i. Prostitution;
j. Vandalism;
k. Gunrunning or possession of deadly
weapons;
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l. Unjust refusal to depart for a
worksite after all documents have
been prepared;
m. Violations of the law and sacred
practices of the host country and
unjustified breach of the employment
contract.
10. OUTSIDE POEA JURISDICTION
The POEA has no jurisdiction to hear and
decide a claim for enforcement of a foreign
judgment. Such a claim must be brought
before the regular courts. This is because the
POEA is not a court, it is only an
administrative agency.
10.1. No Jurisdiction Over Torts
Intention must be to seek and claim
protection under the Labor Code and not the
Civil Code. In the case at bar, the items
demanded are not labor benefits such as
wages, overtime pay or separation pay, but
are items claimed as natural consequences of
his dismissal (which he denominates as
damages.) POEA has no jurisdiction.

Article 18: BAN ON DIRECT-HIRING
Article 19: OFFICE OF EMIGRANT AFFAIRS

COMMENTS
Direct hiring of Filipino workers by a foreign
employer is not allowed except direct hiring by
members of he diplomatic corps and others
mentioned in this article. Also excepted are name
hirees or those individual workers who are able to
secure contracts for overseas employment on their
own efforts and representations without the
assistance or participation of any agency.
The Office of Emigrant Affairs has been abolished
and its pertinent functions were transferred to the
Commission on Filipinos Overseas (CFO) by Batasang
Pambansa Blg. 79.

Article 20: NATIONAL SEAMEN BOARD

COMMENTS AND CASES
1. NSB NOW POEA
EO 797 abolished the NSB and transferred its
function to the POEA. But this adjudicatory function
of the POEA has since been moved to the NLRC by RA
8042.
2. ARTICLE 20 CONSTRUED; SEAMENS EMPLOYMENT
CONTRACTS AND THE INTERNATIONAL TRANSPORT
FEDERATION (ITF)
Wallem Shipping vs. Ministry of Labor: Seamen who
were dismissed because they demanded that they be
paid the worldwide rate, instead of the lower Far
East rate as provided in their contracts of
employment, did not commit serious misconduct as
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to warrant their dismissal. They were only exercising
their rights. Hence, dismissal was illegal.
Filipino seamen are admittedly as competent and
reliable as seamen from any other country in the
world; otherwise, there would not be so many of
them in the vessels sailing in every ocean and sea on
this globe. They are entitled to government
protection when they ask for fair and decent
treatment by their employers and when they
exercise their right to petition for improved terms of
employment, especially when they feel that these
are substandard or are capable of improvement
according to internationally accepted rules. Also,
the standard forms embody the basic minimums
which must be incorporated as parts of the
employment contract. They are not collective
bargaining agreements or immutable contracts which
the parties cannot improve upon or modify in the
course of the agreed peril of time. (Vir-jen Shipping
vs. NLRC)
3. INVALID SIDE AGREEMENT
An agreement that diminishes the employees [ay
and benefits as contained in a POEA-approved
contract is void, unless such subsequent agreement
is approved by the POEA.
4. DELAY IN FILING CLAIM
There is no absolute rule as to what constitute
laches; each case is to be determined according to
its particular circumstances. The question of laches
is addressed to the sound discretion of the court and
since it is an equitable doctrine, its application is
controlled by equitable considerations. It cannot be
worked to defeat justice or perpetrate fraud or
injustice.
Where the claim was filed within the three-year
statutory period, recovery therefore cannot be
barred by laches. Courts should never apply the
doctrine of laches earlier than the expiration of time
limited for the commencement of actions at law.
(Imperial Victory Shipping vs. NLRC)
5. MINIMUM EMPLOYMENT CONDITIONS
a. Guaranteed wages for regular working
hours and overtime pay
b. Free transportation to and from the
worksite, or offsetting benefit;
c. Free food and accommodation, or
offsetting benefit;
d. Just and authorized causes for
termination of contract taking into
consideration the customs and norms
of the host country.
6. FREEDOM TO STIPULATE
Parties are allowed to stipulate other terms and
conditions and other benefits not provided under
these minimum requirements, provided the whole
employment package should be more beneficial to the
worker than the minimum, and that the same not be
contrary to law, public policy, and morals.

Article 21: FOREIGN SERVICE ROLE AND PARTICIPATION
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COMMENTS

1. PROTECTION AND ASSISTANCE BY GOVERNMENT
AGENCIES
RA 8042 assigns four government agencies to
promote the welfare and protect the rights of
migrant workers and, as far as practicable, of all
overseas Filipinos: DFA, DOLE, POEA, and OWWA.
2. THE RPM CENTER
Re-Placement and Monitoring Center
Serves as a promotion house for local employment of
these returning workers and to tap their skills for
national development.
3. THE OWWA
Overseas Workers Welfare Administration
Intended to provide social and welfare services,
including insurance coverage, legal assistance,
placement assistance, and remittance services to
OFWs.
Funded with contributions from the workers
themselves and the fees and charges imposed by the
POEA and BLE.
4. REPATRIATION OF WORKERS
The primary responsibility to repatriate a worker,
including his or her remains and personal effects,
belongs to the principal or the agency that recruited
or deployed the worker.
If the termination is due solely to the fault of the
worker, the principal or agency may recover the cost
of repatriation from the worker after return to the
country.
If the principal of agency does not comply with this
obligation, the POEA shall notify the OWWA to
advance the repatriation cost with recourse to the
agency or principal.

Article 22: MANDATORY REMITTANCE OF FOREIGN
EXCHANGE EARNINGS

COMMENTS
REMMITTANCE

Article 23: COMPOSITION OF THE BOARDS

COMMENTS

1. COMPOSITION OF THE POEA

Article 24: BOARDS TO ISSUE RULES AND COLLECT FEES

Chapter II
REGULATIONS OF RECRUITMENT AND
PLACEMENT ACTIVITIES

Article 25: PRIVATE SECTOR PARTICIPATION IN THE
RECRUITMENT AND PLACEMENT OF WORKERS

COMMENTS AND CASES
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1. VALIDITY OF POEA REGULATIONS
Valid under the principle of subordinate legislation
1.1. POEA Circular No. 11 (1983) Unenforceable
This circular has not yet been published or filed with
the National Administrative Register, hence, cannot
be used as a basis for the imposition of
administrative sanctions.

Article 26: TRAVEL AGENCIES PROHIBITED TO RECRUIT

COMMENTS
The POEA rules also disqualify persons with
derogatory records such as those convicted for
illegal recruitment or other crimes involving moral
turpitude, an official or employee of DOLE, POEA,
OWWA, DFA and other government agencies directly
involved in the implementation of RA 8042 or any of
their relatives within the fourth civil degree.

Article 27: CITIZENSHIP REQUIREMENT
Article 28: CAPITALIZATION

COMMENTS
The required capitalization, according to POEA rules,
is a minimum of two million pesos in case of single
proprietorship or partnership and a minimum paid-up
capital of the same amount for a corporation.

Article 29: NON-TRANSFERABILITY OF LICENSE OR
AUTHORITY

COMMENTS

PLACE OF RECRUITMENT
Licensees or holders of authority or their duly-
authorized representatives may, as a rule, undertake
recruitment and placement activities only at their
authorized official address.
Under existing regulations, however, they may be
allowed to conduct provincial recruitment only upon
written authority from the POEA.
Recruitment of workers for overseas employment
cannot be lawfully undertaken on a house-to-house
basis, in residences, or secluded places.

Article 30: REGISTRATION FEES
Article 31: BONDS

COMMENTS AND CASES
The POEA possesses the power to enforce liability
under cash or surety bonds.
These are means of ensuring prompt and effective
recourse against such companies when held liable for
applicants and workers claims. (Finman General
Assurance vs. Innocencio)

Article 32: FEES TO BE PAID BY WORKERS

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COMMENTS AND CASES

1. CHARGEABLE FEES
Unless otherwise provided, the principal shall be
liable to pay for the ff:
a. visa fee;
b. airfare;
c. POEA processing fee; and
d. OWWA membership fee.
A land-based agency may charge and collect from its
hired workers a placement fee in an amount
equivalent to one month salary, exclusive of
documentation costs. These documentation costs
shall include expenses for the ff:
a. Passport;
b. NBI/ Police/ Barangay clearance;
c. Authentication;
d. Birth Certificate;
e. Medicare;
f. Trade test, if necessary;
g. Inoculation, when required;
h. Medical Examination fees.
The abovementioned placement and documentation
costs are the only authorized payments that may be
collected from a hired worker. No other charges in
whatever form, manner or purpose, shall be imposed
on and be paid by the worker without prior approval
by the POEA.
Such fees shall be collected from the hired worker
only after he has obtained employment through the
facilities of the recruitment agency.
2. REFUND FEES
POEA has the power to order the refund of illegally
collected fees.

Article 33: REPORTS ON EMPLOYMENT STATUS
Article 34: PROHIBITED PRACTICES

COMMENTS AND CASES

PROHBITED PRACTICES
Article 34(a) prohibits the charging or accepting of
fees greater than that allowed by regulations. It is
also a deterrant to loan sharks who lend money at
usurious interests.
Article 34(b) includes the act of furnishing fake
employment documents to a worker, and the act of
publishing false notice or information in relation to
recruitment or employment.
In Article 34(d), it is not necessary that the worker
was actually induced or did quit the employment.

Article 35: SUSPENSION AND/OR CANCELLATION OF
LICENSE OR AUTHORITY

COMMENTS AND CASES

1. SUSPENSION OR CANCELLATION OF LICENSE
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The grounds for imposition of administrative
sanctions include engaging in acts of
misrepresentation for the purpose of securing a
license or renewal thereof, etc. The acts prohibited
under Art. 34 are not just grounds for suspension or
cancellation of license or authority. They likewise
constitute illegal recruitment under RA 8042.

1.1. Concurrent Jurisdiction to Suspend or Cancel a
License
The SC has affirmed the concurrent jurisdiction
of the DOLE Secretary and the POEA
Administrator to suspend or cancel a license.

2. PERSONS LIABLE; DURATION OF LIABILITY
A recruitment agency is solidarily liable for the
unpaid salaries of a worker it recruited for
employment with a foreign principal.
Even if the recruitment agency and the principal had
already severed their agency agreement at the time
the worker was injuredm the recruitment agency
may still be sued for violation of the employment
contract, if no notice of the agency agreements
termination was given to the employee.
The responsibilities of the recruitment agency and
the principal to the worker extends up to and until
the expiration of the employment contracts of the
employees recruited and employed pursuant to the
said employment agreement.
3. SOLIDARY LIABILITY ASSUMED BY RECRUITMENT AGENT
Contract contained a provision empowering the
agency to sue and be sued jointly and solidarily with
the foreign principal for any of the violations of the
recruitment agreement and the contracts of
employment. These contractual undertakings
constitute the legal basis for private agencies being
liable jointly and severally with its principal, for all
claims filed by recruited workers which may arise in
connection with the implementation of the service
agreements or employment contracts. (Royal Crown
Inernationale vs. NLRC)

3.1. Required Undertaking by Agent
3.2. Contract by Principal
It has been held that even if it was the
petitioners principal which entered into a
contract with the private respondent,
nevertheless, petitioner, as the manning agent in
the Philippines, is jointly and solidarily
responsible with its principal. (Seagull Maritime
Corp vs. Balatongan)
3.3. Proper Party
A sister in the Philippines of a maltreated Filipino
domestic helper in Abu Dhabi is a proper party to
file a complaint.
4. SUABILITY OF A FOREIGN CORPORATION WHICH HIRES
FILIPINO WORKERS
A foreign corporation which, through unlicensed
agents, recruits workers in the country may be sued
in and found liable by Philippine courts.
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5. DEREGULATION AND PHASE OUT
RA 8042 envisions a phase-out of POEAs regulatory
function so that the migration of workers will
become strictly a matter between the worker and
his employer. This projected deregulation has stirred
some controversies which, to this day, continue to
remain unresolved.

Chapter III Miscellaneous Provisions

Art. 36 Regulatory Power
The Secretary of Labor shall have the power to restrict
and regulate the recruitment and placement activities
of all agencies within the coverage of this Title and is
hereby authorized to issue orders and promulgate rules
and regulations to carry out the objectives and
implement the provision of this Title.

Art. 37 Visitorial Power
The Secretary of Labor or his duly authorized
representatives may, at any time, inspect the premises,
books of accounts and records of any person or entity
covered by this Title, require it to submit reports
regularly on prescribed forms, and act on any violations
of this Title.

Art. 38 ILLEGAL RECRUITMENT
2

2
Amended by Republic Act 8042 or The Migrant Workers and Overseas
Filipinos Act of 1995
As stated in the Code: (a) Any recruitment activities,
including prohibited practices enumerated under Art. 34
of this Code, to be undertaken by non-licensees or non-
holders of authority shall be deemed illegal and
punishable under Art. 39 of this Code. The DOLE or any
law enforcement officer may initiate complaints under
this Article.
(b) Illegal Recruitment, when
committed by a syndicate or in large scale shall be
considered an offense involving economic sabotage and
shall be penalized in accordance with Art. 39 hereof.
Illegal Recruitment is deemed committed by a
syndicate if carried out by a group of three (3) or more
persons conspiring and/or confederating with one
another in carrying out any unlawful of illegal
transaction, enterprise or scheme, defined under the
first paragraph hereof. Illegal Recruitment is deemed
committed in large scale if committed against three (3)
or more persons individually or as a group.
(c) The Secretary of Labor and
Employment or his duly authorized representatives shall
have the power to cause the arrest and detention of
such non-licensee or non-holder of authority if after
investigation it is determined that his activities
constitute danger to national security and public order
or will lead to further exploitation of job-seekers. The
Minister shall order the search of the office or premises
and seizure of documents, paraphernalia, properties
and other implements used in illegal recruitment
activities and the closure of companies, establishments
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3B 2006-2007

and entities found to be engaged in the recruitment of
workers for overseas employment without having been
licensed or authorized to do so.

Now, under RA 8042, the abovementioned article
has been amended to also include LICENSED or
AUTHORIZED entities; the list of ACTS CONSIDERED
AS ILLEGAL RECRUITMENT has also been EXPANDED
as found in SECTION 6, RA 8042:
Definition: xxx 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 as contemplated
under the Labor Code; 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 change or accept directly or
indirectly any amount greater
than that specified in the
schedule of allowable fees
prescribed by the DOLE
Secretary, or to make a worker
pay any amount greater than
that actually received by him as
a loan or advance;
b.) To furnish of 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
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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 DOLE
Secretary or by his duly
authorized representative;
h.) To fail to submit reports on the
status of employment,
placement vacancies, remittance
of forex earnings, separation
from jobs, departures and such
other information as may be
required by the DOLE Secretary;
i.) To substitute or alter to the
prejudice of the worker,
employment contracts approved
and verified by the DOLE from
the time of the actual signing
thereof by the parties up to and
including the period of the
expiration of the same without
the approval of the DOLE;
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 provisions
of the Labor Code and its IRRs;
l.) Failure to actually deploy
without valid reason as
determined by the DOLE;
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 workers 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 and/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.
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Persons Liable: Principals, Accomplices, and
Accessories; for Juridical Persons: the officers
HAVING CONTROL, MANAGEMENT, OR DIRECTION of
their business
General Rule: Employees who have no control, do
not manage nor direct the business may not be held
liable; UNLESS, it is shown that such employees
ACTIVELY AND CONSCIOUSLY PARTICIPATED in the
illegal recruitment
LACK OF RECEIPTS: will not defeat the purpose of
criminal prosecution AS LONG AS THE WITNESSES
CAN POSITIVELY SHOW THROUGH THEIR RESPECTIVE
TESTIMONIES that the accused was the one involved
in the prohibited recruitment; credible testimonies
suffice
ECONOMIC SABOTAGE: IR committed by syndicate
and IR committed in large scale; each is an
independent and separate category that can stand
on their own and need not coincide or concur within
the same case
ESTAFA: CONVICTION for Illegal Recruitment is not a
bar for filing suit against such person for ESTAFA
under the RPC as long as the requisites for said
felony are present
THE POWER TO ISSUE SEARCH AND ARREST
WARRANTS AS FOUND IN ART. 38 (C) DEEMED
UNCONSTITUTIONAL see Salazar v. Achacoso and
Marquez, G.R. No. 81510, March 14, 1990
- under the Constitution (Art. III, Sec. 2, 1987
Constitution) only a judge may issue a
warrant of arrest or a search warrant
- the Secretary of Labor is not a judge hence is
no longer granted the power to issues said
warrants. Authorities must now undergo
judicial process
- Exception: Deportation or Illegal and
Undesirable Aliens Casesthe President or
the Commissioner of Immigration may order
arrested following a final order of deportation
for the purpose of deportation
SUBJECT TO ARREST: Illegal Recruiters are still
subject to arrest, upon compliance with the
procedure as provided for by law namely through a
warrant of arrest issued by a judge of an RTC where
a criminal information was filed after preliminary
investigation; also RULES ON WARRANTLESS ARRESTS
under Rule 113, Section 5 of the ROC may still apply
to illegal recruiters when they fall under the
circumstances enumerated therein; WARRANTLESS
SEARCHES: INCIDENTAL to lawful arrest; PLAIN VIEW;
with INDIVIDUALS CONSENT
CLOSURE ORDER: DOLE Secretary or his duly
authorized representative still has power or
authority to issue and order closure of illegal
recruitment establishes, this being an
ADMINISTRATIVE and REGULATORY action; Issuance
after an ex parte preliminary examination to
determine whether the activities of a non-licensee
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constitute a danger to national security and public
order or will lead to further exploitation of job
seekers
PROCEDURE FOR CLOSURE: Rules Secs. 14 27;
these cover the POEAs Anti-Illegal Recruitment
Programs; Provision for Legal Assistance; Complaints
Desk; Surveillance; Issuance of Closure Order;
Implementation of Closure Order; Report on CO,
Institution of Criminal Action; Motion to Lift CO;
Who may file such Motion; Grounds for Lifting or Re-
opening; Appeal and Re-padlocking of Office

Art. 39 - PENALTIES
3

(A) The penalty of life imprisonment and a fine of One
Hundred Thousand Pesos (P100,000) shall be
imposed if illegal recruitment constitutes economic
sabotage as defined herein;
(B) Any licensee or holder of authority found violating
or causing another to violate any provision of this
Title or its implementing rules and regulations shall
upon conviction thereof, suffer the penalty of
imprisonment of not less than two years nor more
than five years or a fine not less than P10,000 nor
more than P50,000, or both such imprisonment and
fine, at the discretion of the court;
(C) Any person who is neither a licensee nor a holder of
authority under this Title found violating any
provision thereof or its IRRS shall, upon conviction
thereof, suffer the penalty of imprisonment of not

3
Amended by RA 8042, Section 7
less than four years nor more than eight years or a
fine not less than P20,000 nor more than P100,000
or both such imprisonment and fine, at the
discretion of the court;
(D) If the offender is a corporation, partnership,
association, or entity, the penalty shall be imposed
upon the officer or officers of the corporation,
partnership, association, or entity responsible for
the violation, and if such officer is an alien, he
shall, in addition to the penalties herein prescribed,
be deported without further proceedings;
(E) In every case, conviction shall cause and carry the
automatic revocation of the license or authority
and all the permits and privileges granted to such
person or entity under this Title, and the forfeiture
of the cash and surety bonds in favor of the
Overseas Employment Board or the National Seamen
Board, as the case may be, both of which are
authorized to use the same exclusively to promote
their objectives.

Section 7, RA 8042 provides:
Any person found guilty of IR shall suffer the
penalty of IMPRISONMENT of NOT LESS THAN SIX
(6) YEARS AND ONE (1) DAY BUT NOT MORE THA
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)

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The penalty of LIFE IMPRISONMENT and a FINE
NOT LESS THAN FIVE HUNDRED THOUSAND PESOS
(P500,000.00) NOR MORE THAN ONE MILLION
PESOS (P1,000,000.00) shall be imposed if IR
CONSTITUTES ECONOMIC SABOTAGE

Provided however, That the MAXIMUM PENALTY
shall be imposed if the PERSON ILLEGALLY
RECRUITED is LESS THAN 18 YEARS OF AGE or
committed by a non-licensee or non-holder of
authority.

VENUE (Sec. 9, RA 8042): Criminal Action arising
from IR shall be filed with the REGIONAL TRIAL
COURT of the province or city WHERE THE
OFFENDED PARTY ACTUALLY RESIDES AT THE TIME
OF THE COMMISSION OF THE OFFENSE
MANDATORY PERIODS for Resolution of IR cases (Sec.
11, RA 8042): terminate within 30 days from date of
filing: preliminary investigation; file information
within 24 hours from termination of investigation;
file information within 48 hours from the date of
receipt of case records if preliminary investigation
conducted by judge and prima facie case is
established
PRESCRIPTIVE PERIODS (Sec. 12, RA 8042): General
IR: five (5) years; IR involving Economic Sabotage:
twenty (20) years

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 DOLE.
The employment permit may be issued to a non-
resident alien or to the applicant employer after a
determination of non-availability of a person in the
Philippines who is competent, able and willing at the
time of the application to perform the services for
which the alien is desired.
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 the employment permit, the
alien shall not transfer to another job or change his
employer without prior approval from the Secretary
of DOLE
(b) Any non-resident alien who shall take up
employment in violation of provision of this Title
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and its IRRs shall be punished in accordance with
Arts. 289
4
and 290 of the Labor Code.
In addition, the alien worker shall be subject to
deportation after service of his sentence.

RESIDENT ALIENS: NOT required to have employment
permits; instead, they need an ALIEN EMPLOYMENY
REGISTRATION CARD (AERC)
NATIONALIZED INDUSTRIES and the ANTI-DUMMY
LAW (C.A. no. 108 as amended by PD715)
Foreigners may not be employed in certain
nationalized industries; law provides and subjects
reservation of ownership and control of such
corporations to the 60% requirement, i.e. public
utility, natural resources; financing companies;
however, media and advertising requires 100%
Filipino ownership and management (Consti)
DOJ OPINION 143, series 1976: provides instances
when aliens may be allowed to engage in
employment within nationalized industries: a.)
where the DOJ Secretary specifically authorizes the
employment of foreign technical personnel, or, b.)
where the aliens are elected members of the Board
of Directors or governing body of corporations or
associations in proportion to their allowable
participation in the capital of such entities

4
Re-check Codal; di nag-ma-match numbers e; Book 7: Title 1: Penal
Provisions and Liabilities; 288 (Penalties) - 289 (Liable Officers of Juridical
Person); Title 2: Prescription; 290: Offenses: 3 years
DEPARTMENT ORDER no. 12, SERIES 2001: Omnibus
Guidelines for the Issuance of Employment Permits
to Foreign Nationals; the following are required to
apply for an Alien Employment Permit (AEP):
1.) All foreign nationals seeking admission to the
Philippines for the purpose of employment;
2.) Missionaries or religious workers who intend
to engage in gainful employment;
3.) Holders of Special Investors Resident Visa
(SIRV), Special Retirees Resident Visa (SRRV),
Treaty Trades Visa, or Special Non-
Immigration Visa, who occupy any advisory,
supervisory, or technical position in any
establishment;
4.) Agencies, organizations, or individuals
whether public or private, who secure the
services of foreign professional to practice
their professions in the Philippines under
reciprocity and international agreements;
5.) Non-Indo Chinese Refugees who are asylum
seekers and given refugee status by the UN
High Commissioner on Refugees (UNHCR) of
the DOJ under the DOJ Department Order no.
49, 1998.
6.) Resident foreign Nationals seeking
employment in the Philippines (see D.O. no.
21-02 which suspends until further notice
the requirement for Resident Foreign
Nationals to secure AEP)

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D.O. 12-01 further, EXEMPTS the following from AEP
requirements:
1.) All members of the diplomatic services and
foreign government officials accredited by
the Philippine Government;
2.) Officers and staff of the 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, and
4.) All foreign nationals granted exemption by
special laws and all other laws that may be
promulgated by Congress

Basis for issuing AEP:
a.) Compliance by the applicant
employer or the foreign national with
the substantive and documentary
requirements;
b.) Determination of the DOLE Secretary
that there is no Filipino national who
is competent, able and willing to do
the job for which the services of the
applicant is desired;
c.) Assessment of the DOLE Secretary
that the employment of the Foreign
national will redound to national
benefit.
- Understudy Program is no longer required for
the issuance of AEP
- G.R. Validity of AEP is for ONE YEAR unless
the employment contract, consultancy
services, or other modes of engagement or
term of office for elective officers, provides
for a longer period;
- RENEWAL OF AEP: application must be filed
at least 15 days before its expiration;
- EFFECTIVITY OF RENEWAL: one day after the
expiration of previous permit; regardless of
whether or not the renewal is granted before
or after the expiration of the previous
permit;
GENERAL RULE: PERMITS VALID ONLY FOR THE
POSITION AND EMPLOYER FOR WHICH THEY WERE
ISSUED; except in cases of holders of MULTIPLE
POSITIONS IN ONE CORPORATION

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.
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BOOK TWO
HUMAN RESOURCES DEVELOPMENT
TITLE I:
MANPOWER DEVELOPMENT PROGRAM
CHAPTER 1
NATIONAL POLICIES AND ADMINISTRATIVE MACHINERY
FOR THEIR IMPLEMENTATION

Articles 43 56; pertaining to National Manpower and
Youth Council has been replaced and absorbed by the
TESDA (Technical Education and Skills Development
Authority) created under RA7796 which was approved
on August 25, 2994.

For the complete copy of Republic Act 7796: The
TESDA Act of 1994,
see Appendix II-1 of Azucenas Labor Book

For the complete copy of the Implementing Rules for
R.A. 7796,
see Appendix II-1.1. of Azucenas Labor Book

Declaration of Policy: It is the declared policy of the
State to provide relevant, accessible, high quality and
efficient technical education and skills development in
support of the development of high quality Filipino
middle-level manpower responsive to and in accordance
with Philippine development goals and priorities.

Private Sector Participation The State shall encourage
the active participation of various concerned sectors,
particularly private enterprises, being direct
participants in and immediate beneficiaries of a trained
and skilled workforce, in providing technical education
and skills development opportunities.

TITLE II TRAINING AND EMPLOYMENT OF SPECIAL
WORKERS

Chapter 1: APPRENTICES

Art. 57 Statement of Objectives
Art. 58 Definition of Terms
As used in this Title: a.) Apprenticeship means any
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 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; (see R.A. 7796) 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 an Apprentice
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To qualify as an apprentice, a person shall:
(a) Be at least fourteen (14) years of
age; (but under the IRR, its 15 years)
(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
Apprenticeship is the arrangement and the period
when an upcoming worker undergoes hands-on
training, more or less formal, to learn the ropes of a
skilled job. It is usually the point of entry to the
world of work.
Department Order no. 8; March 9, 1989 DOLE
Policy on Apprenticeship; by virtue of which, the
DOLE is required to undertake the review of trades,
occupation, and jobs in all sectors of the economy
to determine the apprenticeability, after which it
shall submit a list of apprenticeable occupations.
The apprenticeable age under this Article is 14, but
under the IRR, its 15, now under R.A. 7610 there is
an explicit prohibition on employment of children
below 15 years of age, although the said law
recognizes certain exceptions, an apprenticeship is
not included in the enumeration.

Art. 61 Contents of Apprenticeship Agreements

Apprenticeship need DOLEs prior approval, or
Apprentice becomes regular employee
- Nitto Enterprises v. NLRC and R. Capili (G.R.
no. 114337) September 29, 1995
- It is mandated that apprenticeship
agreements entered into by an employer and
an apprentice shall be entered only in
accordance with the apprenticeship program
duly approved by the Minister of Labor and
Employment; hence, since the apprenticeship
agreement between petitioner and private
respondent has no force and effect in the
absence of a valid apprenticeship program
duly approved by the DOLE, private
respondents assertion that he was hired not
as an apprentice but as a delivery boy
deserves credence.

Art. 62 Signing of Apprenticeship Agreement
Art. 63 Venue of Apprenticeship Programs
Art .64 - Sponsoring of Apprenticeship Program
Art. 65 -Investigation of Violation of Apprenticeship
Agreement
Art. 66 - Appeal to the Secretary of Labor
Art. 67 - Exhaustion of Administrative Remedies
Art. 68 - Aptitude Testing of Applicants
Art. 69 - Responsibility for Theoretical Instruction
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Art. 70 - Voluntary Organization of Apprenticeship
Programs, Exceptions
Art. 71 - Deductibility of Training Costs
Art. 72 - Apprentices without Compensation

Implementing Rules (Section X, Rule 14) provide, in
relation to Art. 72: There is no employer-employee
relationship between students on one hand and
schools, colleges or universities, on the other,
where there is a 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.
- Filamer Christian Institue v. Hon.
Intermediate Appellate Court, et a, (G.R. no.
75112) August 17, 1992
- Section 14, Rule X, Book III of the IRR of the
Labor Code was promulgated by the Secretary
of Labor and Employment only for the
purpose of administering and enforcing the
provisions of the Labor Code on conditions of
employment. Particularly, Rule X of Book III
provides guidelines on the matter by which
the powers of the Labor Secretary shall be
exercised; on what records should be kept or
maintained, etc Rule X is merely a guide to
the enforcement of the substantive law on
labor. The case does not deal with a labor
dispute on conditions of employment
between an alleged employer and employee
reliance of petitioner on the IRR is misplaced.
An IRR on labor cannot be used by an
employer as a shield to avoid liability under
the substantive provisions of the Civil Code.

Chapter II LEARNERS

Art. 73 Definition
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 hired when:
a.) no experienced workers are available,
b.) the employment of learners is necessary to
prevent curtailment of opportunities; and
c.) the employment does not create unfair
competition in terms of labor costs or impair
or lower working standards.

Art. 75 Learnership Agreement
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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
(75%) percent of the applicable legal
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
learner.
The learnership agreement shall be subject to
inspection by the Secretary of Labor, or his duly
authorized representatives.

Art. 76 Learners in Piecework
Learners employed in piecework 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 IRRs shall be subject
to the general penalty clause provided for in this Code.

Learnership v. Apprenticeship:
BOTH: Training periods for jobs requiring skills
that can be acquired through actual work
experience; both learner and apprentice may be
paid wages twenty-five (25%) percent lower than
the applicable legal minimum wage

Learnership Apprenticeship
- training in semi-skilled
job; industrial occupations
that require training for
less than 3 months
- job is non-apprenticeable
because its practical skills
can be learned in 3 (not 6)
months
- commitment to hire a
learner after the period
- no need for prior
approval from DOLE in
terms of hiring
- training in highly-skilled
job; job found in highly-
technical industry; training
period exceeds 3 months
- minimum period is 6
months
- no commitment to hire
an apprentice even after
completion of period
- prior DOLE approval
required for hiring
apprentices

Learner is not an apprentice, but an apprentice is
considered a learner.

Chapter III HANDICAPPED WORKERS
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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:
a.) their employment is necessary to prevent
curtailment of employment opportunities; and
b.) 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:
a.) the names and addresses of the handicapped
workers to be employed;
b.) the rate to be paid the handicapped workers
to be employed which shall be not less than
seventy-five (75%) percent of the applicable
legal minimum wage;
c.) the duration of the employment period; and
d.) the work to be performed by the handicapped
workers.
The employment agreement shall be subject to
inspection by the Secretary of Labor or his duly
authorized representatives.

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.

The MAGNA CART FOR DISABLED PERSONS- Republic
Act no. 7277, March 24, 1992 insures equal
opportunities for disabled persons and prohibits
discrimination against them

Book 3
Conditions of Employment

Title I
Working Conditions and Rest Periods

Chapter 1
HOURS OF WORK

Art. 82 Coverage of Title 1
Employees in all establishments and undertakings
whether for profit or not BUT NOT TO govt
employees, managerial employees [those whose
primary duty consists of the management of the
establishment in which they are employed or of a
dept or subdivision thereof, and to other officers or
members of the managerial staff], field personnel
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[refer to non-agricultural employees who regularly
perform their duties away from the principal place
of business or branch office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty], members of
the family who are dependent on him for support,
domestic helpers, persons in the personal service of
another, workers who are paid by results
Employer-employee must exist; existence is
determined by law, not by contract
Elements of employment relationship
(4-fold test)
1. selection and engagement of the
employee
2. payment of wages
3. power of dismissal
4. employers power to control the
employee with respect to the
means and methods by which
the work is to be accomplished
aka control test
evidence of employment: id, vouchers,
SSS registration, memorandum,
appointment letters, payrolls,
organization charts
pakiao workers are considered employees
as long as the employer exercises
control over the means by which such
workers are to perform their work
(Zamudio vs NLRC)
mere fact that an entity is a labor union
does not mean that it cannot be
considered an employer of the persons
who work for it; even unregistered
association may be deemed an
employer
LC defines an employer as any person
who acts in the interest of an employer
in/directly; the law does not require an
employer to be registered in order to
be considered as an employer (Orlando
Farm Growers vs NLRC)
No employment relationship job
contracting or independent contractor
Employer is free to regulate, accdg to his
own discretion and judgment, all
aspects of employment, including
hiring, work assignments, working
methods, time, place and manner of
work, tools to be used, processes to be
followed, supervision of workers,
dismissal and recall of workers so long
as the they are exercised in good faith
for the advancement of the employers
interest and not for the purpose of
defeating or circumventing the rights
of the employees under special laws or
under valid agreements
Excluded employees
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1. govt employees governed by CSC rules EXCEPT
govt employees of govt agencies and govt
corporations incorporated under the Corporation
Code
2. managerial employees or staff
3. outside or field sales personnel
4. employers family members
5. domestic helpers
6. persons rendering personal service
7. workers paid by result

Art. 83 Normal Hours of Work
8-hour law prescribes the minimum

Art. 84 Hours worked
Prelim and postlim activities are deemed performed
during working hours, where such activities are
controlled or required by the employer and are
pursued necessarily and primarily for the employers
benefit
Whether waiting time constitutes working time
depends on the circumstances of each case
whether it is spent predominantly for the employers
benefit or for the emmployees; considered as
working time if waiting is an integral part of his work
or if the employee is required or engaged by an
employer to wait
Working while eating not compensable if
completely freed from duites even though he
remains in the workplace
Working while sleeping may be considered
working if it is subject to interruption or takes place
under conditions substantially less desirable than
would likely to exist at employees home
on call compensable; within reach through
cellphone or other contact device not
compensable
Travel from home to work not worktime EXCEPT
when employee receives an emergency call outside
of his regular working hours and is required to travel
to his regular place of business or some other work
site, all of the time spent in such travel is working
time
travel away from home travel that keeps an
employee away from home overnight; worktime
attendance at lectures, meetings, training programs
and other similar activities not considered worktime
if it is outside employees regular working hours, it is
voluntary, and the employee does not perform
productive work during such attendance
time spent in grievence meetings considered
worktime
regular full-time teachers are entitled to salary and
emergency cost-of-living allowance during semestral
breaks (UPang Faculty Union vs UPANG)
a laborer need not leave the premises of the
workplace in order that his rest period shall not be
counted; it is enough that he ceases to work (case in
point: seamen)
hours worked: employer has burden of proof
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Art. 85 Meal Periods
GR: not compensable
E: predominantly spent for employers benefit or
where it is less than 60 minutes (but in no case shall
it be shorter than 20 minutes)
Continuous shifts
E to E: shortened break is upon employees request
Requisites:
1. agree in writing to a shortened meal break
and waive overtime pay for such shortened
period
2. no diminution in the salary and other fringe
benefits
3. work does not involve strenuous physical
exertion and are provided w/ coffee breaks
4. value of the benefits derived by the
employees from the proposed work
arrangement is equal to or commensurate
with the compensation due them
5. overtime pay of the employees will become
due and demandable if ever they are
permitted or made to work beyond 4:30pm
6. effectivity of proposed working time
arrangement shall be of temporary duration as
determined by DOLE

Art. 86 Night Shift Differential
not less than 10% of regular wage for each hour of
work performed b/w 10pm to 6am
NSD not waivable since it is founded on public policy
Burden of proof of payment rests upon the employer

Art. 87 Overtime Work
Compensation for work rendered in excess of 8 hours
a day
Multiply the overtime hourly rate by the number of
hours worked in excess of 8
Receipt of overtime pay does not preclude right to
NSD
Overtime rate based on regular wage (excludes
money received in different concepts and other
fringe benefits)
How work day is counted 24-hour period which
commences from the time the employee regularly
starts to work
Work in excess of 8 hours w/n a work day is
considered as overtime regardless of whether this is
performed in a work shift other than at which
employee regularly works
Estoppel and laches cannot be invoked against
employees in an action for the recovery of
compensation for overtime work
Overtime pay in arrears retroacts to the date when
services were actually rendered
GR: NO waiver or quitclaim of overtime pay
E: waiver is in exchange for certain benefits
Agreement that overtime pay will be integrated in
basic salary is not per se illegal; however, there
should have been express agreement to that effect
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and that the mathematical result shows that the
agreed legal wage rate and the overtime
pay,computed separately, are equal to or higher
than the separate amounts legally due
Compressed workweek (45 hours in 5 days) as an
exception to the non-waiver of overtime pay if the
following requisites are present:
1. agree in writing to work 9 hours a day from
Monday to Friday
2. no diminution in the salary and other fringe
benefits
3. value of the benefits that will accrue to the
employees under the proposed work schedule is
more than or at least commensurate with or
equal to the one-hour overtime pay that is due
them during weekdays
4. overtime pay of the employees will become due
and demandable if ever they are permitted or
made to work on weekend
5. work does not involve strenuous physical exertion
and are provided w/ coffee breaks
6. effectivity of proposed working time arrangement
shall be of temporary duration as determined by
DOLE

Art. 88 Undertime not offset by Overtime
Art. 89 Emergency Overtime Work
1. country is at war or when any national or local
emergency has been declared by Congress or
the President
2. necessary to prevent loss of life or property or
in case of imminent danger to public safety
due to impending emergency caused by
accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity
3. urgent work to be performed on the
machines, ect. In order to avoid loss or
damage to employer
4. to prevent loss or damage to perishable goods
5. to prevent serious obstruction ot prejudice to
the business or operations of the employer
6. to avail of favorable weather or
environmental conditions where performance
or quality of work is dependent thereon

Art. 90 Computation of Additional Compensation
regular wage shall include cash wage only, w/o
deduction on account of facilities provided by
employer

Chapter II
WEEKLY REST PERIODS

Art. 91 Right to weekly rest day
rest period of not less than 24 hours after every 6
consecutive normal work days

Art. 92 When employer may require work on a rest
day
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1. necessary to prevent loss of life or
property or in case of imminent danger to
public safety due to impending emergency
caused by accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or
calamity
2. urgent work to be performed on the
machines, ect. In order to avoid loss or
damage to employer
3. abnormal pressure of work due to special
circumstances, where the employer cannot
ordinarily be expected to resort to other
measures
4. prevent loss or damage to perishable goods
5. nature of work requires continuous
operations and stoppage of work may
result in irreparable injury or loss to the
employer
6. similar circumstances as determined by
DOLE Sec.

Art. 93 Compensation for rest day, Sunday, or
holiday work
at least 30% of regular wage
when such holiday falls on his rest day, addl
compensation of at least 50%
CBA may stipulate higher premium pay
3 special days (holidays) Nov.1, Dec. 31, Aug. 21
30%

Chapter III
HOLIDAYS, SERVICE INCENTIVE LEAVES, AND SERVICE
CHARGES

Art. 94 Right to (Regular) Holiday
100% addl compensation
10 regular holidays
1. New Year (Jan.1)
2. Maundy Thursday
3. Good Friday
4. Araw ng Kagitingan (Apr 9)
5. Labor Day (May 1)
6. Independence Day (Jun 12)
7. National Heroes Day (Last Sunday of Aug)
8. Bonifacio Day (Nov 30)
9. Christmas Day (Dec 25)
10. Rizal Day (Dec 30)
11. Eidul Fitras - 1
st
day after 30-day fasting period
12. Eidul Adha regl holiday in the ARMM

Muslim Holidays
shall be observed in the provinces of
Basilan, Lanao del Norte/ Sur,
Maguindanao, North Cotabato, Sultan
Kudarat, Sulu, Tawi-tawi, Zamboanga del
Norte/Sur, cities of Cotabato, Iligan,
Marawi, Pagadian, and Zamboanga, and in
such other Muslim provinces and cities as
may be created. Upon proclamation by the
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President, Muslim holidays may also be
officially observed in other provinces and
cities
PP 1198 all private corps, offices, and
agencies operating within the provinces
and cities enumerated herein shall observe
the legal holidays as proclaimed, provided,
that all Muslim employees working outside
of the Muslim provinces and cities shall be
excused from work during the observance
of Muslim holidays as recognized by law,
without diminution of salary during said
period
Both Muslim and Christian employees
within the Muslim areas may not report for
work on the designated Muslim holidays
1. amun jadid (new year)
2. mauled-un-nabi (birthday of Mohammed)
3. lailatul isra wal mi rai (nocturnal journey and
ascension of the Prophet Mohammed)
4. id-ul-fitr (hari raja pausa) end of fasting season
5. id-ul-adha (hari raha haji)

a legal holiday falling on a Sunday creates no legal
obligation for the employer to pay extra, aside from
the usual holiday pay, to its monthly-paid employees
(Wellington Investment vs Trajano)
double holiday: 2 regular holidays on same day
if unworked covered employees are entitled to
at least 200% of their basic wage even if said
holiday is unworked
if worked entitled to compensation equivalent
to at least 300% of his basic wage
double holiday rule for monthly-paid employees if
worked, additional 100% of regular salary
successive regular holidays an employee may not
be paid for both holidays if he absents himself from
work on the day immediately preceding the 1
st

holiday, unless he works on the 1
st
holiday, in which
case, he is entitled to his holiday pay on the 2
nd

holiday
holiday pay of hourly-paid faculty members during
semestral break
employer-school is exempted from paying
hourly paid faculty members their pay for regular
holidays, whether the same be during the regular
semester or during semestral, Christmas, or Holy
Week vacations
employer-school must pay said faculty
members their regular hourly rate on days
declared as special holidays or for some reason
classes are called off or shortened for the hours
they are supposed to have taught, whether
extension of class days be ordered or not; in case
of extensions said faculty mems shall likewise be
paid their hourly rates should they teach during
said extension (JRC vs NLRC)
field personnel not entitled to holiday pay
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Art. 95 Right to Service Incentive Leave
coverage: every employer who has rendered at least
1 year of service shall be entitled to a yearly SIL of 5
days with pay
SIL not applicable to those already enjoying the
benefit herein provided, those enjoying vacation
leave with pay of at least 5 days, and those
employed in establishments regularly employing less
than 10 employees
1 year of service 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 number of working days in the
establishment as a matter of practice or policy, or
provided ini the employment contract is less than 12
months, in which case said period shall be
considered as 1 year for the purpose of determining
entitlement to the SIL
SIL of part-time workers proportionate to the
daily work rendered and the regular salary,
respectively (DOLE Explanatory Bulletin dated
January 2, 1996)
on contract workers entitled to SIL
Commutation of SIL valid; basis of conversion shall
be the salary rate at the date of commutation;
availment and commutation of the SIL benefit may
be on a pro-rata basis
SIL is mandatory
Vacation and sick leaves are voluntary benefits
Leave credits are normally converted into their cash
equivalent based on the last prevailing salary
received by the employee
Paternity leave available only for the 1
st
four
deliveries of the legitimate spouse with whom the
husband is cohabiting; delivery includes childbirth,
miscarriage, or abortion
shall not exceed 7 calendar days for each
delivery
entitled to full pay
non-commutation of benefits
Requisites:
1. he is an employee at the time of delivery
of his child
2. he is cohabiting with his spouse at the
time she gives birth or suffers a
miscarriage
3. he has applied for paternity leave
4. hi wife has given birth or suffered a
miscarriage
Maternity leave see discussion under Art 133 of LC
Parental (Solo Parent) Leave not more than 7
working days each year
non-convertible to cash if unused
requisites:
1. has rendered at least 1 year of service
2. has notified employer of the availment
thereof w/n a reasonable period of time
3. has presented a Solo Parent ID to employer
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who is a solo parent?
1. woman gives birth as result of rape or
crime against chastity, provided she keeps
and raises the child
2. spouse has died
3. spouse is detained or is serving sentence
for at least 1 year
4. legally separated or de facto separated for
at least 1 year, provided s/he is entrusted
with custody
5. physical/mental incapacity of spouse
6. abandoned by spouse for at least 1 year
7. unmarried mother/father
8. any other person who solely provides
parental care and support to a child
9. any family mem who assumes the
responsibility of head of family

Art. 96 Service Charges
covered employees except those receiving more
than P2,000 a month
in case service charge is abolished, the share of
covered employees shall be considered as integrated
in their wages
basis shall be the average monthly share of each
employee for the past 12 months immediately
preceding the abolition or withdrawal of such
charges
pooled tips shall be monitored, accounted for, and
distributed in the same manner as service charge

Title II WAGES
Chapter 1 Preliminary Chapter

Art. 97 - Definitions:
a. person
b. employer
c. employee
d. agriculture
e. employ
f. wage
g. fair and reasonable value

WAGE applies to the compensation for manual
labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or
season
- indicates inconsiderable pay for a lower
and less responsible character of
employment
- includes sales commissions
- includes facilities (include articles or
services for the benefit of the employee or
his family but shall not include tools of the
trade or articles or service primarily for
the benefit of the employer or necessary
to the conduct of the employers business)
or commodities (employer may provide
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them but he may deduct their values from
the employees wages

distinguish facilities from supplements
(criterion: purpose)
supplements constitute extra
remuneration or special privileges or
benefits given to or received by the
laborers over and above their ordinary
earnings or wages.
Facilities items of expense
necessary for the laborers and his familys
existence and subsistence so that by
express provision of law, they form part of
the wage and when furnished by the
employer are deductible therefrom

HOWEVER, re: meals and snacks
deduction cannot be more than 70% of the
value of the meals and snacks, provided
that such deduction must be authorized in
writing by the employee; remaining 30%
has to be subsidized by the employer

Lodging facility value is determined to be
the cost of operation and maintenance,
including adequate depreciation plus
reasonable allowance

Requirements for deducting value of
facilities (Mabeza v NLRC)
1. proof must be shown that such
facilities are customarily furnished
by the trade
2. provision of deductible facilities
must be voluntarily accepted in
writing by the employee
3. facilities must be charged at fair
and reasonable value

-
SALARY denotes a higher degree of
employment, or a superior grade of services, and
implies a position or office
- suggestive of a larger and more permanent
or fixed compensation for more important
office
- excludes allowances

Songco v NLRC sales commissions and
allowances should be included in computation of
separation pay

GRATUITY something given freely, or without
recompense; a gift; something voluntarily given
in return for a favor or services; a bounty; a tip
- that which is paid to the beneficiary for
past services rendered purely out of the
generosity of the giver or grantor
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- not intended to pay a worker for actual
services rendered

fair days wage for fair days labor
equal pay for equal work (think ISAE v
Quisumbing case)

Agricultural work work on the soil and its
harvests
if highly mechanized and carries on processing
activities not merely incidental to purely farming
operations, deemed industrial employees
nature of work classifies a worker

Art. 98 Application of Title 2 (Wages)
Not applicable to:
1. farm tenancy or leasehold
2. domestic services
3. persons working in their respective homes in
needle work or any cottage industry
4. workers employed in any establishment duly
registered with the National Cottage
Industries and Development Authority
5. workers in any duly registered cooperative
when so recommended by the Bureau of
Cooperative Development
6. Barangay micro business enterprise any
business entity engaged in the production,
processing, or manufacturing of products or
commodities, including agro-processing,
trading and services, whose total assets
including those arising from loans but
exclusive of the land on which the particular
business entitys office, plant and equipment
are situated, shall not be more than P3M.
7. wage orders issued by the wage boards under
A 99 and 122

Chapter 2 Minimum Wage Rates

Art. 99 - Regional Minimum Wages
Agri and non-agri prescribed by the Regional
Tripartite Wages and Productivity Boards

MINIMUM WAGE
- lowest wage rate fixed by law that an
employer can pay his worker
- adopted to reduce the evils of the
sweating system
- raises standard of competition among
employers
- employers ability to pay is immaterial;
cant exempt himself to pay minimum
wages
- acceptance by an employee of the wages
paid him without objection does not give
rise to estoppel precluding him from suing
for the difference between the amount
received and the amount he should have
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received pursuant to a valid minimum
wage law

Art. 100 Prohibition against elimination or
diminution of benefits
NONDIMINUTION OF BENEFITS

Requisites for application of nondiminution rule
1. grant of the benefit is founded on a policy or has
ripened into a practice over a long period
2. the practice is consistent and deliberate
3. the practice is not due to error in the
construction or application of a doubtful or
difficult question of law
4. the diminution or discontinuance is done
unilaterally by the employer

Extent of the Rule
1. food and meal allowances
2. noncontributory retirement plan
3. monthly emergency allowance

Exceptions to the non-diminution rule
1. not established practice
2. benefit on reimbursement basis
3. negotiated benefits (i.e. CBA)
4. reclassification of position/promotion made in
good faith
ex: rank-and-file to supervisory lose overtime
pay and other benefits under A 82-96 but A 100 is
not violated (Natl Sugar Refineries Corp v NLRC)
5. contingent or conditional benefits/bonus
bonus is an amount 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; bonus is not a demandable and
enforceable obligation BUT it is when made part
of the wage or salary or compensation
equity or long practice as basis of bonus even
if bonus is not demandable; long and regular
concession; fixed hope
services rendered as basis of bonus right is
not defeated by a release and quitclaim upon
termination (Marcos v NLRC redundancy
benefits))
reduction of bonus not diminution of benefits;
no profit, no bonus. Granting of bonus is basically
a management prerogative (Traders Royal Bank v
NLRC)
bonus as productivity incentives; employees
share is in the nature of salary bonus
proportionate to increases in current productivity
over the average for the preceding 3 consecutive
years; bonus is not gratuity but the computed
result of joint planning and effort; claimable only
on the basis of predefined output level
PD 851 13
TH
MONTH PAY
Finals Reviewer

3B 2006-2007

- issued during the Martial Law,
requires all employers to pay their
rank-and-file employees receiving
a basic salary of not more than
P1000 a month, regardless of the
nature of employment, a 13
th

month pay not later than
December 24 of every year
- President Aquino removed the
P1000 ceiling, entitled to 13
th

month pay all rank-and-file
employees, regardless of salary
rate, but still excluding
managerial or supervisory
employees
- equivalent (i.e. Christmas
bonus, mid-year bonus, profit-
sharing payments, and other cash
bonuses amounting to not less
than 1/12 of the basic salary but
shall not include cash and stock
dividends, cost-of-living
allowances and all other
allowances enjoyed by the
employees, as well as non-
monetary benefits) or bonuses
may be credited as 13
th
month pay
(Natl Federation of Sugar Workers
v Ovejera year-end productivity
bonus of 1/12 of basic salary plus
difference)
- If the CBA did provide for bonus in
graduated amounts depending on
the length of service of the
employee, bonus provided in the
CBA was meant to be in addition
to the legal requirement
(Universal Corn Products v NLRC
graduated Christmas bonus)
- Absence of an express provision in
the CBA obligating the employer
to pay the employees a 13
th
month
pay is immaterial; PD 851 is
mandatory, 13
th
month pay is
deemed written in contract
- Supplements or other employees
benefits or favorable practice not
substitute for 13
th
month pay
- Computation of 13
th
month pay
1/12 of basic salary within a
calendar year

Basic salary include all
remunerations or earnings paid by
an employer to an employee for
services rendered but may not
include cost-of-living allowances,
profit-sharing payments and all
allowances and monetary benefits
Finals Reviewer

3B 2006-2007

which are not considered or
integrated as part of the basic
salary of the employee;
- overtime pay and other
remunerations are excluded
as part of basic salary and in
the computation of the 13
th

month pay (San Miguel Corp v
Inciong)
- commissions are included or
excluded, depending on what
kind of commissions are
involved; if wage-or-sales-
percentage type [intimately
related to the extent or
energy of an employees
endeavors], includible in the
13
th
month pay computation
(Phil. Duplicators v NLRC); if
profit-sharing or productivity
bonus type [something extra
for which no specific
additional services are
rendered by any particular
employee], excluded (Boie-
Takeda Chemicals v Dela
Serna)
- employees w/ guaranteed
wages/commissions entitled
to 13
th
month pay based on
their total earnings during
the calendar year on both
their fixed and guaranteed
wage and commissions (Phil.
Agricultural and Industrial
Workers Union v NLRC
drivers and conductors)
- commissions recompense,
compensation, reward of an
employee, agent, salesman,
executor, broker or bailee,
when the same is calculated
as a percentage on the
amount of his transactions or
on the profit of the principal
- teachers overload pay
performed during or within
the 8 hours in a day [the load
in excess of the normal load
of private school teachers as
prescribed by DECS or the
policies, rules, and standard
of particular private schools;
work in excess of the regular
teaching load; may be
performed within or outside 8
hours in a day] part of basic
pay for computing 13
th
month
pay
Finals Reviewer

3B 2006-2007

- an employee who has
resigned or whose services
were terminated at any time
before the time for payment
of the 13
th
month pay is
entitled to this monetary
benefit in proportion to the
length of time he worked
during the year, reckoned
from the time he started
working during the calendar
year up to the time of his
resignation or termination
from service (Intl School of
Speech v NLRC)
- distressed employer may be
exempt from paying the 13
th

month pay only upon prior
authorization from Labor Sec
(Dentech Manufacturing Corp
v NLRC)
- difference of opinion on how
to compute the 13
th
month
pay does not justify a strike
- nonpayment of 13
th
month
pay is not an issue of unfair
labor practice but one of
money claim
- PD 851 only applies to private
employers and their
employees; no intention to
cover persons working in the
govt service (Alliance of Govt
Workers v Minister of Labor
and Employment)

Art. 101 Payment by Results
Workers paid by results [pay is calculated not on
the basis of time spent on the job but of the
quantity and quality or the kind of work they turn
out] grouped into 2:
1. those whose time and performance is
supervised by the employer embodies an
element of control and supervision over
the manner as to how the work is to be
performed
ex: piece-rate worker
2. those whose time and performance is
unsupervised
ex: pakiaw and takay workers

payment by result not determinative of er-ee
rel., only a method of compensation
basis of output rate the performance of an
ordinary worker of minimum skill or ability [aka
the average worker of the lowest producing group
representing 50% of the total number of
employees engaged in similar employment in a
particular establishment, excluding learners,
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3B 2006-2007

apprentices, and handicapped workers employed
therein
unsupervised piece-rate workers are not entitled
to night differential pay and service incentive
leaves
re: yearly commutation or cash conversion of the
service incentive leave of piece-rate workers
based on their average daily earnings during the
particular year of service which can be derived
by dividing the amount earned during the year by
the actual number of working days or the
statutory minimum rate, whichever is higher
in the absence of any agreement which provides
otherwise, the amount earned during the year
may exclude COLA, overtime pay, and premium
pay, holiday pay, night differential pay and
company fringe benefits
computation of service incentive leave of piece-
rate worker get actual wage earned for 1 year,
divide by 12 to get average monthly earnings
then divide by the average number of actual
worked days in a month, multiply result by 5; if
average daily rate is less than P36, basis for the
computation is P36, the minimum rate outside
Metro Manila.
Other entitlements:
1. holiday pay
2. 13
th
month pay (if he has rendered at least
1 month work or service during the
calendar year)
Variant Jurisprudence on Piece-rate workers
entitlement to statutory benefits
a. Makati Haberdashery v NLRC
Held:
- workers are regular employees
although paid on piece-rate basis
- entitled to minimum wage
- as regular employees, they can
claim cost-living allowances, 13
th

month pay
- not entitled to service incentive
leave pay and holiday pay because
they fall under one of the
exceptions stated in Section 1(d),
rule 5, Implementing Regulations,
Book 3, Labor Code for being paid
at a fixed amount for performing
work irrespective of time
consumed in the performance
thereof
b. Labor Congress v NLRC
Held:
- piece-rate employees are entitled
to night shift differential, holiday
pay, service incentive leave,
premium pay, and 13
th
month pay
because they do not fall within
the group of workers who are
field personnel and other
employees whose time and
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3B 2006-2007

performance is unsupervised by
the employer, including those who
are engaged on task or contract
basis, purely commission basis, or
those who are paid a fixed amount
for performing work irrespective
of the time consumed in the
performance thereof.
- entitled to overtime pay if their
output pay rate is not shown to be
in accordance with the standards
prescribed under the
Implementing Rules [Rule 7-A,
Sec.5] or by the Secretary of Labor
- further, piece workers are
specifically mentioned as being
entitled to holiday pay (Sec 8-B,
Rule 4, Book 3)
- Revised Guidelines on the
Implementing of the 13
th
Month
Pay Law, in view of the
modifications to P.D. 851 by
Memorandum Order No. 28,
clearly exclude the employer of
piece-rate workers from those
exempted from paying the 13
th

month pay
- Entitled to overtime pay because
respondent company did not
allege adherence to the standards
set forth in Sec 8, Rule 7, Book 3
Summation of benefits payable to Piece-rate
workers
1. minimum wage
2. service incentive leave of 5 days with pay
3. night differential pay
4. holiday pay
5. meal and rest periods
6. overtime pay (conditional)
7. premium pay (conditional)
8. 13
th
month pay
9. other benefits granted by law, by individual or
collective agreement or company policy or
practice

IF output rates conform with the standards
prescribed by the Labor Code, employer is not
required to grant the piece-rate workers the
benefits under the Rule on Hours of Work nor
to pay the wage differentials if their daily
earnings do not amount to the applicable
statutory minimum daily wage.

Chapter III Payment of Wages

Art 102. Forms of Payment
Forms of payment

1. Proof of wage payment
Finals Reviewer

3B 2006-2007

Where the employee alleges non-payment of wages
and/or commission, the employer has the burden to
prove payment.

Jimenez et al v. NLRC (1996)
Facts:
Employee Juanatas sued for full payment of his 20%
commission of the gross income. There were cash
advances may by the employee as evidenced by a
notebook presented by the employer.

Held:
Although the employer submitted a notebook
showing the alleged vales, the same is inadmissible
considering the it is not properly accomplished
undated, unsigned and is thus uncertain as to its
origin and authenticity.

The employer has the burden of proof to establish
full payment of wages.

The Implementing Rules require every employer to
keep a payroll showing length of time to be paid,
the pay rate, amt actually paid, etc. The employee
should sign the payroll

Art. 103. Time of Payment
Art. 104. Place of Payment

Place of Payment

GR should be near place of undertaking
E -
1. Payment cannot be effected at or near the
place of work:
a. bec of deterioration of peace & order
b. by reason of actual or impending
emergencies caused by fire, flood,
epidemic or other calamity
rendering payment thereat
impossible;
1. When employer provides free transpo back &
forth
2. Under any analogous circumstances, provided:
a. Time spent by employee in collecting their
wages shall be considered as compensable
hours worked

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

2. Payment through banks
Upon written permission of the majority of the
employee or workers concerned,
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3B 2006-2007

Entities with 25 or more employees and
Located within 1 km radius to a bank
Shall pay wages & other benefits through
any of said banks
Within period of payment of wages fixed
by Labor Code
(Wage Rationalization act RA 6727)

Whenever applicable and
Upon request of a concerned worker or union,
Bank shall issue a cert of the record of payment
of wages
Of particular worker/workers
For a particular pay period.
(Wage Rationalization act RA 6727)

Payment through ATM allowed.
(under a labor advisory dated Nov
25, 1996)

Art. 105. Direct Payment of Wages
Art. 106. Contractor or Subcontractor
Art. 107. Indirect Employer
Art. 108. Posting of Bond
Art. 109 Solidary Liability
Contractor of Subcontractor
1. Contracting and Subcontracting in general

Co. A engaged in resto business concludes contract
with const co. B which in turn hires the services of
another contractor C to handle certain aspect of
construction project. B & C hires people.
GR -
Employer-employee relationship (see Art 82)
Bet B and his workers
Bet C and his workers
A is not an employer to B or C
to their respective groups
of workers
E employment arrangement unlawful
A is indirect employer

D.O. 18-02
Contracting or subcontracting as an arrangement
whereby a principal agrees to put out or farm out
with a contractor or subcon the eprformance 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.

4 features of legit contracting
i. Parties principal enters into a contract with
subcon.
ii. Specific Job performance or completion of a
specific job, work or service
iii. Period definite or predetermined period
iv Location performed within or outside principals
premises
Finals Reviewer

3B 2006-2007

1.2 Trilateral relationship
3 parties principal, contractor and contractual
employees

Bet principal and contractor Civil code & pertinent
commercial law
Bet contractor & employee Labor code and special
labor laws

2. 1
st
set of prohibition Labor only contracting (DO
18-02)

L.o.C = EE + (CE1 or CE2)
EE = essential element arrangement is merely
to recruit, supply or place workers to perform a
job, work or service for the principal
CE1 = confirming element 1 lack of substantial
capital or investment and performance of
activities directly related to the principals main
business
CE2 = confirming element 2 contractor does
not exercise control over the performance of the
employees

L.o.C. by presumption of law a full-pledged
legitimate labor contractor has to be registered with
DOLE, otherwise he is presumed to be an L.o.C.

Substantial capital or investment capitalization,
tools, eqpt, implements, machineries and work
premises, actually and directly used by the
contractor or subcon in performance or completion
of the jobm work or service contracted out.

Neri v. NLRC (1993)
Law does not require both substantial capital and
investment in the form of tools, eqpt, machineries,
etc.

Filipinas Synthetic Fiber v. NLRC (1996)
Where the contractor is a going concern duly
registered with the SEC with substantial
capitalization of P1.6M, P400T of which is actually
subscribed, such contractor cannot be considered as
engaged in LoC being a highly capitalized venture.

Control right reserved to the person for whom the
service of contactual 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.

Insular Life v. NLRC (1989)
The fact that the complainant worker was required
to solicit business exclkusively for the alleged
employer could hardly be considered as control in
labor jurisprudence. Under the memo issued by the
Finals Reviewer

3B 2006-2007

Insurance Commission, insurance agents are barred
from serving more than 1 insurance company.

AFP MBAI v.NLRC (1997)
Exclusive servicing does not necessarily mean being
under the control, or employment of the entity
being served.

2.3 Consequence of LoC Worker supplied by Agency
becomes employee of client company
PBCOM v. NLRC (1986)
There is of course nothing illegal about hiring
persons to carry out a specific project or
undertaking the completion or termination of which
(was) 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.

Given te circumstances of this case, CESI was
engaged in LoC vis--vis the petitioner bank. The
bank is liable to the employee as if the employee
had been directly employed not only by CESI but also
by the bank. But the bank may in turn proceed
against CESI to obtain reimbursement of, or some
contribution to, the amounts which the bank will
have to pay to Orpiada.

2.4 Consequence of LoC Agency hired employee
becomes entitled to benefits under CBA of client
company
Tabas v. California Manufacturing Co (1989)
The existence of an employer-empoyee relation is a
question of law and being such, cannot be made the
subject of agreement.
Employee is reinstated with the full status and rights
of regular employees; all benefits as may be
provided by existing CBA or other relations or by
law.

3. Summary of prohibited labor contracting

4. 2
nd
set of prohibitions Arrangements that violate
public policy (DO 18-02)
Not LoC but are likewise prohibited because they
contravene public policy:
Prohibitions:
a) Contracting 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 with cabo
c) Contracting with in house agency
d) Contracting bec of strike or lockout
e) Contracting that constitutes ULP under Art
248
Finals Reviewer

3B 2006-2007

5. 3
RD
set of prohibitions Exploitative acts
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 ff
instances:
i) in addition to his assigned functions,
requiring the contractual employee to
perform functions done by regular
employees
ii) Requiring him to sign as a precondition to
employment/continuance: antedated
resignation letter; blank payroll; waiver of
labor standards incl min wage, social or
welfare benefits; quitclaim
iii) Contract with period of employment
shorter than term of contract bet principal
& contractor/subcon, unless contract is
divisible into phases for w/c substantially
different skills are reqd & this known to
employee at time of engagement

6. Extent of employer;s liability in invalid
contracting and violation of other pohibitions

Liability is immediately and directly imposed upon
the principal, as if directly hired by the employer.
(Broadway Motors v. NLRC)

Rosewood Processing
If the liability is in the nature of a penalty, such as
backwages and separation pay because of a wrongful
dismissal, the liabilithy should be solely that of the
contractor if there is no proof that the principal
conspired with the contractor in committing the
wrongful dismissal of the contractors worker.

7. Legitimate Contracting Independent
Contractor/Job Contracting
Legitimate when the ff circumstances concur:
i) Contractor carries on a distinct and
independent business & undertakes to
perform job, work or service on its own
account and under its own resp, accdg to its
own manner and method and free from the
control and direction of the principal in all
matter connected with the perf of work
except as to the results thereof
ii) Contractor has substantial capital or
investment
iii) Contractual agreement assures contractual
employees entitlement to all labor,
occupational safety and health standards,
right to self organization, security of tenure,
social and welfare benefits.

In legitimate or valid contracting, what is contracted
is the performance of a job and the contractor is an
Finals Reviewer

3B 2006-2007

independent businessman capable of doing the job
by his own means and methods. (Andovo v. MRR)

An independent contractor is one who exercises
independent employment and contracts to do a
piece of work accdg to his own methods and without
being subject to control of his employer except as to
the result of the work. (Mafinco Trading v. Ople)

To restate, the significant factor in determing the
delationship of the parties is the presence or
absence of supervisory authority to control the
method and the details of performance of the
service being rendered and the degree to which the
principal may intervene to exercise such control
(AFP MBAI v. NLRC).

7.1 Summary of Legitimate Labor Contracting
Legitimate when:
i) contractor is a job contractor and not a labor
only contractor
ii) properly registered in accordance with DO 18-
02
does not fall under Sec 5 or 6 of DO 18-02.

7.2 Examples of Independent Contractor

Dealership
Mafinco Trading Corp v. Ople
Where the peddler shall have the right to employ his
own workers, shall post a bond to protect the
manufacturer against losses, shall be responsible for
damages caused to 3
rd
persons, shall obtain
necessary licenses and permits and bear the
expenses incurred in the sale of soft drinks is not a
contract of employment. independent
contractors.

Commission Agent
Insular Life v. NLRC
Under the contract, Basiao is not an employee of
Insular life but a commission agent, an independent
contractor whose claim for unpaid commissions
should have been litigated in an ordinary civil
action.

Messengerial/Janitorial Service
Rhone-Poulenc Phils v. NLRC
The respondents themselves admitted that they
were selected and hired by CSI and were assigned to
Union Carbide. [Union Carbide was bought by
Rhoune Poulenc.]
The janitors drew their salaries from CSI which
exercised control over them. Moreover, CSI had the
power to assign its janitors to various clients and to
pull out.

Independent Operator
Ushio v. NLRC
Finals Reviewer

3B 2006-2007

Severino is one of those independent, free lance
operators who offer services to customers of auto
parts shops along Banawe.
The power to control the employees conduct is
absent, with respect to the means and methods by
which his work was to be accomplished.

Private respodent was free to offer his services to
other stores along Banawe.

7.3 Judicial Notice of Job Contracting
Neri v. NLRC
Judicial notice of general practice adopted in govt &
privateinstitutions of hiring independent
contractings to perform special services janitorial,
security or even technical or other specific services.

8. A manpower company may be a LoC in one case
but an independent contractor in another
Coca Cola Bottlers v. Hingpit
In 1
st
case, it failied to prove that Lipercon has
substantial capital, investment, tools, etc. In
present case, Lipercon established its character as
an independent contractor.

Escario v. NLRC
In earlier case of Tabas v. CMC, Livi was determined
to be an LoC. But reliance of Tabas case is
misplaced because Livi was a mere placement
agency that had simply supplied CMC with manpower
necessaru tp carry oiut the companys merchandizing
activity.

But in this case, applying the 4-fold test in
determining employer-employee relationship, the
status of Admark as the true employer of the
petitioners is further established.

9. Extent of Principals liability in legit contracting
Contractor considered to be the employer of the
contractual employee for purposes of enforcing the
provisions of the Labor cCode and other Social
legislation. (DO 18-02)

The principal shall be solidarily liable with the
contractor in the event of any violation of the
provisions of the Labor Code, including failure to pay
wages. (DO 18-02).

9.1 As to payment of wages/money claims
When a contractor fails to pay the wages of his
employees in accordance with the Labor Code, the
employer who contracted out the job becomes
jointly and severally liable with the contractor to
the extent of the work performed under the
contract. as if such employer were the employer
of the contractors employee. (PBCOM v. NLRC)

Legislated wage increases are deemed amendments
to the contract. (Rosewood Processing; also NFA)
Finals Reviewer

3B 2006-2007

9.2 As to other violations
Under DO 18-02, Sec 7 par 1, indirect employer is
solidarily liable.

Rosewood Processing v. NLRC
Liability does not extend to the payment of
backwages and separation pay of employees who
were constructively or illegally dismissed by thec
ontractor no showing that principal conspired in
effecting illegal dismissal.
An order to pay backwages and separation pay is
invested with a punitive character such that an
indirect employer should not be made liable without
a finding that it had committed ot conspired in the
illegal dismissal.

Solidary Liability - Limitation to extent of work
performed under contract, to perf of any work, task
job or project, to extent of their civil liability on
payment of wages.

10. Rights of contractual employees
Contractual employees entitled to all rights and
privileges due a regular employee as provided under
labor code to include:
a) safe and healthgul working conditions
b) Labor standards
c) Social security and welfare benefits
d) Self organizations, CBA, peaceful concerted
action
e) Security of Tenure

10.1 Security of Tenure
In case of pre-termination of contract bet principal
& contractor governed by applicable laws
Expiration of contract bet principal & contractor
not entitled to separation pay

11. Registration of Contractors
Registration of contractor with DOLE regional office.
An unregistered contractor is presumed to be a
labor-only contractor.

Art. 110 Worker Preference in case of bankruptcy

Worker preference in case of bankruptcy
Prereq- declaration of bankruptcy or judicial liquidation
of employers business
Unpaid wages earned prior to declaration/liquidation
shall be given 1
st
preference for payment, even ahead
of claims of govt.
Preference even to claims of govt for taxes (DBP v.
NLRC)

Coverage of Preference
Termination pay, separation pay, all other monetary
claims.

Finals Reviewer

3B 2006-2007

Art. 111 Attys Fees
Attorneys fees
1. Attys fees assessed
a. cases of unlawful withholding of wages
b. arising from CBA negotiations
(Reahs Corp)
2. Awarded Attys fee may not exceed 10%, but
between lawyer and client quantum meruit may
apply (TRB EU v. NLRC)
3. Non lawyers not entitled to attys fees (Five J
Taxi v. NLRC)
4. Since the union president is not the lawyer for
the workers, he cannot be allowed to share
in the atty fees. (Amalgated Laborers Assoc v.
CIR)

5. Pao Lawyers
PAO lawyers disqualified from being awarded atty
fees (Lambo v. NLRC)

Chapter IV Prohibition Regarding Wages

Art. 112. Non-interference in disposal of wages
1. Civil Code Provisions
a. Art 1705 CC: paid in legal currency
b. Art 1706 CC: withholding of wages, except
for a debt due, shall not be made by the
employer
c. Art 1707 CC: Labors wages shall be a lien
on goods manufactured or work done.
d. Art 1708 CC: wages not subject to
execution or attachment, except for debts
incurred for food, shelter, clothing and
medical attenda.ce
e. Art 1709 CC: Employer shall neither seize
nor retain any tool or other articles
belonging to the laborer.

Art. 113. Wage Deduction
Wage deduction
Authorized deductions by law:
a. Value of means and other facilities
b. Premium paid by employer where insured with
employees consent
c. Union to check off recognized by employer/
authorized in writing by indiv employee
d. Employee is indebted to employer, due &
demandable
e. Subject to exection for debts incurred for
food, shelter clothing and medical attendance
f. Withholding tax
g. Salary deductions cooperative
h. SSS, Medicare, Pag-ibig

Payment to 3
rd
person
Authorized in writing by employee
Employer agrees to make deduction
Employer must not receive any pecuniary benefit,
directly or indirectly from transaction.

Finals Reviewer

3B 2006-2007

Art. 114. Deposits for Loss or Damage
Art. 115. Limitations
Deductions for Loss or Damage
(1) employee clearly shown to be responsible for
loss or damage
(2) employee given ample opprotunity to show
cause why deduction should not be mde
(3) deduction fair and reasonable and shall not
exceed actual loss or damage
(4) deduction not exceed 20% of employees
wages in a weel

Deductions for absences
Deductions for unpaid absences are allowed.

Illegal Deposit
Art. 114 provides the rule on deposits for loss or
damage to tools, materials or eqpt supplied by
employer. It does not permit daily deposits which
taxi drivers are required to make to defray any
shortage in their boundary. No Showing that the
DOLE Sec recognized such deposit as a practice in
taxi industry. Hence illegal. (5-J Taxi v. NLRC)

Art. 116 Withholding of wages and kickbacks
prohibited
Art. 117. Deduction to Ensure employment
Art. 118 Retaliatory Measures

Are retaliatory measures (Art 118) striakeable?
Acts under Art 118 are broad, and can lead to a ULP
case if employer retaliated against testifying
employee. If ULP, striekable.

Reprisal for Silent Testimony
Art 118 equally applies to implicit or unspoken
testimony by an employee.

Art. 119. False Reporting

Chapter V. Wage studies, wage agreements and
wage determination

Art. 120 Creation of National Wages and Productivity
Commission
National Wages and Productivity Commission created by
RA 6727.

Art. 121. Powers and Functions of the Commission
Art. 122. Creation of the RTWPB

Regional Tripartite Wages and Producticity Boards
Composed of:
DOLE Regional Director
NEDA Regional Director
DTI Regional Director
2 workers
2 employers

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While the RTWPB has the power to issue wage orders
under Art 122 (b) of the Labor Code, such orders are
subject to the guidelines prescribed by the National
Wages and Productivity Commission (NWPC), who has
the power to prescribe the rules and guidelines for the
determination of appropriate wages in the country.

Art. 123 Wage Order
Wage Order
Takes effect after complete publication in at least 1
newspaper of gen circulation in region.
Not be disturbed for a period of 12 months from
effectivity.
Public Hearing reqd
Wage increase cannot be retroactive to effectivity of
wage order (Cagayan Sugar Milling v. Secretrary of
Labor)

Art. 124. Standards/Criteria for Min Wage Fixing
Standards/Criteria for Min wage fixing
a. Living Wage
b. Consumer price index
c. Cost of living
d. Needs of workers and their families
e. Induce industries to invest in
countryside
f. Improvements in standards of living
g. Prevailing wage levels
h. Fair return of capital
i. Effects on employment generation and
family income
j. Equitable distribution of income and
wealth

Wage distortion situation where an increase in
prescribed wage rates results in the elimination or
severe contraction of intentional quantitative
differences in wage of salary rates among employee
groups, obliterating the distinctions as to skills, length
of service or other logical bases of differentiation.

Distortion adjustment formula (Metro Bank v. NLRC):

Minimum wage / actual salary = % x prescribed increase
= distortion adjustment

See also equitable bank case

Art. 125 Freedom to Bargain
Art. 126 Prohibition against Injunction
Art. 127. Non-Dimunition of Benefits

Chapter VI Administration and Enforcement

Art. 128. Visitorial and Enforcement Power
If employer-employee relationship still exists regional
director has power to order and administer, after due
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notice and hearing, compliance with labor standards
provision of Labor Code/other laws

DOLE regional director must endorse case to Labor
arbiter
Where employer contests finding of labor standards
and welfare officers and
Raises issues which cannot be resolved without
considering evidentiary matters
That are not verifiable in the normal course of
inspection.

Regional director can enforce a labor standards law
even if the compliance issue is not raised in the
complaint. (Aboitiz Shipping v. dela Serna)

See also Univ of Immaculate Conception case

But Regional director without authority to declare an
order or law unconstitutional; only duty to enforce the
laws, which stands valid.

Double Indemnity
Fine of double prescribed wage increase when employer
refuses or fails to pay prescribed adjustment in wage
rates. (RA 6727).
Based on unpaid benefits, where benefits defined to be
prescribed wage rates which employer failed to pay
upon effectivity of wage order, exclusive of other wafe
related benefits.

Labor Standards Cases
DOLE Regional Director exercises both visitorial and
enforcement power over labor standard cases
emplowered to adjudicate money claims, provided
employer-employee relationship exists and finding are
not contested by employer (Maternity Childrens
Hospital v. sec of labor)

Art. 129. Recovery of wages, simple money claims
and other benefits
Money claims arising from complaint/routine inspection
Regional director refers case to Labor Standards and
Welfare Officer for field inspection. LSWO to submit
report to Regional Director through the Chief of the
Labor Standards Enforcement Division (LSED) with 24 hrs
after investigation or within a reasonable period as
determined by Regional Director.

Restitution
Plant Level restitution may be effected for money
claims not exceeding P50T. Report submitted to
Regional Director for verification and confirmation.

Compromise agreement
In writing, signed by parties in the presence of Regional
Director or his duly authorized rep.

Hearing
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Where no proof of compliance submitted by employer
after 7 days from receipt of inspection, Regional
director to summon employer & complainants to a
summary investigation.

Enforcement under Art 128 are beyond injunctive power
of an inferior court.

Appeal
Appealable to DOLE sec. Then to CA through certiorari.

DO 57-04 New system for enforcement of labor laws
3 approaches
(1) self-assessment voluntary compliance applicable
for shops >= 200 workers or those with CBA
(2) Inespection 10 to 199 workers; hazardous,
construction projects; labor standards complaints
(3) advisory - < 10 workers; micro business enterprises;
not punitive; assistance to increase productivity;
relaxed

DOLE may delegate to Lgu the inspection of safety (ex
boiler).

Title III Working Conditions for Special Groups of
employees
Chapter I Employment of Women

Nightwork prohibition (Art 130)
Exceptions (Art 131)

Most call centers are exempt DOLE Secretary
exemption (under Art 131 (g))

Art. 132 Facilities for Women

Art. 133. Maternity Leave (obsolete)
Maternity leave benefits (now under SSS law)
Pre-req: at least 3 monthly contributions in 12 month
period immediately preceding semester of childbirth or
miscarriage:
60 days salary credit
78 days in case of caesarian delivery

Paternity Leave (RA 8187) legit married, living with
spouse

Maternity leave benefits apply to married or unmarried
women.

Art. 134. Family Planning Services; Incentives for
Family Planning
Art. 135. Discrimination Prohibited

Discrimination prohibited
solely on account of her sex
RA 7192 provides that the state recognizes the role of
women in nation-bldg and shall ensure the fundamental
equality before the law of women and men. The State
shall provide women rights and opportunities equal to
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that of men. To attain this policy: (1) substantial
portion of Official Devt Funds set aside & utilized by
agencies to support programs & activities for women;
(2) All govt depts. Ensure that women benefit equally &
participate directly in devt programs & projects of said
depts.; and (3) All depts. And agencies shall review &
revise regulations, circulars, issuances and procedures
to remove gender bias therein.

Art. 136. Stipulation against marriage

Stipulation against marriage
Nondiscrimination policy against women for T&C of
employment.
See star paper case

Prohibited acts: (Art 137)
1) Deny any woman employee benefits or
dischrage woman for purpose of
preventing her from enjoying benefits
under this code
2) Discharge woman on acct of her
pregnancy
3) Refuse admission of such woman upon
returning to work for fear that she may
again be pregnant

Art 138 Classification of certain women workers
Any woman working in any night club, cocktail lounce,
massage clinic, bar or similar establishment, under the
effective control of the employer for a substantial
period of time condiered employee of such
establishment

Zialcita v. PAL (1977) OP decision
We cannot agree to the respondent PALs proposition
that termination from employment of flight attendants
on account of marriage is a fair and reasonable standard
designed for their own health, safety, protection and
welfare, as no basis has been laid therefore. Actually,
respondent claims that its concern is not so much
against the continued employment of the flight
attendant merely by reason of marriage but rather on
the consequence of marriage pregnancy. Xxx The
sweeping intendment of the law, be it on special or
ordinary occupations is reflected in the whole text and
supported by Art 135 that speaks of nondiscrimination
on the employment of women.

PT&T v. NLRC
Similar to the Zialcita case except that the employer
did not admit that the employee was dismissed because
she was married. The cause of the dismissal, the
employer insisted, was her dishonesty in stating in the
job application that she was single though in fact she
was not.
PT&Ts policy that married women are not qualified for
employment in PT&T is not only in derogation of the
provisions of Art 136 on the right of women to be free
from any kind of stipulation against marriage in
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connection with her employment, but it likewise
assaults good morals and public policy tending as it does
to deprive a woman of the freedom to choose her
statusl, a privilege that by all accounts inheres in the
individual as an intangible and inalienable right.

Gualberto v. Marinduque Mining (1978) CA Case
Whether pre-employment agreement or company
policy, the policy of the firm to consider, due to lack of
facilities for married women, female employees as
separated the moment they get married, is void. No
employer may require female applicants for jobs to
enter into preemployment agreements that they would
be dismissed once they get married.

Art. 137. Prohibited Acts
Art. 138. Classification of Certain Women Workers.

Sexual Harassment
RA 7877
Victim may be male or female.

Elements: DRR AIMA
Demand/Request/Require sexual favor
Authority, influence or moral ascendancy over victim

Punishes sexual harassment if same is:
(1) work related
(2) education related
(3) training related

Excluded:
Salewoman-Client relations but RPC, Independent Civil
Actions
Employee-employee but file case with company based
on company rules

Duty of employer or head of office
To prevent or deter the commission of acts of sexual
harassment and provide procedures for resolution or
prosecution of acts of sexual harassment
To promulgate rules and regulations prescribing
procedure for investigation of secual harassment cases
and admin sanctions therefor
To create committee on decorum and investiation of
cases on sexual harassment

BOOK FOUR
HEALTH, SAFETY AND SOCIAL
WELFARE BENEFITS

Title I
MEDICAL, DENTAL AND
OCCUPATIONAL SAFETY

Chapter I
MEDICAL AND DENTAL SERVICES
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Article 156: FIRST-AID TREATMENT
Article 157: EMERGENCY MEDICAL AND DENTAL
SERVICES
Article 158: WHEN EMERGENCY HOSPITAL NOT
REQUIRED
Article 159: HEALTH PROGRAM
Article 160: QUALIFICATIONS OF HEALTH PERSONNEL
Article 161: ASSISTANCE OF EMPLOYER

COMMENTS

The Implementing Rules in Book IV, Rule I, provide
details additional to those in the above codal provisions:

Coverage: The Rule shall apply to ALL employers
whether operating for profit or not, including the
Government and any of its political subdivisions
and government-owned or controlled
corporations, which employ one or more workers
Bureau of Dental Health Services of DOH: in
charge of the development of dental standards
Definition:
o First Aid Treatment ADEQUATE,
IMMEDIATE, and NECESSARY, medical and
dental attention or remedy given in case
of injury o sudden illness suffered by a
worker during employment, irrespective of
whether or not such injury or illness is
work-connected, BEFORE more extensive
medical and/or dental treatment can be
secured. It does not include continued
treatment or follow-up treatment for any
injury or illness.
o Workplace OFFICE, PREMISES or
WORKSITE where the workers are
HABITUALLY employed and shall include
the office or place where the workers who
have no fixed or definite worksite
REGULARLY REPORT for assignment in the
course of their employment.
o First Aider any person trained and duly
certified as qualified to administer first aid
by PHILIPPINE NATIONAL RED CROSS or any
other organization accredited with the
former.
Medicines and Facilities:
o An employer shall keep in or about his
workplace firs-aid medicines, equipment
and facilities prescribed by the
Department of Labor 5 days from issuance
of regulation
o The list may be revised anytime by the
Bureau of Labor Standards, subject to
approval of the Secretary of Labor.
Emergency Medical and Dental Services:

Number of
Employees
Medical and Dental Services
Hazardous Non-Hazardous
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10 to 50 in a
workplace
Graduate First-aider, and may be one
of the workers in the workplace AND
who has immediate access to the firs-
aid medicine prescribed in Section 3
Exceeds 50 but
not more than
200
Full-time
Registered Nurse
Full-time First-
aider IF a Nurse is
not available

Exceeds 200
but not more
than 300
Full-time Registered Nurse
Part-time Physician
Part-time Dentist
Emergency Clinic
The Physician and the dentist shall stay
in the premises for at least 2 hours a
day.*

Exceeds 300
Full-time
Nurse
Full-time
Physician
Full-time
Dentist
Dental
Clinic and
Infirmary OR
Emergency
Hospital
with One
bed
capacity for
every 100
workers
Full-time
Registered
Nurse
Part-time
Physician
Part-time
Dentist
Shall have same
responsibilities as
those provided in
previous box
The Physician and
the Dentist shall
stay in the
premises of the
workplace for at
least 8 hours a
day*
*Where the establishment has more than one
workshift a day, the required two-hour stay shall be
devoted to the workshift which has he biggest
number of workers and they shall, in addition to the
requirements of this Rule, be subject to call at
anytime during the other workshifts to attend to
emergency cases.

** In all workplaces where there are more than one
workshift in a day, the employer shall, in addition to
the requirements of this rule, provide for the
services of a full-time first-aider for each workshift.

Emergency Hospital: An employer need not put
up and emergency hospital or dental clinic in the
following situations:
o Urban Area where there is a hospital or
dental clinic not more than 5 kilometers
away from the workplace OR which can be
reached by motor vehicle in 25 minutes of
travel
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o Rural Area - the employer has facilities
readily for transporting a worker to the
hospital or clinic in case of emergency
o The employer must enter into a written
contract with the hospital or dental clinic
for the use thereof in the treatment of
workers in case of emergency.
Training and Qualifications of Medical and Dental
Personnel:

Personnel Requirements

First-aider
Must be able to read and
write
Completed a course in
first-aid duly certified by
the National Red Cross or
any other organization
accredited by the same

Nurse
Passed the examinations
given by the Board of
Examiners
Duly licensed to practice
nursing in the Philippines
and preferably with at
least 50 hours of training in
occupational nursing
conducted by
o DOH
o Institute of Public
Health of UP; OR
o Any organization
accredited by the
former

Physician
Passed the examination
Examiners
Licensed to practice
medicine in the Philippines
Preferably a graduate of a
training course in
occupational medicine
conducted by the
o Bureau of Labor
Standards
o Institute of Public
Health of UP
o Or any organization
accredited by the
former

Dentist
Passed the examinations
Examiners
Licensed to practice in the
Philippines
Preferably has completed a
training course in
occupational dentistry
conducted
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o Bureau of Dental
Services of DOH
o OR any organization
duly accredited by
the former

Opportunity for Training:
Hazardous Workplaces
Health Program
Medical and Dental Records

Chapter II
OCCUPATIONAL HEALTH AND SAFETY

Article 162: SAFETY AND HEALTH STANDARDS
Article 163: RESEARCH
Article 164: TRAINING PROGRAMS
Article 165: ADMINISTRATION OF SAFETY AND
HEALTH LAW

COMMENTS

The Implementing Rules in Book IV, Rule II, provide
details additional to those in the above codal provisions:

Coverage: The Rule shall apply to ALL
establishments, workplaces and other
undertakings except:
o Those engaged in land, sea and air
transportation
Provided: that their dry docks,
garages, hangars, maintenance and
repair shops and offices, shall be
covered by this Rule
o Residential places exclusively devoted to
dwelling purposes
*GR: Department of Labor has jurisdiction to
inspect all establishments, workplaces and
undertakings.
Exception: Chartered cities may be
allowed to assume responsibility for technical
safety inspection upon compliance with such
standards and guidelines as the Secretary of
Labor may promulgate

*Technical Safety Inspection includes inspection
for purposes of safety determination of boilers,
pressure, wheels, internal combustion engines,
elevators (passenger and freight), dumbwaiters,
escalators, and electrical installations in all
workplaces.

Work Condition not covered by standards: Any
specific standards applicable to a condition,
practice, means, method, operation, or process
shall also apply to other similar work situations
for which NO specific standards have been
established.
Training of Personnel in safety and Health: Every
employer shall take steps to train a sufficient
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number of his supervisors or technical personnel
in occupational safety and health.

Number of
Employees
Training
Hazardous Non-Hazardous

50 to 400 each
shift
At least one of
the supervisors
or technical
personnel shall
be trained in
occupational
health and safety
and shall be
assigned as part-
time safety man.
Such safety man
shall be the
secretary of the
safety committee

Over 400 workers
per shift
At least two of
its supervisors
shall be trained
and a full time
safety man shall
be provided

20 to 200 each
shift
At least one of
its supervisors
or technical
men shall be
trained who

shall work as
part-time safety
man. He shall
be the
secretary of the
safety
committee

Over 200 workers
each shift
At least two of
its supervisors
or technical
personnel shall
be trained and
one of them
shall be
appointed full-
time safety man
and secretary of
safety
committee
therein.

* The employment of a full-time safety man may not be
required where the employer enters into a written
contract with a qualified consulting organization which
shall develop and carry out his safety and health
activities. Provided, that the consultant shall conduct
plant visits at least four hours a week and is subject to
call any time to conduct accident investigations and is
available during scheduled inspections or surveys by the
Secretary of Labor or his authorized representatives.

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* The provisions of this Section shall be made mandatory
upon orders of the Secretary of Labor as soon as he is
satisfied that the adequate facilities on training in
occupational safety and health are available in the
Department of Labor and other public or private
entities duly accredited by the Secretary of Labor

General duties of workers:
o Every worker shall cooperate with the
employer in carrying out the provisions of
this Rule
o Every worker shall make us of ALL
safeguards and safety devices furnished in
accordance with the provisions of this Rule
for his protection and the protection of
others and shall follow ALL instructions
made by the employer in compliance with
the provisions of this Rule.
Duties of Other persons: Any person, including
builders or contractors, who visits, builds,
innovates or installs devices in establishments or
workplaces shall comply with the provisions of
this Rule and all regulations issued by the
employer in compliance with the provisions of
this Rule and other subsequent issuances, of the
Secretary of Labor.
Training

TITLE II

EMPLOYEES COMENSATION AND STATE
INSURANCE FUND

Chapter I
POLICY AND DEFINITIONS

Article 166: POLICY

COMMENTS AND CASES

1. OVERVIEW: WORKMENS COMPENSATIONS PROGRAM
AND SIF

Workmens Compensation is a general and
comprehensive term applied to those laws providing for
compensation for loss resulting from the INJURY,
DISABLEMENT, or DEATH of workmen through
INDUSTRIAL ACCIDENT, CASUALTY or, DISEASE.

Compensation means the money relief afforded
according to the scale established under the statute, as
differentiated from compensatory damages
recoverable in an action at law for breach of contract or
for tort

Amount of Compensation generally determined in
accordance with a definite schedule, based on the loss
of earning power, the usual provision being for the
payment of a specified amount at regular intervals over
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a definite period. Provision is also made, in most
instance, for the furnishing of medical, surgical,
hospital, nursing, and burial services in addition to
independently of the payment of compensation.

Primary Purpose is to provide compensation for
disability or death resulting from occupational injuries
or diseases, or accidental injury to, or death of,
employees. It is for the benefit of the EMPLOYEES and
not the employer

It is not Charity but a recognition of a moral duty and
erection of it into a legal obligation of the PUBLIC not
only of that of the employer.

Based on the Idea that liability arising out of employers
negligence is inapplicable to modern conditions of
employment because of highly organized and hazardous
industries of modern times. The causes of injuries are
often so obscure and complex that it is usually
impossible to ascertain the fact to from an accurate
judgment. Further litigation causes expense and delays
that defeats justice and antagonisms between employer
and employee. Basically, the theory of negligence is
discarded as the basis of liability, and in general a right
to compensation is given for all injuries incident to the
employment, the amount is limited to a given schedule.

Purpose
Improve the economic status of the worker
Obviate uncertainties, delay, expense, and
hardship attendant upon the enforcement of
court remedies
Transfer from the worker to the industry in which
he is employed, and ultimately to the consuming
public, a greater proportion of the economic loss
due to industrial accidents and injuries.
Improve the relations between employers and
employees by avoiding or reducing the friction
incident to litigation.
Provide, not only for employees a remedy which
is both expeditious and independent of proof of
fault, but also for employers a liability which is
limited and determinate.

Statutorily given Right which both create and measure
the right

Source of Compensation:
1. Direct Payment Statutes payment by the
employer
2. Insurance Statutes
a. require the employer to take out
insurance either with
i. an insurance bureau operated by
the state
ii. private company
b. require and employer to contribute to a
compensation fund

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State Insurance Fund the Labor Code adopts the
compensation fund type. All covered employers are
required to remit to a common fund a monthly
contribution equivalent to one percent of the monthly
salary credit of every covered employee. The employee
pays NO contribution into the fund; agreement to the
contrary is VOID and PROHIBITED.

Compensation is in the form of medical supplies and
services and/or cash income if employee is unable to
earn because of injury of disease. Death benefits and
funeral benefits are also given.

Process:
1. Injury befalls the employee
2. Within 5 days must notify employer, if
notification is required, who in turn ,must enter
notice in the logbook
3. Within 5 days after entry report the sickness,
injury or death deemed work connected to:
a. SSS in private sector or;
b. GSIS in public sector
Note: The employer INITIALLY decided whether the
injury, sickness or death is work related or not.
4. The claim is decided by the SSS or GSIS. Decisions
of the two administering agencies are appealable
to the Employees Compensation Commission,
which is the policy making body, within 30 days.
a. If the result of the appeal is favorable to
the employee becomes final and
executory, appealable to the SC in limited
cases
b. If SSS or GSIS is reversed the two systems
cannot appeal to the high court.

2. PD 626 AND ITS EFFECTIVE DATE

PD 626 amended extensively the Labor Code
provisions on ECC and SIF. It applies only
prospectively. Because it took effect on January 1,
1975 it applies to illness contracted on or after that
date. For those contracted before said date the
applicable law is the workmens compensation act
its commission was finally abolished on March 31,
1976.

3. VALIDITY OF PD 626: NATURE OF THE STATE
INSURANCE FUND

Jose B. Sarmiento vs. Employees Compensation
Commission, et. al. - PD 626 does not infringe upon the
workers constitutional rights. The said new law
discarded the concepts of presumption of
compensability and aggravation to restore what the
law believes as a sensible equilibrium between the
employers obligation to pay and the employees right
to receive reparation

The new law establishes a state insurance fund built up
by the contributions of employers base don the salaries
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of their employees. The injured workers does not have
to litigate his right to compensation. No employer
opposes his claim. There is no notice of injury nor
requirement of controversion. The sick worker simply
files a claim with a new neutral ECC which then
determines on the basis of employees supporting
papers and medical evidence whether or not
compensation may be paid. The payment of benefits is
more prompt. The cost of administration is low. The
amount of death benefits has also been doubled.

3.1. Trust Fund

It is now the trust fund and not the employer that
suffers if benefits are paid to the claimants who are not
entitled under the law. The employer joins the
employee in trying to have their claims approved. The
employer is spared the problem of proving a negative
proposition that the disease was not caused by
employment.

3.2. Social Insurance

Employees compensation is based on social security
principles. All covered employers throughout the
country are required to contribute fixed and regular
premiums or contributions to a trust fund for their
employees. Benefits are paid from this trust fund. At
the time the amount of the contributions was being
fixed, actuarial studies were undertaken. The
actuarially determined number of workers who would
probably file claims within any given year is important
in insuring the stability of the trust fund and making
certain that the system can pay its benefits due to all
who are entitled and in the increased amounts fixed by
law. Thus, if diseases no intended by the law to be
compensated are inadvertently or recklessly included
the integrity of SIF is endangered.

4. WORKMENS COMPENSATION ACT DISTINGUISHED
FROM EMPLOYEES COMPENSATION LAW

Workmens Compensation
Act
Employees Compensation
Law
Presumption of
Compensability once it is
proven that injury or
disease arose in course of
employment
Abolished

Rule that if ailment
aggravated by work
employer becomes liable
Abolished
Requires the employer to
controvert the claim within
14 days from disability or
10 days from knowledge
otherwise considered
waived
No need to controvert
because the claim is
against the SIF not the
employer

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The old law destroyed the parity or balance between
the competing interests of employer and employee with
respect to workmens compensation. The balance was
tilted unduly in favor of the workmen since it was
possible to stretch the work-related nature of an
ailment beyond the seemingly rational limits.

Under the present law for an employee to be entitled to
sickness, injury or death benefits, it must be result form
or must have resulted:
1. Any illness definitely accepted as an occupational
disease listed by the Commission
2. Any illness caused by employment subject to
proof that the risk of contracting the same is
increased by working conditions

The list of occupational diseases is in Annex A of the
ECC Rules in the Appendix.

4.1. Presumptive Compensability for AFP Members
and Policemen

In a limited sense, Presumption of Compensability has
been restored through Resolution No 3906, adopted on
July 5, 1988 by the ECC which states:

This board resolves, as it hereby resolves, to approve
the adoption of a policy that the moment an AFP
member suffers a contingency, the presumption is that
it is because of the nature of his work; provided that
the evidentiary details of his injury, or death, are
clearly established through duly issued medical
certifications on his injury or injuries, or death, by the
attending physician or duly authorized representatives
of the hospital where he is brought for medical
treatment.

5. LIBERAL INTERPRETATION

The ECC should adopt a liberal attitude in favor of the
employee in deciding claims for compensability,
especially where there is some basis in the facts for
inferring a work-connection to the accident. This kind
of interpretation gives meaning and substance to the
compassionate spirit of the law as embodied in Article 4
of the New Labor Code.

However, it is not the intention of the legislature the
insurer against all accidental injuries which might
happen to an employee while in the course of the
employment, but only for such injuries arising from, or
growing out of, the risks peculiar to the nature of the
work in the scope of the workmens employment or
incidental to such employment, and accidents in which
it is possible to trace the injury to some risk or hazard
to which the employee is exposed in a special degree by
reason of such employment.

Article 167: DEFINITION OF TERMS

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COMMENTS AND CASES

1. COMPENSABLE WORK-RELATED INJURY DEFINED

What is compensated is not the injury or the disease
itself but the attendant loss or impairment of earning
capacity.

Rule III, Section 1(a):
For the injury and the resulting disability or
death to be compensable, the injury must be the result
of an employment accident satisfying all the following
grounds:
1. the employee must have been injured at
the place where his work requires him to
be;
2. the employee must have been performing
his official functions; and
3. if the injury is sustained elsewhere, the
employee must have been executing an
order for the employer

2. MEANING OF ARISING OUT OF AND IN THE
COURSE OF THE EMPLOYMENT

Although it has been said that the coverage formula is
composed of two separate tests, the basic concept of
compensation is unitary and is best expressed by the
word, work-connection. An uncompromising
insistence on an independent application of each of the
two portions of the test can exclude clearly work-
related injuries.

Arising out of refer to the origin or cause of the
accident and are descriptive of its character

In the course of the Employment when it takes place
within the period of the employment, at a place where
the employee reasonable may be, and while he is
fulfilling his duties or is engaged in doing something
incidental thereto

Accident need not be foreseen or expected it is
sufficient that after the event it appears to have its
origin in a risk connected with employment, and to have
flowed from that source as a rational consequence.

Nature and Degree of relation there is an existing
conflict of views whether should be inherent to the
employment (conservative view) or it is sufficient that
employee was exposed by reason of employment, not
necessary that inherent (liberal view). It has been
stated that an accident arise out of employment if it
ensues from a risk reasonably incident to the
employment, and if it is in some sense due to the
employment. Again, the view has been taken that an
injury arises out of the employment if the employment
is one of the contributing causes without which the
accident which actually happened would not have
happened. The position has also been taken that an
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accident arises in the course of employment if it had its
origin there in the sense that it was the end-product of
a force or cause set in motion in the course of
employment.

No Precise Formula for Sphere of Employment:
Generally, time and place of and the circumstances
surrounding its occurrence. Sphere of Employment
varies, dependent upon the nature of the work and
terms and conditions in the hiring contract.

Not necessary it should have occurred during hours of
active labor or in premises or within control of
employer, employment includes not only the actual
doing of work, but also reasonable margin of time and
space necessary to be used in passing to and form the
place where the work is to be done, where the latter is
expressly included in the terms of employment

3. PROXIMATE CAUSE

It is the sufficient cause, which may be the most remote
of an operation chain. It must be that which sets the
others in motion and is to be distinguished from a mere
preexisting condition upon which the effective cause
operates, and must have been adequate to produce the
resultant damage without the intervention of an
independent cause.

Where the primary injury is shown to have arisen in the
course of employment, every natural consequence that
flows from the injury likewise arises out of the
employment, unless it is the result of an independent
intervening cause attributable to claimants own
negligence or misconduct. Simply stated, all medical
consequences and sequels that flow from the primary
injury are compensable.

3.1. Illustrative Case: Proximate Cause

Belarmino vs. Employees Compensation Commission
The condition of the classroom floor caused Mrs.
Belarmino to slip and fall and suffer injury as a result.
The fall precipitated the onset of recurrent abdominal
pains which culminated in the premature termination of
her pregnancy with tragic consequences to her. Her fall
on the classroom floor brought about her premature
delivery which caused the development of septicemia
postpartum which resulted in death. Her fall was the
proximate or responsible cause that set in motion an
unbroken chain of events leading to her, demise. True,
that she probably would not have suffered lacerations
of the vagina and would not have contracted the fatal
infection. But she is not to blame for her inability to
afford a hospital delivery and the services of a trained
doctors and nurses. Penury compelled the deceased to
scrimp by delivering her baby at home instead of the
hospital.

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3.2. Arising Out/In the Course of Employment

Hinoguin vs. Employees Compensation Commission
The death of Sgt. Hinoguin that resulted from his being
hit by an accidental discharge of his companions rifle
arose out of and in the course of his employment as a
soldier on active duty status in the AFP, and hence
compensable. The concept of workplace cannot
always be literally applied to a soldier on active duty
status. A soldier must go where his company is
stationed. Sgt. Hinoguin and his companions had
permission to proceed to Aritao. This is a place where
soldiers have secured lawful permission to be and
cannot be very different from a place where they are
required to go by their commanding officer. Hinoguin
and his companions were not on vacation leave. They
are authorized to carry their firearms with which they
were to defend themselves if NPA elements happen to
attack them.
A soldier should be presumed to be on official duty
unless he is shown to have clearly and unequivocally put
aside that status or condition temporarily by, e.g. going
on approved vacation leave. Even vacation leave may be
preterminated by superior officers.

3.3. The 24-Hour Duty Doctrine and Its Qualifications;
Moonlighting Policemen

Soldiers and policemen and even firemen by the nature
of their work may be considered on duty round-the-
clock. But this doctrine, while it relaxes the workplace
factor does not dispense with the work-connection
requisite.

GSIS vs. CA and F. Alegre From the cases (Hinoguin vs.
ECC, Nitura vs. ECC and ECC vs. CA), it can be gleaned
that the Court did not justify its grant of death benefits
merely on account of the rule that soldiers or
policemen, as the case may be, are virtually working
round-the-clock. Note that the court likewise attempted
in each case to find reasonable nexus between the
absence of the deceased from his assigned place of
work and the incident that led to his death.

Obviously, the matter SPO2 Alegre was attending to at
the time he met his death that of ferrying passengers
for a fee, was intrinsically private and unofficial in
nature proceedings as it did from no particular directive
or permission from his superior officer. In the absence
of such as in the case of Hinoguin and Nitura, or
peacekeeping nature of the act attended to by the
policeman at the time he died even without the explicit
permission or directive of a superior officer, as in
Alavaran, there is no justification for holding that SPO2
Alegre met the requisites set forth in the ECC
guidelines.

At any rate the 24-hour duty doctrine serves more as an
after-the-fact validation of their acts to place them
within the scope of the guidelines rather than a blanket
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license to benefit them in all situations that may give
rise to their deaths. In other words, the doctrine should
not be sweepingly applied to all acts and circumstances
causing the death of the police officer but only to those
which, although not on official line of duty, are
nonetheless, basically police service in character.

3.4. The 24-Hour Duty Doctrine Requires Work-
Connection; Police Service Activities

Valeriano vs. Employees Compensation Commission and
GSIS Petitioner Valeriano was not able to demonstrate
solidly how his job as a firetruck driver was related to
the injuries he has suffered. That he sustained the
injuries after pursuing a purely personal and social
function having dinner with some friends. Because he
was neither at his assigned work place nor in pursuit of
the orders of his superiors when he met an accident and
more importantly was not doing an act within his duty
and authority as a firetruck driver, or any other act of
such nature, at the time he sustained his injuries. There
is not any reasonable connection between his injuries
and his work as a firetruck driver.

4. INGRESS-EGRESS/PROXIMITY RULE

The general rule in workmens compensation law known
as going and coming rule, simply stated, is that in
the absences of special circumstances, an employee
injured in, going to, or coming from, his place of work is
excluded from the benefits of workmens compensation
acts.
Exceptions:
1. Where the employee is proceeding to
or from his work on the premises of his
employer
2. Where the employee is about to enter
or about to leave the premises of his
employer by way of the exclusive
customary means of ingress and egress
(Proximity Rule)
3. Where the employee is charged, while
on his way to or from his place of
employment or at his home, or during
his employment, with some duty or
special errand connected with his
employment.
4. Where the employer, as an incident of
the employment, provides the means of
transportation to and from the place of
employment.

Iloilo Dock & Engg. Co. vs. WCC The point where
Pablo was shot was barely twenty meters away from the
main IDECO gate, certainly nearer that a stones throw
therefrom. The spot is immediately proximate to the
IDECOs premises. Considering the fact, and further
facts that Pablo has just finished overtime work at the
time, and was killed barely two minutes after dismissal
from work and the place was immediately proximate to
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the place of work, the accident in question must be
deemed to have occurred within the zone of
employment and therefore arose out of and in the
course thereof.

Bountiful Brick Company vs. Giles Employment
includes not only the actual doing of work, but
reasonable margin of time and space necessary to be
used in passing to and from the place where the work is
to be done. If the employee be injured while passing,
with the express or implied consent of the employer, to
or from his work by a way over the employers
premises, or over those of another in such proximity and
relation as to be in practical effect a part of the
employers premises, the injury is one arising out and in
the course of the employment as much as though it had
happened while the employee was engaged in his work
at the place of its performance.

5. GOING TO OR COMING FROM WORK RULE

Resolution No. 3914-A, July 5, 1988 extending the
compensable coverage of off-premises injury from near
the premises up to the residence of the employee. The
resolution provides that an injury or death of a covered
member in an accident while he is going to, or coming
from, the workplaces, shall henceforth be duly
considered compensable provided the following
conditions are established definitely:

1) The act of the employee of going to, or coming
from, the workplace, must have been a
CONTINUING ACT, that is, he had not been
diverted therefrom by any other activity, and he
had not departed from his usual route to, or
from, his workplace; and
2) Re: an employee on an special errand, the
special errand must have been official and in
connection with his work.

5.1. Accident on the Way to Work

Alano vs. ECC Dedication was a school principal. Her
tour of duty was from 7:30am to 5:30pm. While waiting
for a ride at a public plaza on her way to school, she
was bumped and run over by a speeding bus which
caused her death. The deceased died while going to her
place of work. She was at the place where her job
necessarily required her to be if she was to reach her
place of work on time. There was nothing private or
personal about her being at the place of the accident.
She was there because her employment required her to
be there.

5.2. Accident on the Way Home

Lazo vs. Employees Compensation Commission Here
Lazo left his station at the Central Bank several hours
after his regular time off, because the reliever did not
arrive, and so he was asked to go on overtime. After
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permission to leave was given, he went home. There is
no evidence that eh deviated from his usual, regular
homeward route or that interruptions occurred in the
journey. Employment includes not only the actual doing
of the work, but a reasonable margin of time and space
necessary to be used in the passing, with the express or
implied consent of the employer, to or from his work by
a way over the employers premises, or over those of
another in such proximity and relation as to be in
practical effect a part of the employers premises, the
injury is one arising out of and in the course of the
employment as much as though it had happened while
the employee was engaged in his work at the place of
its performance.

6. INJURY AT PLACE OF EMPLOYMENT NOT NECESSARY
ELEMENT OF COMPENSABILITY

For an injury to be compensable, it is not necessary that
the cause therefore shall take place within the place
employment. If a workman is acting within the scope of
his employment, his protection in the course of
employment usually continues regardless of the place of
injury

The use of streets by the workman merely to get to or
from his work stands on a different footing altogether,
but as soon as it is established that the work itself
involves exposure to the perils of the streets, the
workman can recover for any injury so occasioned. The
fact that street perils are common to all mankind is
immaterial

In fine, the general rule is that the accident should have
occurred at the place of work and this is known as the
direct premises rule. Exceptions among others are the
Coming-and-going rule and the Ingress and
egress/proximity rule

7. INCIDENTS OF EMPLOYMENT

It is settled that injuries sustained in connection with
acts which are reasonably incidental to the employment
are deemed as arising out of such employment.
1) Acts of personal ministration for the comfort or
convenience of the employee
2) Acts for the benefit of the employer
3) Acts done to further the goodwill of the business
4) Slight deviations from work, from curiosity or
otherwise
5) Acts in emergency

8. ACTS OF MINISTRATION

Acts of Ministration are those done by a person for the
purpose of satisfying the call of nature, such as:
quenching his thirst, relieving himself by way of
urination or excretion etc. They are deemed to be
incidents of employment and necessary to the health of
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the employee, so that injuries sustained thereby are
compensable.

8.1. Rest or Refreshment

The general rule is that injuries occurring to an
employee during an intermission or break for rest or
refreshment arise in the course of the employment and
are compensable. Such rule is not affected by the fact
that the employee is paid by the hour and receives no
pay for the period covered by such intermission.
Whether an employee, by resting during work hours,
departs from, abandons, or breaks his employment so as
to deprive himself of the right to compensation for any
injury sustained while so resting generally depends upon
whether such resting, in view of all the circumstances is
reasonable incident to the employment.

8.2. Lunch Period

Thus, while generally an accidental injury to an
employee is not covered by workmens compensation as
being one arising out of and in the course of
employment if it occurs OFF the employers PREMISES
while the employee is going or coming from lunch on
UNPAID TIME, there are exceptions

8.3. Union Meeting

It has been held that an injury received at a union
meeting held during a lunch period at the plant for the
purpose of electing a shop steward, the shop steward
system being recognized by the employer in its contract
with the union, was not an injury arising out of and in
the course of employment

9. ACTS FOR THE BENEFIT OF EMPLOYER

The relation of master and servant is ordinarily
suspended during the period that the employee is off
duty and. Therefore, the general rule is that injuries
occurring before or after regular working hours are not
within the course of employment. However, an injury
sustained by an employee outside his regular working
hours or during a temporary stoppage or cessation of
work may, nevertheless, under some circumstances, be
compensable as arising out of and in the course of the
employment, and is generally held to be so where the
employee was at the time engaged in the performance
of some service for the benefit of the employer in
connection with his usual duties.

9.1. While Doing Work at Home

Injuries sustained by an employee at his own home or
upon his own premises, in connection with the
performance of the duties of his employment, are
generally held to be compensable where such work is
done there pursuant to the terms of the contract,
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express or implied, or pursuant to the direction or
request of the employer, but not where it is there
performed voluntarily by the employee for his own
convenience or benefit.

10. ACTS DURING EMERGENCY

According to many authorities the following are injuries
arising out of and in the corus of his employment and
entitling the employee to compensation:
1) Outside the scope of his usual duty
a. Which the employer has expressly ordered
to do by someone authorized to direct him
as to his work or;
b. Even in the absence of orders when such
act is reasonably necessary or incidental to
his regular work, particularly where an
emergency existed
c. Even without emergency, direct orders or
reasonable necessity, if it was done in the
furtherance of the employers business or
in pursuance of a habit or custom

11. EXTRA-PREMISES RULE

a.k.a. Shuttle Bus Rule Where a company which
provides the means of transportation in going to and
coming from the place of work is liable for the injury
sustained by employees while on board said means of
transportation. This is because the company vehicle is
an extension of its premises

12. SPECIAL ERRAND RULE

An injury sustained by an employee outside the
company premises is compensable if his being out is
covered by an office order or a locator slip or pass for
official business.

13. WHILE LIVING, BOARDING, OR LODGING ON PREMISES
OF EMPLOYER, OR AT WORKING PLACE

The mere fact that an employee was living on the
employers premises at the time of injury does not
ordinary of itself, render such injury compensable as
arising out of or in the course of the employment where
such residence on the employers premises is merely
permissive and not required, or where the injury results
from a risk or danger which is not reasonable incidental
to employment.

14. WHILE TRAVELING

The right to compensation depends, as in other cases
generally, upon whether the injury results from a risk
which is inherent in the nature of the employment, or
which is reasonably incidental thereto, or which the
employee is specially exposed, and upon whether the
employee, at the time of the occurrence of the
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accident, was engaged in the exercise of some functions
or duties reasonably necessary or incidental to the
performance if the contract of employment, or, if not
actively engaged, whether he was at the place where he
was authorized or required by such contract to be.

14.1. Where Employee Uses Own Vehicle Which
He Also Uses in Performance of Duties

In some cases in which it appeared that an employee
was using his own vehicle at the time he was injured in
an accident while going to or from work, and that he
used such vehicle in the performance of his duties to his
employer, it was held that his it was held that such
injuries arose out of and in the course of employment.

14.2. Effect of Deviation from Route, Schedule,
or Mode of Travel

Non Compensability of Deviation depends upon the
Extent, Purpose and Effect Thereof - An unauthorized
deviation may preclude recovery of compensation for an
injury caused by an added peril to which the employee
is thereby exposed during the period of the deviation,
but the compensability of an injury occurring after the
deviation has ended and the employee is again in the
course of his employment is not ordinarily affected
thereby.

14.3. Effect of Mingling of Purposes of Employer
and Employee; Dual Purpose

Dual Purpose Doctrine considers as compensable an
injury that an employee sustains while on a trip
undertaken for the benefit of the employer even if in
the course thereof the employee pursues also a personal
purpose

Resolution No. 99-08-0469, August 31, 1999 the
doctrine may be applied in the adjudication of
employees compensation claims. The application,
however, is subject to the following guidelines:

The Test in the applicability of the dual purpose
doctrine:

The test is that is ordinarily employed for
determining liability in such a case is that if
the work of the employee tends to create
necessity for travel, he or she is deemed in the
course of employment, albeit the employee
serves at the same time some personal
purpose. The requirement is that the services
of the employer is at least a concurrent cause
of the trip of the employee

15. EMPLOYER-SPONSORED ACTIVITIES

The Test
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Whether the recreation was for the employees
exclusive benefit, or whether the employer had
some interest in the activity. Where an employee
is injured while at recreation during a temporary
cessation of work, the injury is compensable as
arising out of and in the course of employment
where the recreation indulged was fostered and
encourages by the employer to the end of
efficiency of the service.

Recreational Activities fall under the so-called special
engagement rule which is one of the exceptions to the
direct premises rule. This exception covers field trips,
intramurals, outings, and picnics when initiated or
sanctioned by the employer. Accidents befalling
employees on those occasions are compensable.
*Considered as an incident of employment

16. ACTS OF GOD OR FORCE MAJEUR

General Rule: The employer is not responsible for
accidents arising from force majeur or an act of God,
when the employee has not been exposed to a greater
danger than usual.

Exception: Positional and Local Risks, when one in the
course of his employment is reasonably required to be
at a particular place at a particular time and there
meets an accident, although one which any other
person then and there present would have met
irrespective of his employemtn, that accident is one
arising out of the employment of the person so
injured. Employer is held liable for compensation
because were it not for the order the employee would
not have been at said position or location which
exposed him to the said danger.

In investigating whether or not the death of an
employee arose out of his employment, all of the
circumstances present in the case should be taken into
consideration in order to be able to determine whether
or not a causal connection exist between his death and
the conditions under which he necessarily had to fulfill
his duties. Liberal Interpretation

17. ASSAULT

Assault although resulting from a deliberate act of the
slayer, is considered an accident within the meaning
of the Workmens Compensation Act, since the word
accident is intended to indicate that the act causing
the injury shall be casual or unforeseen, an act for
which the injured party is not legally responsible

Where the duties of an employee entail his presence (at
a place and a time) the claim for an injury there
occurring is not to be barred because it results from a
risk common to all othersunless it is also common to
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the general public without regard to such conditions,
and independently of place, employment, or pursuit.

Jurisprudence is to the effect that injuries sustained by
an employee while in the course of his employment, as
the result of an assault upon his person by another
employee, or by a third person, no question of the
injured employees own culpability being involved, is
compensable where, from the evidence presented, a
rational mind is able to trace the injury to a cause set in
motion by the nature of the employment, or some
condition, obligation or incident therein, and not by
some other agency.

When a quarrel had its origin at work, injury from
assault committed outside the work premises is deemed
compensable. The SC reasoning that it was merely a
continuation or extension of the quarrel that begun
within; that continuity of the case had been so
combined with continuity in time and space that the
quarrel from origin to ending must be taken as one

17.1. Increased Risk Jobs

1. Jobs having to do with keeping the peace or
guarding property
2. Jobs having to do with keeping or carrying of
money which subject the employee to the risk
of assault because of the increased
temptation to robbery
3. Jobs which expose the employee to direct
contact with lawless and irresponsible
members of the community, like that of a
bartender; and
4. Work as bus driver, taxi driver, or street car
conductor.

18. NPA VICTIMS; PRESUMPTIVE COMPENSABILITY

Quebec vs. GSIS, ECC Case No. 4310, promulgated
November 9, 1988: The moment an AFP member
suffers a contingency, the presumption is that it is
because of the nature of his work. This policy is
adopted because of certain serious peace and order
problems of the country, more particularly the
insurgency problem, it has become generally
perceptible that on account of the nature of their
work, members of the AFP have become marked
men insofar as insurgents and other lawless
elements are concerned and are, therefore killed by
such insurgents at every opportunity. Same problem
is true to the members of the police force. Police
officers are also targets of the insurgents an other
lawless elements.

18.1. Presumptive Compensability Not
Applicable

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Jahuran vs. GSIS, ECC Case No. 3551, promulgated on
March 29, 1989: Presumption applied in the Quebec
case was not applied because said presumption only
attaches when the members of the AFP are killed by
insurgents or lawless elements because of the mere fact
that they are soldiers. In the case at bar Jahurans heirs
were denied compensability although he was killed by
another member of the Philippine Constabulary because
evidence revealed the indeed the incident was brought
about by personal conflicts.

19. EFFECTS OF VIOLATION OF RULES

Acts within the sphere of employment but carried out in
violation of some employer-promulgated rules are
compensable.

1. Where the violation of the rule itself did not
bring about the cause of the accident
2. Where there is serious doubt that the prohibition
was known to the employees injured.
3. Where the violation was not intentional but due
to carelessness or negligence.

Hawaiian-Philippine CO. vs. WCC: If the injury or death
was the result of horseplay or larking among employees,
the courts have declared the same as a compensable
accident. There can be no question that horseplay or
larking is unfortunately too common in factory life.

20. WHEN NOT COMPENSABLE

Although violation of company rules does not necessarily
defeat compensability it will be a different matter,
however, if the injury results from intoxication whether
or not the company rule is violated. It will be seen
under Art. 172 that the disability or death is not
compensable if it is caused by the employees
intoxication, willful intention to injure or kill himself or
another, notorious negligence, or otherwise excluded
from coverage of law.

21. SICKNESS, DEFINED; OCCUPATIONAL OR
COMPENSABLE DISEASE

Sickness any illness definitely accepted as an
occupational disease listed by the Commission, or any
illness caused by employment subject to proof by the
employee that the risk of contracting the same is
increased by working conditions. For this purpose, the
Commission is empowered to determine and approve
occupational diseases and work-related illnesses that
may be considered compensable based on peculiar
hazards of employment. (Occupational diseases found in
ECC Rules, appended to the book. Book IV)

21.1. Occupational Disease

Menez vs. Employees Compensation Commission, et.
al: Nature means conditions to which all employees of
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a class are subject and which produce the disease as a
natural incident of a particular occupation, and attach
to that occupation a hazard which distinguishes it from
the usual run of the occupation and is in excess of the
hazard attending the employment in general.

To be an occupational disease it must be one due wholly
to causes and conditions which are normal and
constantly present and characteristic of the particular
occupation; that is, those things which science and
industry have not yet learned how to eliminate. Every
worker in every plant of the same industry alike
constantly exposed to the danger of contracting a
particular occupational disease.

21.2. Duties of Employer Regarding Occupational
Disease

Under Rule III, Sec. 2 of the Amended ECC Rules, the
employer is bound to require preemployment
examination of employees exposed to occupational
diseases.

22. THEORY OF INCREASED RISK

Increased Risk Theory to establish compensability, the
claimant must show proof of reasonable work-
connection, not necessarily direct causal relation. The
degree of proof required is merely substantial evidence
which means such relevant evidence as will support a
decision, or clear and convincing evidence. Although
strict rules of evidence are not applicable, yet the basic
rules that mere allegations is not evidence cannot be
disregarded.

22.1. Illustrative Case: Increased Risk Shown

Clemente vs. GSIS: Working as a cleaner in a skin clinic
whereas the deceased was exposed to different carriers
of viral and bacterial diseases.

Narazo vs. ECC: (Uremia) Deceased was a Budget
Examiner. From human experience, prolonged sitting
down and putting off urination result in stagnation of
urine. This encourages the growth of bacteria in the
urine, and affects the delicate balance between
bacterial multiplication rates and the host defense
mechanisms. Delayed excretion may permit the
retention and survival of microorganisms which multiply
rapidly, and infect the urinary tract.

22.2. Illustrative Case: Increased Risk Not Shown

Quantum of Evidence: to prove the cause of the ailment
or the increased risk from the job can obviously be
determined only on a case-to-case basis

Limbo vs. ECC: Absence of the sickness from the list of
Occupational Diseases is not a bar to petitioner to claim
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so long as he can probe that the risk of contracting the
illness was increased by his working conditions. In
determining whether a disease is compensable, it is
enough that there exists a reasonable work connection
as the workmens claim is based on probability and not
on certainty.

Dabatian vs. GSIS: Aside from the undisputed fact that
deceased was a heavy coffee drinker, which was his way
of warding off sleepiness; no evidence was ever
adduced by claimant to bolster the theory that her
husbands work increased the risk of contracting the
ailment. The Supreme Court takes notice of the fact
that the conditions in this case are not peculiar to the
work mentioned therein. Many, if not most, employees
are equally exposed to similar conditions but have not
been victims of peptic ulcer.

Sarmiento vs. ECC: Parotid carcinoma or cancer of the
salivary glands is not an occupational disease
considering the deceaseds employment as accounting
clerk and later as manager of the budget division. The
petitioner must, therefore, prove that his wifes
ailment was caused by her employment or that her
working conditions increased the risk of her contracting
fatal illness. The evidence presented by petitioner that
her field trips necessitated her to take frequent plane
travels which caused defeaning and numb sensation in
the ears were held by the court as mere conjectures
and not sufficient to grant her relief.

23. SPECIFIC DISEASES/AILMENTS
23.1. Adenocarcinoma of the Ileocaecal Junction

A malignancy affecting a certain portion of the small
intestines, it is not listed as an occupational disease.
Despite scientific advances on the matter, even
professional experts have not as yet determined its
cause. Since its cause is not known, there is no duty on
the part of the claimant to present proof, since proof is
required only when the cause of the disease is known.

23.2. Asbestosis

Guidelines:
1. the employee must have been exposed to
asbestos dust in the workplace, as duly certified
to by the employer, or by a medical institution,
or competent medical practitioner acceptable to,
or accredited by the System
2. The chest x-ray report of the employee must
show findings of asbestos, or asbestos-related
disease, (e.g. plural plaques, pleural thickening,
effusion, neoplasm and interstitial fibrosis;
3. in case the ailment is discovered after the
employees retirement/separation from the
service, the claim therefore must be filed with
the System within (3) years from discovery

23.3. Bangungot
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3B 2006-2007

The exact cause of death is still unknown. But even if
the deceased died of bangungot, still, where the
cause of an ailment is unknown and undetermined even
by medical science, the requirement of proof of causal
link between the ailment and the working conditions
should be liberalized.

23.4. Bells Palsy, Anxiety Neurosis, Peripheral
Neuritis

Not among those listed, thus, the claimant must prove
that he contracted the disease in the course of
employment.

23.5. Cancer of the Pancreas

Still of unknown origin

23.6. Cancer of the Stomach

In ECC Resolution No. 247-A, dated April 13, 1977,
cancer of the stomach and other lymphatic and blood
forming vessels is considered occupational only among
wood-workers, loggers, carpenters and employees, in
plywood, pulp and paper mills.
23.7. Carcinoma of the Breast with Metastases
to the Gastrointestinal Tract

Metastases to the gastrointestinal Tract and lungs is
listed as occupational disease only among workers in
pulp and paper mills and plywood mills, and vinyl
chloride and plastic factories.

23.8. Cardiovascular Failure

Under the restrictive provisions of the Labor Code,
which cast aside the presumption of compensability
provided in the Workmens Compensation Act,
cardiovascular disease, which includes myocardial
infarction, is listed as a work-related disease

23.9. Chronic Glomerulonephritis*
23.10. Chronic Osteomylitis*
23.11. Chronic Pylonephritis, Diabetes Mellitus,
Anemia, Pulmonary Metastases (Cancer)*
23.12. Incomplete Abortion

Carvajal vs. ECC: Records reveal that petitioners wife,
while working as campaign clerk in the Treasurers
Office of San Juan, Eastern Samar, suffered two
attacks of vaginal bleeding and hypogastric pain
attributing said ailment to the lifting of heavy tax
declaration books, due to incomplete abortion.

Pregnant women become tired more readily; therefore,
the prevention of fatigue must be stressed very
emphatically. The body is made up of various types of
cells, each type with a specific function. Depletion of
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3B 2006-2007

nerve-cell energy results in fatigue, and fatigue causes
certain reactions in the body that are injurious.

Additionally, medical opinion to the contrary can be
disregarded especially when there is some basis in the
facts for inferring a work-connection.

23.13. Intestinal Obstruction Partial

It is a condition in which the passage of intestinal
contents is arrested or seriously impaired. This is due to
causes which are either mechanical, vascular or
neurogenic. Mechanical causes are intrinsic factors as
adhesions and tumors, and hernia and such factors as
impacted foreign body of feces, parasites, and
gallstones.

23.14. Leprosy
23.15. Parotid Carcinoma*
23.16. Peptic Ulcer*
23.17. Rheumatoid Arthritis*
23.18. Schistosomiasis

A teacher who works under a hazardous condition in far-
flung town and has to hike daily to his place of work, is
liable to contract schistosomiasis.

23.19. Senile Cataract*
23.20. Tuberculosis

It is an occupational disease or work-connected in such
occupations as that of a teacher, laborer, driver, land
inspector and other similar occupations; hence
compensable.

*Not an occupational disease, hence must prove that
the risk of contracting the disease was increased by the
working conditions.

24. EVIDENCE; DEGREE OF PROOF

Proof of direct causal relation is not, however,
indispensably required. It is enough that the claimant
adduces proof of reasonable work connection, whereby
the development of the disease was brought about
largely by the conditions present in the nature of the
job. Strict rules of evidence are not demanded. The
degree of proof required is merely substantial evidence,
which has been held to be such relevant evidence as a
reasonable mind might accept as sufficient to support a
conclusion.

Under the law, it is not required that the employment
be the sole factor in the growth development or
acceleration of claimants illness to entitle him to the
benefits provided for. It is enough that his employment
had contributed even in a small degree.

25. PROOF IS REQUIRED ONLY IF CAUSE IS KNOWN; OLD
DOCTRINE
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3B 2006-2007

The Necessity of Proof is present only when the cause of
the disease is known. If not known, there is no duty to
present proof, for the law does not demand an
impossibility. Thus, the requirement that the disease
was caused or aggravated by the employment or work
applies only to an illness where the cause can be
determined or proved.

Where the causes of an ailment are unknown to and/ or
undetermined even by medical science, the
requirement of proof of any causal link between the
ailment and the working conditions should be liberalized
so that hose who have less in life will have more in law.

26. NEW DOSCTRINE; PROOF IS REQUIRED

Raro vs. ECC: It is not correct to say that all cancers are
not compensable. The list of occupational diseases
prepared by the ECC includes some cancers as
compensable.

Cancer is still a disease of still unknown origin which
strikes people in all walks of life, employed or
unemployed. Unless it be shown that a particular form
of cancer is caused by specific working conditions. The
court cannot conclude that it was the employment
which increased the risk of contracting the disease.

Orate vs. CA: It is well to remember that if diseases not
intended by the law to be compensated are
inadvertently or recklessly included, the integrity of the
State Insurance Fund is endangered. Compassion for the
victims of diseases not covered by the law ignores the
need to show a greater concern for the trust fund to
which the tens of millions of workers and their families
look to for compensation whenever covered accidents,
diseases and death occur. This stems from the
development in law that no longer is the poor employee
still arrayed against the might and power of his rich
corporate employer, hence the necessity of affording all
kinds of favorable presumptions to the employee. This
reasoning is no longer good policy. It is now the trust
fund and not the employer which suffers if benefits are
paid to claimants who are not entitled under the law.

Chapter II
COVERAGE AND LIABILITY

Article 168: COMPULSORY COVERAGE
Article 169: FOREIGN EMPLOYMENT
Article 170: EFFECTIVE DATE OF COVERAGE
Article 171: REGISTRATION

COMMENTS
1. COVERAGE

Employees
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3B 2006-2007

Covered from first day of employment
All employees, public or private, including
casual, emergency, temporary or substitute
employees
It includes a member of the Armed Forces of the
Philippines (Article 167(g) of the Labor Code as
amended and Section 4(b)(1) of Rule 1 as
amended of the implementing rules on
employees compensation
Not over 60 years of age, or over 60 if he had
been paying contributions to the System prior to
age 609 and has not been compulsorily retired.

Employer
Covered compulsorily from first day of operation

2. FOREIGN EMPLOYMENT

Filipinos working abroad for employers doing business in
the Philippines are covered by the employees
compensation law. They are entitled to the same
benefits as for those working in the Philippines.
Considering their situation, the application for the rule
on accreditation of hospitals and physicians and the rule
requiring notice to employer is relaxed.

Article 172: LIMITATIONS OF LIABILITY

COMMENTS AND CASES

1. EXCLUSIONS

Self-Inflicted or Self-Courted contingencies

1.1. Intoxication or Drunkenness

To the extent that one is not entirely himself or so that
his judgment is impaired and his act, word, or conduct
is visibly impaired.

1.2. Self-Inflicted Injuries
The injury must be intentionally self-inflicted, which
contemplates a deliberate intent on the part of the
employee, not a failure on his part to realize the
probable consequences to himself of his foolish act.

1.2.a. Suicide or Provoked Death Not
Compensable
1.2.b. Death Not the Result of Workers Willful
Act
1.2.c. Suicide, When Compensable

According to American authorities, suicide is
compensable in the following cases:
1. when it results from insanity resulting from
compensable work injury or disease
2. when it occurs during a delirium resulting from
compensable disease

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3B 2006-2007

NAESS Shipping Phil. Vs. NLRC: No law or rule would
make it illegal for an employer to assume the obligation
to pay death benefits in favor of his employee in their
contract of employment. Since, NAESS freely bound
itself to a contract which on its dace makes it
unqualifiedly liable to pay compensation benefits for
Dublins death while in its service, regardless or
whether or not it intended to make itself the insurer, in
the legal sense, of Dublins life, NAESS cannot escape
liability.

1.3. Notorious Negligence

Notorious Negligence something more than simple or
contributory negligence. It signifies a deliberate act of
the employee to disregard his own personal safety.
Disobedience to rules and/or prohibition does not in
itself constitute notorious negligence, if no intention
can be attributed to the injured to en his life. It
exempts the State Insurance Fund from liability for
injuries suffered by the former by notorious negligence.

ART. 173 EXTENT OF LIABILITY

1. OPTIONS AVAILABLE: BENEFITS UNDER THE
COMPENSATION LAW OR UNDER THE CIVIL CODE

Question: Does the compensation remedy under the
Workmens Compensation Act (now under the Labor
Code) for work-connected death or injuries exclude
other remedies under the civil code?

Answer: Case of Ysmael Maritime Corporation vs.
Avelino (June 30, 1987)
In this case, the employer refused to grant the claim of
the deceased employees parents on the ground that
the claimants had already been compensated by the
Workmens Compensation Commission for the same
incident, for which reason they are now precluded from
seeking other remedies against the same employers
under the Civil Code.

Ruling: In the case of Robles vs. Yap, it was held that
the action is selective and the employee or his heirs
have a choice of availing themselves of the benefits
under the WCA or of suing in the regular courts under
the Civil Code for higher damages from the employer by
reason of his negligence. But once the election has
been exercised, the employee or his heirs are no longer
free to opt for the other remedy, i.e., the employee
cannot pursue both actions simultaneously.

2. RECOVERY UNDER THE LABOR CODE AND THE SOCIAL
SECURITY LAW
- Simultaneous recovery of benefits under the
employees compensation program of the Labor Code
and under the Social Security Law is allowed.

ART. 174 LIABILITY OF THIRD PARTIES
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3B 2006-2007

ART. 175 DEPRIVATION OF BENEFITS

Rule: No contract, regulation, or device whatsoever
shall operate to deprive the employee or his dependents
of any part of the income benefits, and medical or
related services granted under this title. Existing
medical services being provided by the employer shall
be maintained and continued to be enjoyed by their
employees.

Exception: When otherwise provided under this Title.

CHAPTER III
ADMINISTRATION

ART. 176 EMPLOYEES COMPENSATION COMMISSION
ART. 177 POWERS AND DUTIES
ART. 178 MANAGEMENT OF FUNDS
ART. 179 INVESTMENT OF FUNDS
ART. 180 SETTLEMENT OF CLAIMS
ART. 181 REVIEW
ART. 182 ENFORCEMENT OF DECISIONS

1. STRUCTURE AND FUNCTIONS

CHAIRMAN of the Employees Compensation Commission
: Secretary of Labor and Employment

FOUR EX-OFFICIO MEMBERS: a. SSS Administrator;
b. President and General Manager
c. ECC Executive Director
d. Medicare Chairman

TWO APPOINTIVE MEMBERS: a. one representing the
employers (for a term of 6 yrs. each)
b. another representing the employees

ECC the policy-making body of the Employees
Compensation Program and also the
appeal body. ( Decisions of SSS or GSIS, if
unfavorable to the claimant, are
appealable to the ECC).

THREE THRUSTS OR COMPONENTS OF THE ECC PRGRAM:
1. Preventive Thrust
- to minimize and control hazards in the working
environment.
- Two agencies involved in this program:
a. Bureau of Working Conditions (BWC)
- inspects work premises
b. Occupational Safety and Health Center
(OSHC)
- trains safety engineers, tests
safety equipment and undertakes
research work.
- the law provides that establishments having
high rate of incidents caused by
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3B 2006-2007

hazards of their working environment will be
liable to 25% of benefits due the
claimants. (To force the observance of the legal
requirement on occupational
health and safety.)
2. Compensative Thrust
- is the heart of the Employees Compensation
Program
- through the SSS and GSIS, the ECC pays benefits
to government and private
Sector workers who suffer work-oriented
contingencies.
- in case of death, the benefits are given to the
beneficiaries.
3. Curative Thrust
- The ECC is also responsible for the treatment of
sickness or injury that a worker
may suffer in line of duty as well as
rehabilitation of those who are disabled.

Note: For medical services, the ECC conduct
accreditation of qualified physicians, clinics and
hospitals where EC patients may be referred to for
admission and treatment.

REHABILITATION SERVICES consist of
a. medical treatment;
b. surgical treatment; or
c. hospital treatment, including appliance.

2. TWO SEPARATE FUNDS

The ECC may not augment the SIF in the GSIS with
funds from the SIF in the SSS because these are two
separate funds.
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3B 2006-2007

CHAPTER IV
CONTRIBUTIONS

ART. 183 EMPLOYERS CONTRIBUTIONS
ART. 184 GOVERNMENT GUARANTEE

The penalties to the employer who is delinquent in
paying ECC contributions include imprisonment and/or
fine and a 3% penalty per month from the date the
contribution falls due until paid.

CHAPTER V
MEDICAL BENEFITS

ART. 185 MEDICAL SERVICES
ART.186 LIABILITY
ART. 187 ATTENDING PHYSICIAN
ART. 188 REFUSAL OF EXAMINATION OR TREATMENT
ART. 189 FEES AND OTHER CHARGES
ART. 190 REHABILITATION SERVICES

1. E.C. BENEFITS SUMMARIZED

THREE KINDS OF COMPENSATION EXTENDED TO THE
EMPLOYEE:
a. Services
- medical services, appliances and supplies;
- rehabilitation services
b. Cash Income Benefit or Pension due to:
- temporary total disability;
- permanent total disability;
- permanent partial disability;
- death.
c. Funeral Benefit

2. MEDICAL BENEFITS
The Medical services, appliances, and supplies shall be
provided to the afflicted employee:
- beginning on the 1
st
day of in injury or
sickness,
- during the subsequent period of his disability,
- and as the progress of his recovery may
require, subject to Sec. 5 of Rule IV, which
requires submission of periodic medical report
from the attending physician.
Notes:
- The employee is entitled to the benefits only
for the ward services of an accredited hospital
and accredited physician.
- ECC accredited hospitals and physicians are
not allowed to ask any deposit from EC
patients as requisite for admission.
- Neither are they allowed to collect any
amount from EC patients as charges.
- However, they are privileged to claim
reimbursement with the ECC through the
System fro expenses incurred in the treatment
of patients.
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3B 2006-2007

- Medicines purchased by EC patients are
reimbursed 100%.
- Expenses incurred at the ICU are also paid in
full.

2.1 Duration of Medical Liability
- Medical attendance is owing as long as the
employee is sick of a compensable
illness, and this duty is not ended when
employment terminates.
- Prevailing Rule in compensation cases: Acts
not containing any limitation as to
the period during which the employer may
furnish or pay for medical, surgical,
or hospital services have been construed as
imposing liability on the employer
as long as such services are required to cure or
relieve the injured employee
from the effect of his injury.

2.2 Reimbursement of Medical Expenses
- The services, appliances and supplies may be
acquired by the employee himself,
in the event of failure of the employer to
furnish the same promptly, at the
expense of the employer or system.
- The employees right of reimbursement for
medical expenses is not extinguished
upon his death but is transmitted to his legal
heirs, unless personal in nature or
declared by law to be so.

The reimbursable medical expenses are not only those
incurred for the primary illness but even those for its
complications developed after the employees
retirement.
Case: Godofredo Alvero, Sr. vs. GSIS (Dec. 4, 1991)
Ruling: The complications that arose from appellants
primary illnesses, PTB and COPD were brought about by
the intake of several medications like steroids,
antibiotics, and diuretics. For this reason, we believe
that appellant is entitled to reimbursement of
medications used in treating the complications,
Diabetes Mellitus and Stomach Ulcerations.

3. REHABILITATION SERVICES

THREE STAGES OF REHABILITATION UNDER THIS
PROGRAM:
a. Physical rehabilitation
-involves physical therapy by the rehab center of
the ECC accredited hospital, furnishing of
prosthesis and appliances all paid by the ECC.
b. Vocational Assessment
-involves evaluation by guidance psychologist of
the ECC and sending to
vocational school of those found ready to
reengage in gainful employment.
b. Vocational Placement
Finals Reviewer

Jojo Baetiong, Gel Baniqued, Elvira Castro, Denise Dy, Sheryl Harina, Giselle Remulla
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3B 2006-2007

Granting Compensation
Temporary Disability To compensate the laborer
or employee for what he
might have earned during
the period of the treatment
of his injury
Permanent Disability To compensate the injured
laborer or employee for the
actual and permanent loss
of a member of the body,
or the use thereof

Kind of Disability Descriptions
1. TEMPORARY
TOTAL
- employee is unable to perform
any gainful occupation for a
continuous period not exceeding
120 days, except as otherwise
provided in Rule X of these Rules.
- income benefit equivalent to 90
percent of his average daily salary
credit, subject to the following
conditions:
1. the daily income benefit shall
not be less than P10 or more than
P90 nor paid longer than 120 days
for the same disability, unless the
in jury or sickness requires more
extensive treatment that lasts
beyond 120 days, but not to
exceed 240 days from onset of
disability, in which case he shall
be paid benefit for temporary
total disability during the
extended period.
2. the monthly income benefit
shall be suspended if the employee
fails to submit a monthly medical
report certified by its attending
physician.
- Maximum Daily Income Benefit :
P200.00
- Paid beginning on the 1
st
day of
disability.
- The system may declare the
total and permanent status at any
time after 120 days of continuous
temporary disability as may be
warranted by the degree of actual
loss or impairment of physical or
mental functions as determined by
the system.
Note:
-After an employee has fully
recovered from an illness, the
period covered by any relapse he
suffers, or recurrence of his illness
shall be considered independent
of, and separate from, the period
covered by the original disability.
Such a period shall not be added
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3B 2006-2007

to the period covered by his
original disability in the
computation of his income benefit
for temporary total disability.
2. PERMANENT
TOTAL
-employee is unable to perform
for a continuous period exceeding
120 days except as otherwise
provided for in Rule X of the ECC
Rules.
- incapacity to perform gainful
work which is expected to be
permanent.
- does not require a condition of
complete helplessness

PERMANENT TOTAL DISABILITIES
(ART. 192):
1. Temporary total disabilities
lasting continuously for
more than 120 days;
2. Complete loss of sight of
both eyes;
3. Loss of two limbs at or
above the ankle or wrist;
4. Permanent complete
paralysis of two limbs;
5. Brain injury resulting in
incurable imbecility and
insanity; and
6. Such cases as determined by
the System and approved by
the Commission.
- The full monthly income benefit
shall be paid for all compensable
months of disability. The monthly
income benefit shall be
guaranteed for 5 years, except as
otherwise provided.

GROUNDS FOR CANCELLATION OF
PTD:
1. Failure of employee to
present himself for
examination at least once a
year upon notice by the
System;
2. Failure to submit a
quarterly medical report
certified by his attending
physician as required under
Sec. 5 of Rule IV hereof;
3. Complete or full recovery
from his permanent
disability; or
4. Upon being gainfully
employed. (ECC Rules)

Amount of Benefits:
a. SSS- monthly income benefit as
defined in Sec. 9 (a), Rule VI
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3B 2006-2007

b. the number of months of paid
coverage shall be the number of
monthly contributions remitted to
the System including contributions
other than for Employees
Compensation if paid before March
31, 1975. The full monthly income
benefit shall be paid for all
compensable months of disability.
c. The first day preceding the
semester of temporary total
disability shall be considered for
purposes of computing the
monthly income benefit for
permanent total disability.

Note:
-Each dependent child, but not
exceeding 5, counted from the
youngest and without substitution,
shall be entitled to 10% percent of
the monthly income benefit of the
employee.
-Except the benefit to dependent
children under Sec.4 of this Rule,
the aggregate monthly benefit
payable, in the case of the GSIS,
shall in no case exceed the
monthly wage or salary actually
received by the employee as of
the date of his permanent total
disability.
3. PERMANENT
PARTIAL
-employee suffers a permanent
partial loss of the use of any part
of his body
- see art. 193 (body parts/period)
-monthly income benefit for the
number of months indicated in art.
193
- If the indicated number of
months exceeds 12, the income
benefits shall be paid in monthly
pension; otherwise, the System
may pay income benefit in lump
sum or in monthly pension.
- a covered employee shall
continue to receive the income
benefits provided thereunder even
if he is gainfully employed and
receiving his wages or salary.

Permanent Total vs. Permanent Partial

Permanent Total Permanent Partial
-results in an employees
loss of work or inability to
perform his usual work

-Test to determine whether
-occurs when an
employee loses the use of
any particular anatomical
part of his body which
disables him to continue
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3B 2006-2007

or nor an employee suffers
from Permanent Total:
a showing of the capacity of
the employee to continue
performing his work
notwithstanding the
disability he incurred.
with his former work.

Permanent Total Disability Cases:
1. Orlino vs. Employees Compensation Commission
Ruling: He is considered permanently and totally
disabled to work when he was incapacitated or disabled
to perform any substantial amount of labor in the line of
work where he was formerly engaged, or any other kind
of work to which he could be assigned.

2. Vicente vs. ECC
Ruling: The test of determining whether or not an
employee suffers from permanent total disability is a
showing of the capacity of the employee to continue
performing his work notwithstanding the disability he
incurred. It does not mean an absolute helplessness but
rather an incapacity to perform gainful work which is
expected to be permanent.

Conversion from Permanent Partial to Permanent Total
1. GSIS vs. CA
Ruling: A persons disability may not manifest fully at
one precise moment in time but rather over a period of
time. It is possible that an injury which at first was
considered to be temporary may later on become
permanent or one who suffers a partial disability
becomes totally and permanently disabled from the
same cause.

NOTE:
-The compensation paid in 1936 on account of the
amputation of an employees foot, below the knee,
should NOT be deducted from the compensation due for
the dsability resulting from the amputation of the left
leg, above the knee in 1857.

CHAPTER VII
DEATH BENEFITS

ART. 194 DEATH

DEPENDENCY
- does not mean absolute dependency for the
necessities of life, but rather, that the
plaintiff looked up to and relied on the
contribution of the decedent in whole or in
part, as a means of supporting and
maintaining herself in accordance with her
station in life.
- A person may be dependent, according to this
view, although able to maintain himself
without any assistance from the decedent.
TEST OF DEPENDENCY
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3B 2006-2007

- dependency may exist although the
dependent could have subsisted without the
assistance he received, if such contributions
were relied on by claimant for his means of
living as determined by his position in life.
- one need not be a part of the deceaseds
household in oreder to be a dependent.

SPOUSE AS DEPENDENT
- arises from fact that marriage exists
- showing of marital status is essential
TWO WIVES AS CLAIMANTS
- the Commission must resolve the dispute
- determine who the legal wife is
PARENTS AS DEPENDENT
- a parent cannot claim as a dependent in a
compensation case where the deceased
employee is an abandoned child.

DEATH BENEFIT AND BENEFICIARIES
Death benefits are paid in the form of cash monthly
pension:
a. for life to the primary beneficiaries, guaranteed
for 5 yrs.;
b. for not more than 60 months to the secondary
beneficiaries in case there are no primary
beneficiaries;
c. in no case shall the total benefit be less than
P1,500

The Beneficiaries
Primary Secondary
a. Dependent spouse
until he/she
remarries
b. Dependent children
(legitimate,
legitimated,
natural-born, or
legally adopted)
a. Illegitimate
children and
legitimate
descendants
b. Parents,
grandparents,
grandchildren.

Notes:
- Amount of income benefits shall be equivalent t the
monthly income benefits under PTD and PPD benefits.
- Under the ECC Rules, the death benefit shall accrue
to the Employees Compensation Fund if the deceased
employee has no beneficiaries at the time of his death.
- Funeral benefit is paid to the survivor or to whoever
shouldered the burial expenses

ART. 195 RELATIONSHIP AND DEPENDENCY
ART. 196 DELINQUENT CONTRIBUTIONS
ART.197 SECOND INJURIES
ART. 198 ASSIGMENT OF BENEFITS
ART. 199 EARNED BENEFITS
ART. 200 SAFETY DEVICES
ART. 201 PRESCRIPTIVE PERIOD
ART. 202 ERROMEOUS PAYMENT
ART. 203. PROHIBITION
ART. 204 EXEMPTION FROM LEVY, TAX, ETC.
Finals Reviewer

3B 2006-2007

CHAPTER IX
RECORDS, REPORTS AND PENAL PROVISIONS

ART. 205 RECORD OF DEATH OR DISABILITY
ART. 206 NOTICE OF SICKNES, INJURY OR DEATH
ART. 207 PENAL PROVISIONS
ART. 208 APPLICABILITY

TITLE III
MEDICAL CARE

TITLE IV
ADULT EDUCATION

Reviewer Prepared By:
Baetiong, Joselito
Baniqued, Marigel
Castro, Elvira
Dy, Denise
Harina, Sheryl
Remulla, Giselle

Labor Code

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