A Case Digest Presentation in Labor Law 1

By: Cinderella M. Prajapati

Cases in #16-B, Numbers 1-5
 Vallum Security Services v. NLRC, 224 SCRA 781, 1993
 Alipio R. Ruga v. NLRC, 181 SCRA 266, 1990
 Osias I. Corporal, Sr. v. NLRC, 341 SCRA 658, 2000
 Cosmopolitan Funeral Homes v. Maalat, 187 SCRA 448, 1989
 Makati Haberdashery, Inc. v. NLRC, 179 SCRA, 1989
 Jurisprudence is abound with cases that recite the factors to be considered in
determining the existence of employer-employee relationship, namely:
1. the selection and engagement of the employee;
2. the payment of wages;
3. the power of dismissal; and
4. the employer’s power to control the employee with respect to the means and
method by which the work is to be accomplished.
 The most important factor involves the control test as it is the determinative
indicator of the presence or absence of the relationship.
 Under the control test, there is an employer-employee relationship when the
person for whom the services are performed reserves the right to control not
only the end achieved but also the manner and means used to achieve that
end.
FACTS:
 Petitioner Baguio Leisure Corporation (Hyatt Terraces Baguio) and Vallum Security
Services entered into a contract for security services wherein the latter will protect
the properties and premises of petitioner by providing 50 security guards, on a 24-
hour basis, a day.
 Hyatt’s General Manager wrote to the President of Vallum Security Services
advising that the contract of security will be terminated.
 Vallum Security then informed the private respondents about said expiration of
contract and instructed them to report to their Head Office in Muntinlupa City for
re-assignment.
 None of the private respondents reported to the head office, instead they filed for
complaints for illegal dismissal and unfair labor practices; for violation of labor
standards relating to underpayment of wages, premium holiday and allowances
ISSUE:
 Whether or not private respondent security guards are indeed employees of
petitioner Hyatt Baguio?
HELD:
 No. With regards to control and supervision, orders received by private
respondent security guards were set forth on paper bearing the letterheads of
both Hyatt and Vallum. Therefore, Hyatt explicitly purported at the very least, to
share with Vallum the exercise of the power of control and supervision with Vallum
over the guards.
 The Court note that the contract for security services between Vallum and Hyatt,
provides that the Agency shall exercise discipline, supervision, control, and
administration over all the guards and provide at its own expense all the necessary
paraphernalia for security purposes. Also, the Agency shall be held solely liable
for any claim of wages and damages.
FACTS:
 Petitioners were 8 fishermen-crew of 7/B Sandyman II, one of the several fishing
vessels owned by private respondent, De Guzman Fishing Enterprises, engaged in
the regular business of “trawl” fishing paid on percentage commission.
 Upon arrival at the fishing port, petitioners were told by the President of the private
respondent to proceed to the police station of Camarines Sur where they will be
investigated based on the report that petitioners sold some of their fish-catch at
midsea to the prejudice of private respondent.
 No criminal charges were filed but private respondent refused to allow the
petitioners to return to the fishing vessel to assume their work.
 Petitioners individually filed their complaints for illegal dismissal on the ground
that they were arbitrarily dismissed.
 Private respondent submitted its position paper denying the employer-employee
relationship between them on the theory that were engaged in a joint venture.
ISSUE:
 Whether or not the fishing crew are employees of its owner-operator, and if so, whether
or not they were illegally dismissed?
HELD:
 Yes, the petitioners are.
 The Court have generally relied on the so-called right-of-control test where the person
for whom the services are performed reserves a right to control not only the end to be
achieved but also the means to be used in reaching such end.
 The conduct of the fishing operations was undisputably shown to be under the control
and supervision of private respondent's operations manager, including matters dealing
on the fixing of the schedule of the fishing trip and the time to return to the fishing port.
 While performing the fishing operations, petitioners received instructions via a single-
side band radio from private respondent's operations manager who called the pilot in
the morning. They are told to report their activities, their position, and the number of
tubes of fish-catch in one day. Clearly thus, the conduct of the fishing operations was
monitored by private respondent and controlled in the manner of doing their work.
FACTS:
 Petitioners are barbers and manicurists in New Look Barbershop, a shop owned by
a corporation by the children of the previous owner,Vicente Lao.
 All the petitioners were allowed to continue working with the new company until
one of the children informed them that the building wherein the shop was located
had been sold and that their services were no longer needed.
 Petitioners then filed a complaint for illegal dismissal, while the respondent
averred that they were joint venture partners and were receiving 50% commission
of the amount charged to customer, thus no employer-employee relationship exists
between them.
ISSUE:
 Whether or not there exists an employer-employee between petitioner and
respondents?
HELD
 Yes, petitioners are employees of the shop and should be accorded with the
benefits in Art. 283 of the Labor Code, which grants separation pay in such cases.
 As to the control test, the following facts indubitably reveal that respondent
company wielded control over the work performance of petitioners, in that: (1)they
worked in the barbershop owned and operated by the respondents; (2)they
required to report daily and observe definite hours of work; (3) they were not free
to accept other employment elsewhere but devoted their full time working in New
Look Barber shop for all 15 years until 1995; (4) that some have worked with
respondents as early as 1960’s; (5) that petitioner was instructed by the
respondents to watch the other 6 petitioners in their daily task.
 Certainly, the respondent company was clothed with the power to dismiss any or all
of them for just and valid cause.
FACTS:
 Petitioner engaged the services of private respondent, Noli Maalat as a
"supervisor“ to handle the solicitation or mortuary arrangements, sales and
collection, and was paid on a commission basis of 3.5% of the amounts actually
collected and remitted.
 Respondent was dismissed by petitioner on violations on: Understatement of
reported contract prices, misappropriation of funds collected, charging of
additional amount and pocketing the same, non-reporting of embalming charges
and engaging in tomb making without prior knowledge of management.
 Maalat filed for illegal dismissal and non-payment of commissions.
ISSUE:
 Whether or not there exists an employer-employee?
HELD:
 Yes. There is an Employer-Employee relationship.
 The right of control was manifested in the facts and evidence on record which was
the most crucial and determinative indicator of the presence or absence of an
employer-employee relationship to wit:
 the petitioner imposed and applied its rule prohibiting superiors from engaging in other
funeral business which it considered inimical to company interests proves that it had the
right of control and actually exercised its control over the private respondent. In other
words, Maalat worked exclusively for the petitioner.
 the respondent was not allowed to issue his own receipts, nor allowed to directly deduct
his commission as truly independent salesmen practice.
 company rules which provide that "negotiation and making of contract with customers
shall be done inside the office“ stand that it does have control over the means and
methods by which the work is accomplished.
 petitioner has reported private respondent to the SSS as a covered employee.
FACTS:
 Individual complainants are working for Makati Haberdashery Inc as tailors,
seamstress, sewers, basters, and “plantsadoras” and are paid on a piece-rate basis
(except two petitioners who are paid on a monthly basis)
 They are given a daily allowance of P 3.00 provided they report before 9:30 a.m.
everyday, with work schedule from 9:30 – 6:00 or 7:00 P.M, Mondays and Saturday and
even on Saturdays and Holidays during peak periods.
 The Sandigan ng Manggagawang Pilipino, the labor organization of the respondent
workers, filed a complaint for underpayment of the basic wages, underpayment of
living allowance, nonpayment of overtime work, nonpayment of holiday pay, and other
money claims.
 The Labor Arbiter rendered judgment in favor of complainants which the NLRC
affirmed but limited back wages to one year. Petitioner then urged that the NLRC erred
in concluding that an employer-employee relationship existed between them and the
workers.
ISSUE:
 Whether or not there exists an employer-employee?
HELD:
 Yes there is, due to the application of the four-fold test wherein it was found that
petitioners had control over the respondents not only as to the result but also as to the
means and method by which the same is to be accomplished.
 Such control is proven by a memorandum which enumerates procedures and
instructions regarding job orders, alterations, and their behavior inside the shop issued
by the Assistant Manager which reads in part:
 Effective immediately, new procedures shall be followed:
 To follow instruction and orders from the undersigned.
 Before accepting the job orders, tailors must check the materials, job orders, due dates, and
other things to maximize efficiency.
 Effective immediately all job orders, must be finished one day before the due date. This can be
done by proper scheduling of job order and if you will cooperate with your supervisors. xxxx
 If there is any problem regarding supervisors or co-tailor inside our shop, consult with me at
once to settle the problem. Fighting inside the shop is strictly prohibited. Any tailor violating
this memorandum will be subject to disciplinary action.
Labor Law 1
October 23, 2018
A Class Presentation in Labor Law 1
By: Cinderella Mateo-Prajapati
1) Coverage
2) Definition of Terms
3) Employment Status
4) Service Agreements
5) Employment Contracts
6) Rights of Security Guards and other Private Security personnel
7) Terms and Conditions of Employment
8) Deductions from Salary
9) Liability and Responsibilities of Security Service Contractors/Private
Agencies and Principals
10) Right to Security of Tenure and Due Process
11) Conciliation-Mediation through Single Entry Approach
12) Oversight Function of NTIPC and PSITC
13) Effect of Existing Issuances and Agreements
14) Non diminution of Benefits
15) Penal Provision
16) Repealing Clause
17) Separability Clause
18) Effectivity Clause
 The Revised Guideline shall apply to ALL PRIVATE
SECURITY, DETECTIVE, INVESTIGATIVE
AGENCIES or OPERATORS, their PRINCIPALS or
CLIENTS, and ALL COMPANIES EMPLOYING
SECURITY GUARDS and other PRIVATE SECURITY
PERSONNEL.
a) BOND – refers to the bond under Article 108 of the Labor Code, that the
principal may require the contractor to posted equal to the cost of labor under
contract (on condition that the bond will answer for the wages due the
employees should the contractor fail to pay the same).
b) DUTY DETAIL ORDER – is a written order/schedule/assignment issued to
the security guard and other private security personnel by a superior
officer, usually the private security agency or branch manager or operation’s
officer, for the performance of security and/or detective service duty/ies.
c) NET FINANCIAL CONTRACTING CAPACITY (NFCC) – refers to the formula
to determine the financial capacity of the contractor to carry out the job,
work, or services sought to be undertaken under a Service Agreement. [NFCC
= (asset-liabities)K] wherein K=10 for 1 year or less; 15 for more than 1 year to 2, 20
for more than 2 years; minus all pending and ongoing contracts.
d) PNP, CIVIL SECURITY GROUP (CSG) – SUPERVISORY OFFICE FOR
SECURITY INVESTIGATION AGENCIES (SOSIA) AND FIREARMS AND
EXPLOSIVES DIVISION (FED) – agencies charged with the implantation of
RA 5487 or also known as Private Security Agency Law.
e) PRINCIPAL – any individual, company, cooperative, or establishment,
including government agencies and GOCC, who or which puts out or farms
out a security and/or detective job, service, or work to a private Security
Service Contractor.
f) PRIVATE SECURITY PERSONNEL – natural persons, including private
detectives, security consultants and security officers, employed by private
agency or firm, to render security and/or detective services.
g) RIGHT TO CONTROL – right reserved to the Security Service Contractor to
determine not only the end to be achieved as required by the principal, but
also the manner and means to be used in reaching that end within the limits of
the law.
h) SECURITY GUARD – any person who offers or renders personal service to
watch or secure a residence, business establishment, building, compound, any
other area or property; or inspects, monitors, or performs body checks or
searches of individuals or baggage and other forms of security inspection.
i) SECURITY SERVICE CONTRACTOR (SSC)/PRIVATE SECURITY AGENCY
(PSA) – any person, association, partnership, firm, or private corporation
engaged in contracting, recruiting, training, furnishing, or posting of
security guard and other private security personnel to individuals,
corporations, offices and organizations, whether private or public, for their
security needs as the PNP may approve.
j) SERVICE AGREEMENT – contract between the principal and SSC/PSA
containing the terms and conditions governing the performance or completion
of security service, job, or work farmed out for a definite period.
k) SOLIDARY LIABILITY – is the liability of the principal, in the same manner
and extent that he/she is liable to his/her direct employees, to the extent of
the worked performed under the contract when the SSC/PSA fails to pay the
wages of his/her employees, as provided in Article 106 of the Labor Code.
l) TOTAL CONTRACT COST – payment of wage and wage-related benefits
including social welfare benefits of security guards and other private
security personnel in conformity with the Standard Computation of the
DOLE using the form prescribed in this Guidelines.
m) TRILATERAL RELATIONSHIP – relationship in
contracting or subcontracting arrangement where there is
an contract for a specific security job, work, or service
between the principal and the SSC/PSA, and a contract of
employment between the latter and its security guards.
There are 3 parties involved in these arrangements:
m.1) Principal - decides to farm out the security job, work, or service to a security service
contractor;
m.2) SSC/PSA - has the capacity to independently undertake the performance of the work;
m.3) Security Guards and other private security personnel - engaged by the SSC/PSA to
accomplish the security job, work or service.
1. 3.1. Employer – Employee Relationship - The SSC/PSA is the employer of its
security guards and other private personnel on duty detail to the principal or
client under a Service Agreement;
2. 3.2. Probationary Employment – Probationary period of newly-hired security
guards/other private security personnel in the private security industry shall
note exceed 6 months. While in said status, their services may be terminated for
failure to meet reasonable standards or criteria made known by the SSC/PSA to
the guards or other security personnel at the time of their engagement or for any
just cause contained in the probationary contract.
3. 3.3 Regular Employment – any guard or other private security personnel who
is allowed to work after the probationary period or in the absence of a valid
probationary contract shall be considered a regular employee.
Guard and other security personnel affected by repeated hiring-firing-
rehiring scheme for short periods of time, the aggregate duration of which
is at least 6 months, shall be considered regular employees.
 The SSC/PSA shall produce or submit the original copy of the service agreement
when directed by the Regional Director.
 Must conform to DOLE Standard Computation and Service Standard Agreement
and shall stipulate among others:
a) Specific description of the kind and nature of the security job, work or service being
subcontracted;
b) Place of work and terms & conditions governing the contracting arrangement which
shall include the agreed amount of security services and the standard admin fee of
not less than 20% of the total contract cost;
c) The basic equipment to be provided by the SSC/PSA which shall be as follows:
1. For every 2 security guards and other private security personnel, 1 handgun as prescribed
by RA 5487; but in no case shall a guard be posted without a firearm, unless required
otherwise by the client; and
2. 1 handheld radio; provided that, if the principal requires more than the basic equipment, it
should be shouldered by the principal.
d) Automatic crediting provision – shall immediately give effect to the common
provision in wage orders that prescribed increases in wage rates and other wage-
related benefits of guards and security personnel shall be borne by the principals or
clients of SSC/PSA with contract amended accordingly;
e) Provisions which shall ensure the principal and the SSC/PSA shall uphold the
rights and provide all the benefits of guards and other private security
personnel under the Labor Code, and other existing laws, and that any violation
will render the service contractor ineligible to participate in any bidding and the
principal ineligible to engage in the service of such SSC/PSA.
f) A provision in NFCC of the SSC/PSA which must equal to the total contract
cost/month, provided that posting of the corresponding bond shall be required
only when the NFCC is less than the total contract cost.
g) Undertaking that the SSC/PSA shall directly remit monthly the employers’ share
and employees’ contribution to SSS, ECC, PhilHealth, and HDMF (Pag-IBIG); and
h) Undertaking that the expenses for any training required by the principal or
other government instrumentalities, in addition to those required by the PNP,
shall be shouldered by the principal.
1. 5.1. Status of Employment – Notwithstanding any oral or written stipulations to
the contrary, the contract between the SSC/PSA and its security guards and
private security personnel shall be governed by the provisions of Article 294
and 295 of the Labor Code.
The SSC/PSA shall provide his/her guards and other private
security personnel a copy of the employment contract duly signed
by the parties, which shall contain the terms & conditions of
employment, such as provided in Sec 7;
2. 5.2. Contents of the Duty Detail Order (DDO) – for every
assignment of security guards and other private security
personnel to principal, the Duty Detail Order shall contain
the following, among others:
a. Name, address, and telephone number of agency;
b. Issue serial number and date of the DDO;
c. Complete name and designation of grantee;
d. Purpose;
e. Inclusive dates of detail;
f. Firearms description and license number;
g. Authorized Uniform to be used;
h. Other specific instructions or remarks; and
i. Signature and designation of issuing office.
 All guards and other security personnel whether deployed or assigned as reliever,
seasonal, week-ender, or temporary, shall be entitled to all the rights and
privileges as for in Labor Code, which shall include the following:
 Safe and healthful working conditions;
 Labor Standards, such as service leave, premium pay, overtime pay, holiday pay, night
shift differential, 13th month pay, separation pay as may be provided by the Service
Agreement of under Labor Code;
 Retirement benefits under RA7641, RA1161, as amended by RA8282, and retirement plans
of the security service contractor, if any;
 Social security and welfare benefits;
 Right to self-organization and collective bargaining, subject to the provisions of existing
laws; and
 Security of tenure.
 7.1. Requirements for Pre-employment and Continued Employment – The
guards and security personnel in the employ of any SSC/PSA should be duly
licensed and must have passed the physical and neuro-psychiatric examination
and drug test required by PNP for pre-employment and for the continued
employment. Expenses for these exams and tests shall be shouldered by the
guards.
 Any additional test my be required at the expense of the requesting party.
 7.2. Obligations of Government Agencies – Agencies engaging security
services from SSC/PSA shall comply with all labor standards and shall require the
submission, as part of the bid, an undertaking from the SSC/PSA to pay their
security guards and private security personnel the prescribed benefits.
 7.3. Entitlement to Minimum Wage – Unless a higher wage is agreed upon by the
parties, the guards and security personnel shall be entitled to receive a salary of
not less than the minimum wage prescribed by non-agri sector or industry in the
region where he/she is assigned.
 7.4. Transfer of Assignment – In transfers, the wage rate most favorable to the
guards and personnel shall apply.
Said transfer to areas outside the region of the domicile or head office of the
SSC/PSA shall not result to reduction of the wage being enjoyed by the guards and
personnel prior to such transfer.
Transfer to an area or region with higher wage rate shall render the higher
rate applicable wage rate for the transferred guards and personnel.
 7.5. Statutory Benefits – guards and other personnel are entitled to not less than
the following benefits depending on the working hours, work shift and workdays
and other analogous conditions, which benefits should be included in the cost
distribution in the Service Agreement:
a) Basic Salary for all actual workdays and for the 12 regular holidays (holiday pay)
which must not be lower than the minimum wage rates, to be computed by using the
factors herein. Whenever work is rendered on a regular holiday, an additional pay of
100% of the minimum ware rate should be paid;
b) Allowance in addition to basic salary, if prescribed by Regional Work Order;
d) Premium pay of 30% of the daily rate for work rendered on special days or on rest
days, which is increased to 50% whenever work is performed coinciding the rest
days and special days;
e) Night Shift Differential equivalent to 10% of the regular hourly rate for work rendered
between 10:00 p.m. and 6:00 a.m. of the following day;
f) 5 days service incentive leaves for every year of service which benefits can be
availed of during days of absence and, if not used, are convertible to into its cash
equivalent. A proportional leave benefit per month may be derived by dividing 5
days/12 months x by current daily rate.
g) Maternity leave, otherwise known as “Social Security Law”, for female guards and
security personnel who are unable to work due to childbirth or miscarriage, up to
first 4 deliveries or miscarriages;
h) Paternity leave of 7 days with full pay (RA 8187), without prejudice to an employer’s
policy of allowing the employee to avail of the benefit before or during the delivery,
granted for the first 4 deliveries or miscarriages of the lawful wife with whom he is
cohabiting;
i) Parental leave of 7 days per year for solo parents who are left alone with the
responsibility of parenthood as defined in “Solo Parents’ Welfare Act of 2004.”
j) Leave for qualified victim-female guards under RA 9262, otherwise known as “VAWC
Act of 2004.”
k) Special leave for Women of not more than 2 months with full pay following surgery
caused by gynecological disorders under RA 9710 or “Marna Carta of Women”.
l) 13th month pay which is equivalent to 1/12 of the total basic salary earned within the
calendar year;
m) Separation Pay if the termination of employment is for authorized cause as provided
by law and as enumerated:
1. ½ month pay per year of service, but guaranteed to 1 month pay if separation is due to:
1.1. Retrenchment or reduction of personnel effected by management to prevent serious
loss;
1.2. Closure or cessation of operation of an establishment not due to serious loss or financial
reverses;
 1.3. Illness or disease not curable within the period of 6 months and continued employment
is prohibited by law or prejudicial to the employee’s health or that of his/her co-employees;
1.4. Lack of service assignment for a continuous period of 6 months.
2. 1 month pay per year of service if separated due to:
2.1. Installation of labor-saving device, such as replacement of employees by
equipment/machinery;
2.2. Redundancy, as when the position has been found to be a surplusage or unnecessary in
the operation of the agency;
2.3. Impossible reinstatement of the employee to his/her former position or to a
substantially equivalent position for reasons not attributed to the fault of the employer, as
when the reinstatement ordered by a competent authority cannot be implemented due to
closure or cessation of operations; or
 Or the position to which the employee is to be reinstated no longer exists and there no
substantially equivalent position to which she/he can be assigned; or
2.4. Lack of service assignment due to age.
n) Benefits under the Employees Compensation Program pursuant to Presidential
Decree 626;
o) PhilHealth benefits under RA 7875;
p) Social Security Benefits under RA 1161;
q) Safe and healthful working conditions as provided by Occupational Safety & Health
Standards;
r) Retirement pay granted under RA7641 to any guard and security personnel which
shall be billable monthly to the principal or client of SSC/PSA;
The fund shall be administered and maintained by a trust company bank, investment
house, pre-need company, or corporation duly authorized to perform trust function
exclusively for collective investment or re-investment of certain money received in its
capacity as trustee, or similar arrangement in accordance to law.
SSC/PSA may establish a retirement plan for the payment of the retirement benefits
from the contributions of the principal. The agreement shall be executed by and between
the SSC/PSA as trustor; trust entity as trustee in favor of the guards employed by the
trustor.
 SSC/PSA may also register with the SEC, a non-stock retirement fund company (RFC)
owned and managed by its members who are officers, employees, guards and other
security personnel. The RFC shall manage and reinvest the retirement fund, and shall pay
the retirement benefits of its members upon retirement.
s) Other benefits granted by law, individual or collective agreement, or company policy
or practice.
 7.6. Recommended Computation of the Estimated Equivalent Monthly Rates
 Using Applicable Daily Rate (ADR) and a factor representing the number of paid days in a
year, the following procedures are recommended to facilitate the Estimated Equivalent
Monthly Rates (EEMR).
 For those required to work everyday including Sundays or rest days, special days, and
regular holiday:
 EMR = (ADR x 393.5)/12
 Where 393.5 is derived from:
 For those considered paid on all days including unworked Sundays or rest days, special
days and regular holidays:
 EMR = (ADR x 365)/12
 Where 365 days derived from:

 For those who do not work and are not considered paid on Sundays or rest days:
 EMR = (ADR x 313)/12
 Where 313 is derived from:
 Recommended Computation of the Estimated Equivalent Monthly Rates
(cont)
 For those who do not work and are not considered paid on Saturdays and Sundays or rest
days:
 EMR = (ADR x 261)/12
 Where 261 is derived from:

*By using the above indicated factors, the daily wage for workdays and 12 holidays are included in the monthly rates.
*30% rest day period is integrated in factor 393.5 for all Sundays or rest days/year.
*For factors 313 and 261, all the 12 regular holidays and the 3 special days are included.
*However for factor 310 or 258 may be used instead of factor 313 or 261 respectively, if the 2 special holidays are not considered paid.
*Not included in the above formula is the additional pay due to an employee whenever work is rendered on an ordinary working day
proclaimed by the President.
 No deduction shall be made from their salary except for:
 SSS Contribution
 Pag-IBIG Contribution
 PhilHealth Contribution
 Withholding tax from income, provided a proper tax receipt is issued to the employee;
 Union dues, if authorized in writing;
 Agency fees which may be collected who are not members of the bargaining agent but accepts
benefits under the CBA;
 Other deductions as may be authorized in writing by employee for payment to a 3rd person,
provided that the latter does not receive any pecuniary benefit from the transaction.
 All deductions should be reflected in the payroll by the SSC/PSA.
 In case the SSC/PSA requires its guards and other security personnel to post a bond for
use of firearms and other paraphernalia, such may only be imposed once, with the
amount not more than 5% of the amount of the firearm issued to them.
 Cash bond, less cost of damage or loss of firearm or paraphernalia due to the fault of the
employee, shall be refunded back to them within 15 days from severance of employment.
 Pursuant to Labor Advisory No. 11, 2014, deductions or requiring
cash deposits from employees to answer for reimbursement of loss
or damage on tools, materials, or equipment supplied by employer
is allowed in private security agencies as a recognized industry
practice.
 However for deductions for such nature to be valid, the following
conditions must be observed:
 The employee is clearly shown to be responsible for the loss or damage;
 The employee is given reasonable opportunity to show cause why the deductions should not be
made;
  The amount is fair and reasonable and shall not exceed the actual loss or damage; and
 The deduction does not exceed 20% of the wage in a week.
 In the SSC/PSA requires a cash deposit from its employees, the maximum amount shall not
exceed the employee’s 1 month basic salary.
 Said deposit may be deducted from the employee’s wage in a amount which shall not
exceed 20% of the wage/week.
 The full amount cash deposit deducted shall be returned to the employee within 10 days
from the employee’s separation from service.
 9.1. Solidary Liability – the SSC/PSA and its principal or client shall be jointly and
solidarily liable with each other in the following circumstances:
a) When the SSC/PSA fails to pay the wages of its guards and security personnel, the
principal shall be considered the “indirect employer” and shall be jointly and
severally liable with the SSC/PSA to the extent of the work performed, in the same manner
as the principal is liable to its direct employees;
b) If there are wage increases or adjustments after the execution of the Service
Agreement, the prescribed increases in the wage rates of guards and other security
personnel shall be borne by the Principal and the agreement shall be amended
accordingly. In the event that the principal fails to pay the increases, the SSC/PSA shall be
jointly and severally liable with the principal.
c) When the SSC/PSA is found to be engaged in labor-only contracting, the principal shall be
jointly and solidarily liable with it in the same manner that the principal is liable to
employees directly hired by them.
d) When the SSC/PSA is found to be an in-house agency, the principal shall be the direct
employer of the guards deployed with it.
e) When a violation of the relevant provisions of the Labor Code has been established by DOLE
Secretary or his duly authorized representative in the exercise of his enforcement power, the
principal shall be deemed solidarily liable with the SSC/PSA to the extent of accrued wages
and ware-related benefits that the latter may owe to its guard in the following instances:
 When the certification of Registration of the SSC/PSA is cancelled, revoked, not renewed by the
competent authority; or
 When the contract between the principal and SSC/PSA is pre-terminated for reasons not
attributed to the fault of the latter.
 9.2. Mandatory Registration and Registry of Legitimate Security Service
Contractors – Consistent with the authority of the DOLE Secretary to protect the right of
the guards and other security personnel, it shall be mandatory for all SSA/PSA to register
pursuant to DO 18-A, 2011. In addition to requirements set forth, the following shall be
submitted:
 Certificate of membership issued by the Philippine Association of Detective and Protective
Agency Operators, Inc. (PADPAO), or other associations recognized by the PNP-CSG-SOSIA, and
License to Operate issued by the latter;
 A certificate of pending or no pending labor standards violation case/s issued by NLRC and
DOLE. The pendency of a case will not prejudice the renewal of the Registration unless a
Compliance Order has been issued by Regional Director.
 9.3. Enforcement of Labor Standards and Working Conditions – In consistent with Art
128 of the Labor Code, the DOLE Secretary or his duly authorized representatives shall:
 Conduct assessment of establishments engaged by the Principal or SSC/PSA.
 They shall have access to employer’s records and premises at anytime of the day or night,
whenever work is being undertaken therein;
 Have the right to copy therefrom, to question any guard and other security personnel; and
 Investigate any fact, condition or matter which may be necessary to determine violations or which
may aid in the enforcement of the Labor Code, wage order or rules and regulations.
Any findings shall be referred to Regional Director for appropriate action, who then has the
power to issue Compliance Orders to give effect to Labor Standards provisions of the Labor
Code.
 9.4. Keeping of Records – The Principals, as indirect employers, shall keep and maintain
their own separate records and files on the assignment of guards in their premises during
the period of the service contract, which shall be open for inspection and verification by
the DOLE.
All employment records shall be kept and maintained in and about the premises of
all workplaces for at least 3 years, unless the establishment has been in existence for less
than 3 years, in which case it shall be required to maintain employment records only
during such shorter duration.
However, SSC/PSA with a centralized recording system shall inform the Labor Laws
Compliance Officer (LLCO) of the RO where their central or head office is located.
 9.5. Duty to Produce Copy of the Service Agreement between the Principal and the
SSC/PSA during Assessment – Both shall have obligation to produce a copy of the
Agreement in the ordinary course of assessment.
The SSC/PSA shall have an obligation to produce a copy of any contract of
employment when directed to do so by the Regional Director or his authorized
representative.
 10.1. Security guards and security personnel shall enjoy security of tenure in their
employment as provided by law. Their services can only be terminated for just cause or
authorized causes after due process.
a) For termination of employment based on just cause, as defined in Art 297, the requirement of
2 written notices served on the employee shall be accordance with the following:
a) 1st written notice should contain:
a) Specific cause or grounds for termination;
b) Detailed narration of the facts and circumstances that will serve as basis for the
charge against the employee. A general description will not suffice;
c) The company rule, if any, that is violated or on the ground of Art 297 of the Labor
Code;
d) A directive that the employee was given an opportunity to submit a written
explanation within 5 calendar days from receipt of 1st warning.
b) After serving the 1st notice, the employer should afford the guard and security personnel
ample opportunity to be heard and defend himself with the assistance of his representative
is he so desires.
“Ample opportunity to be heard” – any meaningful opportunity (verbal or written)
given to the guard to answer the charges against him and submit evidence is support of his
defense, whether in a hearing, conference, or in other fair, just and reasonable way. A formal
hearing or conference is mandatory only:
a) When requested by the guard in writing;
b) Substantial evidentiary disputes exists;
c) Company rule or practice requires it; or
d) When similar circumstances justify it.
c) After determining that termination of employment is justified, the SSC/PSA shall
serve the guard a second written notice, the notice of termination, indicating that:
a) All circumstances involving the charge against him have been considered;
b) The grounds have been established to justify the severance of his employment.

The notices shall be served on the guard’s last known address.

The termination for just cause does not entitle the guard to separation pay, unless
otherwise provided in the employer’s policy, individual contract or collective agreement.
b) For termination of employment based on authorized cause, as defined in Art
298 and 299, the requirement of due process shall be deemed complied upon
service of a written notice to the security guard and to the appropriate DOLE
Regional Office at least 30 days before the effectivity of the termination,
specifying the grounds of termination.
c) If termination is brought about by completion of the contract, no prior notice
is required. If termination is brought about by failure of a probationary guard
and security personnel to meet the reasonable standards of the SSC/PSA,
which was made known to the guard at the time of employment, it shall be
sufficient that a written notice is served upon the guard within a reasonable
time prior to the expiration of the probationary period.
b) In case the termination is caused by pre-termination of the Service
Agreement not due to any authorized cause, the right of the guard to accrued
and unpaid wages and benefits including unremitted contributions to the SSS,
PhilHealth, Pag-IBIG, and ECC shall be borne by the party at fault, without the
prejudice to the solidary liability of the parties in the service agreement.
 10.2. Report of Dismissal, Termination or Retirement – the SSC/PSA shall submit a
monthly report of all during the month to the DOLE RO having jurisdiction over its main
branch using the prescribed form. All information will be used by DOLE for policy and
statistical purposes.
 10.3. Reserved Status – the guard and security personnel may be placed in a work pool
or on reserved status due to lack of service assignment after the termination or expiration
of the service agreement with the principal, or due to temporary suspension of security
service operations, or due to valid relief from the current place of work and there is no
work assignment available.
 No security guard can be placed in a work pool or on reserved status in any of the
following situations:
a) After expiration of the service contract, if there are other principals where he can be
assigned;
b) As a measure of constructive dismissal; and
c) As an act of retaliation for filing a complaint against the employer for violations of labor
laws, among others.
If after 6 months, the SSC/PSA cannot provide work or assignment to the reserved, the
latter maybe separated from the service and shall be entitled to separation pay in
Subsection 7.5. An assignment as a reliever for less than 1 month shall not be considered
as an interruption of 6 months period.
 10.4. Retaliatory Measures – Pursuant to Art 118 of the Labor code, it shall be unlawful
for the principal, SSA/PSA or any party privy to the Service Agreement to refuse to pay or
reduce the wages and benefits, and discharge or in any manner discriminate against
guard who has filed a complaint or instituted any proceeding on wages, labor standards
violation, or has testified or is about to testify in such proceedings.
 10.5. Preventive Suspension – Subject to Constitutional rights of the workers to security
of tenure and the right to be protected against dismissal except for just cause and without
prejudice to the notice requirement, guards may be preventively suspended is their
continuous employment poses a serious and imminent threat to life or property of the
SSC/PSA or principal or co-workers and other personnel.
No preventive suspension shall be more than 30 days. The SSC/PSA shall reinstate the
guard to his former position, or extend the period of suspension provided that wages are
paid.
 All issues of employment, disciplinary measures, suspension, termination and compliance
with labor standards and occupational health and safety standards between the SSC/PSA
and its guards and security personnel shall be subject to the 30-day mandatory
conciliation-mediation or the Single Entry approach of the DOLE pursuant to RA 10396.
(AN ACT STRENGTHENING CONCILIATION-MEDIATION AS A VOLUNTARY
MODE OF DISPUTE SETTLEMENT FOR ALL LABOR CASES, AMENDING FOR THIS
PURPOSE ARTICLE 228 OF PRESIDENTIAL DECREE NO. 442, AS AMENDED,
OTHERWISE KNOWN AS THE "LABOR CODE OF THE PHILIPPINES“)
 The Private Security Industry Tripartite Council (PSITC) shall
establish and industry Incentives and Rewards System to recognize
compliant and/or competitive SSCs/PSAs standards of benefits and
working conditions for their guards and security personnel, and
accordingly, establish an industry category or classification of the
SSC/PSA with DOLE.
 The NTIPC through PSITC shall serve as the oversight committee to
monitor, verify and review the implementation and industry
compliance with this Guidelines.
 It may propose measures deemed necessary to ensure compliance
with mandated employment benefits and working conditions for
the security guards and other security personnel.
 This issuance shall serve as a guide for the DOLE and its agencies
in the administration and enforcement in the security service
industry of applicable labor laws, social legislation and
implementing rules and regulations.
 Nothing herein shall be construed to authorize the diminution of
benefits or reduction of benefits being enjoyed by the guards and
personnel at the time of the issuance of this Guidelines.
 Violation of any of the provisions of this Guidelines shall be a
ground for cancellation of the SSC/PSA’s certificate of registration,
without prejudice to other penalties under existing laws.
 This Guidelines supersedes DO 14, 2001 (Guidelines Governing
the Employment and Working Conditions of Security) and all
other department orders and issuance inconsistent herewith.
 If any provision/s or portion/s of this Guidelines is/are declared
void and unconstitutional, the remaining portion/s or provision/s
shall continue to be valid and in effect.
 The Guidelines shall take effect immediately after its publication in
the Official Gazette or in a newspaper of general circulation.
 Manila, February 9, 2016 by DOLE Secretary, Rosalinda Dimapilis-
Baldoz.