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FACILITIES V. SUPPLEMENTS ............................ 33


Fundamental Principles and REST DAY ....................................... 35

Policies ...................................... 1 WEEKLY REST DAY ..........................................35
CONSTITUTIONAL PROVISIONS ....... 1 EMERGENCY REST DAY WORK ...........................35

CIVIL CODE ...................................... 4 HOLIDAY PAY/PREMIUM PAY ....... 35

LABOR CODE ................................... 5 COVERAGE.....................................................35
REGULAR HOLIDAYS........................................36
HOLIDAY PAY COMPUTATION ............................36
Recruitment and Placement .. 9 RIGHT TO HOLIDAY PAY................................... 38
MIGRANT WORKERS ....................... 9 SEASONAL WORKERS, ETC. ............................. 38
ILLEGAL RECRUITMENT.................................... 10
DIRECT HIRING ............................................... 17 LEAVES ......................................... 40
SERVICE INCENTIVE LEAVE PAY ........................ 40
REGULATION AND ENFORCEMENT MATERNITY LEAVE .......................................... 41
........................................................ 18 PATERNITY LEAVE ........................................... 41
SUSPENSION OR CANCELLATION OF LICENSE OR PARENTAL LEAVE .......................................... 42
AUTHORITY ................................................... 18 LEAVES FOR VICTIMS OF VIOLENCE AGAINST WOMEN
REGULATORY AND VISITORIAL POWERS ............. 18 ................................................................... 43

SERVICE CHARGES ....................... 46

Labor Standards.................... 19 COVERAGE.................................................... 46
COVERAGE ..................................... 19 EXCEPTIONS ................................................. 46
GOVERNMENT EMPLOYEES ............................... 19 DISTRIBUTION ............................................... 46
MANAGERIAL EMPLOYEES ................................ 19 INTEGRATION ............................................... 46
FIELD PERSONNEL ......................................... 20
GOVERNMENT EMPLOYEES .............................. 20 AND OTHER BONUSES ................... 47
DOMESTIC HELPERS ........................................ 21 RATIONALE....................................................47
PERSONS IN PERSONAL SERVICE OF ANOTHER .... 21 COVERAGE.....................................................47
13TH MONTH PAY IN SPECIAL CASES ................. 48
HOURS OF WORK .......................... 21
COVERAGE/EXCLUSIONS ................................. 21 SEPARATION PAY .......................... 49
NORMAL HOURS OF WORK ............................... 21 DEFINITION................................................... 49
MEAL BREAK ................................................. 25 GENERAL RULE ............................................. 49
WAITING TIME ............................................... 26 EXCEPTION ................................................... 49
OVERTIME WORK, OVERTIME PAY ..................... 26 AMOUNT ...................................................... 49
NIGHT WORK, NIGHT SHIFT DIFFERENTIAL ......... 28 NOTICE OF TERMINATION ................................ 50
PART-TIME WORK.......................................... 28 BASIS OF SEPARATION PAY ............................. 50
COMPUTATION .............................................. 50
WAGES ...........................................29
GENERAL CONCEPT ........................................ 29 RETIREMENT PAY.......................... 50
WAGE VS. SALARY.......................................... 29 RATIONALE................................................... 50
MINIMUM WAGE ............................................ 29 ELIGIBILITY ................................................... 50
COMMISSIONS................................................ 31 RETIREMENT BENEFITS OF WORKERS WHO ARE
DEDUCTIONS FROM WAGES ............................. 31 PAID BY RESULTS............................................ 51

TAXABILITY ................................................... 52 PREVENTIVE SUSPENSION ............92

DEFINITION................................................... 92
WOMEN WORKERS ........................52
PROHIBITED ACTS ...........................................53
ANTI-SEXUAL HARASSMENT ACT.......................53
Management Prerogative .... 92
DISCIPLINE .....................................93
MINOR WORKERS ......................... 54 TRANSFER OF EMPLOYEES ............93
CONSTITUTIONAL BASIS.................................. 54 PRODUCTIVITY STANDARD............93
EMPLOYMENT OF CHILDREN FROM 15 TO 18 ...... 55 GRANT OF BONUS ......................... 94
DEFINITION................................................... 55 EMPLOYEES OF COMPETITOR-
RIGHTS AND PRIVILEGES .................................56 EMPLOYERS .................................. 94
TERMINATION ................................................ 57 POST-EMPLOYMENT BAN ............. 94
EMPLOYMENT OF HOMEWORKERS58 Social and Welfare Legislation
DEFINITION................................................... 58
RIGHTS AND BENEFITS ACCORDED HOMEWORKERS 58 ............................................... 95
CONDITIONS FOR DEDUCTION FROM SSS LAW ........................................ 95
HOMEWORKERS EARNINGS ............................ 59 COVERAGE.................................................... 95
EXCLUSIONS FROM COVERAGE ......................... 95
APPRENTICES AND LEARNERS ..... 59 BENEFITS ..................................................... 95
APPRENTICES ............................................... 59 BENEFICIARIES ............................................... 97
LEARNERS ..................................................... 61

HANDICAPPED WORKERS GSIS ................................................ 97

COVERAGE..................................................... 97
DEFINITIONS ..................................................63
BENEFITS ...................................................... 97
RIGHTS OF DISABLED WORKERS ........................63
BENEFICIARIES .............................................. 99
DISABLED PERSON ......................................... 64
INCENTIVES FOR EMPLOYERS .......................... 66
COVERAGE................................................... 103
PROCESS ..................................................... 103
Termination of Employment 66 WHY? ......................................................... 103
RELATIONSHIP .............................. 66 EMPLOYEES COMPENSATION
FOUR-FOLD TEST ........................................... 66 COVERAGE AND WHEN
ECONOMIC DEPENDENCE TEST .......................... 67 COMPENSABLE ............................ 103
KINDS OF EMPLOYMENT .................................. 67 COVERAGE................................................... 103
JOB CONTRACTING ..........................................74 EFFECTIVITY................................................. 103
WHEN COMPENSABLE ................................... 103
SECURITY OF TENURE ..................................... 80 Labor Relations Law ........... 104
JUST CAUSES ................................................. 81 BASIS OF RIGHT TO SELF-ORGANIZATION ......... 104
DUE PROCESS ................................................87 RIGHT ......................................................... 104
RELIEFS FOR ILLEGAL DISMISSAL 89 ORGANIZATION ............................................ 104
REINSTATEMENT ........................................... 89 SCOPE OF RIGHT TO SELF-ORGANIZATION ........ 104
BACKWAGES ................................................. 90 WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE
BARGAINING ................................................ 104

ORGANIZATIONS .......................................... 106 CONCILIATION VS. MEDIATION ........................ 148
BARGAINING UNIT ........................................ 107
VOLUNTARY RECOGNITION ..............................110 DOLE REGIONAL DIRECTORS ....... 148
CERTIFICATION ELECTION ...............................110 JURISDICTION .............................................. 148


...................................................... 120 VISITORIAL AND ENFORCEMENT POWERS ...........93
MANDATORY PROVISIONS OF CBA ................... 124 ASSUMPTION OF JURISDICTION ........................ 94
UNION SECURITY .......................................... 128 APPELLATE JURISDICTION ............................... 94
BARGAINING ................................................ 129
ACTIVITIES .................................... 132 VOLUNTARY ARBITRATOR .............................. 150
CONSTITUTIONAL BASIS................................. 132
STATUTORY BASIS ........................................ 132 COURT OF APPEALS ...................... 151
FORMS OF CONCERTED ACTIVITIES .................. 133 RULE 65, RULES OF COURT ............................. 151
REQUISITES OF A VALID STRIKE ....................... 134 SUPREME COURT ......................... 152
REQUISITES OF A VALID LOCKOUT ................... 136 RULE 45, RULES OF COURT ............................ 152
SECRETARY OR CERTIFICATION OF THE LABOR MONEY CLAIMS ............................................ 152
DISPUTE TO THE NLRC FOR COMPULSORY ILLEGAL DISMISSAL ....................................... 152
ARBITRATION .............................................. 138 UNFAIR LABOR PRACTICE............................... 153
ORDER ........................................................ 138 ISSUED PURSUANT THERETO .......................... 153
CERTIFICATION ORDERS ................................ 139 CASES ......................................................... 153
ILLEGAL STRIKE ............................................ 140
INJUNCTIONS ............................................... 142

Procedure and Jurisdiction . 143

LABOR ARBITER ........................... 143
JURISDICTION .............................................. 143


COMMISSION................................ 145
JURISDICTION .............................................. 145
ORDER OF REINSTATEMENT ........................... 145
REMEDIES ................................................... 145
CERTIFIED CASES .......................................... 146


(BLR) MED ARBITERS ................ 147


PAGE iii

Fundamental Principles Article II, Section 9. The State shall promote a

just and dynamic social order that will ensure
and Policies the prosperity and independence of the nation
and free the people from poverty through
policies that provide adequate social services,
CONSTITUTIONAL PROVISIONS promote full employment, a rising standard of
living, and an improved quality of life for all
Article II, Secs. 9, 10, 11, 13, 14, 18, 20
Article II, Section 9. The State shall promote a Article II, Section 10. The State shall promote
just and dynamic social order that will ensure social justice in all phases of national
the prosperity and independence of the nation development.
and free the people from poverty through
policies that provide adequate social services, Article II, Section 11. The State values the
promote full employment, a rising standard of dignity of every human person and
living, and an improved quality of life for all guarantees full respect for human rights.

Article II, Section 10. The State shall promote Article II, Section 13. The State recognizes the
social justice in all phases of national vital role of the youth in nation-building and
development. shall promote and protect their physical,
moral, spiritual, intellectual, and social well-
General definition of Social Justice being. It shall inculcate in the youth
Social Justice is neither communism, nor patriotism and nationalism, and encourage
despotism, nor atomism, nor anarchy, but the their involvement in public and civic affairs.
humanization of laws and the equalization of
social and economic forces by the State so that Article II, Section 14. The State recognizes the
justice in its rational and objectively secular role of women in nation-building, and shall
conception may at least be approximated. ensure the fundamental equality before the
[Calalang vs. Williams (1940)] law of women and men.

Welfare State Article II, Section 18. The State affirms labor as
The welfare state concept is found in the a primary social economic force. It shall
constitutional clause on the promotion of social protect the rights of workers and promote
justice to ensure the well-being and economic their welfare.
security of all the people, and in the pledge of
protection to labor with specific authority to Article II, Section 20. The State recognizes the
regulate the relations between landowners and indispensable role of the private sector,
tenants and between labor and capital. encourages private enterprise, and provides
[Alalayan vs. National Power Corporation (1968)] incentives to needed investments.

Limits of Social Justice

Social justice should be used only to correct an
injustice. It must be founded on the recognition
of the necessity of interdependence among
diverse units of a society, and of the protection
that should be equally and evenly extended to
all groups as a combined force in our social and
economic life. As partners in nation-building,
labor and management need each other to
foster productivity and economic growth; hence,
the need to weigh and balance the rights and
welfare of both the employee and employer.
[Agabon vs. NLRC (2004)]


Due process requirements are two-fold

The policy of social justice is not intended to substantive (dismissal should be for a valid and
countenance wrongdoing simply because it is authorized cause as provided by law) and
committed by the underprivileged. At best it procedural (due notice and hearing). [Salaw vs.
may mitigate the penalty but it certainly will not NLRC (1991)]
condone the offense. Compassion for the poor is
an imperative of every humane society but only To constitute valid dismissal from employment,
when the recipient is not a rascal claiming an two requisites must concur: (1) the dismissal
undeserved privilege. Social justice cannot be must be for a just or authorized cause and (2)
permitted to be a refuge of scoundrels any more the employee must be afforded an opportunity
than can equity be an impediment to the to be heard and to defend himself. [Jeffrey
punishment of the guilty. Those who invoke Nacague vs. Sulpicio Lines, Inc. (2010)]
social justice may do so only if their hands are
clean and their motives blameless and not Labor as Property Right
simply because they happen to be poor. This Ones employment is a property right, and the 6
great policy of our Constitution is not meant for wrongful interference therewith is an actionable
the protection of those who have proved they wrong. [Sibal vs. Notre Dame of Greater Manila
are not worthy of it, like the workers who have (1990)]
tainted the cause of labor with the blemishes of
their own character. [Tirazona vs. Philippine EDS
Article III, Section 4. No law shall be passed
Techno-Service Inc. (2009)]
abridging the freedom of speech, of
expression, or of the press, or the right of the
Liberty of Contract/Laissez Faire
people peaceably to assemble and petition
The prohibition to impair the obligation of
the government for redress of grievances.
contracts is not absolute and unqualified. In
spite of the constitutional prohibition and the
Article III, Section 8. The right of the people,
fact that both parties are of full age and
including those employed in the public and
competent to contract, it does not necessarily
private sectors, to form unions, associations,
deprive the State of the power to interfere
or societies for purposes not contrary to law
where the parties do not stand upon an
shall not be abridged.
equality, or where the public health demands
that one party to the contract shall be protected
against himself. [Leyte Land Transportation Co. Art. XIII, Secs. 1, 2, 3, 13, 14
vs. Leyte Farmers & Workers Union (1948)] Article XIII, Section 1. The Congress shall give
highest priority to the enactment of measures
The Constitution is primarily a document of that protect and enhance the right of all the
social justice, and although it has recognized people to human dignity, reduce social,
the importance of the private sector, it has not economic, and political inequalities, and
embraced fully the concept of laissez-faire or remove cultural inequities by equitably
relied on pure market forces to govern the diffusing wealth and political power for the
economy. [Employees Confederation of the common good.
Philippines vs. NWPC (1991)]
To this end, the State shall regulate the
Article III, Secs. 1, 4, 8 acquisition, ownership, use, and disposition of
property and its increments.
Article III, Section 1. No person shall be
deprived of life, liberty, or property without
Article XIII, Section 2. The promotion of social
due process of law, nor shall any person be
justice shall include the commitment to
denied the equal protection of the laws.
create economic opportunities based on
freedom of initiative and self-reliance.
Due Process
Article XIII, Section 3. The State shall afford


full protection to labor, local and overseas, the inherent economic inequality between labor
organized and unorganized, and promote full and management. Never should the scale be so
employment and equality of employment tilted if the result is an injustice to the employer.
opportunities for all. [Phil. Geothermal Inc. vs. NLRC (1994)]

It shall guarantee the rights of all workers to This Court held that the employers right to
self-organization, collective bargaining and conduct the affairs of his business according to
negotiations, and peaceful concerted its own discretion and judgment, is well-
activities, including the right to strike in recognized. An employer has a free reign and
accordance with law. They shall be entitled to enjoys wide latitude of discretion to regulate all
security of tenure, humane conditions of work, aspects of employment. This is a management
and a living wage. They shall also participate prerogative, where the free will of management
in policy and decision-making processes to conduct its own affairs to achieve its purpose
affecting their rights and benefits as may be takes form. [Torreda vs. Toshiba (2007)]
provided by law.
Limits to Management Prerogative
The State shall promote the principle of
shared responsibility between workers and (1) Good faith
employers and the preferential use of So long as a companys management
voluntary modes in settling disputes, prerogatives are exercised in good faith for the
including conciliation, and shall enforce their advancement of the employers interest and not
mutual compliance therewith to foster for the purpose of defeating or circumventing the
industrial peace. rights of the employees under special laws or
under valid agreements, this Court will uphold
The State shall regulate the relations between themEven as the law is solicitous of the
workers and employers, recognizing the right welfare of the employees, it must also protect
of labor to its just share in the fruits of the right of an employer to exercise what are
production and the right of enterprises to clearly management prerogatives. The free will
reasonable returns to investments, and to of management to conduct its own business
expansion and growth. affairs to achieve its purpose cannot be denied.
[Ernesto G. Ymbong vs. ABS-CBN Broadcasting
Participation in Decision-Making Process Corp. (2012)]
Verily, a line must be drawn between
management prerogatives regarding business (2) Without grave abuse of discretion
operations per se and those which affect the But, like other rights, there are limits thereto.
rights of the employees. In treating the latter, The managerial prerogative to transfer
management should see to it that its employees personnel must be exercised without grave
are at least properly informed of its decisions or abuse of discretion, bearing in mind the basic
modes action. Indeed, industrial peace cannot elements of justice and fair play. Having the
be achieved if the employees are denied their right should not be confused with the manner in
just participation in the discussion of matters which the right is exercised. [Tinio vs. CA (2007)]
affecting their rights. [Phil. Airlines Inc. vs. NLRC
(1993); also cited in Manila Electric Co. vs. Sec. of (3) Assumption of jurisdiction by the Secretary of
Labor Quisumbing (2000)] Labor
This Court declared that it recognizes the
Management and the Constitution: Management exercise of management prerogatives and it
Function/Prerogative often declines to interfere with the legitimate
The law in protecting the rights of the business decisions of the employerHowever,
employees authorizes neither oppression nor as expressed in PAL vs. NLRC, the privilege is
self-destruction of the employer. It should be not absolute, but subject to exceptions. One of
made clear that when the law tilts the scale of these exceptions is when the Secretary of Labor
justice in favor of labor, it is but a recognition of assumes jurisdiction over labor disputes involving


industries indispensable to the national interest pertinent labor laws, the provisions of said laws
under Article 263(g) of the Labor Code. would prevail over the terms of the contract,
[University of Immaculate Concepcion Inc. vs. and private respondent would still be entitled to
Sec. of Labor (2005)] overtime pay. [PAL Employees Savings and Loan
Assn., Inc. vs. NLRC (1996)]
Article XIII, Section 14. The State shall protect
working women by providing safe and Indeed, a contract of employment is impressed
healthful working conditions, taking into with public interest. For this reason, provisions
account their maternal functions, and such of applicable statutes are deemed written into
facilities and opportunities that will enhance the contract. Hence, the parties are not at
their welfare and enable them to realize their liberty to insulate themselves and their
full potential in the service of the nation. relationships from the impact of labor laws and
regulations by simply contracting with each
Article XIII, Section 13. The State recognizes other. Moreover, in case of doubt, the terms of a
the vital role of the youth in nation-building contract should be construed in favor of labor.
and shall promote and protect their physical, [Innodata Philippines, Inc. vs. Quejada-Lopez
moral, spiritual, intellectual, and social well- (2006)]
being. It shall inculcate in the youth
patriotism and nationalism, and encourage Liberal Construction
their involvement in public and civic affairs. While the terms and conditions of a CBA
constitute the law between the parties, it is not
however, an ordinary contract to which is
CIVIL CODE applied the principles of law governing ordinary
contracts. A CBA, as a labor contract within the
Article 19, Civil Code, Articles 19, 1700, 1702 contemplation of Article 1700 of the Civil Code
Art. 19. Every person must, in the exercise of of the Philippines which governs the relations
his rights and in the performance of his duties, between labor and capital, is not merely
act with justice, give everyone his due, and contractual in nature but impressed with public
observe honesty and good faith. interest, thus, it must yield to the common
good. As such, it must be construed liberally
Art. 1700. The relations between capital and rather than narrowly and technically, and the
labor are not merely contractual. They are so courts must place a practical and realistic
impressed with public interest that labor construction upon it, giving due consideration to
contracts must yield to the common good. the context in which it is negotiated and
Therefore, such contracts are subject to the purpose which it is intended to serve. (Cirtek
special laws on labor unions, collective Employees Labor Union-FFW v Cirtek Electronics,
bargaining, strikes and lockouts, closed shop, 2010)
wages, working conditions, hours of labor and
similar subjects. When there is doubt between the evidence
submitted by the employer and that submitted
Art. 1702. In case of doubt, all labor legislation by the employee, the scales of justice must be
and all labor contracts shall be construed in tilted in favor of the employee. This is consistent
favor of the safety and decent living for the with the rule that an employers cause could
laborer. only succeed on the strength of its own evidence
and not on the weakness of the employees
Contracts evidence. [Misamis Oriental II Electric Service
Under the Civil Code, contracts of labor are Cooperative (Moresco II) vs. Virgilio Cagalawan
explicitly subject to the police power of the state (2012)]
because they are not ordinary contracts but are
impressed with public interest. Inasmuch as in Fair treatment
this particular instance the contract in question The right of an employer to dismiss an
employee differs from and should not be 7
would have been deemed in violation of


confused with the manner in which such right is Art. 4. Construction in favor of labor. All doubts
exercised. It must not be oppressive and abusive in the implementation and interpretation of
since it affects one's person and property. the provisions of this Code, including its
[General Bank and Trust Co. vs. CA (1985)] implementing rules and regulations, shall be
resolved in favor of labor
Mutual obligation
The employer's obligation to give his workers Liberality in Application of Rules
just compensation and treatment carries with it We stress at this point that it is the spirit and
the corollary right to expect from the workers intention of labor legislation that the NLRC and
adequate work, diligence and good conduct. the labor arbiters shall use every reasonable
[Firestone Tire and Rubber Co. vs. Lariosa (1987)] means to ascertain the facts in each case
speedily and objectively, without regard to
Compliance with law technicalities of law or procedure, provided due
It is also important to emphasize that the process is duly observed. xxx The application of
return-to-work order not so much confers a technical rules of procedure in labor cases may
right as it imposes a duty; and while as a right it be relaxed to serve the demands of substantial
may be waived, it must be discharged as a duty justice. [Manila Electric Co. vs. Jan Carlo Gala
even against the worker's will. [Sarmiento vs. (2012)]
Tuico (1988)]
It is settled that subsequent and substantial
Employee's compliance and obedience to compliance may call for the relaxation of the
employer's orders rules of procedureThe Court has time and
The lack of a written or formal designation again relaxed the rigid application of the rules
should not be an excuse to disclaim any to offer full opportunity for parties to ventilate
responsibility for any damage suffered by the their causes and defenses in order to promote
employer due to his negligence. The measure of rather than frustrate the ends of justice. [Ma.
the responsibility of an employee is that if he Ligaya Santos vs. Litton Mills (2011)]
performed his assigned task efficiently and
according to the usual standards, then he may Article 172, Labor Code
not be held personally liable for any damage
arising therefrom. Failing in this, the employee Art. 172. Policy. The State shall promote and
must suffer the consequences of his negligence develop a tax-exempt employees
if not lack of due care in the performance of his compensation program whereby employees
duties. [PCIB vs. Jacinto (1991)] and their dependents, in the event of work-
connected disability or death, may promptly
secure adequate income benefit and medical
LABOR CODE related benefits.
Article 3, Labor Code Article 217, Labor Code
Art. 3. Declaration of basic policy. The State 1. Art. 217, Declaration of Policy.
shall afford protection to labor, promote full 2. A. It is the policy of the State:
employment, ensure equal work opportunities
regardless of sex, race or creed and regulate 1. (a) To promote and emphasize the
the relations between workers and employers. primacy of free collective bargaining and
The State shall assure the rights of workers to negotiations, including voluntary
self-organization, collective bargaining, arbitration, mediation and conciliation, as
security of tenure, and just and humane modes of settling labor or industrial
conditions of work. disputes;
Article 4, Labor Code 2. (b) To promote free trade unionism as an
instrument for the enhancement of
democracy and the promotion of social


justice and development; amended.

(e) "Employer" includes any person acting in
3. (c) To foster the free and voluntary the interest of an employer, directly or
organization of a strong and united labor indirectly. The term shall not include any
movement; labor organization or any of its officers or
agents except when acting as employer.
4. (d) To promote the enlightenment of (f) "Employee" includes any person in the
workers concerning their rights and employ of an employer. The term shall
obligations as union members and as not be limited to the employees of a
employees; particular employer, unless the Code so
explicitly states. It shall include any
5. (e) To provide an adequate administrative individual whose work has ceased as a
machinery for the expeditious settlement result of or in connection with any current
of labor or industrial disputes; labor dispute or because of any unfair
labor practice if he has not obtained any
6. (f) To ensure a stable but dynamic and other substantially equivalent and regular
just industrial peace; and employment.
(g) "Labor organization" means any union or
7. (g) To ensure the participation of workers association of employees which exists in
in decision and policy-making processes whole or in part for the purpose of
affecting their rights, duties and welfare. collective bargaining or of dealing with
employers concerning terms and
To encourage a truly democratic method of conditions of employment.
regulating the relations between the (h) "Legitimate labor organization" means any
employers and employees by means of labor organization duly registered with
agreements freely entered into through the Department of Labor and
collective bargaining, no court or Employment, and includes any branch or
administrative agency or official shall have the local thereof.
power to set or fix wages, rates of pay, hours (i) "Company union" means any labor
of work or other terms and conditions of organization whose formation, function or
employment, except as otherwise provided administration has been assisted by any
under this Code. [As amended by Section 3, act defined as unfair labor practice by this
Republic Act No. 6715, March 21, 1989] Code.
(j) "Bargaining representative" means a
Article 218, Labor Code legitimate labor organization whether or
not employed by the employer.
Art. 218. Definitions
(k) "Unfair labor practice" means any unfair
(a) "Commission" means the National Labor
labor practice as expressly defined by the
Relations Commission or any of its
divisions, as the case may be, as provided
(l) "Labor dispute" includes any controversy or
under this Code.
matter concerning terms and conditions
(b) "Bureau" means the Bureau of Labor
of employment or the association or
Relations and/or the Labor Relations
representation of persons in negotiating,
Divisions in the regional offices
fixing, maintaining, changing or arranging
established under Presidential Decree No.
the terms and conditions of employment,
1, in the Department of Labor.
regardless of whether the disputants
(c)"Board" means the National Conciliation
stand in the proximate relation of
and Mediation Board established under
employer and employee.
Executive Order No. 126.
(m) "Managerial employee" is one who is
(d) "Council" means the Tripartite Voluntary
vested with the powers or prerogatives to
Arbitration Advisory Council established
lay down and execute management
under Executive Order No. 126, as


policies and/or to hire, transfer, suspend, runaway shops, of the employer struck
lay-off, recall, discharge, assign or against, as well as the immediate vicinity
discipline employees. Supervisory actually used by picketing strikers in
employees are those who, in the interest moving to and fro before all points of
of the employer, effectively recommend entrance to and exit from said
such managerial actions if the exercise of establishment.
such authority is not merely routinary or
clerical in nature but requires the use of Article 261, Labor Code
independent judgment. All employees not Art. 261. Exclusive bargaining representation
falling within any of the above definitions and workers participation in policy and
are considered rank-and-file employees decision-making. The labor organization
for purposes of this Book. designated or selected by the majority of the
(n) "Voluntary Arbitrator" means any person employees in an appropriate collective
accredited by the Board as such or any bargaining unit shall be the exclusive
person named or designated in the representative of the employees in such unit
Collective Bargaining Agreement by the for the purpose of collective bargaining.
parties to act as their Voluntary Arbitrator, However, an individual employee or group of
or one chosen with or without the employees shall have the right at any time to
assistance of the National Conciliation present grievances to their employer.
and Mediation Board, pursuant to a
selection procedure agreed upon in the Any provision of law to the contrary
Collective Bargaining Agreement, or any notwithstanding, workers shall have the right,
official that may be authorized by the subject to such rules and regulations as the
Secretary of Labor and Employment to Secretary of Labor and Employment may
act as Voluntary Arbitrator upon the promulgate, to participate in policy and
written request and agreement of the decision-making processes of the
parties to a labor dispute. establishment where they are employed
(o) "Strike" means any temporary stoppage of insofar as said processes will directly affect
work by the concerted action of their rights, benefits and welfare. For this
employees as a result of an industrial or purpose, workers and employers may form
labor dispute. labor-management councils: Provided, that
(p) "Lockout" means any temporary refusal of the representatives of the workers in such
an employer to furnish work as a result of labor-management councils shall be elected
an industrial or labor dispute. by at least the majority of all employees in
(q) "Internal union dispute" includes all said establishment. [As amended by Section
disputes or grievances arising from any 22, Republic Act No. 6715, March 21, 1989]
violation of or disagreement over any
provision of the constitution and by-laws Article 283, Labor Code
of a union, including any violation of the
rights and conditions of union
membership provided for in this Code.
(r) "Strike-breaker" means any person who
obstructs, impedes, or interferes with by
force, violence, coercion, threats, or
intimidation any peaceful picketing
affecting wages, hours or conditions of
work or in the exercise of the right of self-
organization or collective bargaining.
(s) "Strike area" means the establishment,
warehouses, depots, plants or offices,
including the sites or premises used as


Article 283.Miscellaneous provisions. Republic Act No. 6715)

All unions are authorized to collect
reasonable membership fees, union dues, No docket fee shall be assessed in labor
assessments and fines and other standards disputes. In all other disputes,
contributions for labor education and docket fees may be assessed against the filing
research, mutual death and hospitalization party, provided that in bargaining deadlock,
benefits, welfare fund, strike fund and credit such fees shall be shared equally by the
and cooperative undertakings. [As amended negotiating parties.
by Section 33, Republic Act No. 6715, March 21,
1989] The Minister of Labor and Employment and
the Minister of the Budget shall cause to be
Subject to the constitutional right of workers created or reclassified in accordance with law
to security of tenure and their right to be such positions as may be necessary to carry
protected against dismissal except for a just out the objectives of this Code and cause the
and authorized cause and without prejudice upgrading of the salaries of the personnel
to the requirement of notice under Article 283 involved in the Labor Relations System of the
of this Code, the employer shall furnish the Ministry. Funds needed for this purpose shall
worker whose employment is sought to be be provided out of the Special Activities Fund
terminated a written notice containing a appropriated by Batas Pambansa Blg. 80 and
statement of the causes for termination and from annual appropriations thereafter.
shall afford the latter ample opportunity to be (Incorporated by Batas Pambansa Bilang 130,
heard and to defend himself with the August 21, 1981)
assistance of his representative if he so
desires in accordance with company rules and A special Voluntary Arbitration Fund is hereby
regulations promulgated pursuant to established in the Board to subsidize the cost
guidelines set by the Department of Labor of voluntary arbitration in cases involving the
and Employment. Any decision taken by the interpretation and implementation of the
employer shall be without prejudice to the Collective Bargaining Agreement, including
right of the worker to contest the validity or the Arbitrators fees, and for such other
legality of his dismissal by filing a complaint related purposes to promote and develop
with the regional branch of the National Labor voluntary arbitration. The Board shall
Relations Commission. The burden of proving administer the Special Voluntary Arbitration
that the termination was for a valid or Fund in accordance with the guidelines it may
authorized cause shall rest on the employer. adopt upon the recommendation of the
The Secretary of the Department of Labor and Council, which guidelines shall be subject to
Employment may suspend the effects of the the approval of the Secretary of Labor and
termination pending resolution of the dispute Employment. Continuing funds needed for
in the event of a prima facie finding by the this purpose in the initial yearly amount of
appropriate official of the Department of fifteen million pesos (P15,000,000.00) shall
Labor and Employment before whom such be provided in the 1989 annual general
dispute is pending that the termination may appropriations acts.
cause a serious labor dispute or is in
implementation of a mass lay-off. [As The amount of subsidy in appropriate cases
amended by Section 33, Republic Act No. 6715, shall be determined by the Board in
March 21, 1989] accordance with established guidelines issued
by it upon the recommendation of the
Any employee, whether employed for a Council.
definite period or not, shall, beginning on his
first day of service, be considered as an The Fund shall also be utilized for the
employee for purposes of membership in any operation of the Council, the training and
labor union. (As amended by Section 33, education of Voluntary Arbitrators, and the


Voluntary Arbitration Program. (As amended mandatory period, the aforesaid officials shall,
by Section 33, Republic Act No. 6715, March without prejudice to any liability which may
21, 1989) have been incurred as a consequence thereof,
see to it that the case or matter shall be
The Ministry shall help promote and gradually decided or resolved without any further delay.
develop, with the agreement of labor [Incorporated by Section 33, Republic Act No.
organizations and employers, labor- 6715, March 21, 1989]
management cooperation programs at
appropriate levels of the enterprise based on
the shared responsibility and mutual respect Recruitment and
in order to ensure industrial peace and
improvement in productivity, working
conditions and the quality of working life.
(Incorporated by Batas Pambansa Bilang 130,
In establishments where no legitimate labor MIGRANT WORKERS
organization exists, labor-management
committees may be formed voluntarily by LICENSE AND AUTHORITY
workers and employers for the purpose of A license is a document issued by the
promoting industrial peace. The Department Department of Labor and Employment (DOLE)
of Labor and Employment shall endeavor to authorizing a person or entity to operate a
enlighten and educate the workers and private employment agency, while an authority
employers on their rights and responsibilities is a document issued by the DOLE authorizing a
through labor education with emphasis on the person or association to engage in recruitment
policy thrusts of this Code. [As amended by and placement activities as a private
Section 33, Republic Act No. 6715, March 21, recruitment agency. [Art. 13(d) and (f), LC]
License Authority
To ensure speedy labor justice, the periods Authorize an entity to Authorize an entity to
provided in this Code within which decisions operate as a private operate as a private
or resolutions of labor relations cases or employment agency recruitment entity
matters should be rendered shall be When a license is Does not entitle a
mandatory. For this purpose, a case or matter given, one is also private recruitment
shall be deemed submitted for decision or authorized to collect entity to collect fees.
resolution upon the filing of the last pleading fees
or memorandum required by the rules of the
Commission or by the Commission itself, or Private employment agency (PEA) v. Private
the Labor Arbiter, or the Director of the recruitment entity (PRE)
Bureau of Labor Relations or Med-Arbiter, or Type Definition Requires
the Regional Director. Private Any person or entity License
Upon expiration of the corresponding period, employment engaged in
a certification stating why a decision or agency recruitment and
resolution has not been rendered within the placement of
said period shall be issued forthwith by the workers for a fee
Chairman of the Commission, the Executive
Private Any person or Authority
Labor Arbiter, or the Director of the Bureau of
recruitment association
Labor Relations or Med-Arbiter, or the
entity engaged in the
Regional Director, as the case may be, and a
recruitment and
copy thereof served upon the parties.
placement of
workers, locally or
Despite the expiration of the applicable
overseas, without


charging, directly or Citizenship requirement

indirectly, any fee (1) Only Filipino citizens or
(2) Corporations, partnerships or entities at
Entities disqualified from being issued a license least seventy-five percent (75%) of the
(1) Travel agencies and sales agencies of airline authorized and voting capital stock of which
companies. [Art. 26] is owned and controlled by Filipino citizens
(2) Officers or members of the Board of any shall be permitted to participate in the
corporation or members in partnership recruitment and placement of workers,
engaged in the business of a travel agency. locally or overseas. [Art. 27, LC]
(3) Corporations and partnerships, when any of SEE: POEA Rules, Part II, Rule I, Sec. 1(a)
its officers, members of the board or
partners, is also an officer, member of the Capitalization requirement
board of partner of a corporation or All applicants for authority to hire or renewal of
partnership engaged in the business of a license to recruit are required to have such
travel agency. substantial capitalization as determined by the
(4) Persons, partnerships or corporations which Secretary of Labor. [Art. 28, LC]
have derogatory records.
(5) Any official or employee of the DOLE, POEA, Based on POEA Rules the following are the
OWWA, DFA and other government substantial capital requirements:
agencies directly involved in the (1) Single proprietorships or partnerships with
implementation of R.A. 8042 as amended minimum capitalization of P2,000,000.
and/or any of his/her relatives within the 4th (2) Corporations with minimum paid-up capital
civil degree of consanguinity and affinity. of P2,000,000.
[POEA Rules of 2002]
Non-transferability of license or authority RECRUITMENT
(1) No license or authority shall be used directly
or indirectly by any person other than the Recruitment and placement" - refers to any act
one in whose favor it was issued or at any of
place other than that stated in the license or (1) Canvassing,
authority, (2) Enlisting,
(2) Nor may such license or authority be (3) Contracting,
transferred, conveyed, or assigned to any (4) Transporting,
other person or entity. (5) Utilizing, or
(6) Hiring procuring workers,
Any transfer of business address, appointment
or designation of any agent or representative And also includes
including the establishment of additional offices (1) referrals,
anywhere shall be subject to the prior approval (2) contract services,
of the Department of Labor. [Art. 29, LC] (3) promising, or
SEE: POEA Rules Part II, Rule II, Sec. 7, 8, and 9. (4) advertising for employment, locally or
abroad, whether for profit or not
Enforceability of the license
Licensed agencies are prohibited from Provided, That any person or entity which, in any
conducting any recruitment activities of any manner, offers or promises for a fee
form outside of the address stated in the employment to two or more persons shall be
license, acknowledged branch or extension deemed engaged in recruitment and
office, without securing prior authority from the placement. [Art. 13 (b), LC]
POEA. [People vs. Buli-e (2003)]
Any of the acts mentioned above constitutes
Duration of Validity recruitment and placement.
4 years [POEA Rules of 2002]


The proviso provides for a presumption that a (a) The person charged with the crime must
person or entity so described engages in have undertaken recruitment activities
recruitment and placement [People v. Panis defined under Art. 13(b) or prohibited
(1988)] activities defined under Art. 34; and
(b)The said person does not have a license or
What constitutes recruitment authority to do so. [Art. 38, LC]
The number of persons dealt with is not an
essential ingredient of the act of recruitment Profit or lack thereof is immaterial
and placement of workers. Any of the acts The act of recruitment may be "for profit or not."
mentioned in Article 13(b) will constitute Notably, it is the lack of the necessary license or
recruitment and placement even if only one authority, not the fact of payment that renders
prospective worker is involved. The proviso the recruitment activity of LCL unlawful. [C.F.
merely lays down a rule of evidence that where Sharp vs. Espanol (2007)]
a fee is collected in consideration of a promise
or offer of employment to two or more Accused must give the impression of ability to
prospective workers, the individual or entity send complainant abroad
dealing with them shall be presumed to be It is well-settled that to prove illegal
engaged in the act of recruitment and recruitment, it must be shown that appellant
placement. [People v. Panis, 1988] gave complainants the distinct impression that
she had the power or ability to send
Acts of referral complainants abroad for work such that the
The act of referral, which is included in latter were convinced to part with their money in
recruitment, is "the act of passing along or order to be employed. [People v. Ochoa (2011)]
forwarding of an applicant for employment after
an initial interview of a selected applicant for Contract Substitution amounts to Illegal
employment to a selected employer, placement Recruitment
officer or bureau." [Rodolfo vs. People (2006)] The reduced salaries and employment period in
the new employment contract contradicted the
Promising employment POEA-approved employment contract. By this
Promising employment as factory workers and act of contract substitution, respondents
receiving money allegedly for processing papers committed a prohibited practice and engaged in
without authorization or license is engaging into illegal recruitment as defined in Art. 34(i), LC.
unlawful recruitment and placement activities. [PERT/CPM Manpower Exponent Co. v. Vinuya
The absence of the necessary license or (2012)]
authority renders all of accused-appellants
recruitment activities criminal. [People vs. Saulo Prohibited practices
(2000)] It shall be unlawful for any individual, entity,
licensee, or holder of authority:
Note: To determine which law applies, the place (a) To charge or accept, directly or indirectly, any
of work is the determining factor: amount greater than that specified in the
(1) If in the Philippines: Labor Code (LC) applies schedule of allowable fees prescribed by the
(2) If abroad: Migrant Workers Act [R.A. 8042, Secretary of Labor, or to make a worker pay
as amended by R.A. 10022]. any amount greater than that actually
received by him as a loan or advance;
ILLEGAL RECRUITMENT FOR LOCAL (b) To furnish or publish any false notice or
WORKERS (GOVERNED BY THE information or document in relation to
recruitment or employment;
LABOR CODE) (c) To give any false notice, testimony,
information or document or commit any act
SIMPLE ILLEGAL RECRUITMENT of misrepresentation for the purpose of
Elements: securing a license or authority under this


(d) To induce or attempt to induce a worker

already employed to quit his employment in Illegal recruitment by a syndicate
order to offer him to another unless the (1) The offender undertakes either any activity
transfer is designed to liberate the worker within the meaning of "recruitment and
from oppressive terms and conditions of placement" defined under Article 13(b), or
employment; any of the prohibited practices enumerated
(e) To influence or to attempt to influence any under Art. 34 of the Labor Code;
person or entity not to employ any worker (2) He has no valid license or authority required
who has not applied for employment by law to enable one to lawfully engage in
through his agency; recruitment and placement of workers; AND
(f) To engage in the recruitment or placement of (3) The illegal recruitment is committed by a
workers in jobs harmful to public health or group of three (3) or more persons
morality or to the dignity of the Republic of conspiring or confederating with one
the Philippines; another. [People v. Gallo (2010)]
(g) To obstruct or attempt to obstruct inspection
by the Secretary of Labor or by his duly Illegal recruitment in large scale
authorized representatives; The acts committed by the accused constituted
(h) To fail to file reports on the status of illegal recruitment in large scale, whose
employment, placement vacancies, essential elements are the following:
remittance of foreign exchange earnings,
separation from jobs, departures and such (a) The accused engages in acts of recruitment
other matters or information as may be and placement of workers defined under
required by the Secretary of Labor. Article 13(b) of the Labor Code or in any
(i) To substitute or alter employment contracts prohibited activities under Article 43 of the
approved and verified by the Department of Labor Code;
Labor from the time of actual signing (b) The accused has not complied with the
thereof by the parties up to and including guidelines issued by the Secretary of Labor
the periods of expiration of the same and Employment, particularly with respect
without the approval of the Secretary of to the securing of license or an authority to
Labor; recruit and deploy workers, either locally or
(j) To become an officer or member of the Board overseas; and
of any corporation engaged in travel agency (c) The accused commits the unlawful acts
or to be engaged directly or indirectly in the against three or more persons individually
management of a travel agency; and or as a group.
(k) To withhold or deny travel documents from
applicant workers before departure for Three or more complainants must be in a single
monetary or financial considerations other case
than those authorized under this Code and When the Labor Code speaks of illegal
its implementing rules and regulations. [Art. recruitment "committed against three (3) or
34, LC] more persons individually or as a group," it must
be understood as referring to the number of
OFFENSE INVOLVING ECONOMIC SABOTAGE complainants in each case who are
(LARGE-SCALE OR BY A SYNDICATE) complainants therein, otherwise, prosecutions
Illegal recruitment is considered economic for single crimes of illegal recruitment can be
sabotage when the commission thereof is cumulated to make out a case of large scale
attended by the ff. qualifying circumstances: illegal recruitment.
(1) By a syndicate - if carried out by a group of 3
or more persons conspiring and confederating In other words, a conviction for large scale
with one another; illegal recruitment must be based on a finding
(2) In large scale - if committed against 3 or in each case of illegal recruitment of three or
more persons individually or as a group. [Art. more persons whether individually or as a
38(b), LC] group. [People vs. Reyes (1995)]


1st type:
Illegal recruitment vs. Estafa (1) Person charged undertakes any recruitment
Illegal recruitment and estafa are entirely activity as defined in Art.13 (b) of the Labor
different offenses and neither one necessarily Code; and
includes or is necessarily included in the other. (2) Said person does not have a license or
A person who is convicted of illegal recruitment authority to do so.
may, in addition, be convicted of estafa by false
pretenses or fraudulent acts under Article 315, 2nd type:
paragraph 2(a) of the Revised Penal Code. In (1) Person charged commits any of the
the same manner, a person acquitted of illegal enumerated acts under Sec. 6 of R.A. 8042, as
recruitment may be held liable for estafa. amended by, R.A. 10022.
Double jeopardy will not set in because illegal (2) It is immaterial whether he is a holder or not
recruitment is malum prohibitum, in which there of any license or authority
is no necessity to prove criminal intent,
whereas estafa is malum in se, in the Illegal recruitment - shall mean any act of
prosecution of which, proof of criminal intent is canvassing, enlisting, contracting, transporting,
necessary. [Rosita Sy vs. People of the Philippines utilizing, hiring, or procuring workers
and includes
One convicted for illegal recruitment may still be referring, contract services, promising or
convicted of estafa advertising for employment abroad,
In People v. Cortez the Court explained that: In
this jurisdiction, it is settled that a person who whether for profit or not,
commits illegal recruitment may be charged
and convicted separately of illegal recruitment when undertaken by non-licensee or non-holder
under the Labor Code and estafa under par. 2(a) of authority contemplated under Article 13(f) of
of Art. 315 of the Revised Penal Code. The Presidential Decree No. 442, as amended,
offense of illegal recruitment is malum otherwise known as the Labor Code of the
prohibitum where the criminal intent of the Philippines
accused is not necessary for conviction, while
estafa is malum in se where the criminal intent Provided,
of the accused is crucial for conviction. That any such non-licensee or non-holder who,
Conviction for offenses under the Labor Code in any manner, offers or promises for a fee
does not bar conviction for offenses punishable employment abroad to two or more persons
by other laws. Conversely, conviction for estafa shall be deemed so engaged. [Sec. 6, RA 8042
under par. 2(a) of Art. 315 of the Revised Penal as amended]
Code does not bar a conviction for illegal
recruitment under the Labor Code. It follows Other prohibited acts
that one's acquittal of the crime of estafa will It shall likewise include the following acts,
not necessarily result in his acquittal of the whether committed by any person, whether a
crime of illegal recruitment in large scale, and non-licensee, non-holder, licensee or holder of
vice versa. [People v. Ochoa (2011); People v. authority:
Ocden (2011)] (1) To charge or accept directly or indirectly any
amount greater than that specified in the
ILLEGAL RECRUITMENT FOR schedule of allowable fees prescribed by the
MIGRANT WORKERS (GOVERNED BY Secretary of Labor and Employment, or to
make a worker pay or acknowledge any
R.A. 8042, AS AMENDED BY R.A. amount greater than that actually received
10022) by him as a loan or advance;
(2) To furnish or publish any false notice or
SIMPLE ILLEGAL RECRUITMENT information or document in relation to
recruitment or employment;


(3) To give any false notice, testimony, monetary or financial considerations, or for
information or document or commit any act any other reasons, other than those
of misrepresentation for the purpose of authorized under the Labor Code and its
securing a license or authority under the implementing rules and regulations;
Labor Code, or for the purpose of (11) Failure to actually deploy a contracted
documenting hired workers with the POEA, worker without valid reason as determined
which include the act of reprocessing by the Department of Labor and
workers through a job order that pertains to Employment;
nonexistent work, work different from the (12) Failure to reimburse expenses incurred by
actual overseas work, or work with a the worker in connection with his
different employer whether registered or documentation and processing for purposes
not with the POEA; of deployment, in cases where the
(4) To include or attempt to induce a worker deployment does not actually take place
already employed to quit his employment in without the worker's fault. Illegal
order to offer him another unless the recruitment when committed by a syndicate
transfer is designed to liberate a worker or in large scale shall be considered an
from oppressive terms and conditions of offense involving economic sabotage; and
employment; (13) To allow a non-Filipino citizen to head or
(5) To influence or attempt to influence any manage a licensed recruitment/manning
person or entity not to employ any worker agency.
who has not applied for employment
through his agency or who has formed, In addition to the acts enumerated above, it
joined or supported, or has contacted or is shall also be unlawful for any person or entity to
supported by any union or workers' commit the following prohibited acts:
organization; (1) Grant a loan to an overseas Filipino worker
(6) To engage in the recruitment or placement with interest exceeding eight percent (8%)
of workers in jobs harmful to public health per annum, which will be used for payment
or morality or to the dignity of the Republic of legal and allowable placement fees and
of the Philippines; make the migrant worker issue, either
(7) To fail to submit reports on the status of personally or through a guarantor or
employment, placement vacancies, accommodation party, postdated checks in
remittance of foreign exchange earnings, relation to the said loan;
separation from jobs, departures and such (2) Impose a compulsory and exclusive
other matters or information as may be arrangement whereby an overseas Filipino
required by the Secretary of Labor and worker is required to avail of a loan only
Employment; from specifically designated institutions,
(8) To substitute or alter to the prejudice of the entities or persons;
worker, employment contracts approved (3) Refuse to condone or renegotiate a loan
and verified by the Department of Labor incurred by an overseas Filipino worker after
and Employment from the time of actual the latter's employment contract has been
signing thereof by the parties up to and prematurely terminated through no fault of
including the period of the expiration of the his or her own;
same without the approval of the (4) Impose a compulsory and exclusive
Department of Labor and Employment; arrangement whereby an overseas Filipino
(9) For an officer or agent of a recruitment or worker is required to undergo health
placement agency to become an officer or examinations only from specifically
member of the Board of any corporation designated medical clinics, institutions,
engaged in travel agency or to be engaged entities or persons, except in the case of a
directly or indirectly in the management of seafarer whose medical examination cost is
travel agency; shouldered by the principal/shipowner;
(10) To withhold or deny travel documents from (6) Impose a compulsory and exclusive
applicant workers before departure for arrangement whereby an overseas Filipino


worker is required to undergo training, scale if committed against three (3) or more
seminar, instruction or schooling of any kind persons individually or as a group.
only from specifically designated
institutions, entities or persons, except for LIABILITIES AND PENALTIES FOR
recommendatory trainings mandated by ILLEGAL RECRUITMENT
principals/shipowners where the latter
shoulder the cost of such trainings; Illegal Recruitment Involving Local Workers [Art.
(7) For a suspended recruitment/manning 39, LC]
agency to engage in any kind of recruitment Act Penalty
activity including the processing of pending Illegal recruitment Life imprisonment
workers' applications; and constituting economic AND
(8) For a recruitment/manning agency or a sabotage Fine: P100,000.00
foreign principal/employer to pass on the Licensee or holder or 2 years
overseas Filipino worker or deduct from his authority violating or
or her salary the payment of the cost of Imprisonment 5
causing another to years OR
insurance fees, premium or other insurance violate Title I, Book I,
related charges, as provided under the P10,000 Fine
compulsory worker's insurance coverage. P50,000 OR both
[Sec. 6, RA 8042 as amended] Violating or causing 4 years
another to violate Title Imprisonment 8
Migrant Workers Act (MWA) expands the I, Book I, LC years OR
definition of illegal recruitment
P20,000 Fine
The amendments to the Labor Code introduced
P100,000 OR both
by Republic Act No. 8042, otherwise known as
the Migrant Workers and Overseas Filipinos Act
If the offender is a corporation, partnership,
of 1995, broadened the concept of illegal
association or entity, the penalty shall be
recruitment and provided stiffer penalties,
imposed upon the officer or officers of the
especially for those that constitute economic
corporation, partnership, association or entity
sabotage. [People v. Ocden (2011)]
responsible for violation.
Law Applicabil Acts Who can be
If such officer is an alien, he shall, in addition to
ity Punishabl punished
the penalties herein prescribed, be deported
without further proceedings.
Labor Local Art. 13(b) Non-
Code Workers licensee
In every case, conviction shall cause and carry
Art. 34 Non- the automatic revocation of the license or
licensee authority and all the permits and privileges
RA Migrant Art. 13(b) Non- granted to such person or entity under this Title,
8042 Workers Labor licensee and the forfeiture of the cash and surety bonds
as Code in favor of the Overseas Employment
amend Enumerat Licensee/N Development Board or the National Seamen
ed by ed on-licensee Board, as the case may be, both of which are
RA prohibite authorized to use the same exclusively to
10022 d acts in promote their objectives.
Section 6
Illegal Recruitment Involving Migrant Workers
OFFENSE INVOLVING ECONOMIC SABOTAGE [Sec. 7, RA 8042 as amended by RA 10022]
Illegal recruitment is deemed committed by a Illegal 12 years and 1 day
syndicate if carried out by a group of three (3) or recruitment
more persons conspiring or confederating with Imprisonment 20 years AND
one another. It is deemed committed in large P1M Fine P2M


Illegal Life imprisonment AND meant to assure the aggrieved worker of

recruitment P2M Fine P5M immediate and sufficient payment of what is
constituting due him. [Becmen Service Exporter and
economic Maximum penalty: Promotion, Inc. v. Spouses Cuaresma, G.R.
sabotage 1. illegally recruited person 182978-79, April 7, 2009]
below 18 years old OR
2. Without license/authority (3) If the recruitment/placement agency is a
Prohibited 6 years and 1 day juridical being, the corporate officers and directors
Act/s and partners as the case may be, shall themselves
Imprisonment 12 years AND be jointly and solidarily liable with the corporation
P500k Fine P1M or partnership for the aforesaid claims and
damages. [Becmen Service Exporter and
If the offender is an alien, he or she shall, in Promotion, Inc. v. Spouses Cuaresma, G.R.
addition to the penalties herein prescribed, be 182978-79, April 7, 2009]
deported without further proceedings.
(4) Foreign employer shall assume joint and
In every case, conviction shall cause and carry solidary liability with the employer for all claims
the automatic revocation of the license or and liabilities which may arise in connection
registration of the recruitment/manning with the implementation of the contract,
agency, lending institutions, training school or including but not limited to payment of wages,
medical clinic. death and disability compensation and
Common Rules on Liability
(1) Employees of a company corporation engaged Theory of imputed knowledge
in illegal recruitment may be held liable as This is a doctrine in agency which states that the
principal, together with his employer, if it is shown principal is chargeable with and bound by the
that he actively and consciously participated in knowledge of or notice to his agent received
illegal recruitment. while the agent was acting as such. Simply put,
notice to the agent is notice to the principal.
E.g. In this case the appellant was both the
APSC Vice-President-Treasurer and the Since the local employment agency is
Assistant General Manager. She was a high considered the agent of the foreign employer,
corporate officer who had direct participation the principal, knowledge of the former of
in the management, administration, existing labor and social legislation in the
direction and control of the business of the Philippines is binding on the latter.
corporation, and is thus liable under Sec. 6 of Consequently, notice to the former of any
RA 8042. The terms control, management violation thereof is notice to the latter.
or direction broadly cover all phases of
business operation, including the aspects of Joint and Several Liability of Agent and Principal
administration, marketing and finances, The written application for a license to operate a
among others. [People vs. Sagayaga (2004)] private employment or manning agency shall
be submitted with, among others, a VERIFIED
(2) Local Employment Agency is solidarily liable UNDERTAKING stating that the applicant:
with foreign principal. Severance of relations 11
between local agent and foreign principal does (1) Shall assume full and complete responsibility
not affect liability of local recruiter. Private for
employment agencies are held jointly and (a) all claims and liabilities which may arise in
severally liable with the foreign-based employer connection with the use of license;
for any violation of the recruitment agreement (b) all acts of its officials, employees and
or contract of employment. This joint and representatives done in connection with
solidary liability imposed by law against recruitment and placement;
recruitment agencies and foreign employers is


(2) Shall assume joint and solidary liability with Pre-Termination of Contract of Migrant Worker
the employer for all claims and liabilities which [Sec. 10, R.A. 8042, as amended by R.A. 10022]
may arise in connection with the
implementation of the contract, including but In case of termination of overseas employment
not limited to payment of wages, death and (1) without just, valid or authorized cause as
disability compensation and repatriation; defined by law or contract, or
(2) any unauthorized deductions from the
(3) Shall guarantee compliance with the existing migrant workers salary
labor and social legislations of the Philippines
and of the country of employment of recruited The worker shall be entitled to the full
workers [POEA Rules, Book II, Rule II, Sec. 1 (f) (2- reimbursement of:
5)] (1) his placement fee and the deductions made
with interest at twelve percent (12%) per annum
Joint and solidary liability is meant to assure (2) plus his salaries for the unexpired portion of
aggrieved workers of immediate and sufficient his employment contract OR for three (3)
payment of what is due them months for every year of the unexpired term,
The fact that the manning agency and its whichever is less.
principal have already terminated their agency
agreement does not relieve the former of its Rule before Serrano: 3-month salary rule applies
liability. The agency agreement with the The employment contract involved in the
principal even if ended as between them, still instant case covers a two-year period but the
extends up to and until the expiration of, the overseas contract worker actually worked for
employment contracts of the employees only 26 days prior to his illegal dismissal. Thus,
recruited and employed pursuant to the said the three months salary rule applies [Flourish
recruitment agreement. Otherwise, this will Maritime Shipping v. Almanzor, G.R. No. 177948,
render nugatory the very purpose for which the March 14, 2008]
law governing the employment of workers for
foreign jobs abroad was enacted, that is, to Serrano ruling: invalidated the 3-month salary
assure aggrieved workers of immediate and cap
sufficient payment of what is due them. [OSM The issue in this case is the constitutionality of
Shipping Phil, Inc. v. NLRC (2003)] the last clause of Sec.10 of RA 8042:
Sec. 10. Money Claims. - x x x In case of
Common Rules on Illegal Recruitment (Local or termination of overseas employment without
Overseas) just, valid or authorized cause as defined by law
or contract, the workers shall be entitled to the
Venue full reimbursement of his placement fee with
A criminal action arising from illegal interest of twelve percent (12%) per annum, plus
recruitment shall be filed with the RTC of the his salaries for the unexpired portion of his
province or city: employment contract or for three (3) months for
(1) where the offense was committed or every year of the unexpired term, whichever is less.
(2) where the offended party actually resides at
the time of the commission of the offense. [Sec. The Court held that said clause is
9, R.A. 8042 (this part was not amended by R.A. unconstitutional for being an invalid
10022)]. classification, in violation of the equal protection
clause. [Serrano v. Gallant Maritime Services, Inc.,
Prescriptive Periods G.R. No. 167614, March 24, 2009]
(1) Simple Illegal Recruitment 5 years
(2) Illegal Recruitment involving Economic DIRECT HIRING
Sabotage 20 years. [Sec. 12, R.A. 8042 [this General Rule: No employer may hire a Filipino
part was not amended by R.A, 10022]. worker for overseas employment except through
the Boards and entities authorized by the
Secretary of Labor. [Art. 18, LC]



(1) Members of the diplomatic corps; POWERS OF THE DOLE SECRETARY
(2) International organizations; Regulatory powers [Art. 36, LC]
(3) Such other employees as may be allowed by The Secretary of Labor shall have the power to
the Sec. of Labor; restrict and regulate the recruitment and
(4) Name hirees those individuals who are placement activities of all agencies within the
able to secure contracts for overseas coverage of this Title and is hereby authorized
employment on their own efforts and to issue orders and promulgate rules and
representation without the assistance or regulations to carry out the objectives and
participation of any agency. Their hiring, implement the provisions of this Title.
nonetheless, has to be processed through the
POEA. [Part III, Rule III of the POEA Rules Visitorial powers [Art. 37, LC]
Governing Overseas Employment as amended in The Secretary of Labor or his duly authorized
2002] representatives may, at any time, inspect the
premises, books of accounts and records of any
GOVERNMENT TECHNIQUES OF person or entity covered by this Title, require it
REGULATION AND to submit reports regularly on prescribed forms,
and act on violations of any provisions of this
See also: 2002 POEA Rules Governing the
Recruitment and Employment of Land-based POEA STANDARD EMPLOYMENT
Overseas Workers
Document containing the standard terms and
SUSPENSION OR CANCELLATION OF condition of the seafarers employment in
LICENSE OR AUTHORITY foreign ocean-going vessels
The Secretary of Labor shall have the power to
suspend or cancel any license or authority to To be integrated in every seafarers contract
recruit employees for overseas employment for The POEA rules and regulations require that the
(1) violation of rules and regulations issued by POEA Standard Employment Contractbe
the Department of Labor, the Overseas integrated in every seafarers contract. This,
Employment Development Board, and the together with the contract the employees sign
National Seamen Board every time they are hired, constitutes the law
(2) violation of the provisions of this and other between the parties. [Wallen Martitime Services,
applicable laws, General Orders and Letters of Inc. v. Tanawan (2012)]
Instructions. [Article 35, LC]
Construction: liberal
The acts prohibited under Article 34 are The POEA standard employment contract for
grounds for suspension or cancellation of seamen was designed primarily for the
license. Note that they likewise constitute illegal protection and benefit of Filipino seamen in the
recruitment under R.A. 8042 as amended by pursuit of their employment on board ocean-
R.A. 10022. going vessels. Its provisions must be construed
and applied fairly, reasonably and liberally in
Who can suspend or cancel the license? their favor. Only then can its beneficent
(1) DOLE Secretary provisions be fully carried into effect. [Abante v.
(2) POEA Administrator KJGS Fleet Management (2009)]
The power to suspend or cancel any license or Breach of contract may give rise to a cause of
authority to recruit employees for overseas action even before commencement of EE-ER
employment is concurrently vested with the relationship
POEA and the Secretary of Labor. [People v.
Diaz, 259 SCRA 441 (1996)]


Even if by the standard contract employment (3) Immigrants and Filipino professionals
commences only upon actual departure of the working with the United Nations and its
seafarer, this does not mean that the seafarer agencies or other specialized bodies.
has no remedy in case of non-deployment
without any valid reason. Even before the start
of any employer-employee relationship, Labor Standards
contemporaneous with the perfection of the
employment contract was the birth of certain
rights and obligations, the breach of which may COVERAGE
give rise to a cause of action for damages under General rule: Shall apply to employees in all
the Civil Code against the erring party. [Stolt- establishments and undertakings whether for
Nielsen v. Medequillo (2012)] profit or not. [Art. 82, LC]


EXCHANGE EARNINGS (1) Government employees [Art. 82; Art. 76]
It shall be mandatory for all Filipino workers (2) Managerial Employees including members
abroad to remit a portion of their foreign of the managerial staff [Art. 82]
earnings to their families, dependents, and/or (3) Field Personnel [Art. 82]
beneficiaries in the country [Art. 22, LC] (4) Members of the family of the employer who
are dependent on him for support [Art. 82];
Amount required to be remitted [Executive Order (5) Domestic helpers and persons in personal
No. 857] service of another [Art. 141]
(6) Workers who paid by result as determined by
The amount of ones salary required to be DOLE regulation [Art. 82]
remitted depends on the type or nature of work
performed by the employee. (1) Government employees
The terms and conditions of employment of all
The following are the percentages of foreign government employees, including employees of
exchange remittance required from various GOCCs, are governed by the Civil Service rules
kinds of migrant workers: and regulations, not by the Labor Code [Art.
(1) Seaman or mariner 80% of their basic 282]
(2) Workers for Filipino contractors and Following Sec. 2(i) Art. IX-B of 1987 Phil.
construction companies 70% Constitution, the test in determining whether a
(3) Doctors, engineers, teachers, nurses and government owned corporation is subject to the
other professional workers whose contract Labor Code or the Civil Service law is finding out
provide for free board and lodging 70% what created it if its created by a special
(4) All other professional workers whose charter, then, Civil Service Law applies, if it is
employment contracts do not provide for created by the General Corporation Law, then
free board and lodging facilities 50% the Labor Code applies. [PNOC Energy
(5) Domestic and other service workers 50% Development Corp. v. NLRC (1991)]
(6) All other workers not falling under the
aforementioned categories 50% (2) Managerial employees
(7) Performing artists 50% Two definitions of managerial employees in the
Labor Code
Individuals exempted from the mandatory Article 82: Those whose primary duty consists of
remittance requirement: the management of the establishment in which
(1) The immediate family members, dependents they are employed or of a department or
or beneficiaries of migrant workers residing with subdivision thereof, and to other officers or
the latter abroad; members of the managerial staff. [Art. 82, LC]
(2) Filipino servicemen working within US
military installations; Article 212 (m): One who is vested with the


powers or prerogatives to lay down and execute policies of their employer;

management policies and/or to hire, transfer, (2) Customarily and regularly exercise discretion
suspend, lay-off, recall, discharge, assign or and independent judgment;
discipline employees. Supervisory employees (3) Those who:
are those who, in the interest of the employer, (a) Regularly and directly assist a proprietor or a
effectively recommend such managerial actions managerial employee whose primary duty
if the exercise of such authority is not merely consists of the management of the
routinary or clerical in nature but requires the establishment in which he is employed or
use of independent judgment. All employees subdivision thereof; OR
not falling within any of the above definitions (b) Execute under general supervision work
are considered rank-and-file employees for along specialized or technical lines
purposes of this Book requiring special training, experience, or
knowledge; OR
The definition in Art. 82 covers more people (c) Execute, under general supervision, special
than that in Article 212 (m) as Article 82 also assignments and tasks;
includes managerial staff. In effect, managerial (4) Who do not devote more than 20 percent of
employees in Article 82 includes supervisors, their hours worked in a work week to
but Article 212(m) does not. activities which are not directly and closely
related to the performance of the work
It follows that under Book V, supervisors are described in paragraphs (1), (2) and (3)
allowed to form, join or assist a labor union. above.
Supervisors are not, however, entitled to the
benefits under Book III Articles 83 through 96, (3) Field personnel
being part of the exemption of managerial Non-agricultural employees
employees as defined in Article 82. [Azucena] (a) who regularly perform their duties away from
the principal place of business or branch
Characteristics of managerial employees [Book office of the employer AND
3, Rule 1, Sec. 2(b), IRR] (b) whose actual hours of work in the field
cannot be determined with reasonable
Managerial employees qualify for the exception certainty. [Art. 82, LC]
if they meet all of the following conditions:
(a) Their primary duty consists of the Legal Test: Control and Supervision of ER
management of the establishment in which Although the fishermen perform non-
they are employed or of a department or agricultural work away from petitioners
sub-division thereof. business offices, the fact remains that
(b) They customarily and regularly direct the throughout the duration of their work they are
work of two or more employees therein. under the effective control and supervision of
(c) They have the authority to hire or fire petitioner through the vessels patron or master.
employees of lower rank; or their Hence, the fishermen are not field personnel.
suggestions and recommendations as to [Mercidar Fishing Corporation v. NLRC (1998)]
hiring and firing and as to the promotion or
any other change of status of other In order to determine whether an employee is a
employees, are given particular weight. field employee, it is also necessary to ascertain if
actual hours of work in the field can be
Managerial Staff also included [Book 3, Rule 1, determined with reasonable certainty by the
Sec. 2(c), IRR] employer. In so doing, an inquiry must be made
as to whether or not the employees time and
Officers or members of a managerial staff also performance are constantly supervised by the
qualify for the exception if they perform the employer. [Far East Agricultural Supply v.
following duties and responsibilities: Lebatique [2007)]
(1) The primary duty consists of the performance
of work directly related to management (4) Dependent family members


Workers who are family members of the official. [Cadiz v. Philippine Sinter Corp,
employer, and who are dependent on him for NLRC Case No. 7-1729, cited by Azucena]
their support, are outside the coverage of this (2) A family cook, who is later assigned to work
Title on working conditions and rest periods. as a watcher and cleaner of the employers
business establishment, becomes an
(5) Domestic helpers industrial worker entitled to receive the
"Domestic or household service" shall mean wages and benefits flowing from such
service in the employers home which is usually status. [Villa v. Zaragosa and Associates, OP
necessary or desirable for the maintenance and Decision No. 0183, cited by Azucena]
enjoyment thereof and includes ministering to
the personal comfort and convenience of the (b) Workers Paid by Result
members of the employers household, Workers who are paid by results, including those
including services of family drivers. [Art. 141, LC] who are paid on piece-work, takay, pakiao or
task basis, and other non-time work if their
Note: The Kasambahay Law (RA 10361) has output rates are in accordance with the
redefined domestic worker or kasambahay: standards prescribed under Section 8, Rule VII,
Book Three of these regulations, or where such
Domestic worker or Kasambahay refers to any rates have been fixed by the Secretary of Labor
person engaged in domestic work within an and Employment in accordance with the
employment relationship such as, but not aforesaid Section. [Book 3, Rule 1, Sec. 2 (e), IRR]
limited to, the following: general househelp,
nursemaid or yaya, cook, gardener, or laundry Workers under piece-rate employment have no
person, but shall exclude any person who fixed salaries and their compensation is
performs domestic work only occasionally or computed on the basis of accomplished tasks.
sporadically and not on an occupational basis. That their work output might have been
[RA 10361 Art. 1, Sec. 4 (d)] affected by the change in their specific work
assignments does not necessarily imply that any
(a) Persons in personal service of another resulting reduction in pay is tantamount to
The provisions of this Rule shall not apply to the constructive dismissal. It is the prerogative of
following persons if they qualify for exemption the management to change their assignments
under the conditions set forth herein: or to transfer them. [Best Wear Garments v. De
Lemos and Ocubillo (2012)]
Domestic servants and persons in the personal
service of another if they perform such services HOURS OF WORK
in the employers home which are usually
necessary or desirable for the maintenance and
enjoyment thereof, or minister to the personal
Please see previous section (Coverage) which
comfort, convenience, or safety of the employer
deals with the general rules of coverage and
as well as the members of his employers
exclusions for the applicability of the Conditions
household. [Book 3, Rule 1, Sec. 2 (d), IRR]
of Employment provisions in Book III of the
Labor Code.
Exclusivity of function required
Note that the definition contemplates a
domestic servant who is employed in the NORMAL HOURS OF WORK
employers home to minister exclusively to the
personal comfort and enjoyment of the General Rule: 8-Hour Labor Law
employers family. [Azucena] The normal hours of work of any employee shall
Thus, it has been held that the following not exceed eight (8) hours a day. [Art. 83, LC]
personnel are NOT domestic employees:
(1) House personnel hired by a ranking company Article 83 of the Labor Code only set a
official but paid by the company itself to maximum of number of hours as "normal hours
maintain a staff house provided for the of work" but did not prohibit work of less than


eight hours [Legend Hotel v. Realuyo (2012)] (3) If the work performed was necessary, or it
benefited the employer, or the employee
Exception to the 8-Hour Law: Work Hours of could not abandon his work at the end of his
Health Personnel normal working hours because he had no
Health personnel in replacement, all time spent for such work
(1) cities and municipalities with a population of shall be considered as hours worked, if the
at least one million (1,000,000) OR work was with the knowledge of his
(2) hospitals and clinics with a bed capacity of at employer or immediate supervisor.
least one hundred (100) (4) The time during which an employee is
shall hold regular office hours for eight (8) inactive by reason of interruptions in his
hours a day, for five (5) days a week, exclusive of work beyond his control shall be considered
time for meals, except where the exigencies of working time either:
the service require that such personnel work for (i) if the imminence of the resumption of work
six (6) days or forty-eight (48) hours, in which requires the employees presence at the place of
case, they shall be entitled to an additional work, or
compensation of at least thirty percent (30%) of (ii) if the interval is too brief to be utilized
their regular wage for work on the sixth day. effectively and gainfully in the employees own
For purposes of this Article, "health personnel"
shall include resident physicians, nurses, Rest period short duration or coffee break
nutritionists, dietitians, pharmacists, social Rest periods of short duration during working
workers, laboratory technicians, paramedical hours shall be counted as hours worked. [Art.
technicians, psychologists, midwives, 84, par. 2, LC]
attendants and all other hospital or clinic
personnel. [Art. 38, LC] Rest periods or coffee breaks running from five
(5) to twenty (20) minutes shall be considered as
Medical secretaries are also considered clinic compensable working time. [Bk III, Rule 1, Sec. 7,
personnel. [Azucena] par. 2, IRR]

Compensable Hours of Work [Art. 84, LC] An employee need not leave the premises of the
Hours worked shall include work place in order that his rest period shall not
(1) All time during which an employee is be counted, it being enough that he stops
required to be on duty or to be at a prescribed working, may rest completely and may leave his
workplace; AND work place, to go elsewhere, whether within or
(2) All time during which an employee is outside the premises of his work place. [Book 3,
suffered or permitted to work. Rule 1, Sec. 4 (b) of the IRR]

General principles in determining if time is On call

considered as hours worked [Book III, Rule 1, Sec. An employee who is
4] (a) required to remain on call in the employers
(1) All hours are hours worked which the premises or so close thereto
employee is required to give his employer, (b) that he cannot use the time effectively and
regardless of whether or not such hours are gainfully for his own purpose
spent in productive labor or involve physical shall be considered as working while on call.
or mental exertion.
(2) An employee need not leave the premises of An employee who is not required to leave word
the work place in order that his rest period at his home or with company officials where he
shall not be counted, it being enough that may be reached is not working while on call.
he stops working, may rest completely and [Book III, Rule 1, Sec. 5(b), IRR]
may leave his work place to go elsewhere,
whether within or outside the premises of Inactive due to work interruptions
his work place. The time during which an employee is inactive


by reason of interruptions in his work beyond his regular working hours;

control shall be considered working time either (b) Attendance is in fact voluntary; and
(i) if the imminence of the resumption of work (c) The employee does not perform any
requires the employee's presence at the place of productive work during such attendance.
work OR [IRR, Book III, Rule 1, Sec. 6]
(ii) if the interval is too brief to be utilized
effectively and gainfully in the employee's own Note:
interest. [Book III, Rule 1, Sec. 4(d), IRR] (1) Attendance in lectures, meetings, and
training periods sanctioned by the employer
Work interruption due to brownouts are considered hours worked.
Brownouts of short duration, but not exceeding (2) Attendance in CBA negotiations or grievance
20 minutes, shall be treated as hours worked, meeting is compensable hours worked.
whether used productively by the employees or (3) Attendance in hearings in cases filed by the
not. employee is NOT compensable hours
If they last more than 20 minutes, the time may (4) Participation in strikes is NOT compensable
not be treated as hours worked if the employees working time.
can leave their workplace or go elsewhere
whether within or without the work premises; or Idle time
the employees can use the time effectively for The idle time that an employee may spend for
their own interest. In this case, the employer resting and dining which he may leave the spot
may extend the working hours beyond the or place of work though not the premises of his
regular schedule on that day to compensate for employer, is not counted as working time only
the loss of productive man-hours without being where the work is broken or is not continuous.
liable for overtime pay. [Policy Instruction No. 36, [National Development Co. v. CIR (1962)]
May 22, 1978]
A laborer need not leave the premises of the
Note: The time during which an employee is factory, shop or boat in order that his period of
inactive by reason of work interruptions beyond rest shall not be counted, it being enough that
his control is considered working time, either if he "cease to work", may rest completely and
the imminence of the resumption of work leave or may leave at his will the spot where he
requires the employees presence at the place of actually stays while working, to go somewhere
work or if the interval is too brief to be utilized else, whether within or outside the premises of
effectively and gainfully in the employees own said factory, shop or boat. If these requisites are
interest. [Book III, Rule 1 Sec. 4-c OR] complied with, the period of such rest shall not be
counted. [Luzon Stevedoring Co. v. Luzon Marine
Necessary Work After Normal Hours Department Union (1957)]
If the work performed was necessary, or it
benefited the employer, or the employee could Travel time [Department of Labor Manual]
not abandon his work at the end of his normal (1) Travel from home to work An employee who
working hours because he had no replacement, travels from home before his regular workday
all the time spent for such work shall be and returns to his home at the end of the
considered as hours worked if the work was with workday is engaged in ordinary home-to-work
the knowledge of his employer or immediate travel which is NOT worktime, except:
supervisor. [IRR, Book III, Rule 1, Sec. 4(c)] (a) When called to travel during emergency;
(b) When travel is done through a conveyance
Lectures, meetings, trainings furnished by the employer;
Attendance at lectures, meetings, training (c) Travel is done under vexing and dangerous
programs, and other similar activities shall not circumstances;
be counted as working time if ALL of the (d) Travel is done under the supervision and
following conditions are met: control of the employer.
(a) Attendance is outside of the employees


(2) Travel that is all in the days work Time Hours worked: Burden of Evidence
spent by an employee in travel from jobsite to When an employer alleges that his employee
jobsite during the workday, must be counted as works less than the normal hours of
hours worked. Where an employee is required to employment as provided for in the law, he bears
report at a meeting place to receive instructions the burden of proving his allegation with clear
or to perform other work there, the travel from and satisfactory evidence. [Prangan v. NLRC, et.
the designated place to the workplace is part of al., G.R. No. 126529, April 15 (1998)]
the days work.
(3) Travel away from home - Travel that keeps ADVISORY NO. 02, SERIES OF 2004]
an employee away from home overnight is Under the CWW scheme, the normal workday
travel away from home. Travel away from home goes beyond eight hours without the
is worktime when it cuts across the employees corresponding overtime premium.
workday. The time is hours worked not only on
regular working hours but also during the The total hours of work, however, shall not
corresponding hours on non-working days. exceed 12 hours a day or 48 hours a week, or the
employer is obliged to pay the worker the
Semestral Break of Private School Teachers overtime premium in excess of said work hours.
Regular full-time teachers are entitled to salary
during semestral breaks. These semestral Conditions for CWW
breaks are in the nature of work interruptions (1) The CWW scheme is undertaken as a result
beyond the employees control. As such, these of an express and voluntary agreement of
breaks cannot be considered as absences within majority of the covered employees or their duly
the meaning of the law for which deductions authorized representatives. This agreement may
may be made from monthly allowances. be expressed through collective bargaining or
[University of the Pangasinan Faculty Union v. other legitimate workplace mechanisms of
University of Pangasinan (1984)] participation such as labor management
councils, employee assemblies or referenda.
Work Hours of Seamen (2) In firms using substances, chemicals and
Seamen are required to stay on board of their processes or operating under conditions where
vessels by the very nature of their duties, and it there are airborne contaminants, human
is for this reason that, in addition to their regular carcinogens or noise prolonged exposure to
compensation, they are given free living which may pose hazards to employees health
quarters to be on board. It could not have been and safety, there must be a certification from an
the purpose of the law to require their accredited health and safety organization or
employers to pay them overtime pay even when practitioner from the firms safety committee
they are not actually working. The correct that work beyond eight hours is within threshold
criterion in determining whether or not sailors limits or tolerable levels of exposure, as set in
are entitled to overtime pay is not, therefore, the OSHS.
whether they are on board and cannot leave (3) The employer shall notify DOLE, through the
ship beyond the regular eight working number Regional Office having jurisdiction over the
of hours, but whether they actually rendered workplace, of the adoption of the CWW scheme.
service in excess of said number of hours. The notice shall be in DOLE CWW Report Form
[Cagampan, et. al. v. NLR (1991)] attached to this Advisory. [DOLE Advisory No.
Hours worked: Proof of work
Entitlement to overtime pay must first be Effects of CWW
established by proof that said overtime work (1) Unless there is a more favorable practice
was actually performed, before an employee existing in the firm, work beyond eight hours
may avail of said benefit. [Lagatic v. NLRC will not be compensable by overtime
(1998)] premium provided the total number of
hours worked per day shall not exceed


twelve (12) hours. In any case, any work

performed beyond 12 hours a day or 48 MEAL BREAK
hours a week shall be subject to overtime General Rule: Subject to such regulations as the
premium. Secretary of Labor may prescribe, it shall be the
(2) Consistent with Art. 85 of the LC, employees duty of every employer to give his employees
under a CWW scheme are entitled to meal not less than sixty (60) minutes time-off for their
periods of not less than 60 minutes. There regular meals [Art. 85, LC]
shall be no impairment of the right of the
employees to rest days as well as to holiday Exception:
pay, rest day pay or leaves in accordance Employees may be given a meal period of not
with law or applicable collective bargaining less than twenty (20) minutes provided that
agreement or company practice. such shorter meal period is credited as
(3) Adoption of the CWW scheme shall in no compensable hours worked of the employee:
case result in diminution of existing
benefits. Reversion to the normal eight- (a) Where the work is non-manual work in
hour workday shall not constitute a nature or does not involve strenuous physical
diminution of benefits. exertion;
(b) Where the establishment regularly operates
Rationale not less than sixteen (16) hours a day;
D.O. No. 21 sanctions the waiver of overtime pay (c) In case of actual or impending emergencies
in consideration of the benefits that the or there is urgent work to be performed on
employees will derive from the adoption of a machineries, equipment or installations to avoid
compressed workweek scheme, thus: serious loss which the employer would
otherwise suffer; and
The compressed workweek scheme was (d) Where the work is necessary to prevent
originally conceived for establishments wishing serious loss of perishable goods [Book 3, Rule 1,
to save on energy costs, promote greater work Sec. 7 par 1, IRR]
efficiency and lower the rate of employee
absenteeism, among others. Workers favor the Employees are not prohibited from going out of
scheme considering that it would mean savings the premises as long as they return to their
on the increasing cost of transportation fares for posts on time. Nowhere in the law may it be
at least one (1) day a week; savings on meal and inferred that employees must take their meals
snack expenses; longer weekends, or an within the company premises. [Philippine
additional 52 off-days a year, that can be Airlines v. NLRC (1999)]
devoted to rest, leisure, family responsibilities,
studies and other personal matters, and that it Synthesis of the Rules
will spare them for at least another day in a General Rule: Meal periods are NOT
week from certain inconveniences that are the compensable.
normal incidents of employment, such as
commuting to and from the workplace, travel Exception:
time spent, exposure to dust and motor vehicle It becomes compensable:
fumes, dressing up for work, etc. Thus, under (1) Where the lunch period or meal time is
this scheme, the generally observed workweek predominantly spent for the employers
of six (6) days is shortened to five (5) days but benefit. [Azucena citing 31 Am. Jur. 881;
prolonging the working hours from Monday to Duka, Labor Laws and Social Legislation]
Friday without the employer being obliged for (2) Meal periods of 1 hour is deemed
pay overtime premium compensation for work compensable when the employee is on
performed in excess of eight (8) hours on continuous shift. [National Development Co.
weekdays, in exchange for the benefits v. CIR, G.R. No. L-15422, Nov. 30, 1962](3)
abovecited that will accrue to the employees. Shortened meal period of less than 1 hour
[Bisig Manggagawa sa Tryco v. NLRC, et al. (say, 30 minutes) must be compensable.
(2008)] [Sec. 7, Rule I, Book III, IRR]


that he cannot use the time effectively and

Note: To shorten meal time to less than 20 gainfully for his own purpose shall be
minutes is not allowed. If the so-called meal considered as working while on call. [Book 3,
time is less than 20 minutes, it becomes only a Rule 1, Sec. 5, IRR]
REST PERIOD and is considered working time.
Legal test: Whether waiting time constitutes
Exception to the Exception: Shortened meal working time depends upon the circumstances of
breaks upon the employees request NOT each particular case. The facts may show that
compensable. The employees themselves may the employer was engaged or was waiting to be
request that the meal period be shortened so engaged. The controlling factor is whether
that they can leave work earlier than the waiting time spent in idleness is so spent
previously established schedule. [Drilon: Letter predominantly for the employers benefit or for
to Kodak Philippines, Nov. 27, 1989; also Cilindro: the employees. [Azucena citing Armour v.
BWC-WHSD Opinion No. 197, s. 1998]. Wantock]

Conditions for shortened meal breaks upon OVERTIME WORK, OVERTIME PAY
employees request. Overtime compensation is additional pay for
(1) The employees voluntarily agree in writing to service or work rendered or performed in excess
a shortened meal period of 30 minutes and of eight hours a day by employees or laborers
are willing to waive the overtime pay for covered by the Eight-hour Labor Law. [National
such shortened meal period; Shipyard and Steel Corp. v. CIR (1961)]
(2) There will be no diminution whatsoever in
the salary and other fringe benefits of the Rationale
employees existing before the effectivity of There can be no other reason than that he is
the shortened meal period; made to work longer than what is
(3) The work of the employees does not involve commensurate with his agreed compensation
strenuous physical exertion and they are for the statutorily fixed or voluntary agreed
provided with adequate coffee breaks in hours of labor he is supposed to do. [PNB v.
the morning and afternoon. PEMA (1982)]
(4) The value of the benefits derived by the
employees from the proposed work Overtime on ordinary working day
arrangement is equal to or commensurate Work may be performed beyond eight (8) hours
with the compensation due them for the a day provided that the employee is paid for the
shortened meal period as well as the overtime work, an additional compensation
overtime pay for 30 minutes as determined equivalent to his regular wage plus at least
by the employees concerned; twenty-five percent (25%) thereof. [Art. 87, LC]
(5) The overtime pay of the employees will
become due and demandable if ever they Overtime work on holiday or rest day
are permitted or made beyond 4:30pm; anD Work performed beyond eight hours on a
(6) The effectivity of the proposed working time holiday or rest day shall be paid an additional
arrangement shall be of temporary duration compensation equivalent to the rate of the first
as determined by the Secretary of Labor. eight hours on a holiday or rest day plus at least
thirty percent (30%) thereof. [Art. 87, LC]
Waiting time spent by an employee shall be Computation of additional compensation
considered as working time if waiting is an For purposes of computing overtime and other
integral part of his work or the employee is additional remuneration as required by this
required or engaged by the employer to wait. Chapter, the "regular wage" of an employee
[Book III, Rule I Sec. 5(a), IRR] shall include the cash wage only, without
deduction on account of facilities provided by
An employee who is required to remain on call the employer. [Art. 90, LC]
in the employers premises or so close thereto


Base of Computation: Regular wage or means

regular base pay; it excludes money received in Synthesis of Rules
different concepts such as Christmas bonus and (1) An employer cannot compel an employee to
other fringe benefits. [Bisig ng Manggagawa ng work overtime
Philippine Refining Co. v. Philippine Refining Co Exception: Emergency overtime work as
(1981)] provided for in Art. 89

BUT when the overtime work was performed on (2) Additional compensation is demandable
the employees rest day or on special days or only if the employer had knowledge and
regular holidays (Art. 93 and 94), the premium consented to the overtime work rendered by the
pay, must be included in the computation of the employee.
overtime pay. [See p. 19 of Handbook on Workers
Statutory Monetary Benefits, issued by the Bureau Exception: Express approval by a superior
of Working Conditions, 2006] NOT a requisite to make overtime
Emergency overtime [Art. 89, LC] (a) If the work performed is necessary, or
Any employee may be required by the employer that it benefited the company; or
to perform overtime work in any of the following (b) That the employee could not abandon
cases: his work at the end of his eight-hour work
(1) When the country is at war or when any other because there was no substitute ready to
national or local emergency has been take his place. [Manila Railroad Co. v. CIR
declared by the National Assembly or the (1952)]
Chief Executive;
(2) When it is necessary to prevent loss of life or Note: However, the Court has also ruled
property or in case of imminent danger to that a claim for overtime pay is NOT
public safety due to an actual or impending justified in the absence of a written
emergency in the locality caused by serious authority to render overtime after office
accidents, fire, flood, typhoon, earthquake, hours during Sundays and holidays.
epidemic, or other disaster or calamity; [Global Incorporated v. Atienza (1986)]
(3) When there is urgent work to be performed
on machines, installations, or equipment, in (3) Compensation for work rendered in excess of
order to avoid serious loss or damage to the the eight (8) normal working hours in a day.
employer or some other cause of similar (a) For ordinary days, additional 25% of the
nature; basic hourly rate.
(4) When the work is necessary to prevent loss (b) For rest day/special day/holiday,
or damage to perishable goods; and additional 30% of the basic hourly rate.
(5) Where the completion or continuation of the
work started before the eighth hour is (4) Not unless a day is a rest day, the given day
necessary to prevent serious obstruction or is considered an ordinary day.
prejudice to the business or operations of
the employer. (5) Undertime does NOT offset overtime

Overtime pay does not preclude night differential Undertime work on any particular day shall not
pay be offset by overtime work on any other day.
When the tour of duty of a laborer falls at Permission given to the employee to go on leave
nighttime [between 10:00pm and 6:00am], the on some other day of the week shall not exempt
receipt of overtime pay will not preclude the the employer from paying the additional
right to night differential pay. The latter is compensation required in this Chapter. [Art. 88,
payment for work done during the night while LC]
the other is payment for the excess of the
regular eight-hour work. [Naric v. Naric Workers No Waiver of Overtime Pay
Union (1959)] The right to overtime pay cannot be waived. The


Labor Code (Art. 87) requires that an employee corporations;

be paid all overtime compensation (2) Those of retail and service establishments
notwithstanding any agreement to work for a regularly employing not more than five (5)
lesser wage. Consequently, such an agreement workers;
or "waiver" will not prevent an employee from (3) Domestic helpers and persons in the
recovering the difference between the wages personal service of another;
paid the employee and the overtime (4) Managerial employees as defined in Book
compensation he or she is entitled to receive. Three of this Code;
[Cruz v. Yee Sing (1959)] (5) Field personnel and other employees whose
time and performance is unsupervised by
Exception: When the waiver of overtime pay is in the employer including those who are
consideration of benefits and privileges which engaged on task or contract basis, purely
may be more than what will accrue to them in commission basis, or those who are paid a
overtime pay, the waiver MAY be permitted. fixed amount for performing work
[Meralco Workers Union v. MERALCO (1959)] irrespective of the time consumed in the
performance thereof.
Composite or Package Pay NOT per se illegal
Composite or package pay or all-inclusive Rest days (night-off)
salary is an arrangement where the employees Night shift employees are entitled to a weekly
salary includes the overtime pay. In other words, night-off (usually Saturday evening) or a weekly
the overtime pay is built-in. rest period of 24 hours beginning at the start of
the night shift.
The conditions for validity of the arrangement
are: Work on special days
(a) There is a clear written agreement knowingly Night shift employees are also entitled to the
and freely entered by the employee; and premium pay on special days and holidays.
(b) The mathematical result shows that the These days are reckoned as calendar days which
agreed legal wage rate and the overtime pay, start at midnight and end at the following
computed separately, are equal to or higher midnight. The premium pay for the night shift
than the separate amounts legally due. also starts or ends at midnight. However, the
[Damasco v. NLRC (2000)] employment contract, company policy or CBA
may provide that in the case of night shift
NIGHT WORK, NIGHT SHIFT workers, daysincluding special days and
DIFFERENTIAL regular holidaysshall begin on the night
Night worker Any employed person whose before a calendar day.
work requires performance of a substantial
number of hours of night work which exceed a PART-TIME WORK
specified limit. This limit shall be fixed by the A single, regular or voluntary form of
Sec of Labor after consulting the workers employment with hours of work substantially
representatives/labor organizations and shorter than those considered as normal in the
employers. [Art. 154, RA 10151] establishment. [International Labor
Night shift differential
The additional compensation of 10% of an This excludes those forms of employment
employees regular wage for each hour of work which, although referred to as part-time work,
performed between 10pm and 6am. [Art. 86, LC] are in particular, irregular, temporary or
intermittent employment, or in cases where
Coverage [Book 3, Rule 2, Sec. 1, IRR] hours of work have been temporarily reduced
All employees, except: for economic, technical or structural reasons.
(1) Those of the government and any of its
political subdivisions, including The wage and benefits of part-time worker are
government-owned and/or controlled in proportion to the number of hours worked.


performing similar functions and responsibilities

CONTRACT FOR PIECE OF WORK under similar working conditions should be paid
A contract for the delivery at a certain price of equally. If an employer accords employees the
an article which the vendor in the ordinary same position and rank, the presumption is that
course of his business manufactures or procures these employees perform equal work.
for the general market, whether the same is on [International School Alliance of Educators v.
hand at the time or not, is a contract of sale Hon. Quisumbing (2000)]

BUT if the goods are to be manufactured Coverage/Exclusions [Art. 98 and Bk 3, Rule VII,
specially for the customer and upon his special Sec 3, IRR]
order, and not for the general market, it is a The Labor Code Title on wages shall not apply
contract for a piece of work. [Article 1467, CC] to the following:
(1) Farm tenancy or leasehold;
WAGES (2) Household or domestic helpers, including
family drivers and other persons in the
personal service of another;
(1) It is the remuneration or earnings, however
(3) Homeworkers engaged in needlework;
designated, capable of being expressed in
(4) Workers in registered cottage industries who
terms of money,
actually work at home;
(2) whether fixed or ascertained on a time, task,
(5) Workers in registered cooperatives when so
piece, or commission basis, or other method
recommended by the Bureau of Cooperative
of calculating the same,
Development upon approval of the
(3) which is payable by an employer to an
Secretary of Labor;
(6) Workers in registered barangay micro
(4) under a written or unwritten contract of
business enterprise [RA 9178].
employment for work done or to be done, or
for services rendered or to be rendered and
(5) includes the fair and reasonable value, as WAGE VS. SALARY
determined by the Secretary of Labor and Wages and salary are in essence synonymous.
Employment, of board, lodging, or other [Songco v. NLRC (1990)]
facilities customarily furnished by the
employer to the employee There are slight differences:
Wage Salary
Fair and reasonable value - shall not include Paid for skilled or Paid to white collar
any profit to the employer, or to any person unskilled manual workers and denote a
affiliated with the employer. [Art. 97(f)] labor higher grade of
No work no pay principle Not subject to Not exempt from
General Rule: the age old rule governing the execution, execution,
relation between labor and capital or garnishment or garnishment or
management and employee is that a "fair day's attachment except for attachment [Gaa vs.
wage for a fair day's labor." [Sugue v. Triumph debts related to CA, 1985]
International (2009)] necessities [Art. 1708]

Exception: When the laborer was able, willing and MINIMUM WAGE
ready to work but was illegally locked out,
suspended or dismissed, or otherwise illegally See also: DOLE Bureau of Working Conditions
prevented from working. [Sugue v Triumph Handbook on Workers Statutory Monetary
International, supra] Benefits and Wage Order No. NCR-18 (Effective:
4 October 2013).
Equal Work for Equal Pay Principle
Employees working in the Philippines, if they are Definition


Statutory minimum wage is the lowest wage Note: Daily minimum wage in NCR applicable
rate fixed by law that an ER can pay his workers. from Oct. 2013 is now P466 [Wage Order
[IRR, RA 6727, (o)] No. NCR-18]

Coverage Factors/Criteria in determining regional

General Rule: The wage increases prescribed minimum wages:
under Wage Orders apply to all private sector (1) Demand for living wages;
workers and EEs receiving the daily minimum (2) Wage adjustment the consumer price index;
wage rates or those receiving up to a certain (3) Cost of living and changes or increases
daily wage ceiling, where applicable, regardless therein;
of their position, designation, or status, and (4) The needs of workers and their families;
irrespective of the method by which their wages (5) The need to induce industries to invest in the
are paid. countryside;
(6) Improvements in standards of living;
Exceptions: (7) Prevailing wage levels;
(1) Domestic Helpers/kasambahay are covered (8) Fair return of the capital invested and
by RA 10361 capacity to pay of employers;
(2) Workers of registered barangay micro (9) Effects in employment generation and family
business enterprise with Certificates of income; and
Authority issued by the Office of the (10) Equitable distribution of income and wealth
Municipal or City Treasurer. along the imperatives of economic and
social development. [Art. 124]
Upon application with and as determined by the Procedure for Wage Fixing by Regional Board
Regional Tripartite Wages and Productivity [Art. 123]
Board, based on documentation and other (1) Investigate and study pertinent facts, based
requirements in accordance with applicable on criteria set in Art. 124
rules and regulations issued by the NWPC, the (2) Conduct public hearings or consultations
following may be exempted from the with notice to employer and employee
applicability of this Order: groups, provinces, city, municipal officials
(1) Distressed establishments; and other interested parties
(2) Retail/Service establishments regularly (3) Decide to ISSUE or NOT TO ISSUE a wage
employing not more than 10 workers; order
(3) Establishments whose total assets including (a) Frequency: Wage orders issued may not be
those arising from loans but exclusive of the disturbed for 12 months from effective date;
land on which the particular business this serves as a bar for petitions for wage
entitys office, plant and equipment are hikes as well
situated, are not more than P3 Million; and, (b) EXCEPT: when Congress passes a new law
(4) Establishments adversely affected by natural affecting wages or other supervening
calamities. [Sec. 8, Wage Order No. 18, 2013] circumstances
(c) Effectivity: If it decides to ISSUE a wage
Basis order, the wage order takes effect after 15
The basis of the minimum wage rates days from complete publication in at least 1
prescribed by law shall be the normal working newspaper of general circulation in the
hours of 8 hours a day. [Sec 7, IRR of RA 6727] region
(4) Appeal wage order to Commission within 10
Freedom to bargain calendar days; mandatory for the
Despite the minimum wage order, employees Commission to decide within 60 calendar
are not prevented from bargaining for higher days from filing.
wages with their employers.
Filing of an appeal DOES NOT STAY order
unless appellant files an undertaking with a


surety, to guarantee payment of employees if graduation or board examination. [Art. 72,

the wage order is affirmed [as amended by RA LC]
Minimum wage of persons with disability
MINIMUM WAGE OF WORKERS PAID A qualified disabled EE shall be subject to the
BY RESULTS same terms and conditions of employment and
the same compensation, privileges, benefits,
WORKERS PAID BY RESULTS fringe benefits or allowances as a qualified
All workers paid by result, including those who able-bodied persons. [Sec 5, RA 7277, The
are paid on piecework, takay, pakyawor task Magna Carta for Disabled Persons]
basis, shall receive not less than the prescribed
wage rates per eight (8) hours of work a day, or COMMISSIONS
a proportion thereof for working less than eight Commissions have been defined as the
(8) hours. [Art. 124] recompense, compensation or reward of an
agent, salesman, executor, trustee, receiver,
The wage rates of workers who are paid by factor, broker or bailee, when the same is
results shall continue to be established in calculated as a percentage on the amount of his
accordance with Art. 101 of the LC, as amended, transactions or on the profit to the principal.
and its IRR. This will be done through: [Philippine Duplicators, Inc. v. NLRC (1993)]
(1) Time and motion studies.
(2) Consultation with representatives of ERs Commissions as part of minimum wage
and workers organizations in a tripartite The Court held that the definition of wage
conference called by the DOLE Sec. under Art. 97 (f) of the LC explicitly includes
commissions as part of wages. While
Request for the conduct of time and motion commissions are, indeed, incentives or forms of
studies, to determine whether the non-time EEs encouragement to inspire employees to put a
in an enterprise are being paid fair and little more industry on the jobs particularly
reasonable wage rates, may be filed with the assigned to them, still these commissions are
proper Regional Office. direct remunerations for services rendered.

Where the output rates established by the ER Likewise, there is no law mandating that
do not conform to the standards set under the commissions be paid only after the minimum
foregoing methods for establishing output wage has been paid to the employee. Verily, the
rates, the EE shall be entitled to the difference establishment of a minimum wage only sets a
between the amount he/she is entitled to floor below which an employees remuneration
receive and the amount paid by the ER. cannot fall, not that commissions are excluded
from wages in determining compliance with the
Minimum wage of apprentices and learners minimum wage law. [Iran v. NLRC (1998)]
Wages of apprentices and learners shall in
no case be less than 75% of the applicable DEDUCTIONS FROM WAGES
minimum wage rates. [Art. 61 & 75, LC] General Rule: No employer, in his own behalf or
Note: Learners employed in piece or in behalf of any person, shall make any
incentive-rate jobs during the training deduction from the wages of his employees.
period shall be paid in full for the work [Art. 113]
done. [Art. 76, LC]
The Secretary of Labor and Employment Exceptions:
may authorize the hiring of apprentices (1) In cases where the worker is insured with his
without compensation whose training on the consent by the employer, and the deduction
job is required by the school or training is to recompense the employer for the
program curriculum or as requisite for amount paid by him as premium on the
(2) For union dues, in cases where the right of


the worker or his union to check-off has Communication of the Phil., Inc. v. Sec. of
been recognized by the employer or Labor (1989)]
authorized in writing by the individual
worker concerned; and Note: Persons earning minimum wage are
(3) In cases where the employer is authorized by excepted from income tax
law or regulations issued by the Secretary of That minimum wage earners as defined in
Labor and Employment (Art. 113), such as: Section 22(HH) of this Code shall be
(i) Employee debt to employer is due and exempt from the payment of income tax on
demandable [CC 1706]; their taxable income: Provided, further,
(ii) Attachment or execution in cases of That the holiday pay, overtime pay, night
debts incurred for necessities: food, shift differential pay and hazard pay
shelter, clothing, medical attendance received by such minimum wage earners
[CC 1708]; shall likewise be exempt from income tax.
(iii) Withholding tax; [RA 9504, Sec. 2 redefining sec. 24(A) of RA
(iv) Deductions of a legally established 8424]
(v) Payment to 3rd parties upon written NON-DIMINUTION OF BENEFITS
authority by employee; General Rule: There is a prohibition against
(vi) Deductions for loss or damage; elimination or diminution of benefits [Art. 100]
(vii) SSS, Medicare, Pag-IBIG premiums;
(viii) Deduction for value meals and other No wage order issued by any regional board
facilities. shall provide for wage rates lower than the
statutory minimum wage rates prescribed by
It shall be unlawful to make any deduction from Congress. [Art. 127, as amended by Republic Act
the wages of any employee for the benefit of the No. 6727, June 9, 1989]
employer as consideration of a promise of
employment or retention in employment. [Art. 117] Requisites
or to retaliate against the employee who filed a If the following are met, then the employer
complaint. [Art. 118] cannot remove or reduce benefits:
(a) Ripened company policy: Benefit is founded
With Employees Without Employees on a policy which has ripened into a practice
consent in Writing consent over a long period [Prubankers Assn. vs.
(1) SSS Payments (1) Workers insurance Prudential Bank and Co., 1999]
(2) PHILHEALTH acquired by the (b) Practice is consistent and deliberate and
payments employer (c) Not due to error in the construction or
(3) Contributions to (2) Union dues, where application of a doubtful or difficult
PAG-IBIG Fund the right to check-off question of law. [Globe Mackay Cable vs.
(4) Value of meals and is recognized by the NLRC, 1988]
other facilities employer (provided in (d) The diminution or discontinuance is done
(5) Payments to third the CBA) unilaterally by the employer.
persons with (3) Debts of the
employees consent employee to the When not applicable: When at least one of the
(6) Deduction of employer that have requisites is absent.
absences become due and (1) Mistake in the application of the law [Globe
(7) Union dues, where demandable Mackay Cable v. NLRC, June 29, 1988]
check-off is not (2) Negotiated benefits [Azucena]
provided in the CBA. (3) Reclassification of Positions e.g. loss of
some benefits by promotion.
Prohibition seeks to protect the employee (4) Contingent or Conditional Benefits the rule
against unwarranted practices that would does not apply to a benefit whose grant
diminish his compensation without his depends on the existence of certain
knowledge and consent. [Radio conditions, so that the benefit is not


demandable if those preconditions are Mere availment is not sufficient to allow

absent. deductions from employees wages. Before the
value of facilities can be deducted from the
Benefits initiated through negotiation between employees wages, the following requisites must
Employee and Employer, e.g. CBA, can only be all be attendant:
eliminated or diminished bilaterally. (a) proof must be shown that such facilities are
customarily furnished by the trade;
FACILITIES VS. SUPPLEMENTS (b) the provision of deductible facilities must be
The distinction between facilities and voluntarily accepted in writing by the
supplement is relevant because the former are employee; and
wage-deductible while the latter is not. Simply (c) facilities must be charged at reasonable
put, a wage includes facilities. [Art. 97] value. [SLL International Cable Specialists v.
NLRC, 2011]
The IRR definition (IRR Book III Rule 7-A Sec. 5)
(1) Facilities are articles or services for the A situation where an increase in prescribed
benefit of the employee or his family. This 1st wage rates results in the elimination or severe
part defines facilities. contraction of intentional quantitative
(2) Facilities shall not include tools of the trade differences in wage or salary rates between and
or articles or service primarily for the benefit among employee groups in an establishment as
of the employer or necessary to the conduct to effectively obliterate the distinctions
of the employers business. This 2nd part is embodied in such wage structure based on
essentially defines what a supplement. skills, length of service, or other logical bases of
differentiation (Art. 124)
Criterion: In determining whether a privilege is a
facility, the criterion is not so much its kind but 4 Elements of wage distortion
its PURPOSE (Millares v NLRC & PICOP, 1999) (a) Existing hierarchy of positions with
corresponding salary rates;
Facilities are items of expense necessary for the (b) A significant change in the salary rate of a
laborers and his familys existence and lower pay class without a concomitant
subsistence. (States Marine Corp. v. Cebu increase in the salary rate of a higher one;
Seamen's Assoc., Inc., 1963) (c) The elimination of the distinction between
the two levels; and
Comparison between Facilities and Supplements (d) The existence of the distortion in the same
Facilities Supplements region of the country. [Prubankers Assn. v.
Articles or Extra Prudential Bank and Co. (1999)]
services/items remuneration or
of expense special benefits How to Resolve
What it is Organized Establishment
/ articles or
services / tools (1) Employer and the union shall negotiate to
of the trade correct the distortions.
For the benefit For the benefit (2) Disputes shall be resolved through the
of the employee or convenience grievance procedure.
Who and his family; of the employer (3) If still unresolved, voluntary arbitration.
benefits for their
existence and Grievance Procedure (under the CBA) if
subsistence unresolved, VOLUNTARY arbitration
YES - Part of NO -
Deductible wage so it is Independent of Unorganized Establishment
from wage deductible the Wage so not (1) ERs and Employees shall endeavor to correct
deductible such distortions.
(2) Disputes shall be settled through the
Requirements for deducting value of facilities National Conciliation and Mediation Board.


(3) If still unresolved after 10 calendar days of proportionate amount corresponding to the
conciliation, it shall be referred to the days when no work was done. The monthly
appropriate branch of the NLRC compensation is evidently intended precisely to
compulsory arbitration avoid computations and adjustments resulting
Both the employer and employee from the contingencies just mentioned which
cannot use economic weapons. are routinely made in the case of workers paid
(4) Employer cannot declare a lock-out; on daily basis. [Wellington Investment Inc. v.
Employee cannot declare a strike because Trajano, 1995]
the law has provided for a procedure for
settling For daily-paid EEs
(5) The salary or wage differential does not need Daily-paid employees are those who are paid on
to be maintained. [National Federation of the days actually worked and on unworked
Labor v. NLRC, 1994] regular holidays.

National Conciliation and Mediation Board if (a) For those who are required to work every day
unresolved, COMPULSORY arbitration by the including Sundays or rest days, special days and
NLRC regular holidays:

CBA vis--vis Wage Orders CBA creditability 394.1 days/year

In determining an employees regular wage, the
pertinent stipulations in the CBA are Where 296 days ordinary working
controlling, provided the result is not less than 394.10 days days
the statutory requirement (Philippine National = 24 days 12 regular holidays
Bank vs. PEMA, 1982) x 200%
67.60 days 52 rest days x 130
6.50 days 5 special days x
Suggested formula for computing the Estimated 130%
Equivalent Monthly Rate (EEMR)
(b) For those who do not work and are not
EEMR =(Applicable Daily Rate (ADR) x considered paid on Sundays or rest days:
days/year) 12
313 days/year
For monthly-paid EEs
Monthly-paid employees are those who are paid
every day of the month, including unworked rest Where 313 296 days ordinary working
days, special days, and regular holidays. days = days
12 days regular holidays
365 days/year 5 days - special days (if
considered paid; if
Where 365 296 days ordinary working actually worked,
days/year = days this is equivalent to
52 days rest days 6.5 days)
12 days regular holidays
5 days special days
Note: This monthly salary shall serve as (c) For those who do not work and are not
compensation "for all days in the month considered paid on Saturdays and Sundays or
whether worked or not," and "irrespective of the rest days:
number of working days therein." In the event
of the declaration of any special holiday, or any
fortuitous cause precluding work on any 278 days/year
particular day or days the employee is entitled
to the salary for the entire month and the Where 278 261 days ordinary working
employer has no right to deduct the


days = 12 days days goods;

5 days - regular holidays (e) Where the nature of the work requires
special days (if continuous operations and the stoppage of
considered paid; if work may result in irreparable injury or loss
actually worked, to the employer; and
this is equivalent to (f) Under other circumstances analogous or
6.5 days) similar to the foregoing as determined by
the Secretary of Labor and Employment.
[Sec. 6, Rules Implementing RA 6727, 1989] [Art. 92, LC]

Note: Under Proclamation No. 459 signed by Synthesis of the Rules

Pres. Benigno Aquino on Aug. 16, 2012, there (1) Rest day of not less than 24 consecutive
are 12 regular holidays and 5 special days. hours after 6 consecutive days of work.
(2) No work, no pay principle applies
(3) If an employee works on his designated rest
REST DAY day, he is entitled to a premium pay.
(4) Premium pay is additional 30% of the basic
It shall be the duty of every employer, whether (5) Employer selects the rest day of his
operating for profit or not, to provide each of his employees
employees a rest period of not less than twenty- (6) However, employer must consider the
four (24) consecutive hours after every six (6) religious reasons for the choice of a rest day.
consecutive normal work days. [Art. 91 (a)]
Preference of the employee
The employer shall determine and schedule the Holiday pay is a one-day pay given by law to an
weekly rest day of his employees subject to employee even if he does not work on a regular
collective bargaining agreement and to such holiday. This gift of a days pay is limited to each
rules and regulations as the Secretary of Labor of the 12 regular holidays.
and Employment may provide. However, the
employer shall respect the preference of NOTE: Art. 94 (c) was superseded by E.O. 203,
employees as to their weekly rest day when such which was subsequently amended by RA 9177,
preference is based on religious grounds. [Art. 9256, 9492, and Proclamation No. 459.
94 (b)]
The employer may require his employees to General Rule: All employees
work on any day:
(a) In case of actual or impending emergencies Exceptions:
caused by serious accident, fire, flood, (1) Those of the government and any of the
typhoon, earthquake, epidemic or other political subdivision, including government-
disaster or calamity to prevent loss of life owned and controlled corporation;
and property, or imminent danger to public (2) Those of retail and service establishments
safety; regularly employing less than 10 workers;
(b) In cases of urgent work to be performed on (3) Domestic helpers and persons in the
the machinery, equipment, or installation, personal service of another;
to avoid serious loss which the employer (4) Managerial employees as defined in Book III
would otherwise suffer; (5) Field personnel and other employees whose
(c) In the event of abnormal pressure of work time and performance is unsupervised by
due to special circumstances, where the the employer including those who are
employer cannot ordinarily be expected to engaged on task or contract basis, purely
resort to other measures; commission basis, or those who are paid a
(d) To prevent loss or damage to perishable fixed amount for performing work


irrespective of the time consumed in the (2) Mauli-un-Nabi (Birthday of the Prophet
performance thereof. [Sec. 1, Rule IV of the Muhammad) which falls on the twelfth
IRR] (12th) day of the third (3rd) lunar month of
Retail Establishment is one principally engaged (3) Lailatul Isra Wal Mi Rai (Nocturnal Journey
in the sale of goods to end-users for personal or and Ascencion of the Prophet
household use; Muhammand) which falls on the twenty-
seventh (27th) day of the seventh (7th) lunar
Service Establishment is one principally month of Rajab;
engaged in the sale of service to individuals for (4) Id-ul-Fitr (Hari Raja Pausa) which falls on
their own or household use and is generally the first (1st) day of the tenth (10th) lunar
recognized as such. [IRR of RA 6727/the Wage month of Shawwal commemorating the end
Rationalization Act] of the fasting season; and
(6) Id-ul-Adha (Hari Raha Haji) which falls on
Regular holidays the tenth (10th) of the twelfth (12th) lunar
Proclamation No. 655 signed by President month of Dhul-Hijja.
Aquino on 25 September 2013, provides for the
observance of the regular holidays and special Note:
(non-working) days for the year 2014 on the Id-ul-Fitr (Eidl Fitr) and Id-ul-Adha (Eidl
following dates: Adha) have been added to the list of
(1) New years Day - January 1 national legal holidays.
(2) Maundy Thursday March 28 Note: There should be no distinction
(3) Good Friday March 29 between Muslims & non-Muslims as
(4) Araw ng Kagitingan April 9 regards to the payment of benefits for
(5) Labor Day May 1 Muslim holidays. Wages & other
(6) Independence Day June 12
emoluments granted by law to the working
(7) National Heroes Day August 26
manare determined on the basis of the
(8) Bonifacio Day November 30
(9) Christmas Day - December 25 criteria laid down by laws &not on workers
(10) Rizal Day - December 30 faith. Art. 3(3), PD 1083 states that nothing
(11) Eidl Fitr date to be determined later herein shall be construed to operateto the
(12) Eidl Adha date to be determined later prejudice of a non-Muslim. [San Miguel Corp
vs. CA, 2002]
Special (Non-Working Days)
(1) Chinese New Year January 31 Holiday pay computation (Art. 94 Labor Code, Book
III, Rule IV of IRR, RA 9424 and DOLE Memorandum
(2) Black Saturday March 30
Circular 1 Series of 2004)
(3) Ninoy Aquino Day - August 21
(4) All Saints Day - November 1
General Rule: An employer may require an
(5) Additional special (Non-working) days
employee to work on any holiday but such
(a) December 24
employee shall be paid a compensation
(b) December 26
equivalent to twice his regular rate. [Art. 94(b)]
(6) Last Day of the Year - December 31
According to the LC, IRR and Memo:
Special Holiday (for all schools)
Work on any regular holiday,
EDSA Revolution Anniversary February 25 Computation
not exceeding 8 hours
P.D. 1083 (Code of Muslim Personal Laws) SEE: Work on any regular 200% of regular
Arts. 169-173 holiday, if it exceeds 8 daily wage (for the
Specifically for the Muslim Areas, P.D. 1083, in hours/overtime 1st 8 hours)
its Book V, Title, recognizes five (5) Muslim + 30% of hourly
Holidays, namely: rate on said day
(1) Amun Jadid (New Year) which falls on the
first (1st) day of the lunar month of


Work on any regular holiday 200% of regular (2) He works on first holiday, which entitles
which falls on the daily wage + 30% him to pay on second holiday.
scheduled rest day, not of such amount
exceeding 8 hours Divisors
Work on any regular holiday Regular holiday- The divisor assumes an important role in
which falls on scheduled on-rest day rate determining whether or not holiday pay is
rest day, if it exceeds 8 (200% of regular already computed.
hours/overtime daily wage plus (1) Monthly paid employees are not entitled to
30% of such the holiday pay if their total annual income
amount) + 30% of is divided by 365 days resulting in a wage
hourly rate on said which is beyond the minimum wage per day
day. because they are considered paid everyday
Work on special holiday not Regular daily wage of the year including holidays, rest days, and
exceeding 8 hours + 30% thereof other non-working days. The 365 days are
Work on special holiday Regular daily wage as follows:
+ 50% thereof 365 days = 296 days ordinary days
52 days rest days
According to DOLE Memo Circular 1-04, a 12 days regular holidays
special holiday/special day includes the 5 days special holidays
National Special Days, and declared special (2) As a general rule, for a company with a 6-
days such as Special Non-working Holiday, day working schedule, the divisor 313
Special Public Holiday and Special National already means that the legal holidays are
Holiday. Such days are entitled to the rates included in the monthly pay of the
prescribed above. These days are not the same employee. The divisor is arrived at by
as a special working holiday. subtracting all Sundays from the total
number of calendar days in a year.
A special working holiday is considered an (3) As a general rule for a company with a 5-day
ordinary working day, so there is no premium working schedule, the divisor 287 means
pay. that the holiday pay is already included in
the monthly salary of the employee.
Double holiday pay
According to DOLE Explanatory Bulletin on Where the employer had a standing practice of
Workers Entitlement to Holiday Pay on 9 April using 286 days as a divisor and following the
1993, if two holidays fall on the same day: correct computation and taking into account
that one of the holidays always falls on a
(1) If unworked, 200% of basic wage.
Sunday, therefore increasing the divisor to
(2) If worked, 300% of basic wage. [Azucena]
287, but increase would in some instances
prejudice the employees, in violation of the
Double Holiday Rule for Monthly-paid
proscription against non-diminution of benefits
under Sec. 100 of the labor code, the 287
For covered employees whose monthly salaries
divisor should only be used for computations
are computed based on 365 days and for those
which would be advantageous to the employer
other employees who are paid using factor 314,
(i.e. deduction for absences) and not for
or 262, or any other factor which already
computations which would diminish the existing
considers the payment for the 11 regular
benefits of the employees (i.e., overtime pay,
holidays, NO additional payment is due them.
holiday pay and leave conversions). [Trans Asia
[BWC-WHSD Opinion No. 053, s. 1998]
Phils. v. NLRC, 1999]
Successive holiday pay
According to IRR, Rule IV, Sec. 10, an employee
(1) When a holiday falls on a Sunday, the
is entitled to holiday pay for both days, IF: following Monday will not be considered a
(1) He is present on day immediately holiday unless a proclamation says so.
preceding first holiday; or


(2) Furthermore as stated in the Wellington regular holiday, he is not entitled to holiday
case (see below), a legal holiday falling on a pay unless he works on such regular
Sunday does not create a legal obligation to holiday.
pay extra, aside from the usual holiday pay,
to monthly-paid employees. [Azucena citing In case of temporary cessation of work
Letter of Instruction No. 1087] (a) In cases of temporary or periodic shutdown
and temporary cessation of work of an
No provision of law requires any employer to establishment, as when a yearly inventory or
make adjustments in the monthly salary rate set when the repair or cleaning of machineries
by him to take account of legal holidays falling and equipment is undertaken, the regular
on Sundays in a given year, otherwise to reckon holidays falling within the periods shall be
a year at more than 365 days. [Wellington compensated in accordance with this Rule.
Investment and Manufacturing Corporation vs. (b) The regular holiday during the cessation of
Trajano (1995)] operation of an enterprise due to business
reverses as authorized by the Secretary of
Non-working/scheduled rest day Labor may not be paid by the employer.
Where the day immediately preceding the [IRR, Book III, Rule IV, Sec 7]
holiday is a non-working day in the
establishment or the scheduled rest day of the An employee is entitled to holiday pay for the
employee, he shall not be deemed to be on regular holidays falling within the period in
leave of absence on that day, in which case he cases of temporary shutdowns or cessation of
shall be entitled to the holiday pay if he worked work, when:
on the day immediately preceding the non- (1) an annual inventory; or
working day or rest day. [IRR, Book III, Rule V, (2) repair or cleaning of machineries and
Sec 6 (c)] equipment is undertaken.

Example: If a holiday falls on Monday, and The employer may not pay his employees for the
Sunday is a non-working day in the regular holidays during the suspension of work
establishment or is the scheduled rest day of if: the cessation of operation is due to business
the employee, the employee shall be entitled to reverses, and is authorized by the Secretary of
holiday pay if he worked on Saturday (which is Labor.
the day immediately preceding Sunday, the
non-working day or rest day). TEACHERS, PIECE WORKERS,
Right to holiday pay WORKERS ETC.
(a) Private school teachers, including faculty
In case of absences members of colleges and universities, may
All covered employees shall be entitled to the not be paid for the regular holidays during
benefit provided herein when they are on leave semestral vacations. They shall, however, be
of absence with pay. paid for the regular holidays during
Christmas vacation;
Employees who are on leave of absence without (b) Where a covered employee, is paid by results
pay on the day immediately preceding a regular or output, such as payment on piece work,
holiday may not be paid the required holiday his holiday pay shall not be less than his
pay if he has not worked on such regular average daily earnings for the last seven (7)
holiday. [IRR, Book III, Rule IV, Sec 6(a)] actual working days preceding the regular
holiday; Provided, However, that in no case
Note: shall the holiday pay be less than the
(1) If an employee is on leave of absence with applicable statutory minimum wage rate.
pay on the day immediately preceding a (c) Seasonal workers may not be paid the
regular holiday, he is entitled to holiday pay. required holiday pay during off-season
(2) If an employee is on leave of absence without when they are not at work
pay on the day immediately preceding a (d) Workers who have no regular working days
shall be entitled to the benefits provided in


this Rule. [Book III, Rule IV, Sec. 8 of IRR] hours on non-work days, such as rest days and
special days.
Holiday Pay of Hourly-Paid Faculty Members
(1) They are not entitled to payment of holiday Coverage (Book 3, Rule 3, Sec. 7 of the IRR)
pay because they are paid only for work
actually done. Since regular holidays are General Rule: All employees
known to both the school and faculty
members as no class day; certainly the Exceptions:
latter do not expect payment for said (1) Those of the government and any of the
unworked holidays. political subdivision, including government-
(2) They are entitled to their hourly rate on days owned and controlled corporations;
declared as special holidays. Be it noted (2) Managerial employees as defined in Book III;
that when a special public holiday is (3) Househelpers and persons in the personal
declared, the faculty member paid by the service of another;
hour is deprived of expected income, and it (4) Workers who are paid by results, including
does not matter that the school calendar is those who are paid on piece rate, takay,
extended in view of the days or hours lost, pakyaw, or task basis, and other noontime
for their income that could be earned from work, if their output rates are in accordance
other sources is lost during the extended with the standards prescribed in the
days. regulations, or where such rates have been
(3) Similarly, when classes are called off or fixed by the Secretary of Labor and
shortened on account of typhoons, floods, Employment;
rallies, and the like, these faculty members (5) Field personnel, if they regularly perform
must likewise be paid, whether or not their duties away from the principal or
extensions are ordered. [Jose Rizal College v. branch office or place of business of the ER
NLRC, 1987] and whose actual hours of work in the filed
cannot be determined with reasonable
Piece workers certainty.
Philosophy underlying the exclusion of piece
workers from the 8-hour law is that said workers Premium pay rates (DOLE Memorandum
are paid depending upon the work they do Circular 1, Series of 2004)
irrespective of the amount of time employed in
doing said work. [Red v. Coconut Products Ltd., WHEN WORK
On scheduled rest day 30% of regular wage
Seafarers On Sunday ONLY IF 30% of regular wage
Any hours of work or duty including hours of ESTABLISHED rest day
watch-keeping performed by the seafarer on No regular work and 30% of regular wage
designated rest days and holidays shall be paid rest days for work performed
rest day or holiday pay. [Section 11.C, Standard on Sundays and
Terms and Conditions Governing the holidays
Employment of Filipino Seafarers on Board On any special 30% of regular wage
Ocean-Going Vessels] holiday/special day
On any special holiday 50% of regular wage
Seasonal workers /special day falling on
Seasonal workers who do not work during off- scheduled rest day
season are not entitled to pay for the regular On any regular holiday 230% of regular
holidays occurring during their off-season. falling on scheduled rest wage
Workers assigned to skeleton crews that work day
during the off-season have the right to be paid
on regular holidays falling in that duration. Where the collective bargaining agreement
or other applicable employment contract
Premium pay refers to the additional stipulates the payment of a higher premium
compensation for work performed within 8


pay than that prescribed under this Article, Employer may require employee to work
the employer shall pay such higher rate. The employer may require an employee to work
[Art. 93 (d)] on any holiday but such employee shall be paid
Nothing in this Rule shall justify an a compensation equivalent to twice his regular
employer in reducing the compensation of rate (Art. 95(b))
his employees for the unworked Sundays,
holidays, or other rest days which are Jurisprudence:
considered paid-off days or holidays by Teachers of private school on contract basis
agreement or practice subsisting upon the are entitled to service incentive leave. [Cebu
effectivity of the Code. [Book III, Rule III, Sec. Institute of Technology v. Ople, 1987]
8 of the IRR] In the case of Makati Haberdashery v. NLRC
Nothing herein shall prevent the employer the Court ruled that piece-rate employees
and his employees or their representatives are not entitled to service incentive leave.
in entering into any agreement with terms [Makati Haberdashery v. NLRC, 1989]
more favorable to the employees than those However, in the case of Labor Congress of
provided herein, or be used to diminish any the Philippines v. NLRC the Court held that
benefit granted to the employees under petitioners are entitled to service incentive
existing laws, agreements, and voluntary leave. The Court looked at several factors
employer practices. [Book III, Rule II, Sec. 9 which led them to conclude that petitioners,
of the IRR] although compensated on a per piece basis,
were regular employees of private
LEAVES respondents. [Labor Congress of the
Philippines v. NLRC, 1998]
Every employee who has rendered at least one Meaning of 1 year of service
year of service shall be entitled to a yearly The term "at least one-year service" shall mean
service incentive leave of five days with pay. (Art. service for not less than 12 months, whether
95(a)) continuous or broken, reckoned from the date
the employee started working, including
Service Incentive Leave DOES NOT apply to the authorized absences and paid regular holidays
following employees: unless the working days in the establishment as
(1) Those of the government and any of its a matter of practice or policy, or that provided in
political subdivisions, including GOCCs; the employment contract is less than 12
(2) Domestic helpers and persons in the months, in which case said period shall be
personal service of another; considered as one year. [Book III, Rule V, Sec. 3 of
(3) Managerial employees as defined in Book 3 the IRR]
of this Code;
(4) Field personnel and other employees whose Entitlement
performance is unsupervised by the The grant of benefit in excess of that
employer including those who are engaged provided herein shall not be made a subject
on task or contract basis, purely commission of arbitration or any court or administrative
basis, or those who are paid a fixed amount action. [Art. 95 (c)]
for performing work irrespective of the time The cause of action of an entitled employee
consumed in the performance thereof; to claim his service incentive leave pay
(5) Those who are already enjoying the benefit accrues from the moment the employer
herein provided; refuses to remunerate its monetary
(6) Those enjoying vacation leave with pay of at equivalent if the employee did not make use
least 5 days; of said leave credits but instead chose to
(7) Those employed in establishments regularly avail of its commutation (into money).
employing less than 10 employees. [Book 3, Accordingly, if the employee wishes to
Rule 5, Sec. 1 of the IRR] accumulate his leave credits and opts for its
commutation upon his resignation or


separation from employment, his cause of The maternity benefits provided under the
action to claim the whole amount of his Social Security Law shall be paid only for the
accumulated service incentive leave shall first four (4) deliveries or miscarriages
arise when the employer fails to pay such
amount at the time of his resignation or SSS pays for the maternity leave
separation from employment. (Auto Bus The employer advances the benefit to the
Transport vs. NLRC, 2005) employee but the SSS shall immediately
reimburse the employer of one hundred
Commutable nature of benefit percent (100%) of the amount upon receipt
The service incentive leave shall be commutable of satisfactory proof of such payment and
to its money equivalent if not used or exhausted legality thereof
at the end of the year.
Other conditions
MATERNITY LEAVE [Sec. 14-A of RA (1) Employer shall advance the payment subject
to reimbursement by the SSS within 30 days
1161 (SOCIAL SECURITY LAW) AS from filing of leave application.
AMENDED BY RA 7322 AND RA 8282] (2) Availment shall be a bar to the recovery of
sickness benefits provided by this Act for the
Coverage same period for which daily maternity benefits
Every pregnant woman in the private sector, have been received.
whether married or unmarried, is entitled to the (3) Employee may only avail of benefit for the
maternity leave benefits. first four (4) deliveries or miscarriages.
(4) Sanction:
This is applicable to both childbirth and That if an employee should give birth or
miscarriage. suffer miscarriage
(a) without the required contributions
Requisites having been remitted for her by her ER
(a) Employment: A female employee employed to the SSS, or
at the time of delivery, miscarriage or (b) without the latter having been previously
abortion notified by the ER of time of the
(b) Contribution: who has paid at least 3 pregnancy, then the employer shall pay
monthly contributions in the 12-month to the SSS damages equivalent to the
period immediately preceding the semester benefits which said employee member
of her childbirth, or miscarriage. would otherwise have been entitled to.
(c) Notice: employee notified employer of her
pregnancy and the probable date of her PATERNITY LEAVE [RA 8187
childbirth, which notice shall be transmitted (PATERNITY LEAVE ACT OF 1996)]
to the SSS in accordance with the rules and
regulations it may provide. Coverage and purpose
Paternity leave is granted to all married male
Benefit received employees in the private and public sectors,
A daily maternity benefit equivalent to 100% of regardless of their employment status (e.g.
her average daily salary credit for: probationary, regular, contractual, project
(1) 60 days for normal delivery basis). The purpose of this benefit is to allow the
(2) 78 days for caesarean delivery husband to lend support to his wife during her
period of recovery and/or in nursing her
This benefit shall NOT be included in the newborn child. [Sec. 3, RA 8187]
computation of 13th month pay as it is granted
to an employee in lieu of wages which is the Benefit
basis for computing 13th month. It shall apply to the first 4 deliveries of the
employees lawful wife with whom he is
Only 4 maternity leaves available cohabiting.


It shall be for 7 calendar days, with full pay, (2) If the existing paternity leave benefit is less
consisting of basic salary and mandatory than that provided in RA 8187, the ER shall
allowances fixed by the Regional Wage Board, if adjust the existing benefit to cover the
any, provided that his pay shall not be less than difference.
the mandated minimum wage. [Sec. 2, RA 8187]
Where a company policy, contract, or CBA
Cohabiting means the obligation of the husband provides for an emergency or contingency leave
and wife to live together. If the spouses are not without specific provisions on paternity leave,
physically living together because of the the ER shall grant to the employee 7 calendar
workstation or occupation, the male employee is days of paternity leave. [Sec. 9, IRR, RA 8187]
still entitled to the paternity leave benefit. [Sec.
Usage of the benefit Leave benefits granted to a solo parent to
Usage of the leave shall be after the delivery, enable him/her to perform parental duties and
without prejudice to an employers policy of responsibilities where physical presence is
allowing the employee to avail of the benefit required. [Sec. 3 (d), RA 8972]
before or during the delivery, provided that the
total number of days shall not be more than 7 Coverage
days for each covered delivery. [Sec. 5, IRR, RA Any solo parent or individual who is left alone
8187] with the responsibility of parenthood due to:
(1) Giving birth as a result of rape or and other
Conditions for entitlement [Sec. 3, IRR, RA 8187] crimes against chastity even without a final
(a) He is married; conviction of the offender: Provided, That
(b) He is an employee at the time of the delivery the mother keeps and raises the child;
of his child; (2) Death of spouse;
(c) He is cohabiting with his spouse at the time (3) Spouse is detained or is serving sentence for
that she gives birth or suffers a miscarriage; a criminal conviction for at least one (1) year;
(d) He has applied for paternity leave with his (4) Physical and/or mental incapacity of spouse
ER within a reasonable period of time from as certified by a public medical practitioner;
the expected date of delivery by his (5) Legal separation or de facto separation from
pregnant spouse, or within such period as spouse for at least one (1) year: Provided,
may be provided by company rules and that he/she is entrusted with the custody of
regulations, or by CBA; and, the children;
(d) His wife has given birth or suffered a (6) Declaration of nullity or annulment of
miscarriage. marriage as decreed by a court or by a
church: Provided, that he/she is entrusted
Application for paternity leave with the custody of the children;
See number 4 under conditions for entitlement. (7) Abandonment of spouse for at least one (1)
In case of miscarriage, prior application for (8) Unmarried father/mother who has preferred
paternity leave shall not be required. [Sec. 4, to keep and rear his/her child/children,
IRR, RA 8187] instead of having others care for them or
give them up to a welfare institution;
Non-conversion to cash (9) Any other person who solely provides
In the event that the paternity leave is not parental care and support to a child or
availed of, it shall not be convertible to cash and children: Provided, that he/she is duly
shall not be cumulative. [Sec. 7, IRR, RA 8187] licensed as a foster parent by the
Department of Social Welfare and
Crediting of existing benefits Development (DSWD) or duly appointed
(1) If the existing paternity leave benefit under legal guardian by the court; and
the CBA, contract, or company policy is (10) Any family member who assumes the
greater than 7 calendar days as provided for responsibility of head of family as a result of
in RA 8187, the greater benefit shall prevail. the death, abandonment, disappearance, or


prolonged absence of the parents or solo VAWC leave is granted to women employees
parent for at least one (1) year. [Sec. 3 (a), who are victims of violence, as defined in RA
RA 8972] 9262. The leave benefit covers the days that the
women employee has to attend to medical or
Conditions for entitlement legal concerns.
A solo parent employee shall be entitled to the
parental leave under the following Definition of Terms
conditions: Violence against women and their children
(a) He/she has rendered at least one (1) year of refers to any act or a series of acts committed by
service, whether continuous or broken; any person against a woman who is his wife,
(b) He/she has notified his/her employer that former wife, or against a woman with whom the
he/she will avail himself/herself of it, within person has or had a sexual or dating
a reasonable period of time; and relationship, or with whom he has a common
(c) He/she has presented to his/her employer a child, or against her child whether legitimate or
Solo Parent Identification Card, which may illegitimate, within or without the family abode,
be obtained from the DSWD office of the which result in or is likely to result in physical,
city or municipality where he/she resides. sexual, psychological harm or suffering, or
[Sec 19, Art. V, IRR, RA 8972] economic abuse including threats of such acts,
battery, assault, coercion, harassment or
Availment arbitrary deprivation of liberty.
The parental leave is in addition to leave
privileges under existing laws with full pay, VAWC includes, but is not limited to, the following
consisting of basic salary and mandatory acts:
allowances. It shall not be more than seven (7) (1) Physical Violence" refers to acts that include
working days every year. [Sec. 8, RA 8972] bodily or physical harm;
(2) "Sexual violence" refers to an act which is
Grant of flexible work schedule sexual in nature, committed against a
The employer shall provide for a flexible woman or her child. It includes, but is not
working schedule for solo parents: Provided, limited to:
That the same shall not affect individual and (a) rape, sexual harassment, acts of
company productivity: Provided, further, That lasciviousness, treating a woman or her
any employer may request exemption from the child as a sex object, making
above requirements from the DOLE on certain demeaning and sexually suggestive
meritorious grounds. [Sec. 6, RA 8972] remarks, physically attacking the sexual
parts of the victim's body, forcing
Protection against work discrimination her/him to watch obscene publications
No employer shall discriminate against any solo and indecent shows or forcing the
parent employee with respect to terms and woman or her child to do indecent acts
conditions of employment on account of his/her and/or make films thereof, forcing the
status. [Sec. 7, RA 8972] wife and mistress/lover to live in the
Termination of the benefit conjugal home or sleep together in the
A change in the status or circumstance of the same room with the abuser;
parent claiming the benefit under the law, such (b) acts causing or attempting to cause the
that he/she is no longer left alone with the victim to engage in any sexual activity
responsibility of parenthood, shall terminate by force, threat of force, physical or
his/her eligibility for these benefits. [Sec. 3 (a), other harm or threat of physical or other
RA 8972] harm or coercion;
(c) Prostituting the woman or child.
LEAVES FOR VICTIMS AND VIOLENCE (3) "Psychological violence" refers to acts or
AGAINST WOMEN [RA 9262, ANTI- omissions causing or likely to cause mental
VIOLENCE AGAINST WOMEN AND or emotional suffering of the victim such as
but not limited to intimidation, harassment,
Coverage and purpose stalking, damage to property, public ridicule


or humiliation, repeated verbal abuse and Usage of the benefit

mental infidelity. It includes causing or The usage of the 10-day leave shall be at the
allowing the victim to witness the physical, option of the woman employee. In the event
that the leave benefit is not availed of, it shall
sexual or psychological abuse of a member not be convertible into cash and shall not be
of the family to which the victim belongs, or cumulative.
to witness pornography in any form or to
witness abusive injury to pets or to unlawful A victim of VAWC who is employed shall be
or unwanted deprivation of the right to entitled to a paid leave of up to ten (10) days in
addition to other paid leaves under the Labor
custody and/or visitation of common
Code and Civil Service Rules and Regulations
children. and other existing laws and company policies:
(4) "Economic abuse" refers to acts that make or (1) At any time during the application of any
attempt to make a woman financially protection order, investigation, prosecution
dependent which includes, but is not limited and/or trial of the criminal case, extendible
to the following: when the necessity arises as specified in the
protection order.
(a) withdrawal of financial support or (2) Upon the issuance of the Punong
preventing the victim from engaging in Barangay/kagawad or prosecutor or the
any legitimate profession, occupation, Clerk of Court, as the case may be, of a
business or activity, except in cases certification (at no cost) to the woman that
wherein the other spouse/partner such an action is pending, and this is all
objects on valid, serious and moral that is required for the employer to comply
grounds as defined in Article 73 of the with the 10- day paid leave.
Family Code; (3) For government employees, in addition to
(b) deprivation or threat of deprivation of the aforementioned certification, the
financial resources and the right to the employee concerned must file an
use and enjoyment of the conjugal, application for leave citing as basis R.A.
community or property owned in 9262. [Sec. 42, IRR, RA 8972]
(c) destroying household property; SPECIAL LEAVE BENEFITS (SLB) FOR
(d) controlling the victims' own money or WOMEN [RA 9710 (THE MAGNA
properties or solely controlling the CARTA OF WOMEN), DOLE DO NO.
conjugal money or properties. [Sec.3, RA 112, SERIES OF 2011 AS AMENDED BY
9262] DO NO. 112-A SERIES OF 2012]

Requirement for entitlement Special leave benefit for women a female

To be entitled to the leave benefit, the only employees leave entitlement of two (2) months
requirement is for the victim-employee to with full pay from her employer based on her
present to her employer a certification from the gross monthly compensation following surgery
barangay chairman or barangay councilor or caused by gynecological disorders, provided
prosecutor or the Clerk of Court, as the case that she has rendered continuous aggregate
may be, that an action relative to the matter is employment service of at least six (6) months
pending. for the last 12 months.

Benefit Gynecological disorders disorders that would

In addition to other paid leaves under existing require surgical procedures such as, but not
labor laws, company policies, and/or CBA, the limited to, dilatation and curettage and those
qualified victim-employee shall be entitled to a involving female reproductive organs such as
leave of up to 10 days with full pay, consisting of the vagina, cervix, uterus, fallopian tubes,
basic salary and mandatory allowances fixed by ovaries, breast, adnexa and pelvic floor, as
the Regional Wage Board, if any. certified by a competent physician. It shall also
include hysterectomy, ovariectomy, and


recuperating period, the female employee shall

Gross monthly compensation the monthly immediately file her application using the
basic pay plus mandatory allowances fixed by prescribed form. (Sec. 3, DO 112)
the regional wage boards. [Sec. 7, Rule II, IRR,
RA 9710] Period of entitlement
The 2 months special leave is the maximum
At least six months continuous aggregate period of leave with pay that a woman
employment service for the last 12 months prior employee may avail of under RA 9710.
to surgery the woman employee should have
been with the company for 12 months prior to For purposes of determining the period of leave
surgery. An aggregate service of at least six (6) with pay that will be allowed to a female
months within the said 12-month period is employee, the certification of a competent
sufficient to entitle her to avail of the special physician as to the required period of
leave benefit. recuperation shall be controlling. [Sec. 4, DO 112,
as amended]
Employment service - includes absences with
pay such as use of other mandated leaves, Availment
company-granted leaves and maternity leaves The special leave shall be granted to the
qualified employee after she has undergone
Competent physician - a medical doctor surgery. [Sec. 5, DO 112, as amended]
preferably specializing in gynecological
disorders or is in the position to determine the Frequency of availment
period of recuperation of the woman employee. A woman employee can avail of the SLB for
[Sec. 1, DO 112, as amended] every instance of surgery due to gynecological
disorder for a maximum total period of 2
Conditions for entitlement of special leave months per year. [Sec. 6, DO 112, as amended]
Any female employee, regardless of age and
civil status, shall be entitled to a special leave Special leave benefit vis--vis SSS sickness
benefit, provided she has complied with the benefit
following conditions: The SLB is different from the SSS sickness
(a) She has rendered at least 6 months benefit. The former is granted by the employer
continuous aggregate employment service in accordance with RA 9710.
for the last 12 months prior to surgery;
(b) She has filed an application for special leave It is granted to a woman employee who has
(c) She has undergone surgery due to undergone surgery due to gynecological
gynecological disorders as certified by a disorder. The SSS sickness benefit, on the other
competent physician. [Sec. 2, DO 112] hand, is administered and given by the SSS in
accordance with RA 1161 as amended by RA
Application for special leave 8282. [Sec. 7, DO 112, as amended]

Application before surgery Special leave benefit vis--vis existing statutory

The employee shall file her application for leave leaves
with her employer within a reasonable period of The SLB cannot be taken from existing statutory
time from the expected date of surgery, or leaves (i.e. 5-day SIL, leave for victims of VAWC,
within such period as may be provided by Parental leave for solo parents). The grant of
company rules and regulations or by CBA. SLB under the law is in recognition of the fact
that patients with gynecological disorder
Application after surgery needing surgery require a longer period of
Prior application for leave shall not be necessary recovery. The benefit is considered an addition
in cases requiring emergency surgical to the leave benefits granted under existing
procedure, provided that the employer shall be laws and should be added on top of said
notified verbally or in written form within a statutory leave entitlements.
reasonable period of time and provided further
that after the surgery or appropriate


If the SLB has already been exhausted, the Coverage

company leave and other mandated leave Employers (Sec 1, Rule VI, Book 3, IRR)
benefits may be availed of by the woman This rule shall apply only to establishments
employee. [Sec. 8, DO 112, as amended] which collect service charges such as:
(a) Hotels, restaurants, lodging houses, night
Special leave benefit vis--vis maternity leave clubs, cocktail lounge, massage clinics, bars,
benefit casinos and gambling houses and similar
Where the woman employee had undergone enterprises
surgery due to gynecological disorder during (b) Including those entities operating primarily
her maternity leave, she is entitled only to the as private subsidiaries of the Government
difference between the SLB and maternity leave
benefit. [Sec. 9, DO 112, as amended] Employees
Shall apply to ALL employees of covered
Crediting of existing or similar benefits employers
If there are existing or similar benefits under a (a) Regardless of their positions, designations,
company policy, practice or CBA providing or employment status,
similar or equal benefits to what is mandated by (b) Irrespective of the method by which their
law, the same shall be considered as wages are paid.
compliance, unless the company policy, practice
or CBA provides otherwise. Exceptions
Managerial employees or one who is vested
In the event the company policy, practice or CBA with powers or prerogatives to lay down and
provides lesser benefits, the company shall execute managerial policies and/or hire,
grant the difference. transfer, suspend, layoff, recall, discharge,
assign or discipline employees or to effectively
More liberal existing or similar benefits cannot recommend such managerial actions. All
be withdrawn or reduced by reason of the employees not falling within this definition shall
mandate of RA 9710. be considered rank-and-file employees. [Sec 2,
Rule VI, Book 3, IRR]
The term similar or equal benefits refers to
leave benefits which are of the same nature and Distribution
purpose as that of the SLB. [Sec. 10, DO 112, as Service charges are distributed in accordance
amended] with the following percentage of sharing:
(1) Eighty-five percent (85%) for the employees
Mode of payment to be distributed equally among them;
The SLB is a leave privilege. The woman (2) Fifteen percent (15%) for the management to
employee shall not report for work for the answer for losses and breakages and, at the
duration of the leave but she will still receive her discretion of the management, distribution
salary covering said period. The employer, in its to managerial employees. [Sec 3, Rule VI,
discretion, may allow said employee to receive Book 3, IRR]
her pay for the period covered by the approved
leave before or during the surgery. The The shares shall be distributed to employees
computation of her pay shall be based on her not less than once every 2 weeks or twice a
prevailing salary at the time of the surgery. [Sec. month at intervals not exceeding 16 days. [Sec 4,
11, DO 112, as amended] Rule VI, Book 3, IRR]

Non-commutation of the benefit Note: The P2,000.00 salary ceiling for

The SLB shall be non-cumulative and non- entitlement thereto is no longer applicable.
convertible to cash unless otherwise provided by
a CBA [Sec. 12, DO 112, as amended] Integration
In case service charge is abolished shares of
SERVICE CHARGES covered employees shall be considered
integrated in their wages. [Art 96]


The basis of the amount to be integrated shall Government;

be the average monthly share of each employee (2) Employers already paying their employees a
for the past twelve (12) months immediately 13th month pay or more in a calendar year
preceding the abolition of withdrawal of such or its equivalent at the time of this issuance;
charges. [Sec. 5, Rule VI, Book 3, IRR] (3) Employers of household helpers and persons
in the personal service of another relation to
Synthesis of the Rules such workers; and
(1) Service charges must be pooled; (4) Employers of those who are paid on purely
(2) Where a restaurant or similar establishment commission, boundary or task basis and
does not collect service charges but has a those who are paid a fixed amount for
practice or policy of monitoring and pooling performing specific work, irrespective of the
tips given voluntarily by its customers to its time consumed in the performance thereof
employees, the pooled tips should be (except those workers who are paid on
monitored, accounted for and distributed in piece-rate basis, in which case their
the same manner as the services charges. employer shall grant them 13th month pay).
[DOLE Handbook on Workers Statutory
Monetary Benefits, 2014ed.] Note:
(3) The amount collected is divided between the Equivalent includes:
company (15%) and employees (85%); (a) Christmas bonus, mid-year bonus, cash
(4) It shall be given twice a month with intervals bonuses
of not more than 15 days; (b) and other payments amounting to not less
(5) If discontinued, removed, or stopped, the than 1/12 of the basic salary
average share of the employees of their (c) but shall NOT INCLUDE cash and stock
service charge or tips shall be integrated dividends, cost of living allowances and all
with their basic wage. other allowances regularly enjoyed by the
employee as well a non-monetary benefits.
PAY AND OTHER BONUSES (PD Workers paid on a piece-rate basis
851 (THE 13TH-MONTH PAY LAW) Those who are paid a standard amount for every
AND THE REVISED GUIDELINES piece or unit of work produced that is more or
ON THE IMPLEMENTATION OF less regularly replicated, without regard to the
THE 13TH MONTH PAY LAW) time spent in producing the same.

Rationale Minimum Amount: 1/12 of the total basic salary

(1) To further protect the level of real wages earned by an employee within a calendar year
from the ravage of world-wide inflation;
(2) There has been no increase in the legal BASE AMOUNT, which is the basic salary shall
minimum wage rates since 1970; include:
(3) The Christmas season is an opportune time (1) cost of living allowances (COLA) integrated
for society to show its concern for the plight into the basic salary of a covered employee
of the working masses so they may properly pursuant to EO 178.
celebrate Christmas and New Year. (2) all remunerations or earnings paid by this
employer for services rendered.
Coverage (3) But not the allowances and monetary
General Rule: ALL EMPLOYERS are hereby benefits which are not considered or
required to pay all their rank and file employees integrated as part of the regular or basic
a 13th month pay not later than Dec 24 of every salary, such as the cash equivalent of:
year, Provided that they have worked for at least (a) unused vacation and sick leave credits,
one (1) month during a calendar year. (b) overtime,
(c) premium,
Exempted Employers: (d) night differential,
(1) Government, its political subdivisions, (e) holiday pay and, and
including GOCCs except those operating (f) cost-of-living allowances.
essentially as private subsidiaries of the


Time of payment length of time he worked during the year,

reckoned from the time he started working
General Rule: paid not later than Dec 24 of each during the calendar year up to the time of his
year. resignation or termination from service.
(Revised Guidelines)
Exception: ER may give to his employees half (6) Wage Difference: The difference between the
() of the required 13th Month Pay before the minimum wage and the actual salary received
opening of the regular school year and the other by the Employee cannot be deemed as his 13th
half on or before the 24th of December every month pay as such difference is not equivalent
year. to or of the same import as the said benefit
contemplated by law. [JPL Marketing
The frequency of payment of this monetary Promotions vs CA, 2005]
benefit may be the subject of agreement (7) Terminated Employees: The payment of the
between the employer and the recognized CBA 13th month pay may be demanded by the
of the employees. employee upon the cessation of employer-
employee relationship. [Archilles Manufacturing
13th Month Pay in Special Cases Corp. vs NLRC, 1995]
(1) Paid by Results: Employees who are paid on
piece work basis are, by law, entitled to the 13th Additional Rules:
Month Pay. [Revised Guidelines on the (1) Commissions: If the commissions may be
Implementation of the 13th Month Pay Law] properly considered part of the basic salary,
(2) Fixed or Guaranteed Wage: Employees who then they should be INCLUDED. If they are
are paid a fixed or guaranteed wage plus not an integral part of the basic salary, then
commission are entitled to 13th month pay (not they should be EXCLUDED. [Phil.
purely commission); the basis for computation Duplicators Inc. vs NLRC, 1995]
shall be both their fixed or guaranteed wage (2) Substitute Payment not allowed: Benefits in
and commission. [Revised Guidelines] the form of food or free electricity, assuming
(3) Those with Multiple Employers: Government they were given, were not a proper
Employees working part time in a private substitute for the 13th month pay required
enterprise, including private educational by law. Neither may year-end rewards for
institutions, as well as Employees working in loyalty and service be considered in lieu of
two or more private firms, whether on full or 13th month pay. [Framanlis Farms, Inc. vs
part time bases, are entitled to the required 13th MOLE, 1989]
Month Pay from all their private Employers (3) 14th Month Pay is not mandated: Employers
regardless of their total earnings from each or already paying their employees a 13th
all their employers. [Revised Guidelines] month pay or its equivalent are not covered
(4) Private School Teachers: Private school by this Decree. [Kamaya Point Hotel vs
teachers, including faculty members of NLRC, 1989]
universities and colleges, are entitled to the
required 13th month pay, regardless of the Commissions vis--vis 13th month pay
number of months they teach or are paid within The Rule on Productivity Bonuses. The so-called
a year, if they have rendered service for at least commissions paid to or received by medical
one (1) month within a year. [Revised Guidelines] representatives of Boie-Takada Chemicals or by
the rank-and-file employees of Philippine Fuji
Overload pay is NOT included in the Xerox Co., were excluded from the term basic
computation for 13th month pay; overload is not salary because these were paid to the medical
overtime as it is additional work done within the representatives and rank-and-file employees as
normal shift (Letran Calamba Faculty vs NLRC, productivity bonuses. These have no clear
2008) direct or necessary relation to the amount of
(5) Resigned or Separated Employee: An work actually done by each individual employee.
Employee who has resigned or whose services More generally, a bonus is an amount granted
were terminated at any time before the time for and paid ex gratia to an employee. If an
payment of the 13th month pay is entitled to employer cannot be compelled to pay a
this monetary benefit in proportion to the productivity bonus to its employees, it should


follow that such productivity bonus, when given,

should not be deemed to fall within the basic General rule: The rule embodied in the Labor
salary of employees when the time comes to Code is that a person dismissed for cause as
compute their 13th month pay [Boie-Takeda vs de defined therein (see Art. 282) is not entitled to
la Serna, 1993] separation pay. [PLDT vs NLRC, 1988]
The decision in Boie-Takeda and the doctrine Considerations of equity as in the cases of
enunciated in this case in fact co-exist with the Filipro, Inc. v. NLRC, Metro Drug Corp. v. NLRC,
other. The two cases present quite different Engineering Equipment, Inc. v. NLRC, San
factual situations (although the same word Miguel Corp v. NLRC. [PLDT vs NLRC, 1988]
commissions was used or invoked) the legal
characterizations of which must accordingly An employee who voluntarily resigns is not
differ. entitled to separation pay unless stipulated in
the employment contract, or the collective
In the instant case, there is no question that the bargaining agreement, or is sanctioned by
sales commission earned by the salesmen who established practice or policy of the employer.
make or close a sale of duplicating machines [Phimco Industries vs NLRC, 1997; Hinatuan
constitute part of the compensation or Mining Corp vs NLRC, 1997 cited in JPL
remuneration paid to salesmen for serving as Marketing Promotions v. CA, 2005]
salesmen, and hence as part of the wage or
salary of petitioners salesmen. It appears that Amount
petitioner pays its salesmen a small fixed or One-Half (1/2) Month Pay per Year of Service
guaranteed wage; the greater part of the An EE is entitled to receive separation pay
salesmens wages or salaries being composed equivalent to month pay for every year of
of the sales or incentive commissions earned on service, a fraction of at least six (6) months
actual sales closed by them. The sales being considered as one whole year, if his/her
commissions were an integral part of the basic separation from the service is due to any of the
salary structure. They are not overtime following authorized causes:
payments, or profit sharing payments or any (1) Retrenchment to prevent losses (i.e.
other fringe benefit. [Phil. Duplicators vs NLRC, reduction of personnel effected by
1995] management to prevent losses)
(2) Closure or cessation of operation of an
CBA vis--vis 13th month pay establishment not due to serious losses or
The Presidential Decree is specific and financial reverses; and,
mandatory. However, if the employers actually (3) When the EE is suffering from a disease not
grant such for the 13th month pay in the curable within a period of six (6) months
monetary benefits provided for in the CBA, they and his/her continued employment is
could be exempted from the operation of the prejudicial to his/her health or to the health
decree. To be exempted, there must be actual of his/her co-employees
payment. [Marcopper Mining Corp. vs. Ople, In no case will an EE get less than one (1) month
1981] separation pay if the separation is due to the
above stated causes and he/she has served for
SEPARATION PAY (ART. 283 & at least six (6) months. [DOLE Handbook on
284, LC, DOLE HANDBOOK ON Workers Statutory Monetary Benefits, 2014 ed.]
MONETARY BENEFITS, 2014) One-Month Pay per Year of Service
An EE is entitled to separation pay equivalent to
Separation pay is defined as the amount that an his/her one-month pay for every year of service,
employee receives at the time of his severance a fraction of at least 6 months being considered
from the service and is designed to provide the as one whole year, if his/her separation from
employee with the wherewithal during the service is due to any of the following:
period that he is looking for another (1) Installation by ER of labor-saving devices;
employment. [A Prime Security Services vs (2) Redundancy, as when the position of the EE
NLRC, 1993] has been found to be excessive or


unnecessary in the operation of the the statute has taken effect, and that its
enterprise; benefits can be reckoned not only from the date
(3) Impossible reinstatement of the EE to of the law's enactment but retroactively to the
his/her former position or to a substantially time said employment contracts have started.
equivalent position for reasons not [Enriquez Security Services, Inc. v. Cabotaje,
attributable to the fault of the ER, as when 2006]
the reinstatement ordered by a competent
authority cannot be implemented due to Pursuant thereto, this Court imposed two (2)
closure of cessation of operations of the essential requisites in order that R.A. 7641 may
establishment/ER, or the position to which be given retroactive effect: (1) the claimant for
he/she is to be reinstated no longer exists retirement benefits was still in the employ of the
and there is no substantially equivalent employer at the time the statute took effect;
position in the establishment to which and (2) the claimant had complied with the
he/she can be assigned. [Gaco vs NLRC, requirements for eligibility for such retirement
1994] benefits under the statute. [Universal Robina
Sugar Milling Corp. vs Caballeda, 2008]
Notice of Termination
The ER may terminate the employment of any ELIGIBILITY
EE due to the above-mentioned authorized All employees in the private sector, regardless
causes by serving a written notice on the EE and of their position, designation, or status, and
the DOLE through its regional office having irrespective of the method by which their wages
jurisdiction over the place of business at least 1 are paid [Sec. 1, IRR, RA 7641]
month before the intended date thereof.
The only exceptions are:
Basis of Separation Pay (1) employees covered by the Civil Service Law;
The computation of separation pay of an EE (2) domestic helpers and persons in the
shall be based on his/her latest salary rate. personal service of another, and
[DOLE Handbook on Workers Statutory (3) employees in retail, service and agricultural
Monetary Benefits, 2014 ed.] establishments or operations regularly
employing not more than ten employees [Sec. 2,
Inclusion of Regular Allowance in the IRR, RA 7641]
In the computation of separation pay, it would Exclusions from coverage
be error not to integrate the allowance with the R.A. No. 7641, otherwise known as "The
basic salary. The salary base properly used in Retirement Pay Law," only applies in a situation
computing the separation pay should include where
not just the basic salary but also the regular (1) there is no collective bargaining agreement
allowances that an EE has been receiving. or other applicable employment contract
[Planters Products, Inc. vs NLRC, 1989] providing for retirement benefits for an
employee; OR
RETIREMENT PAY (RA 7641 - (2) there is a collective bargaining agreement or
The Retirement Pay Law) other applicable employment contract
providing for retirement benefits for an
Rationale employee, but it is below the requirements
RA 7641 is undoubtedly a social legislation. The set for by law.
law has been enacted as a labor protection
measure and as a curative statute that absent a The reason for the first situation is to prevent
retirement plan devised by, an agreement with, the absurd situation where an employee, who is
or a voluntary grant from, an employer can otherwise deserving, is denied retirement
respond, in part at least, to the financial well- benefits by the nefarious scheme of employers
being of workers during their twilight years soon in not providing for retirement benefits for their
following their life of labor. There should be employees. The reason for the second situation
little doubt about the fact that the law can is expressed in the Latin maxim pacta private juri
apply to labor contracts still existing at the time public derogare non possunt. Private contracts


cannot derogate from the public law. [Oxales vs Retirement pay under RA 7641 vis--vis
Unilab, 2008] retirement benefits under SSS and GSIS laws
RA 7641 mandates payment of retirement
Age of retirement benefits. All private sector employees
In the absence of a retirement plan or regardless of their position, designation or
agreement providing for retirement benefits of status and irrespective of the method by which
employees in the establishment, an employee their wages are paid are entitled to retirement
upon reaching the age of sixty (60) years or benefits upon compulsory retirement at the age
more, but not beyond sixty-five (65) years which of sixty-five (65) or upon optional retirement at
is hereby declared the compulsory retirement sixty (60) or more but not 65. The minimum
age (and have served the establishment for at retirement pay due covered employees shall be
least 5 years). [Sec. 1, IRR, RA 7641] equivalent to one-half month salary for every
year of service, a fraction of at least six (6)
Optional retirement in the absence of a months being considered as one whole year.
retirement plan or other applicable agreement The benefits under this law are other than those
providing for retirement benefits of EEs in an granted by the SSS or the GSIS.
establishment, an EE may retire upon reaching
the age of 60 or more if he has served for at Retirement Benefits under a CBA or Applicable
least 5 years in said establishment. Contract
Any EE may retire or be retired by his/her ER
Compulsory retirement in the absence of a upon reaching the age established in the CBA
retirement plan or other applicable agreement or other applicable agreement/contract and
providing for retirement benefits of EEs in an shall receive the retirement benefits granted
establishment, an EE shall be retired at the age therein; provided, however, that such retirement
of 65 years. [Sec. 4, IRR, RA 7641] benefits shall not be less than the retirement
pay required under RA 7641, and provided
AMOUNT OF RETIREMENT PAY further that if such retirement benefits under
The minimum retirement pay shall be the agreement are less, the ER shall pay the
equivalent to one-half (1/2) month salary for difference.
every year of service, a fraction of at least six (6)
months being considered as one whole year. Where both the ER and the EE contribute to a
retirement fund pursuant to the applicable
For the purpose of computing retirement pay, agreement, the ERs total contributions and the
one-half month salary shall include all of the accrued interest thereof should not be less than
following: the total retirement benefits to which the EE
(1) Fifteen (15) days salary based on the latest would have been entitled had there been no
salary rate; such retirement benefits fund. If such total
(2) Cash equivalent of five (5) days of service portion from the ER is less, the ER shall pay the
incentive leave; deficiency.
(3) One-twelfth (1/12) of the 13th month pay.
(1/12 x 365/12 = .083 x 30.41 = 2.52) RETIREMENT BENEFITS OF
Thus, one-half month salary is equivalent to RESULTS
22.5 days. [Capitol Wireless, Inc. vs Sec. For covered workers who are paid by result and
Confessor, 1996] do not have a fixed monthly salary rate, the
basis for the determination of the salary for 15
Other benefits may be included in the days shall be their average daily salary (ADS).
computation of the retirement pay upon The ADS is derived by dividing the total salary or
agreement of the ER and the EE or if provided in earning for the last 12 months reckoned from
the CBA. the date of retirement by the number of actual
working days in that particular period, provided
that the determination of rates of payment by
results are in accordance with established


separation shall likewise be exempt as

RETIREMENT BENEFIT OF PART- hereinabove provided.
Part-time workers are also entitled to "Reasonable private benefit plan" means a
retirement pay of one-month salary for every pension, gratuity, stock bonus or profit sharing
year of service under RA 7641 after satisfying plan maintained by an employer for the benefit
the following conditions precedent for optional of some or all of his officials and employees,
retirement: wherein contributions are made by such
(a) Theres no retirement plan between the ER employer or officials and employees, or both, for
and the EE; and, the purpose of distributing to such officials and
(b)The EE should have reached the age of 60 employees the earnings and principal of the
years, and should have rendered at least 5 fund thus accumulated, and wherein it is
years of service with the ER. provided in said plan that at no time shall any
part of the corpus or income of the fund be used
Applying the foregoing principle, the for, or be diverted to, any purpose other than for
components of retirement benefit of part-time the exclusive benefit of the said officials and
workers may likewise be computed at least in employees.
proportion to the salary and related benefits
due them. (DOLE Handbook on Workers WOMEN WORKERS
Statutory Monetary Benefits, 2014 ed.)
Any provision of law to the contrary It shall be unlawful for any employer to
notwithstanding, the retirement benefits discriminate against any woman employee with
received by officials and employees of private respect to terms and conditions of employment
firms, whether individual or corporate, in solely on account of her sex.
accordance with a reasonable private benefit
plan maintained by the employer The following are acts of discrimination:
(1)shall be exempt from all taxes and (1) Payment of a lesser compensation,
(2) shall not be liable to attachment, including wage, salary or other form of
garnishment, levy or seizure by or under any remuneration and fringe benefits, to a
legal or equitable process whatsoever female employees as against a male
employee, for work of equal value; and
Exception (2) Favoring a male employee over a female
Except to pay a debt of the official or employee employee with respect to promotion,
concerned to the private benefit plan or that training opportunities, study and
arising from liability imposed in a criminal scholarship grants solely on account of their
action: sexes. [Art.133]
(1) That the retiring official or employee has It shall be unlawful for an employer to:
been in the service of the same employer for (1) require as a condition of employment or
at least ten (10) years and is not less than continuation of employment that a woman
fifty years of age at the time of his employee shall not get married, or
retirement; (2) stipulate expressly or tacitly that upon
(2) That the retirement benefits shall be availed getting married a woman employee shall be
of by an official or employee only once; and, deemed resigned or separated or
(3) That in case of separation of an official or (3) actually dismiss, discharge, discriminate or
employee from the service of the employer otherwise prejudice a woman employee
due to death, sickness or other physical merely by reason of her marriage. (Art. 134)
disability or for any cause beyond the
control of the said official or employee, any Bona fide occupational qualification exception
amount received by him or by his heirs from
the employer as a consequence of such


When the employer can prove that the Expulsion of Women faculty/ female student due
reasonable demands of the business require a to pregnancy outside of marriage
distinction based on marital status and there is Expulsion and non-readmission of women
no better available or acceptable policy which faculty due to pregnancy outside of marriage
would better accomplish the business purpose, shall be outlawed. No school shall turn out or
an ER may discriminate against an EE based in refuse admission to a female student solely on
the identity of the EEs spouse. [Star Paper Corp. the account of her having contracted pregnancy
vs. Simbol, 2006] outside of marriage during her term in school.
[Sec. 13(c), RA 9710]
The Court sustained the validity of employer
policy prohibiting an employee from having a ANTI-SEXUAL HARRASSMENT (RA
personal or marital relationship with an 7877 ANTI-SEXUAL HARRASSMENT
employee of a competitor. The prohibition was ACTO OF 1995)
reasonable under the circumstances because
relationships of such nature might compromise Forms of Sexual Harassment
the interests of the company. [Duncan (1) Employment or Work Related
Association of Detailmen vs. Glaxo Wellcome, (a) The sexual favor is made as a condition
2004] (i) in the hiring or in the employment,
re-employment or continued
PROHIBITED ACTS (ART. 135) employment of said individual or
(II) in granting said individual favorable
Note: Nightwork/ Exception (Art 130-131) No compensation, terms, conditions,
more nightwork prohibition under R.A. 10151. promotions, or privileges, or
(iii) in the refusal to grant the sexual
Discrimination (Art 133, RA 9710) favor results in limiting, segregating
See previous section or classifying the EE which in any
way would discriminate, deprive or
Stipulation against marriage (Art 134) diminish employment opportunities
See previous section or otherwise adversely affect said
Discharge to prevent enjoyment of benefits
To deny any woman employee the benefits (b) The above acts would either:
provided for in this Chapter or to discharge any (i) impair the employees rights or
woman employed by him for the purpose of privileges under existing labor laws;
preventing her from enjoying any of the benefits or
provided under this Code. [Art. 135 (1)] (ii) result in an intimidating, hostile, or
offensive environment for the
Discharge on account of pregnancy employee.
To discharge such woman on account of her
pregnancy, while on leave or in confinement due (1) Education or Training environment. In an
to her pregnancy. [Art. 135 (2)] education or training environment, sexual
harassment is committed:
Discharge on account of testimony a. Against one who is under the care,
To discharge or refuse the admission of such custody or supervision of the offender
woman upon returning to her work for fear that b. Against one whose education,
she may again be pregnant. [Art. 137 (3)] training, apprenticeship or tutorship is
entrusted to the offender;
It shall be unlawful for any employer: to c. When the sexual favor is made a
discharge any woman or child or any other condition to the giving of a passing
employee for having filed a complaint or having grade, or the granting of honors and
testified or being about to testify under the scholarships, or the payment of a
Code [Book III, Rule XII, Sec 13(d), IRR] stipend, allowance or other benefits,
privileges, or considerations; or


d. When the sexual advances result in an As a managerial employee, petitioner is bound

intimidating, hostile or offensive by more exacting work ethics. When such moral
environment for the result, trainee or perversity is perpetuated against his
apprentice. subordinate, he provides a justifiable ground for
his dismissal for lack of trust and confidence. It
Persons who may be liable is the right, nay the duty of every employer to
(1) Any employer, employee, manager, protect its employees from oversexed superiors.
supervisor, agent of the employer, teacher, [Libres vs NLRC, 1999]
instructor, professor, coach, trainer or any
other person, regardless of whether the The gravamen of the offense in sexual
demand, request for requirement for harassment is not the violation of the
submission is accepted by the object of said employee's sexuality but the abuse of power by
act having authority, influence or moral the employer. Any employee, male or female,
ascendancy over another in a work or may rightfully cry "foul" provided the claim is
training or education environment, who well substantiated. Strictly speaking, there is no
demands, requests or otherwise requires any time period within which he or she is expected
sexual favor from another, to complain through the proper channels. The
(2) Any person who directs or induces another to time to do so may vary depending upon the
commit any act of sexual harassment as needs, circumstances, and more importantly,
herein defined. OR the emotional threshold of the employee.
(3) Any person who cooperates in the
commission by another without which it Not many women are made of the stuff that can
would NOT have been committed, shall also endure the agony and trauma of a public, even
be held liable under this Act [Sec. 3, RA corporate, scandal. If petitioner-corporation had
7877] not issued the third memorandum that
terminated the services of private respondent,
Role of the employer or Head of Office we could only speculate how much longer she
The Employer or Head of Office shall have the would keep her silence. Perhaps, to private
duty: respondent's mind, for as long as she could
(1) to prevent the commission of such acts and outwit her employer's ploys she would continue
(2) to lay down the procedure for the resolution, on her job and consider them as mere
settlement or prosecution of committed occupational hazards. [Phil. Aelous Automotive
acts. [Sec. 4, RA 7877] United Corp. vs NLRC, 2000]

He shall be solidarily liable for damages: MINOR WORKERS

(1) if he is informed of such acts by the offended
party and Relevant Laws: RA 7610 (Special Protection of
(2) no immediate action is taken thereon. [Sec. Children Against Abuse, Exploitation and
5, RA 7877] Discrimination Act), RA 9231 (Special Protection
of Children Against Child Abuse, Exploitation
Independent Action for Damages and Discrimination Act), Art. 137(a)
The victim of work, education or training-related
sexual harassment can institute a separate and Constitutional basis: Art II, Sec. 13 of the 1987
independent action for damages and other Constitution
affirmative relief. [Sec. 6, RA 7877] The State recognizes the vital role of the youth
in nation-building and shall promote and
Sanctions protect their physical, moral, spiritual,
(1) Criminal: imprisonment of 1 month to mos. intellectual, and social well-being. It shall
Or fine of P10k to P20k or both inculcate in the youth patriotism and
Prescription of such action is in 3 years. nationalism, and encourage their involvement in
(2) Termination [Sec. 7, RA 7877] public and civic affairs.

General Rule: Children below 15 shall NOT be



The Secretary of Labor shall from time to time

Exceptions publish a list of hazardous work and activities in
(1) Child works directly under the sole which persons 18 years of age and below cannot
responsibility of his parents or legal guardian be employed [Sec. 3, Rule XII, Book III, IRR of LC]
and where only members of the ERs family are
employed, provided: The following are HAZARDOUS workplaces:
(a) his employment does NOT endanger his (1) Nature of the work exposes the workers to
life, safety, health and morals, dangerous environmental elements,
(b) nor impairs his normal development, contaminants or working conditions;
and (2) construction work, logging, fire-fighting,
(c) the parent or legal guardian shall mining, quarrying, blasting, stevedoring,
provide the said minor child with the dock work, deep sea fishing, and
prescribed primary and/or secondary mechanized farming;
education; [Sec. 12 of RA 7610 as (3) manufacture or handling of explosives and
amended by RA 7658] other pyrotechnic products;
(4) exposure to or use of heavy power-driven
(2) childs employment or participation in public machinery or equipment;
entertainment or information through cinema, (5) exposure to or use of power-driven tools
theater, radio or television is essential, provided
that: [Sec. 12 of RA 7610 as amended by RA Working Hours of a Child
(a) employment does NOT involve ads or Quantity
commercials promoting alcohol, Age Bracket Daily Max Weekly Max
tobacco and its by-products or violence Below 15 y 4 hours 20 hours
[Sec. 14 of RA 7610]
(b) the employment contract is concluded 15 to below 18 8 hours 40 hours
by the childs parents or guardian, and
approved by DOLE
(c) The ER shall ensure the protection, Night work prohibition
health, safety and morals of the child Age Bracket Prohibited Hours
(d) The ER shall institute measures to Below 15 y 8 pm to 6 am (10 hrs)
prevent the childs exploitation or 15 to below 18 10 pm to 6 am (8 hrs)
discrimination taking into account the
system and level of remuneration, and EMPLOYMENT OF
the duration and arrangement of
working time HOUSEHELPERS
(e) The ER shall formulate and implement,
subject to the approval and supervision Relevant Law: RA 10361 (Batas Kasambahay or
of competent authorities, a continuing Domestic Workers Act)
program for training and skills
acquisition of the child. [Sec. 12 of RA Note: RA 10361 has expressly repealed Chapter
7610 as amended by RA 7658] III, Employment of Househelpers, Title III of
Book III of the LC
Employment of Children from 15 to 18
Employment is allowed but restricted to non- Domestic work
hazardous work. This refers to work performed in or for a
household or households. [Sec 4(C). RA 10361]
Non-hazardous work shall mean any work or
activity in which the EE is not exposed to any Domestic worker or Kasambahay
risk which constitutes an imminent danger to Refers to any person engaged in domestic work
his safety and health. [Sec. 3, Rule XII, Book III, within an employment relationship such as, but
IRR of LC] not limited to, the following: general househelp,


nursemaid or yaya, cook, gardener, or laundry The employer shall grant the domestic worker
person.[Sec 4(D). RA 10361] access to outside communication during free
time: Provided, That in case of emergency,
The term domestic worker or kasambahay access to communication shall be granted even
excludes any person who performs domestic during work time. [Sec. 8, RA 10361]
work only occasionally or sporadically and not
on an occupational basis. [Sec.4(D), RA 10361] (f) Education and Training
The employer shall afford the domestic worker
Rights and Privileges the opportunity to finish basic education and
may allow access to alternative learning
(a) Minimum wage systems and, as far as practicable, higher
The minimum wage of domestic workers shall education or technical and vocational training.
not be less than the following: [Sec. 9, RA 10361]
(1) P2,500 a month for those employed in
NCR (g) Social and Other Benefits
(2) P2,000 a month for those employed in A domestic worker who has rendered at least
chartered cities and first class one (1) month of service shall be covered by the
municipalities Social Security System (SSS), the Philippine
(3) P1,500 a month for those employed in Health Insurance Corporation (PhilHealth), and
other municipalities the Home Development Mutual Fund or Pag-
Within one year from the effectivity of the Act, IBIG, and shall be entitled to all the benefits in
and periodically thereafter, the Regional accordance with the pertinent provisions
Tripartite and Productivity Wage Boards shall provided by law.
review, and if proper, determine and adjust the
minimum wage rates of domestic workers. [Sec. (h) Leave Benefits
24, RA 10361] A domestic worker who has rendered at least
one (1) year of service shall be entitled to an
(b) Standard of Treatment annual service incentive leave of five (5) days
The employer or any member of the household with pay [Sec. 29, RA 10361]
shall not subject a domestic worker or
kasambahay to any kind of abuse nor inflict Pre-Employment Requirement
any form of physical violence or harassment or Prior to the execution of the employment
any act tending to degrade the dignity of a contract, the employer may require the
domestic worker. [Sec. 5, RA 10361] following from the domestic worker:
(1) Medical certificate or a health certificate
(c) Board, Lodging and Medical Attendance issued by a local government health officer;
The employer shall provide for the basic (2) Barangay and police clearance;
necessities of the domestic worker to include at (3) National Bureau of Investigation (NBI)
least three (3) adequate meals a day and clearance; and
humane sleeping arrangements that ensure (4) Duly authenticated birth certificate or if not
safety and shall provide appropriate rest and available, any other document showing the age
assistance to the domestic worker in case of of the domestic worker such as voters
illnesses and injuries sustained during service identification card, baptismal record or
without loss of benefits. [Sec. 6, RA 10361] passport.

(d) Privacy However, Section 12(a), (b), (c) and (d) shall be
Respect for the privacy of the domestic worker standard requirements when the employment
shall be guaranteed at all times and shall of the domestic worker is facilitated through the
extend to all forms of communication and PEA.
personal effects [Sec. 7, RA 10361]

(e) Access to Outside Communication


The cost of the foregoing shall be borne by the (e) Any disease prejudicial to the health of the
prospective employer or agency, as the case domestic worker, the employer, or
may be. [Sec. 12, RA 10361] member/s of the household; and
(f) Other causes analogous to the foregoing.
Time and Manner of Payment: Payment of [Sec. 33, RA 10361]
wages shall be made on time directly to the
domestic worker in cash at least once a month (2) Initiated by the employer
and unless allowed by the domestic worker An employer may terminate the services of the
through a written consent, employer shall make domestic worker at any time before the
no deductions from the wages other than that expiration of the contract, for any of the
which is mandated by law. [Sec. 25, RA 10361] following causes:
(a) Misconduct or willful disobedience by the
Right against assignment to non-household domestic worker of the lawful order of the
work at a wage rate lower than that mandated employer in connection with the formers
for agricultural or non-agricultural enterprises work;
depending on the case. [Sec. 22, RA 10361] (b) Gross or habitual neglect or inefficiency by
the domestic worker in the performance of
Employment Age of Domestic Workers: Unlawful duties;
to employ any person below fifteen (15) years of (c) Fraud or willful breach of the trust reposed
age as a domestic worker [Sec. 16, RA 10361] by the employer on the domestic worker;
(d) Commission of a crime or offense by the
Persons between 15-18 years old should only be domestic worker against the person of the
employed in non-hazardous work. [DO 4-99 employer or any immediate member of the
Sec. 4] employers family;
(e) Violation by the domestic worker of the
Daily Rest Period: Aggregate of eight (8) hours terms and conditions of the employment
per day. [Sec. 20, RA 10361] contract and other standards set forth
under this law;
Employment Certification: ER shall give the (f) Any disease prejudicial to the health of the
househelper a written statement of the nature domestic worker, the employer, or
and duration of the service and his or her work member/s of the household; and
performance as househelper upon severance. (g) Other causes analogous to the foregoing.
[Sec. 35, RA 10361] [Sec. 34, RA 10361]

Termination Unjust dismissal

(1) Initiated by the domestic worker Neither the domestic worker nor the employer
The domestic worker may terminate the may terminate the contract before the
employment relationship at any time before the expiration of the term except for grounds
expiration of the employment contract for any of provided in Sec. 33 and 34 of RA 10361.
the following causes:
(a) Verbal or emotional abuse of the domestic If the domestic worker is unjustly dismissed, the
worker by the employer or any member of domestic worker shall be paid the
the household; compensation already earned plus the
(b) Inhuman treatment including physical abuse equivalent of 15 days work by way of indemnity.
of the domestic worker by the employer or
any member of the household; Leaving without justifiable reason by the
(c) Commission of a crime or offense against the domestic worker
domestic worker by the employer or any (1) any unpaid salary due not exceeding the
member of the household; equivalent 15 days work shall be forfeited
(d) Violation by the employer of the terms and AND
conditions of the employment contract and (2) the employer may recover from the domestic
other standards set forth under this law; worker the costs incurred related to the


deployment expenses, if any: Provided, that

the service has been terminated within 6 Rights and benefits accorded homeworkers
months from the domestic workers (1) Right to form, join or assist organizations
employment. (Sec 3, Rule XIV, Book III, IRR)
(2) Right to acquire legal personality and the
Notice to end the working relationship rights and privileges granted by law to
If the duration of the domestic service is not legitimate labor organizations upon
determined either in stipulation or by the nature issuance of the certification of registration
of the service, the employer or the domestic (Sec 4, Rule XIV, Book III, IRR)
worker may give notice to end the working (3) Immediate payment upon ERs receipt of
relationship five (5) days before the intended finished goods or articles (Sec 6, Rule XIV,
termination of the service. Book III, IRR)
(4) SSS, MEDICARE and ECC premium
The domestic worker and the employer may contributions shall be deducted from their
mutually agree upon written notice to pre- pay and shall be remitted by
terminate the contract of employment to end ER/contractor/subcontractor to the SSS
the employment relationship. [Sec. 32, RA [Sec 6, Rule XIV, Book III, IRR]
Liability of Employer
EMPLOYMENT OF (1) ER may require homeworker to redo work
improperly executed without additional pay
Note: DO 5, DOLE (February 4, 1992), is now (2) ER need not pay homeworker for any work
Rule XIV, Book III of the IRR. done on goods or articles not returned due
to homeworkers fault [Sec 9b, Rule XIV,
Industrial homework Book III, IRR]
(1) Is a system of production under which work (3) If subcontractor/contractor fails to pay
for an ER or contractor is carried out by a homeworker, ER is jointly and severally
homeworker at his/her home. liable with the former to the homeworker for
(2) Materials may or may not be furnished by his/her wage [Sec 11, Rule XIV, Book III, IRR]
the ER or contractor. (4) ER shall assist the homeworkers in the
(3) Decentralized form of production, where maintenance of basic safe and healthful
there is ordinarily very little supervision or working conditions at the homeworkers
regulation of methods of work. [Sec. 2(a), place of work. [Sec 11, Rule XIV, Book III, IRR
Rule XIV, Book III, IRR] of LC]
Industrial Homeworker means a worker who is Regional Office shall provide technical
engaged in industrial homework assistance to registered homeworkers
organizations [Sec 14, Rule XIV, Book III, IRR of
Employer means any person who LC]
(1) Acts as a contractor delivers or causes to be
delivered any goods, articles, or materials to Prohibited Homework
be processed or fabricated in or about a Homework is prohibited in the ff:
home and thereafter to be returned or to be (1) explosives, fireworks and articles of like
disposed of or distributed in accordance character;
with ERs direction; OR (2) drugs and poisons; and
(2) Sells any goods, articles, or materials to be (3) other articles, the processing of which
processed or fabricated in or about a home requires exposure to toxic substances. [Sec
and then rebuys them after. [Art. 153, LC] 13, Rule XIV, Book III, IRR]
Note: Sec 2(d), Rule XIV, Book III is substantially
similar to the above.


Conditions for deduction from homeworkers instantaneously give rise to an employer-

earnings apprentice relationship. It must be duly
No deduction from the homeworkers earnings approved by the Minister of Labor and
for the value of materials lost, destroyed or Employment. Hence, since the apprenticeship
damaged unless: agreement between petitioner and respondent
(1) Homeworker is clearly shown to be has no force and effect, respondent's assertion
responsible for loss or damage that he was hired not as an apprentice but as a
(2) Reasonable opportunity to be heard delivery boy deserves credence. [Nitto
(3) Amount of deduction is fair and reasonable, Enterprises vs. NLRC, 1995]
and does not exceed actual loss or damage
(4) Deduction does not exceed 20% of Conditions under which children below 15 may
homeworkers weekly earnings [Sec. 8, Rule be employed
XIV, Book III, IRR] Children below fifteen (15) years of age shall not
be employed except:
A. APPRENTICES AND LEARNERS (1) When a child works directly under the sole
responsibility of his parents or legal guardian
Relevant Law: RA 7796 (Technical Education and where only members of the employer's
and Skills Development Act of 1994 or TESDA family are employed: Provided, however, That
Act of 1994) his employment neither endangers his life,
safety, health and morals, nor impairs his
APPRENTICES normal development: Provided, further, That
the parent or legal guardian shall provide the
Art 58 has been superseded by Section 4 (j),
said minor child with the prescribed primary
(k), (l), (m) of RA 7796 quoted below:
and/or secondary education; o
(2) Where a child's employment or participation
(j) "Apprenticeship" training within
in public entertainment or information through
employment with compulsory related
cinema, theater, radio or television is essential:
theoretical instruction involving a contract
Provided, The employment contract is
between an apprentice and an employer on
concluded by the child's parents or legal
an approved apprenticeable occupation.
guardian, with the express agreement of the
child concerned, if possible, and approval of the
(k)Apprentice" is a person undergoing
Department of Labor and Employment: and
training for an approved apprenticeable
Provided, That the following requirements in all
occupation during an apprenticeship
instances are strictly complied with:
(a) The employer shall ensure the protection,
health, safety, morals and normal
(l)"Apprenticeship Agreement" is a contract
development of the child;
wherein a prospective employer binds himself
(b) The employer institute measures to prevent
to train the apprentice who in turn accepts the
the child's exploitation or discrimination
terms of training for a recognized
taking into account the system and level of
apprenticeable occupation emphasizing the
remuneration and the duration and
rights, duties and responsibilities of each
arrangement of working time; and
(c) The employer shall formulate and
implement, subject to the approval and
(m) Apprenticeable Occupation is an
supervision of competent authorities, a
occupation officially endorsed by a tripartite
continuing program for training and skills
body and approved to be apprenticeable by
acquisition of the child.
the authority. (Sec. 4, RA 7796)
In the above exceptional cases where any such
The act of filing the proposed apprenticeship child may be employed, the employer shall first
program with the DOLE is a preliminary step secure, before engaging child, a work permit
towards its final approval, and does not from the Department of Labor and Employment


which shall ensure observance of the above only in accordance with apprenticeship
requirements. programs duly approved by the Secretary of
Labor and Employment. [Art. 61, LC]
The Department of Labor and Employment
shall promulgate rules and regulations The Secretary of Labor and Employment may
necessary for the effective implementation of authorize the hiring of apprentices without
this Section. [RA 7160, Sec. 12 as amended by RA compensation whose training on the job is
7658, Sec. 1] required by the school or training program
curriculum or as requisite for graduation or
Qualifications of apprentice board examination. [Art. 72, LC]
(a) Possess vocational aptitude and capacity for
appropriate tests; and The wages of apprentices and learners shall in
(b) Possess the ability to comprehend and no case be less than seventy-five percent (75%)
follow oral and written instructions. [Art. 59, LC] of the applicable minimum wage rates. [Wage
Order No. NCR-17, May 17, 2012]
Integrating both the abovementioned provisions
then the qualifications of an apprentice are as Enforcement
follows: No person shall institute any action for the
(1) At least 15 years of age (as amended by R.A. enforcement of any apprenticeship agreement
7610), provided that if he is below 18 years, or damages for breach of any such agreement,
he shall not be eligible for hazardous unless he has exhausted all available
occupation; administrative remedies. [Art. 67, LC]
(2) Possess vocational aptitude and capacity for
appropriate tests; Incentives for employers
(3) Possess the ability to comprehend and An additional deduction from taxable income of
follow oral and written instructions. [Art. 59 one-half (1/2) of the value of labor training
of the LC, as amended by R.A. 7610] expenses incurred for developing the
(4) Physically fit for occupation productivity and efficiency of apprentices shall
be granted to the person or enterprise
Allowed employment organizing an apprenticeship program:
SEE: RA 7769, Sec. 4 (m) above Provided, That such program is duly recognized
by the Department of Labor and Employment:
Employment of Apprentices: When applicable: Provided, further, That such deduction shall not
(1) Only employers in highly technical industries exceed ten (10%) percent of direct labor wage:
may employ apprentices; and and Provided, finally, That the person or
(2) Only in apprenticeable occupations enterprise who wishes to avail himself or itself of
approved by the Secretary of Labor. [Art. 60, this incentive should pay his apprentices the
LC] minimum wage. [Art. 71, LC]

Terms and conditions Requisites of the deduction:

Apprenticeship agreements, including the wage (a) Apprenticeship program must be duly
rates of apprentices, shall conform to the rules approved by the DOLE;
issued by the Secretary of Labor and (b) Deduction shall NOT exceed 10% of direct
Employment. labor wage;
(c) Employer must pay his apprentices the
The period of apprenticeship shall not exceed minimum wage.
six months.
Summary of Rules:
Apprenticeship agreements providing for wage (1) The apprentice must be paid not less than
rates below the legal minimum wage, which in 75% of the prescribed minimum salary (Art.
no case shall start below 75 percent of the 61);
applicable minimum wage, may be entered into


HOWEVER, the employer MAY NOT pay any

wage if the apprenticeship training is: Terms and conditions of employment
a. part of the school curriculum, Any employer desiring to employ learners shall
b. a requirement for graduation, or enter into a learnership agreement with them,
c. a requirement for board examination which agreement shall include:
[Art. 72] (1) The names and addresses of the learners;
(2) The apprenticeship agreement must be (2) The duration of the learnership period, which
approved by the DOLE Secretary (without shall not exceed three (3) months;
such one shall be deemed a regular (3) The wages or salary rates of the learners
employee) [Nitto Enterprises v. NLRC, G.R. which shall begin at not less than seventy-
No. 114337, Sept. 29, 1995]; five percent (75%) of the applicable
(3) The employer is not compelled to continue minimum wage; and
ones employment upon termination of (4) A commitment to employ the learners if they
apprenticeship; so desire, as regular employees upon
(4) One-half (1/2) of the value of labor training completion of the learnership. All learners
expenses incurred for developing the who have been allowed or suffered to work
productivity and efficiency of apprentices of during the first two (2) months shall be
the training cost is deducted from the deemed regular employees if training is
employers income tax but it shall not terminated by the employer before the end
exceed 10% of direct labor wage [Art. 71] of the stipulated period through no fault of
the learners.
Working scholars there is no employer-
employee relationship between students on one The learnership agreement shall be subject to
hand, and schools, colleges or universities on inspection by the Secretary of Labor and
the other, where there is written agreement Employment or his duly authorized
between them under which the former agree to representative. [Art. 75, LC]
work for the latter in exchange for the privilege
to study free of charge, provided, the students Learners employed in piece or incentive-rate
are given real opportunities, including such jobs during the training period shall be paid in
facilities as may be reasonable and necessary to full for the work done. [Art. 76, LC]
finish their chosen courses under such
agreement. [Sec. 14, Rule X, IRR] Summary of Rules
(1) The duration of learnership shall not exceed
LEARNERS 3 months [Art. 73, LC];
Persons hired as trainees in semi-skilled and (2) If the learnership of 3 months is completed,
other industrial occupations which are non- the employer may be compelled to continue
apprenticeable. Learnership programs must be with the services of the learner as a regular
approved by the authority. [Sec. 4, RA 7796] employee;
(3) There is a commitment from the employer to
[Occupations] which may be learned through employ the learners if they so desire, as
practical training on the job in a relatively short regular employees upon completion of the
period of time which shall not exceed three (3) learnership;
months. [Art. 73(2), LC] (4) If the learner is dismissed from service
without just and valid cause and without
When may learners be hired due process after 2 months of service, he
(1) No experienced workers are available; will be deemed as regular employee; and
(2) The employment of learners being necessary [Art. 75(d)]
to prevent the curtailment of employment (5) The wages or salary rates of the learners
opportunities; and which shall begin at not less than 75% of
(3) The employment will neither create unfair the applicable minimum wage. [Art. 75(c)]
competition in terms of labor costs nor
impair working standards. [Art. 74, LC]


not less than 75% of the begin at not less

min wage than 75% of the
Distinctions between Learnership and min wage
Apprenticeship No compensation if SOLE
Apprenticeship Learnership authorizes, as OJT is Learners in
Highly technical Semi-skilled required by the school piecework shall be
industries industrial paid in full for the
occupations work done.
Practical training Practical training A commitment to
supplemented by related whether or not employ the
theoretical instruction such practical learners if they so
training is desire, as regular
supplemented by employees upon
theoretical completion of the
instructions learnership.
Apprenticeable Non-
occupations approved by apprenticeable All learners who
the SOLE occupations have been allowed
Written apprentice Learnership or suffered to work
agreement ratified by the agreement during the first two
appropriate committees (2) months shall be
More than three months, Shall not exceed 3 deemed regular
shall not exceed six months employees if
months training is
(1) The person is at least (1) When no terminated by the
fifteen (15) years of experienced employer before
age, provided those workers are the end of the
who are at least available; stipulated period
fifteen (15) years of (2) The through no fault of
age but less than employment of the learners.
eighteen (18) may be learners is Deductibility of of
eligible for necessary to training costs
apprenticeship only in prevent incurred, provided: -
non-hazardous curtailment of Program is duly
occupation; employment recognized by
(2) The person is opportunities; DOLE
physically fit for the and Deduction shall
occupation in which (3) The not exceed 10% of
he desires to be employment direct labor wage
trained; does not create Payment of
(3) The person possesses unfair minimum wage
vocational aptitude competition in to apprentices
and capacity for the terms of labor
particular occupation costs or impair
as established or lower
through appropriate working
tests; and standards.
(4) The person is able to
comprehend and
follow oral and
written instructions
Wage rate shall begin at Wage rate shall


HANDICAPPED WORKERS engaged in social development shall be

reserved for disabled persons. [Sec 5 (par. 2), RA
CARTA FOR DISABLED (1) Sheltered employment
If suitable employment for disabled persons
PERSONS, AS AMENDED BY RA cannot be found through open employment, the
9442) State shall endeavor to provide it by means of
sheltered employment.

Disabled Persons are those suffering from In the placement of disabled persons in
restriction or different abilities, as a result of a sheltered employment, it shall accord due
mental, physical or sensory impairment, to regard to the individual qualities, vocational
perform an activity in the manner or within the goals and inclinations to ensure a good working
range considered normal for a human being atmosphere and efficient production. [Sec 6, RA
[Sec. 4(a), RA 7277] 7277]

Impairment is any loss, diminution or aberration (2) Apprenticeship opportunity

of psychological, physiological, or anatomical Disabled persons shall be eligible as
structure or function [Sec. 4(b), RA 7277] apprentices or learners: Provided, that their
handicap is NOT as much as to effectively
Disability shall mean: impede the performance of job operations in the
(1) physical or mental impairment that particular occupation for which they are hired;
substantially limits one or more provided, further, That after the lapse of the
psychological, physiological or anatomical period of apprenticeship, if found satisfactory in
function of an individual or activities of such the job performance, they shall be eligible for
individual; OR employment. [Sec. 7, RA 7277]
(2) a record of such an impairment; OR
(3) being regarded as having such an (3) Full minimum wage
impairment [Sec 4(c), RA 7277] All qualified handicapped workers shall receive
the full amount of the minimum wage rate
Handicap refers to a disadvantage for a given prescribed herein. [Sec 6, Wage Order No. NCR-
individual, resulting from an impairment or a 17, May 17, 2012]
disability that limits or prevents the function, or
activity that is considered normal given the age In this light, the Magna Carta for Disabled
and sex of the individual. [Sec 4(d), RA 7277] Persons mandates that a qualified disabled EE
should be given the same terms and conditions
Rights of disabled workers of employment as a qualified able-bodied
(1) Equal opportunity for employment person. Since the Magna Carta accords them
No disabled person shall be denied access to the rights of qualified able-bodied persons, they
opportunities for suitable employment. A are thus covered by Article 280 of the Labor
qualified disabled EE shall be subject to the Code. In the present case, the handicap of
same terms and conditions of employment and petitioners (deaf-mutes) is NOT a hindrance to
the same compensation, privileges, benefits, their work. The eloquent proof of this statement
fringe benefits, incentives or allowances as a is the repeated renewal of their employment
qualified able-bodied person. [Sec. 5 (par. 1), RA contracts. [Bernardo v. NLRC, 1999]
Discounts and other privileges
(2) Reserved contractual positions Persons with disability shall be entitled to the
5% of all casual, emergency and contractual following:
positions in the DSWD; DOH, DepEd; and other (1) At least 20% discount from all
government agencies, offices or corporations establishments relative to the utilization of


all services in hotels and similar lodging for persons with disability on purchase of
establishments; restaurants and recreation basic commodities, subject to guidelines to
centers for the exclusive use or enjoyment of be issued for the purpose by the DTI and the
persons with disability; DA; and
(2) A minimum of 20% discount on admission (11) Provision of express lanes for persons with
fees charged by theaters, cinema houses, disability in all commercial and government
concert halls, circuses, carnivals and other establishments; in the absence thereof,
places of culture, leisure and amusement priority shall be given to them. [Sec 32, RA
for the exclusive use or enjoyment of 7277, as amended by RA 9442]
persons with disability;
(3) At least 20% discount for the purchase of Conditions for entitlement
medicines in all drugstores for the exclusive (1) Persons with disability who are Filipino
use or enjoyment of persons with disability; citizens upon submission of any of the following
(4) At least 20% discount on medical and dental as proof of his/her entitlement thereto:
services including diagnostic and laboratory (a) An identification card issued by the city
fees such as, but not limited to, x-rays, or municipal mayor or the barangay
computerized tomography scans and blood captain of the place where the persons
tests, in all government facilities, subject to with disability reside;
guidelines to be issued by the DOH in
coordination with the PHILHEALTH. (b) The passport of the persons with
(5) At least 20% discount on medical and dental disability concerned; or
services including diagnostic and laboratory (c) Transportation discount fare ID issued by
fees and professional fees of attending the National Council for the Welfare of
doctors in all private hospitals and medical Disabled Persons (NCWDP).
facilities, in accordance with the rules and (2) The privileges may not be claimed if the
regulations to be issued by the DOH, in persons with disability claim a higher
coordination with PHILHEALTH; discount as may be granted by the
(6) At least 20% discount on fare for domestic commercial establishment and/or under
air and sea travel for the exclusive use or other existing laws or in combination with
enjoyment of persons with disability; other discount program/s. [Sec 32, RA 7277,
(7) At least 20% discount in public railways, as amended by RA 9442
skyways, and bus fare for the exclusive use
and enjoyment of persons with disability. Other Provisions Against Discrimination
(8) Educational assistance to persons with
disability, for them to pursue primary, (a) Discrimination of Employment
secondary, tertiary, post tertiary, as well as No entity, whether public or private shall
vocational or technical education, in both discriminate against a qualified disabled person
public and private schools, through the by reason of disability in regard to job
provision of scholarships, grants, financial application procedures, the hiring, promotion,
aids, subsidies and other incentives to or discharge of employees compensation, job
qualified persons with disability, including training and other terms, conditions and
support for books, learning materials and privileges of employment. The following
uniform allowance to the extent feasible; constitute acts of discrimination:
Provided, That persons with disability shall (1) Limiting, segregating or classifying a
meet minimum admission requirements; disabled job applicant in such a manner
(9) To the extent practicable and feasible, the that adversely affects his work opportunities
continuance of the same benefits and (2) Using qualification standards, employment
privileges given by the GSIS, SSS, and PAG- tests or other selection criteria that screen
IBIG, as the case may be, as are enjoyed by out or tend to screen out a disabled person
those in actual service; unless such standards, tests or other
(10) To the extent possible, the government may selection criteria are shown to be related for
grant special discounts in special programs


the position in question and are consistent (b) Information obtained during the medical
with business necessity; condition or history of the applicant is
(3) Utilizing standards, criteria, or methods of collected and maintained on separate forms
administration that: and in separate medical files and is treated
(i) have the effect of discrimination on the as a confidential medical record; Provided,
basis of disability; or however, That:
(ii) perpetuate the discrimination of others (1) supervisors and managers may be
who are the subject to common informed regarding necessary
administrative control. restrictions on the work or duties of the
(4) Providing less compensation, such as salary, employees and necessary
wage or other forms of remuneration and accommodations:
fringe benefits, to qualified disabled (2) first aid and safety personnel may be
employee, by reason of his disability, than informed, when appropriate, if the
the amount to which a non-disabled person disability might require emergency
performing the same work is entitled; treatment;
(5) Favoring a non-disabled employee over a (3) government officials investigating
qualified disabled employee with respect to compliance with this Act shall be
promotion, training opportunities, study and provided relevant information on
scholarship grants, solely on account of the request; and
latter's disability; (4) the results of such examination are
(6) Re-assigning or transferring a disabled used only in accordance with this Act.
employee to a job or position he cannot [Sec. 35, RA 7277 as amended by RA
perform by reason of his disability; 9442]
(7) Dismissing or terminating the services of a (c) Prohibition on Verbal, Non-Verbal Ridicule
disabled employee by reason of his and Vilification Against Persons with Disability
disability unless the employer can prove (i) No individual, group or community shall
that he impairs the satisfactory execute any of these acts of ridicule
performance of the work involved to the against persons with disability in any
prejudice of the business entity; Provided, time and place which could intimidate
however, That the employer first sought to or result in loss of self-esteem of the
provide reasonable accommodations for the latter. [Sec. 40, RA 7277, as amended by
disabled persons; RA 9442]
(8) Failing to select or administer in the most (ii) Any individual, group or community is
effective manner employment tests which hereby prohibited from vilifying any
accurately reflect the skills, aptitude or person with disability which could result
other factor of the disabled applicant or into loss of self-esteem of the latter.
employee that such test purports to [Sec. 42, RA 7277, as amended by RA
measure, rather than the impaired sensory, 9442]
manual or speaking skills of such applicant
or employee, if any; and Public Ridicule - The act of making fun of or
(9) Excluding disabled persons from contemptuous imitating or making mockery of
membership in labor unions or similar persons with disability whether in writing, or in
organizations. [Sec. 34, RA 7277 as amended words, or in action due to their impairments.
by RA 9442] [Sec. 39, RA 7277, as amended by RA 9442]

Vilification includes:
(b) Employment Entrance Examination (1) The utterance of slanderous and abusive
Upon an offer of employment, a disabled statements against a person with disability;
applicant may be subjected to medical and/or,
examinations, on the following occasions: (2) An activity in public which incites hatred
(a) all entering employees are subjected to such towards, serious contempt for, or severe ridicule
an examination regardless of disability;


of persons with disability. [Sec. 41, RA 7277, as EMPLOYER-EMPLOYEE

amended by RA 9442] RELATIONSHIP
The existence or absence of ER-EE relationship
Tax Incentives for Employers/Establishments is a question of law and a question of fact, each
(1) For employment of disabled persons - in its defined sense.
additional deduction, from their gross
income, equivalent to 25% of the total The recognition of the existence of ER-EE
amount paid as salaries and wages to relationship is not dependent upon the
disabled persons agreement of the parties. The characterization
(a) Private entities of the law prevails over that in the contract. In
(b) Employ disabled persons either as this sense, the existence of an EE-ER
regular EEs, apprentice or learner relationship is a matter of law. [Tabas et.al. v.
(c) Provided such entities present proof as California Manufacturing Co., et. Al., G.R. No.
certified by the DOLE and the DOH [Sec. 80680, January 26, 1989]
8[b], RA 7277]
(2) For construction of disabled-friendly facilities The conclusion that an EE-ER relationship
additional deduction from their net depends upon the facts of each case. In this
taxable income, equivalent to 50% of the sense, it is a question of fact. [SSS v. CA, G.R.
direct costs of the improvements or No. 100388, Dec. 14, 2000].

a. Private entities FOUR-FOLD TEST

b. That improve or modify their physical (1) Selection and engagement of the employee;
facilities in order to provide reasonable (2) Payment of wages;
accommodation for disabled persons (3) Power of dismissal; and
c. Does NOT apply to improvements or (4) Employers power to control the employees
modifications or facilities required conduct with respect to the means and methods
under BP 344. [Sec. 8 (c), RA 7277] by which the work is to be accomplished.
(3) For establishments giving discounts may [Brotherhood Labor Unity Movement of the
claim such discounts as tax deductions Philippines et. al. v. Zamora, G.R. No. 48645,
based on the net cost of the goods sold or Jan. 7, 1987].
services rendered
Power to control is the most important
(a) The cost of the discount shall be element. [Sonza v. ABS-CBN Broadcasting
allowed as deduction from gross Corp, G.R. No. 138051, June 10, 2004]
income for the same taxable year that The control test calls merely for the
the discount is granted existence of the right to control and not
the actual exercise of the right. [Zanotte
(b) The total amount of the claimed tax Shoes v. NLRC, G.R. No. 100665, Feb. 13,
deduction net of VAT if applicable, shall 1995]
be included in their gross sales receipts
for tax purposes and shall be subject to Not every form of control will have the effect of
proper documentation and to the establishing ER-EE relationship. The line should
provisions of the National Internal be drawn between:
Revenue Code, as amended. (Sec. 32, (1) Rules that merely serve as guidelines
RA 7277, as amended by RA 9442) towards the achievement of mutually
desired results without dictating the means
Termination of or methods to be employed in attaining it.
These aim only to promote the result. In
Employment such case, NO EE-ER relationship exists.
(2) Rules that control or fix the methodology
and bind or restrict the party hired to the


use of such means. These address both the IRR, Book VI, Rule 1, Sec. 6(d). In all cases of
result and the means used to achieve it and probationary employment, the employer shall
hence, EE-ER relationship exists. [Insurance make known to the employee the standards
Life v. NLRC, G.R. No. 84484, Nov. 15, 1989] under which he will qualify as regular
employee at the time of his engagement.
Economic Dependence Test Where no standards are made known to the
Two-tiered approach. employee at the time of engagement, he shall
(1) First Tier: Control Test (refer to the Four-Fold be deemed a regular employee.
(2) Second Tier: The underlying economic Probationary employee is one who is on trial by
realities of the activity or relationship. [Sevilla v. an employer during which the employer
Court of Appeals] determines whether or not he is qualified for
permanent employment [International Catholic
The benchmark of economic reality in analyzing Migration Comm. vs. NLRC, 1989]
possible employment purposes ought to be the
economic dependence of the worker on his Termination
employer. Can only be terminated for:
(1) Just causes; or
The standard of economic dependence is (2) Failure to qualify as a regular employee in
whether the worker is dependent on the alleged accordance with reasonable standards made
employer for his continued employment in that known by the employer to the employee at the
line of business. [Orozco v. CA, GR No. 155207, time of engagement.
13 August 2008].
The probationary employee is entitled to
KINDS OF EMPLOYMENT substantial and procedural due process before
Legal basis Limitations to termination
Article 281. Probationary employment shall (1) It must be exercised in accordance with the
not exceed 6 months from the date the specific requirements of the contract
employee started working, unless it is covered (2) If a particular time is prescribed, the
by an apprenticeship agreement stipulating a termination must be within such time and if
longer period. The services of an employee formal notice is required, then that form
who has been engaged on a probationary must be used;
basis may be terminated for a just cause or (3) The employers dissatisfaction must be real
when he fails to qualify as a regular employee and in good faith, not feigned so as to
in accordance with reasonable standards circumvent the contract or the law;
made known by the employer to the employee (4) There must be no unlawful discrimination in
at the time of his engagement. An employee the dismissal. [Manila Hotel Corporation v.
who is allowed to work after a probationary NLRC, G.R. No. 53453, January 22, 1986]
period shall be considered a regular
employee. Purposes
(1) Observance Period for employer to
determine if employee is qualified and for
employee to demonstrate to the ER his
(2) Restrictive - As long as the termination was
made before the expiration of the six-month
probationary period, the employer has a
right to sever the employer-employee


day shall be excluded and the last day

Indeed, the employer has the right or is at included. Thus, the one hundred eighty
liberty to choose as to who will be hired and (180) days commenced on May 27, 1996,
who will be declined. It is within the exercise and ended on November 23, 1996. By the
of this right to select his employees that the time Paras received the letter he was
employer may set or fix a probationary already a regular employee of the petitioner
period within which the latter may test and under Article 281 of the Labor Code
observe the conduct of the former before [Mitsubishi Motors vs. Chrysler Union, 2004].
hiring him permanently. [Grand Motors
Corp. vs. MOLE, 1984] To reiterate, the rule on duration may be
summarized as follows:
Duration General Rule: Probationary employment shall
Generally, the probationary period of not exceed six (6) months from the date the
employment is limited to six (6) months. employee started working.
The exception to this general rule is when
the parties to an employment contract may Exceptions:
agree otherwise, such as when the same is (1) When the parties to an agreement contract
established by company policy or when the otherwise:
same is required by the nature of work to be (2) When the same is established by company
performed by the employee. In the latter policy;
case, there is recognition of the exercise of (3) When the same is required by the nature of
managerial prerogatives in requiring a the work performed by the employee; and
longer period of probationary employment, (4) When it is covered by an apprenticeship
such as in the present case where the agreement stipulating a longer period
probationary period was set for eighteen
(18) months, i.e. from May, 1980 to October, Agreement to extend probationary period
1981 inclusive, especially where the If the extension was ex gratia, an act of liberality
employee must learn a particular kind of on the part of his employer affording him a
work such as selling, or when the job second chance to make good after having
requires certain qualifications, skills, initially failed to prove his worth as an
experience or training. [Busier vs. Leogardo, employee. Such an act cannot now unjustly be
1984] turned against said employers account to
Honasan was accepted for on-the-job compel it to keep on its payroll one who could
training on April 15, 1991. Assuming that her not perform according to its work standards.
probation could be extended beyond that [Mariwasa Manufacturing v. Leogardo, G.R. No.
date, it nevertheless could continue only up 74246, Jan. 26, 1989].
to October 15, 1991, after the end of six
months from the earlier date. Under this Criteria for regularization must be disclosed
more lenient approach, she had become a In all cases of probationary employment, the
regular employee of Holiday Inn and employer shall make known to the employee
acquired full security of tenure as of October the standards under which he will qualify as a
15, 1991. [Holiday Inn Manila vs. NLRC, 1993] regular employee at the time of his
Paras started reporting for work on May 27, engagement. Where no standards are made
1996. The employers unanimously agreed known to the employee at that time, he shall be
that his performance was unsatisfactory. On deemed a regular employee. Conversely, an
November 26, 1996, he received a Notice of employer is deemed to substantially comply
Termination dated November 25, 1996, with the rule on notification of standards if he
Applying Article 13 of the Civil Code, the apprises the employee that he will be subjected
probationary period of six (6) months to a performance evaluation on a particular
consists of one hundred eighty (180) days. date after his hiring. [Alcira vs. NLRC, 2004]
As clearly provided for in the last paragraph
of Article 13, in computing a period, the first Regular Status After Probation


When the bank renewed the contract after the by the Manual of Regulations for Private
lapse of the six-month probationary period, the Schools and not the Labor Code. [Paragraph
employees thereby became regular employees. 75of the 1970 Manual; Aklan College vs. Guarino,
No employer is allowed to determine 2007]
indefinitely the fitness of its employees.
[Bernardo vs. NLRC, 1999] Employer obligation to make standards known
The law is clear that in all cases involving
Absorbed employees employees engaged on probationary basis, the
The private respondents could not be employer shall make known to the employee at
considered probationary employees because the time he is hired, the standards by which he
they were already well-trained in their will qualify as a regular employee.
respective functions. As stressed by the Solicitor
General, while private respondents were still There is also no evidence on record showing
with the CCAS they were already clerks. that the respondent Grulla had been apprised
Respondent Gelig had been a clerk for CCAS for of his probationary status and the requirements
more than ten (10) years, while respondent which he should comply in order to be a regular
Quijano had slightly less than ten (10) years of employee. In the absence of these requisites,
service. They were, therefore, not novices in their there is justification in concluding that
jobs but experienced workers. [Cebu Stevedoring respondent Grulla was a regular employee at
Co., Inc. vs. Regional Director, 1988] the time he was dismissed by petitioner, and as
such cannot be done without just and
Double probation authorized cause. [A. M. Oreta and Co., Inc. vs.
There is no basis for subjecting an employee to NLRC, 1989]
a new probationary or temporary employment
where he had already become a regular REGULAR EMPLOYMENT
employee when he was absorbed by a sister Regular employment is not synonymous with
company. [A Prime Security Services, Inc. vs. permanent employment, because there is no
NLRC, 2000] such thing as a permanent employment. Any
employee may be terminated for just cause.
Termination and salary
A probationary employee enjoys only a A regular employee is one who is engaged to
temporary employment status. This means that perform activities which are necessary and
he is terminable at any time, permanent desirable in the usual business or trade of the
employment not having been attained in the employer as against those which are
meantime. The employer could well decide he undertaken for a specific project or are seasonal.
no longer needed the probationary employees There are two separate instances whereby it can
services or his performance fell short of be determined that an employment is regular:
expectations, etc. As long as the termination (1) if the particular activity performed by the
was made before the termination of the six- employee is necessary or desirable in the
month probationary period, the employer was usual business or trade of the employer;
well within his rights to sever the employer- (2) if the employee has been performing the job
employee relationship. A contrary interpretation for at least a year. [Pangilinan vs. Gen.
would defect the clear meaning of the term Milling Corp., 2004]
probationary. [De la Cruz, Jr. vs. NLRC, 2004]
Standard of determination (Reasonable
Private school teachers Connection rule)
The provisions of Article 280 of the Labor Code The primary standard in determining regular
are not applicable to the present case especially employment is the reasonable connection
with respect to the issue of respondent's between the particular activity performed by the
acquisition of security of tenure. It is settled that employee in relation to the usual business or
questions respecting a private school teachers trade of the employer. The connection can be
entitlement to security of tenure are governed determined by considering the nature of the


work performed and its relation to the scheme Length of time is not controlling, merely serves
of the particular business or trade in its entirety. as a badge of regular employment. [Maraguinot
The repeated and continuing need for the vs. NLRC, 1998]
performance of the job has been deemed
sufficient evidence of the necessity, if not PROJECT EMPLOYMENT
indispensability of the activity to the business. Employment fixed on a specific project or
[Lopez vs. MWSS, 2005] undertaking, completion or termination of
which is determined at the time of engagement
Hiring for an extended period of the employee.
Where the employment of project employees is
extended long after the supposed project has Whether or not the project has a direct relation
been finished, the employees are removed from to the business of the ER is not important, BUT:
the scope of project employees and considered (1) EE must be informed of the nature and
regular employees. [Audion Electric Co., Inc. vs. duration of project
NLRC, 1999] (2) project and principal business of ER are two
separate things
Repeated renewal of contract (3) no attempt to deny security of tenure to the
The petitioner cannot rightfully say that since worker 39
the private respondent's employment hinged
from contract to contract, it was "temporary", Test of project employment
depending on the term of each agreement. The principal test for determining whether
Under the Labor Code, an employment may employees are properly characterized as
only be said to be "temporary" "where: "project employees," as distinguished from
(1) [it] has been fixed for a specific undertaking, "regular employees," is whether or not the
the completion of or termination of which project employees were assigned to carry out a
has been determined at the time of the "specific project or undertaking," the duration
engagement of the employee OR and scope of which were specified at the time
(2) where the work or services to be performed is the employees were engaged for that project.
seasonal in nature and the employment is As defined, project employees are those workers
for the duration of the season. hired:
(a) for a specific project or undertaking, and
Quite to the contrary, the private respondent's (b) the completion or termination of such
work, that of "typist-clerk" is far from being project or undertaking has been determined
"specific" or "seasonal", but rather, one "where at the time of the engagement of the
the employee has been engaged to perform employee. [PNOC Energy Devt Corp vs.
activities which are usually necessary or NLRC, 2007]
desirable in the usual business." And under the
Code, where one performs such activities, he is a Indicators of project employment
regular employee, "[t]he provisions of written (1) The duration of the specific/identified
agreement to the contrary notwithstanding undertaking for which the worker is
engaged is reasonably determinable;
It is true that in Biboso vs Victorias Milling (2) Such duration, as well as the specific
Company, Inc. we recognized the validity of work/service to be performed, is defined in
contractual stipulations as to the duration of an employment agreement and is made
employment. But we cannot apply it here clear to the employee at the time of the
because clearly, the contract-to-contract hiring;
arrangement given to the private respondent (3) The work/service to be performed by the
was but an artifice to prevent her from acquiring employee is in connection with the particular
security of tenure and to frustrate constitutional project/undertaking for which he is
decrees. [Beta Electric Corp. vs. NLRC, 1990] engaged;

Length of time involved


(4) The employee, while not employed and A work pool may exist although the workers in
awaiting engagement, is free to offer his the pool do not receive salaries and are free to
services to any other employer; seek other employment during temporary
(5) The termination of his employment in the breaks in the business, provided, that the worker
particular project/undertaking is reported to shall be available when called to report for a
the DOLE Regional Office having jurisdiction project. Although primarily applicable to regular
over the workplace following the date of his seasonal workers, this set-up can likewise be
separation from work, using the prescribed applied to project workers insofar as the effect
form on employees terminations of temporary cessation of work is concerned.
/dismissals/suspensions; [Maraguinot vs. NLRC, 1998]
(6) An undertaking in the employment contract
by the employer to pay completion bonus to Members of a work pool from which a
the project employee as practiced by most construction company draws its project
construction companies. [Samson v. NLRC, employees, if considered employees of the
G.R. No. 11366, Feb. 1, 1996)] construction company while in the work pool,
are non-project employees, or employees for an
See also: Policy No. 2 of 1997 and D.O. 19 of indefinite period. If they are employed in a
1993 particular project, the completion of the project
or any phase thereof will not mean severance of
When the present action for regularization was the employer-employee relationship. [Aguilar
filed on November 5, 1989 and during the entire Corp. vs. NLRC, 1997]
period of petitioner's employment with private
respondent prior to said date, the rule in force Rationale for project employment
then was Policy Instruction No. 20, which If a project has already been completed, it
required the employer company to report to the would be unjust to require the employer to
nearest Public Employment Office the fact of maintain them in the payroll while they are
termination of a project employee as a result of doing absolutely nothing except waiting until
the completion of the project or any phase in another project is begun, if at all. In effect, these
which he is employed. stand-by workers would be enjoying the status
of privileged retainers, collecting payment for
Furthermore, Department Order No. 19, which work not done, to be disbursed by the employer
was issued on April 1, 1993, did not totally from profits not earned. [De Ocampo vs. NLRC,
dispense with the notice requirement. Instead, it 1990]
made provisions and considered it (i.e. the
notice) as one of the "indicators" that a worker is Examples of project employment
a project employee. [Samson vs. NLRC (1996)] The corporation does not construct vessels
for sale or otherwise which will demand
Work pool employee continuous production of ships and will
A project EE or a member of a work pool may need regular workers. It merely accepts
acquire the status of a regular employee when contracts for ship-building or for repair of
the following concur: vessels from third parties. It is only on
(a) There is a continuous rehiring of project occasion when it has work contract of this
employees even after cessation of a project; nature that it hires workers to do the job
and which, needless to say, lasts only for less
(b) The tasks performed by the alleged project than a year or longer. Completion of their
employee are vital, necessary, and work or project automatically terminates
indispensable to the usual business or trade their employment. [Sandoval Shipyards, Inc.
of the employer. However, the length of vs. NLRC, 1985
time during which the EE was continuously Petitioner was engaged to perform data
rehired is not controlling, but merely serves encoding and keypunching, and her
as a badge of regular employment. employment was fixed for a specific project
or undertaking the completion or


termination of which had been determined a project-to-project basis did not confer
at the time of her engagement. [This] may upon them regular employment status. The
be observed from the series of employment practice was dictated by the practical
contracts between petitioner and private consideration that experienced construction
respondent, all of which contained a workers are more preferred. It did not
designation of the specific job contract and change their status as project employees.
a specific period of employment. [Imbuido [C.E. Construction Corp vs. Cioco, 2004]
vs. NLRC, 2000]
Fixed-period Work or services to be performed are seasonal
The Court has upheld the legality of fixed- in nature, employment is for the duration of the
term employment. It ruled that the decisive season.
determinant in term employment should
not be the activities that the employee is There is no continuing need for the worker.
called upon to perform but the day certain
agreed upon by the parties for the Regular Seasonal Employees After One
commencement and termination of their Season
employment relationship. But, this Court Regular seasonal employees are those
went on to say that where from the called to work from time to time. The nature
circumstances it is apparent that the of their relationship with the employer is
periods have been imposed to preclude such that during off season they are
acquisition of tenurial security by the temporarily laid off but during summer
employee, they should be struck down or season they are reemployed, or when their
disregarded as contrary to public policy and services may be needed. They are not,
morals. [Purefoods Corp. vs. NLRC, 1987] strictly speaking, separated from the service
but are merely considered as on leave of
absence without pay until they are
Continuous rehiring reemployed. Their employment relationship
Despite the insistence of petitioner that they is never severed but only suspended. As
were project employees, the facts show that such those employees can be considered as
as masons, carpenters and fine graders in in the regular employment of the employer.
petitioners various construction projects, [Manila Hotel Co. v. CIR, G.R. No. L-18875,
they performed work which was usually Sept. 30, 1963].
necessary and desirable to petitioners For respondents to be excluded from those
business which involves construction of classified as regular employees, it is not
roads and bridges. It is not enough that an enough that they perform work or services
employee is hired for a specific project or that are seasonal in nature. They must have
phase of work. There must also be a been employed only for the duration of one
determination of, or a clear agreement on, season. While the records sufficiently show
the completion or termination of the project that the respondents work in the hacienda
at the time the employee was engaged. This was seasonal in nature, there was, however,
second requirement was not met in this case. no proof that they were hired for the
[Chua vs. Court of Appeals, 2004] duration of one season only. In fact, the
The fact that the workers have been payrolls, submitted in evidence by the
employed with the company for several petitioners, show that they availed the
years on various projects, the longest being services of the respondents since 1991.
nine (9) years, did not automatically make Absent any proof to the contrary, the
them regular employees considering that general rule of regular employment should,
the definition of regular employment in therefore, stand.
Article 280 of the Labor Code, makes
specific exception with respect to project The disparity in facts between the Mercado
employment. The re-hiring of petitioners on Sr., vs. NLRC case and the instant case is


best exemplified by the fact that the farm FIXED-TERM EMPLOYMENT

laborers, work only for a definite period for a Article 280 of the Labor Code does not
farm worker, after which they offer their proscribe or prohibit an employment
services to other farm owners. In Mercado, contract with a fixed period provided the
although respondent constantly availed same is entered into by the parties, without
herself of the petitioners services from year any force, duress or improper pressure
to year, it was clear from the facts therein being brought to bear upon the employee
that they were not in her regular employ. In and absent any other circumstance vitiating
other words, they worked for respondent, consent.
but were nevertheless free to contract their
services with other farm owners. [Hacienda It does not necessarily follow that where the
Bino vs. Cuenca, 2005] duties of the employee consist of activities
usually necessary or desirable in the usual
CASUAL EMPLOYMENT business of the employer, the parties are
Casual Employment When not a regular, forbidden from agreeing on a period of time
project or seasonal employee. for the performance of such activities. There
is thus nothing essentially contradictory
Requirements to become regular employee: between a definite period of employment
(a) one year service, continuous or broken and the nature of the employee's duties.
(b) with respect to activity employed
(c) employment shall continue while such It goes without saying that contracts or
activity exists employment govern the relationship of the
parties. In this case, private respondent's
Nature of work contract provided for a fixed term of nine (9)
What determines regularity or casualness is not months, from June 1, 1991 to March 31, 1992.
the employment contract, written or otherwise, Such stipulation, not being contrary to law,
but the nature of the job. If the job is usually morals, good customs, public order and
necessary or desirable to the main business of public policy, is valid, binding and must be
the employer, then employment is regular. [A. respected. [St. Theresas School vs. NLRC,
M. Oreta and Co., Inc. vs. NLRC, 1989]. 1998]
However, the Court upholds the principle
One-year service that where from the circumstances it is
As held in Philippine Bank of Communications v. apparent that periods have been imposed
NLRC, a temporary or casual employee, under to preclude acquisition of tenurial security
Article 281 of the Labor Code, becomes regular by the employee, they should be
after service of one year, unless he has been disregarded for being contrary to public
contracted for a specific project. policy. [Servidad vs. NLRC, 1999]

And we cannot say that merchandising is a

specific project for the obvious reason that it is Agreement should not violate security of tenure
an activity related to the day-to-day operations This arrangement does NOT circumvent
of California. Security of Tenure when:
(1) Knowingly and voluntarily agreed upon by
The records show that the petitioners had been the parties without any force, duress, or
given an initial six month contract, renewed for improper pressure or any other
another six months. Accordingly, under Article circumstances vitiating his consent; OR
281 of the Code, they had become regular (2) The employer and the employee dealt with
employees of California and had acquired a each other on more or less equal terms with
secure tenure. Hence, they cannot be separated no moral dominance exercised by the
without due process of law. [Tabas vs. California former or the latter. [Brent School v.
Marketing Co., Inc., 1989] Zamora, 1990; Romares v. NLRC, 1998;
Medenilla v. Phil. Veterans Bank, 2000]


(3) If a contract is for a fixed term and the directly related to the principal business of
Employee is dismissed without just cause, such employer. In such cases, the person or
he is entitled to the payment of his salaries intermediary shall be considered merely as an
corresponding to the unexpired portion of agent of the employer who shall be
the employment contract. [Medenilla v. Phil. responsible to the workers in the same
Veterans Bank, 2000]. manner and extent as if the latter were
directly employed by him.
9. Article 107. Indirect employer. The provisions of
ARTICLES 106 TO 109 OF THE LABOR CODE the immediately preceding article shall
likewise apply to any person, partnership,
Articles 106 to 109 of the Labor Code association or corporation which, not being an
1. Article 106. Contractor or subcontractor. employer, contracts with an independent
Whenever an employer enters into a contract contractor for the performance of any work,
with another person for the performance of task, job or project.
the formers work, the employees of the 10.
contractor and of the latters subcontractor, if 11. Article 108. Posting of bond. An employer or
any, shall be paid in accordance with the indirect employer may require the contractor
provisions of this Code. or subcontractor to furnish a bond equal to
2. the cost of labor under contract, on condition
3. In the event that the contractor or that the bond will answer for the wages due
subcontractor fails to pay the wages of his the employees should the contractor or
employees in accordance with this Code, the subcontractor, as the case may be, fail to pay
employer shall be jointly and severally liable the same.
with his contractor or subcontractor to such 12.
employees to the extent of the work Article 109. Solidary liability. The provisions of
performed under the contract, in the same existing laws to the contrary notwithstanding,
manner and extent that he is liable to every employer or indirect employer shall be
employees directly employed by him. held responsible with his contractor or
4. subcontractor for any violation of any
5. The Secretary of Labor and Employment may, provision of this Code. For purposes of
by appropriate regulations, restrict or prohibit determining the extent of their civil liability
the contracting-out of labor to protect the under this Chapter, they shall be considered
rights of workers established under this Code. as direct employers.
In so prohibiting or restricting, he may make
appropriate distinctions between labor-only Examples of Labor-Only Contracting
contracting and job contracting as well as The respondents, as checkers, were employed to
differentiations within these types of check and inspect cargo, a task which is clearly
contracting and determine who among the necessary for the petitioners business of
parties involved shall be considered the forwarding and distributing cargo. Grigio did
employer for purposes of this Code, to prevent not undertake the performance of its service
any violation or circumvention of any provision contract according to its own manner and
of this Code. method, free from the control and supervision of
6. its principal.
7. There is "labor-only" contracting where the
person supplying workers to an employer The work activities, shifts, and schedules of the
does not have substantial capital or respondents, including time allowed for "recess"
investment in the form of tools, equipment, were set under the Written Contract of Services.
machineries, work premises, among others, This clearly indicates that these matters, which
and the workers recruited and placed by such consist of the means and methods by which the
person are performing activities which are


work is to be accomplished, were not within the The contract also provides that any personnel
absolute control of Grigio. found to be inefficient, troublesome,
uncooperative and not observing the rules and
Petitioners allegation that Grigio retained regulations set forth by Burlingame shall be
control by providing supervisors to monitor the reported to F. Garil and may be replaced upon
performance of the respondents cannot be request. Corollary to this circumstance would
given much weight. Instead of exercising their be the exercise of control and supervision by
own discretion or referring the matter to the Burlingame over workers supplied by F. Garil in
officers of Grigio, its supervisors were obligated order to establish the nature of undesirable
to refer to petitioners supervisors any personnel. [Lakas vs. Burlingame (2007)]
discrepancy in the performance of the
Lastly, the law casts the burden on the 109 OF THE LC, AS AMENDED (14
contractor to prove that it has substantial NOVEMEBER 2011)
capital, investment, tools etc. In this case,
neither Grigio nor the petitioner was able to Coverage
present any proof that Grigio had substantial This shall apply to:
capital. [Aboitiz Haulers vs. Dimapatoi (2006)] (1) all parties of contracting and subcontracting
arrangements where ER-EE relationships
No proof was adduced to show F. Garils exist
capitalization. The work of the promo-girls was (2) cooperatives engaging in contracting or
marketing and selling, and thus directly related subcontracting arrangements
to the principal business or operation of
Burlingame. Contractors and subcontractors referred to in
these rules are prohibited from engaging in
Finally, F. Garil did not undertake the recruitment and placement activities as defined
performance of its service contract according to in Art. 13(b) of the LC whether for local or
its own manner and method, free from the overseas employment.
control and supervision of Burlingame. Based
on the contract, F. Garil was responsible in the Cabo a persons or group of persons or a labor
hiring process only with respect to the groups which, in the guise of a labor
screening, testing and pre-selection of the organization, cooperative or any entity, supplies
personnel it provided to Burlingame. Actual workers to an employer, with or without any
hiring itself was done through the deployment monetary or other consideration, whether in the
of personnel to establishments by Burlingame. capacity of an agent of the employer or as an
ostensible independent contractor.
The contract also stipulated that Burlingame
shall pay F. Garil a certain sum per worker. F. Contracting or subcontracting an arrangement
Garil merely served as conduit in the payment of whereby a principal agrees to put out or farm
wages to the personnel. The interpretation out with a contractor the performance or
would have been different if the payment was completion of a specific job, work or service
for the job, project, or services rendered during within a definite or predetermined period,
the month and not on a per worker basis. regardless of whether such job, work or service
is to be performed or completed within or
The Court has taken judicial notice of the outside the premises of the principal.
practice of employers who do not issue payslips
directly to employees. Under current practice, a Contractor any person or entity, including a
third person, usually the purported contractor cooperative, engaged in a legitimate
(service or manpower placement agency), contracting or subcontracting arrangement
assumes the act of paying the wage. providing either services, skilled worker,


temporary workers or a combination of services net worth of at least P3,000,000. [Sec 3, D.O.
to a principal under a Service Agreement. 18-A-11]

Contractors employee includes one employed Service agreement refers to the contract
by a contractor to perform or complete a job, between the principal and contractor containing
work, or service pursuant to a Service the terms and conditions governing the
Agreement with a principal. performance or completion of a specific job,
work or service being farmed out for a definite or
It shall also refer to regular EEs of the predetermined period.
contractor whose functions are not dependent
on the performance or completion of a specific Legitimate contracting or subcontracting
job, work or service within a definite period of Contracting or subcontracting shall be
time i.e. administrative staff. legitimate if ALL the following circumstances
In-house agency a contractor which is owned, (1) The contractor must be registered in
managed, or controlled directly or indirectly by accordance with these rules and carries a
the principal or one where the principal distinct and independent business
owns/represents any share of stock, and which (2) The contractor undertakes to perform the
operates solely or mainly for the principal. job, work or service on its own responsibility,
according to its own manner and method,
Net Financial Contracting Capacity (NFCC) and free from control and direction of the
refers to the formula to determine the financial principal in all matters connected with the
capacity of the contractor to carry out the job, performance of the work except as to the
work or services sought to be undertaken under results thereof;
a Service Agreement. (3) The contractor has substantial capital and/or
investment; and
Formula: (4) The Service Agreement ensures compliance
NFCC = (current assets - current liabilities) x (K with all the rights and benefits under Labor
value of all outstanding or ongoing projects laws.
including contracts to be started)
Factors to determine existence of independent
K stands for contract duration equivalent to: contractor relationship
(a) 10 for one year or less (1) Whether the contractor is carrying on an
(b) 15 for more than 1 year up to 2 years independent business
(c) 20 for more than 2 years (2) whether the work is part of the employers
general business.
Principal any ER, whether a person or entity, (3) The nature and extent of the work.
including government agencies and GOCCs, (4) The skill required.
who/which puts out or farms out a job, service (5) The terms and duration of the relationship.
or work to a contractor. (6) The right to assign the performance of the
work to another.
Right to control the right reserved to the (7) The control and supervision of the work and
person for whom the services of the contractual the employers powers with respect to the
workers are performed, to determine not only hiring, firing and payment of salaries.
the end to be achieved, but also the manner (8)The duty to supply premises, tools, and
and means to be used in reaching that end. appliances. [Mafinco vs. Ople, 1976]

Substantial capital refers to paid-up capital Prohibition against labor-only contracting

stocks/shares of at least P3,000,000 in the Labor only contracting is prohibited. There is
case of corporations, partnerships and labor-only contracting where:
cooperatives; in case of single proprietorship, a (a) The contractor does not have substantial
capital or investments in the form of tools,


equipment, machineries, work premises, (vi) Contracting out of a job, work or service
among others, and the employees recruited being performed by union members when
and places are performing activities which such will interfere with, restrain or coerce
are usually necessary or desirable to the EEs in the exercise of their rights to self-
operation of the company, or directly organization as provided in Art. 248(c) of
related to the main business of the principal the LC, as amended.
within a definite or predetermined period, (vii) Repeated hiring of EEs under an
regardless of whether such job, work or employment contract of short duration or
service is to be performed or completed under a Service Agreement of short
within or outside the premises of the duration with the same or different
principal; OR contractors, which circumvents the LC
(b) The contractor does not exercise the right to provisions on Security of Tenure.
control the performance of the work of the (viii) Requiring EEs under a subcontracting
employee. arrangement to sign a contract fixing the
period of employment to a term shorter
Other prohibitions than the term of the Service Agreement,
(1) Contracting out of jobs, works or services unless the contract is divisible into phases
when not done in good faith and not justified by for which substantially different skills are
the exigencies of the business such as the required and this is made known to the EE
following: at the time of the engagements.
(i) Contracting out of jobs, works or services (ix) Refusal to provide a copy of the Service
when the same results in the termination or Agreement and the employment contracts
reduction of regular EEs and reduction of between the contractor and the EEs
work hours or reduction or splitting of the deployed to work in the bargaining unit of
bargaining unit. the principals certified bargaining agent to
(ii) Contracting out of work with a Cabo the sole and exclusive bargaining agents.
(iii) Taking undue advantage of the economic (x) Engaging or maintaining by the principal of
situation or lack of bargaining strength of subcontracted EEs in excess of those
the contractors EEs, or undermining their provided in the applicable CBA or as set by
security of tenure or basic rights, or the Industry Tripartite Council.
circumventing the provisions of regular
employment in any of the following (b) Contracting out of jobs, works, or services
instances: analogous to the above when not done in good
(iv) Requiring them to perform functions which faith and not justified by the exigencies of the
are currently being performed by the business.
regular EEs of the principal; and requiring
them to sign, as a precondition to The court recognizes that contracting out is not
employment or continued employment, an unlimited; rather, it is a prerogative that
antedated resignation letter; a blank management enjoys subject to well-defined
payroll; a waiver of labor standards legal limitations. The company can determine in
including minimum wages and social or its best business judgment whether it should
welfare benefits; or a quitclaim releasing contract out the performance of some of its
the principal, contractor or from any liability work for as long as the employer is motivated by
as to payment of future claims. good faith, and
(iv) Contracting out of a job, work or service (a) the contracting out must not have been
through an in-house agency. resorted to to circumvent the law or
(v) Contracting out of a job, work or service that (b) must not have been the result of malicious
is necessary or desirable or directly related or arbitrary action. [Manila Electric Co. v.
to the business or operation of the principal Quisumbing, 1999 citing Mafinco vs. Ople
by reason of a strike or lockout whether (1976)]
actual or imminent.


We perceive at the outset the disposition of the Agreement, without prejudice to his/her
NLRC that janitorial services are necessary and entitlement to the completion bonuses or other
desirable to the trade or business of petitioner emoluments, including retirement benefits
Coca-Cola. But this is inconsistent with our whenever applicable.
pronouncement in Kimberly Independent Labor
Union v. Drilon where the Court took judicial Mandatory registration
notice of the practice adopted in several It shall be mandatory for all persons or entities,
government and private institutions and including cooperative, acting as contractors, to
industries of hiring janitorial services on an register with the Regional Office of the DOLE
independent contractor basis. In this respect, where it principally operates.
although janitorial services may be considered
directly related to the principal business of an Failure to register shall give rise to the
employer, as with every business, we deem presumption that the contractor is engaged in
them unnecessary in the conduct of the labor-only contracting.
employers principal business. [Coca-Cola
Bottlers Phil. Inc. vs. NLRC, 1999] Contracting or subcontracting arrangements in
the Construction and other industries
Rights of contractors EEs Contracting or subcontracting arrangements in
All contractors EEs, whether deployed or the Construction Industry, under the licensing
assigned ass reliever, seasonal, week-ender, coverage of the Philippine Construction
temporary, or promo jobbers, shall be entitled Accreditation Board (PCAB), shall be covered by
to all the rights and privileges as provided for in the applicable provisions of these Rules and
the LC, as amended. shall continue to be governed by Dept Order
No. 19, Series of 1993 [Guidelines Governing the
Security of tenure of contractors EEs Employment of Workers in the Construction
It is understood that all contractors EEs enjoy Industry) Dept. Order No 13, Series of 1998
security of tenure regardless of whether the (Guidelines Governing the Occupational Safety
contract of employment is co-terminus with the and Health in the Construction Industry]; DOLE-
service agreement, or for a specific job, work, or DPWH-DILG-DTI and PCAB Memorandum of
service, or phase thereof. Agreement-Joint Administrative Order No. 1,
Series of 2011 (on coordination and
Effect of termination of employment harmonization of policies and programs on
The termination of the contractor EE prior to the occupational safety and health in the
expiration of the Service Agreement shall be construction industry.
governed by Arts. 282-284 of the LC.
In case the termination is caused by the pre- 2012: CLARIFYING THE APPLICABILITY OF
termination of the Service Agreement not due to DO NO.18-A, 2011 TO BUSINESS PROCESS
authorized causes under Art. 283, the right of OUTSOURCING (BPO)/KNOWLEDGE
the contractor EE to unpaid wages and other PROCESS OUTSOURCING AND THE
unpaid benefits including unremitted legal CONSTRUCTION INDUSTRY
mandatory contributions, e.g., SSS, Philhealth,
Pag-ibig, ECC, shall be borne by the party at Applicability to BPO
fault, without prejudice to the solidary liability of DO 18-A speaks of a trilateral relationship that
the parties to the Service Agreement. characterizes the covered contracting/sub-
contracting arrangement. Thus, vendor-vendee
Where the termination result from the relationship for entire business processes
expiration of the Service Agreement, or from the covered by the applicable provisions of the Civil
completion of the phase of the job, work or Code on Contracts is excluded.
service for which the EE is engaged, the latter
may opt for payment of separation benefits as DO 18-A contemplates generic or focused
may be provided by law or the Service singular activity in one contract between the


principal and the contractor (for example, relationship is defined and prescribed by the
janitorial, security, merchandising, specific law itself. [Industrial Timber Corporation vs.
production work) and does not contemplate NLRC, 1997]
information technology-enabled services In legitimate job contracting, no employer-
involving an entire process (for example, BPO, employee relation exists between the
KPO, legal process outsourcing, hardware principal and the job contractor's
and/or software support, medical transcription, employees. The principal is responsible to
animation services, back office the job contractor's employees only for the
operations/support). These companies engaged proper payment of wages. But in labor-only
in BPOs may hire employees in accordance with contracting, an employer-employee relation
applicable laws, and maintain these EEs based is created by law between the principal and
on business requirements, which may or may the labor-only contractor's employees, such
not be for different clients of the BPOs at that the former is responsible to such
different periods of the EEs employment. employees, as if he or she had directly
employed them. [PAL vs. NLRC, 1998]
Applicability to the Construction Industry The only time the indirect employer may be
Licensing and the exercise of regulatory powers made solidarily liable with the contractor is
over the construction industry is lodged with when the contractor fails to pay his
PCAB which is under the Construction Industry employees their wages and other benefits
Authority of the Philippines and not with the claimed. [Landazares vs. Amethyst Security,
DOLE or any of its regional offices. 2003]

Thus, the DOLE, through its regional offices Solidary liability of principal and labor-only
shall not require contractors licensed by PCAB contractor
in the Construction Industry to register under In the case at bar, it is beyond dispute that the
DO 18-A. Moreover, findings of violation/s on security guards are the employees of EAGLE
labor standards and occupational health and (contractor.) That they were assigned to guard
safety standards shall be coordinated with the premises of PTSI (principal) pursuant to the
PCAB for its appropriate action, including the latters contract with EAGLE and that neither of
possible cancellation/suspension of the these two entities paid their wage and
contractors license. allowance increases under the subject wage
orders are also admitted. Thus, the application
EFFECTS OF FINDING THAT THERE IS of the aforecited provisions of the Labor Code
LABOR-ONLY CONTRACTING on joint and several liability of the principal and
A finding by a competent authority of labor- contractor is appropriate.
only contracting shall render the principal
jointly and severally liable with the The solidary liability of PTSI and EAGLE,
contractor to the latters EEs, in the same however, does not preclude the right of
manner and extent that the principal is reimbursement from his co-debtor by the one
liable to EEs directly hired by him/her. who paid [See Article 1217, Civil Code]. It is with
respect to this right of reimbursement that
A finding of commission of any of the petitioners can find support in the aforecited
prohibited activities in Sec. 7 or violation of contractual stipulation. [Eparwa Security, Inc. vs
either Secs. 8 or 9 hereof, shall render the Liceo de Cagayan University (2006)]
principal the direct ER of the EEs of the
contractor or subcontractor. [Sec. 27, DO 18- TRILATERAL RELATIONSHIP IN
If found to be labor-only contractor, it is There are three parties involved:
equivalent to finding that there exists an (1) Principal who decides to farm out a job,
employer-employee relationship between work or service to a contractor;
the owner of the project and the employees
of the labor-only contractor since that


(2) Contractor who has the capacity to constructive dismissal. [Lanzadares vs. Amethyst
independently undertake the performance of Security, 2003]
the job, work, or service; and
(3) Contractual workers engaged by the Coverage
contractor to accomplish the job, work or 1987 Constitution: all workers (Art. XIII Sec.
service. [Sec. 3 D.O. 18-A-11] 3)
Labor Code: regular employees (Art. 279) in
In legitimate contracting there exists: all establishments or undertakings, whether
(a) An ER-EE relationship between the for profit or not (Art. 278), except
contractor and the employees it engaged to government and its political subdivisions
perform the specific job, work or service being including government owned or controlled
contracted corporations or GOCCs (IRR Book VI Rule I
(b) A contractual relationship between the Sec. 1)
principal and the contractor as governed by the Security of tenure extends to non-regular
provisions of the CC. Employees [Kiamco vs. NLRC, 1999]
In the event of any violation of any provisions of Contract Employees
the LC (including failure to pay wages) there Limited extent; secured during the period their
exists a solidary liability on the part of the respective contracts of employment remain in
principal and the contractor for purposes of effect. [Labajo vs. Alejandro, 1988]
enforcing the provisions of the LC and other
social legislation, to the extent of the worked
performed under the employment contract. Probationary Employees
[Sec. 5, D.O. 18-A-11] Limited extent; additional limitations on power
of employer to terminate: must be exercised in
DISMISSAL FROM accordance with the specific requirements of
the contract; dissatisfaction of the employer
EMPLOYMENT must be real and in good faith, not feigned so as
Art. 279: In case of regular employment, the to circumvent the contract or the law
employer shall not terminate the services of an
employee except for Project/seasonal Employees
(a) just cause (Art. 282) Limited extent; secured for the duration of the
(b) authorized cause (Art. 283-284) limited period of their employment

Security of Tenure Managerial Employees

Right not be removed from ones job without Entitled to security of tenure; They may be
valid cause and valid procedure. [Kiamco v. dismissed upon loss of confidence [Maglutac vs.
NLRC, 1999] NLRC, 1990].

Nature An employee cannot be arbitrarily dismissed at

It is a constitutionally protected right (Art. XIII any time, and without cause as reasonably
Sec. 3, 1987 Constitution); it cannot be blotted established in an appropriate investigation.
out by an employment contract. [Inter Orient Maritime Enterprises, Inc. vs. NLRC,
It does not give the employee an absolute right
to his position; when a transfer is not Fixed-period Employees / Term Employment
unreasonable, nor inconvenient, nor prejudicial This arrangement does NOT circumvent
to an employee; and it does not involve a Security of Tenure when:
demotion in rank or diminution of his pay, (1) knowingly and voluntarily agreed upon by the
benefits, and other privileges, the employee parties without any force, duress, or improper
may not complain that it amounts to pressure or any other circumstances vitiating his
consent; OR


(2) Brent Doctrine: the employer and the family or his duly authorized
employee dealt with each other on more or less representatives; and
equal terms with no moral dominance exercised (5) Other causes analogous to the foregoing.
by the former or the latter. [Brent School v. (Art. 282)
Zamora, 1990; Romares v. NLRC, 1998; Medenilla
v. Phil. Veterans Bank, 2000] Serious misconduct or willful disobedience

If a contract is for a fixed term and the employee Misconduct

is dismissed without just cause, he is entitled to (1) improper or wrongful conduct
the payment of his salaries corresponding to the (2) transgression of some established and
unexpired portion of the employment contract. definite rule of action, a forbidden act, a
[Medenilla v. Phil. Veterans Bank, 2000] dereliction of duty, willful in character, and
implies wrongful intent and not mere error
Management Prerogatives and Security of in judgment. [Dept of Labor Manual, Sec.
Tenure 4343.01; Hayuan Restaurant vs. NLRC,
Management prerogatives
(1) To Discipline [San Miguel v. NLRC, 1980] Requisites
(2) Right to dismiss or otherwise impose (a) Serious to be serious, misconduct must be:
disciplinary sanctions upon an employee for (1) of such grave and aggravated character
just and valid cause, pertains in the first (2) in connection with the employee's work.
place to the employer, as well as the [Lakpue Drug, Inc. vs. Belga, 2005]
authority to determine the existence of said (b) Shows that the employee has become unfit
cause in accordance with the norms of due to continue working for the Employer.
process. [Makati Haberdashery, Inc. v. NLRC, [Philippine Aeolus Automotive United Corp.
1989] vs. NLRC]
(3) To Demote [Petrophil vs. NLRC, 1986]
(4) To Dismiss it is a measure of self Willful disobedience
protection [Reyes vs. Ministry of Labor, 1989] Requisites
(a) The employees assailed conduct has been
Requisites for the validity of management willful or intentional, the willfulness being
prerogative affecting security of tenure characterized by a wrongful and perverse
(a) Exercised in good faith for the advancement attitude; and
of the Employer's interest, and (b) The order violated must have been:
(b) NOT for the purpose of defeating or (1) Reasonable and lawful;
circumventing the rights of the Employees (2) Made known to the employee; and
under special laws or under valid (3) In connection to the duties which he has
agreements [San Miguel vs. Ople, 1989] been engaged to discharge. [Acesite
Corp. v. NLRC, G.R. No. 152308, January
Just Causes 26, 2005]
(1) Serious misconduct or willful disobedience by
the employee of the lawful orders of his Gross and habitual neglect of duties
employer or representative in connection Gross negligence is want of even slight care,
with his work; acting or omitting to act in a situation where
(2) Gross and habitual neglect by the employee there is a duty to act, not inadvertently but
of his duties; willfully and intentionally with a conscious
(3) Fraud or willful breach by the employee of indifference to consequences insofar as
the trust reposed in him by his employer or other persons may be affected. [Tres Reyes
duly authorized representative; v. Maxim's Tea House, 2003]
(4) Commission of a crime or offense by the Habitual neglect implies repeated failure to
employee against the person of his perform one's duties for a period of time,
employer or any immediate member of his


depending upon the circumstances. [Chua restricted to with trust and

v. NLRC, 2005] MANAGERIAL confidence [Coca-Cola
Employees [Computer vs. NLRC, 1989] e.g.
Requisites Products Corp. v. CA, care and custody of
(a) Neglect of duty must be both gross and 2005] property
(b) Habitual 45
Abandonment of employment
Fraud or willful breach of trust (loss of trust and Abandonment is the deliberate and unjustified
confidence) refusal of an Employee to resume his
employment. [Nueva Ecija Electric Cooperative v.
Requisites NLRC, 2005]
(a) Committed against the Employer or his
representative;willful since fraud implies Requisites
wrongful intent; (1) Failure to report to work or absence w/o valid
(b) EE concerned holds a position of trust and reason;
confidence; [Mabeza vs. NLRC, 1997] (2) Clear intent to sever the employer-employee
(c) Act complained of must be work-related i.e. relationship via overt acts [Floren Hotel v. NLRC,
it must show the employee concerned to be 2005]
unfit to continue working for the employer.
Cannot be lightly inferred, much less legally
Proof beyond reasonable doubt not necessary presumed from certain equivocal acts such as
(a) It is sufficient that there is some basis for interim employment [Hacienda Dapdap v.
such loss of confidence such as when the NLRC, 1998]
employer has reasonable ground to believe
that the employee concerned is responsible Totality of infractions doctrine
for the purported misconduct; The totality of infractions or the number of
(b) And the nature of his participation therein violations committed during the period of
renders him unworthy of the trust and employment shall be considered in determining
confidence demanded of his position the penalty to be imposed upon an erring
[Uniwide Sales Warehouse Club v. NLRC, employee. The offenses committed by petitioner
2008] should not be taken singly and separately.
Fitness for continued employment cannot be
Loss of confidence: managerial/confidential vs. compartmentalized into tight little cubicles of
rank-and-file employees aspects of character, conduct and ability
Managerial Rank-and-file separate and independent of each other. While
Substantial evidence Proof of involvement in it may be true that petitioner was penalized for
reasonable ground to the alleged events in his previous infractions, this does not and
believe Employees
question required; mere should not mean that his employment record
guilt; mere existence uncorroborated would be wiped clean of his infractions. After
of a basis for the belief
assertions and all, the record of an employee is a relevant
[Etcuban vs. Sulpicio accusations consideration in determining the penalty that
Lines, 2005] are not enough should be meted out since an employee's past
misconduct and present behavior must be taken
Employment for a [Etcuban vs. Sulpicio together in determining the proper imposable
long time is counted Lines, 2005] penalty. [Merin v. NLRC, 2008]
against the Employee
[Salvador v. Phil.
Mining Service Corp.,
Recognized right of employers
General rule: trust Except: when rank-and- The law recognizes the right of every business
and confidence is file position is reposed entity to reduce its workforce if the same is


made necessary by compelling economic Employers good faith in implementing a

factors which would endanger its existence or redundancy program is not necessarily put
stability. in doubt by the availment of services of an
independent contractor. [Asian Alcohol
The fundamental law itself guarantees, even Corp. v. NLRC, 1999]
during the process of tilting the scales of social
justice towards workers and employees, the Requisites for valid redundancy
right of enterprises to reasonable returns of (a) Written notice served on both the Employees
investment and to expansion and growth. and the DOLE at least 1 month prior to the
[Uichico v. NLRC, 1997] intended date;
(b) Payment of separation pay equivalent to one
Art. 283 and 284 are not exhaustive; other month pay or one month pay for every year of
authorized causes are: service, whichever is higher;
(a) total and permanent disability, (c) Good faith in abolishing the redundant
(b) disease incurable in 6 mos, positions; and
(c) valid application of union security clause, (d) Fair and reasonable criteria in ascertaining
(d) expiry of term employment period, what positions are to be declared redundant
(e) completion of project, and accordingly abolished. The following are
(f) failure in probation, etc usually considered in redundancy: position
itself, nature of the services performed by the
Redundancy, retrenchment and closure employee, and necessity of such position. [Edge
Redundancy - exists where the service Apparel v. NLRC, 1998]
capability of the workforce is in excess of
what is reasonably needed to meet the Separation pay entitlement
demands of the business enterprise; Employee is entitled to separation pay of 1
A reasonably redundant position is one month pay or 1 month pay per year of service,
rendered superfluous by any number of whichever is higher
factors, such as overhiring of workers,
decreased volume of business, dropping of Retrenchment is the termination of
a particular product line previously employment effected by management during
manufactured by the company, or phasing periods of business recession, industrial
out of service activity previously undertaken depressions, seasonal fluctuations, lack of work
by the business [Dusit School Nikko v. or considerable reduction in the volume of the
NUWHRAIN, 2005] employers business. [AMA Computer College v.
Redundancy does not refer to duplication of Ely Garcia, 2008]
work. That no other person was holding the
same position which the dismissed General standards for when retrenchment is
employee held prior to the termination of preventive rather than curative
his services does not show that his position (a) Losses expected are substantial and not
had not become redundant. [Escareal v. merely de minimis in extent;
NLRC, 1992] (b) Apprehended losses are reasonably
Financial loss is not a requisite. [Escareal v. imminent, can be perceived objectively and in
NLRC, 1992] good faith;
Creation of positions with functions related (c) Retrenchment must be reasonably necessary
or similar to those of the abolished to prevent the expected lossesmeasure of last
functions does not necessarily invalidate the resort; and
declaration of redundancythe old and new (d) Expected or actual losses must be proved by
positions were different and the declaration sufficient and convincing evidence. [Lopez Sugar
was not maliciously motivated. [Santos v. Corp. v. Federation of Free Workers, 1990]
CA, 2001]


Reduction of work days may be considered Must de bona fide or in good faith
constructive retrenchment [International
Hardware v. NLRC, 1989] Procedural steps required
At least 1 month before the intended date of
Temporary retrenchment or temporary termination, Employer is to serve written notice
cessation or suspension of operations (Art. 286) to:
(a) Affected employees; and
A specific period that employees may remain (b) DOLE (Art. 283)
temporarily laid-off or in floating status. The
temporary lay-off or bona fide suspension of Criteria in selecting employees for dismissal
operations of a business or undertaking wherein
the employees likewise cease to work should Fair and reasonable criteria in ascertaining who
not last longer than 6 months. After 6 months, will be affected:
the employees should either be recalled to work (1) preferred status (e.g. temporary, casual or
or permanently entrenched following the regular Employees),
requirements of the law, and that failing to (2) efficiency
comply with this would be tantamount to (3) physical fitness,
dismissing the employees and the employer (4) age,
would thus be liable for such dismissal. (5) financial hardship, or
[International Hardware v. NLRC, 1989] (6) seniority. [Asian Alcohol Corp. v. NLRC, 1999]

Requisites for a valid retrenchment Standards to be followed

(a) Necessary to prevent or minimize losses and Retrenchment Redundancy Closure
such losses are proven;
(b) There must be 1 month written notice to the Reduction of The service of The reversal of
DOLE and the employee; 47
personnel an Employee is the fortune of
(c Separation pay is paid; usually due to in excess of the employer
(d) Exercised in good faith the prerogative was poor financial what is whereby there
exercised for the advancement of the returns so as to required by an is a complete
employers interest and not to defeat or cut down on enterprise cessation of
circumvent the employees right to security costs of business
of tenure; and operations in operations
(e) Fair and reasonable criteria in ascertaining terms of and/or actual
who will be affected salaries and locking-up of
wages the doors of
Separation pay entitlement the
Employee is entitled to separation pay of 1 establishment,
month pay or 1/2 month pay per year of service, usually due to
whichever is higher financial losses
Resorted to To save Aims to
Closure primarily to production prevent further
Employer may close or cease his business avoid or costs financial drain
operations or undertaking even if he is not minimize upon the
suffering from serious business losses or business losses Employer
financial reverses, as long as he pays his
employees their termination pay in the
Disease or illness
amount corresponding to their length of
service. [Catatista v. NLRC, 1995]
(a) Employee has been found to be suffering
It includes both the complete cessation of from any disease;
all business operations and the cessation of
only part of a companys business [Coca-
Cola Bottlers, Inc. v. NLRC, 1991]


(b) His continued employment is prohibited by 2. Lawful,

law or is prejudicial to his health as well as 3. Sufficiently
to the health of his co-employees; known to
(c) Payment of separation pay; Employee,
(d) A medical certification by a competent 4. In connection to
public health authority that the disease the duties.
cannot be cured w/in 6 months even with
proper medical treatment (IRR Book VI. Rule
I. Sec. 8) Gross and Habitual Neglect must be both
(i) Medical certification cannot be dispensed Neglect gross and habitual.
with [Manlyl Express, Inc. v. Payong,
2005] Fraud or Willful Breach Loss of Confidence
(ii) It must be issued by a competent public of Trust 1. Committed
health authority and not the company against the
physician [Cebu Royal Plant v. Deputy Employer or his
Minister of Labor, 1987] representative
Separation pay entitlement 2. willful since
Employee is entitled to separation pay of 1 fraud implies
month pay or month pay per year of service, wrongful intent;
whichever is higher 3. EE concerned
holds a position
Termination of employment pursuant to a union of trust and
security clause confidence
(Mabeza vs.
Art. 283 and 284 are not exhaustive; other NLRC, 1997);
authorized causes are: 4. Act complained
(1) total and permanent disability, of must be
(2) disease incurable in 6 mos, work-related.
(3) application of union security clause,
(4) expiry of term employment period, Additional Guidelines
(5) completion of project, 1. NOT simulated;
(6) failure in probation, etc 2. NOT used as a
Just Cause Requisites 3. NOT arbitrarily
asserted; and
Serious Misconduct Serious 4. genuine, NOT a
(1) Grave and mere
aggravated afterthought
character, (Vitarich v.
(2) In connection with NLRC, 1999;
work; and Coca-Cola
(3) Shows that Bottlers, Phils.,
Employee is unfit Inc. v.
to work for Kapisanan ng
Employer. Malayang
Willful Disobedience Willful conduct Manggagawa sa
wrongful and perverse Coca-Cola,
attitude; and 2005)
Order violated must be: Commission of a crime Crime against the
1. Reasonable, or offense against 1. Employer,


Employer 2. Immediate Alcohol Corp. v.

member of NLRC, 1999),
employers such as but not
family, or limited to:
3. Employers duly preferred
authorized status (e.g.
representative; temporary,
and casual or
4. Conviction or regular
prosecution Employees)
NOT required. efficiency, or
Analogous Causes Due to a voluntary seniority.
and/or willful act or (Panlilio v.
omission by Employee NLRC, 1997;
(Nadura vs. Benguet Golden Thread
Consolidated, 1962) Knitting
Industries, Inc.
v. NLRC, 1999)
Retrenchment (1) Necessary to
Installation of Labor 1. 1 month written minimize losses
Saving Devices notice to DOLE and such losses are
and Employee proven
2. separation pay (2) 1 month written
equivalent to notice to DOLE and
one month pay the Employees
or one month (3) Separation pay
pay for every equivalent to at
year of service, least one month
whichever is pay or at least 1/2
higher month pay for every
year of service,
Redundancy 1. 1 month written
whichever is
notice to DOLE
and Employee
(4) Exercise is in good
2. separation pay
faith; and
equivalent to
(5) Fair and reasonable
one month pay
criteria in
or one month
ascertaining who
pay for every
will be affected
year of service,
(1) preferred
whichever is
status (e.g.
3. Good faith in
casual or
abolishing the
positions; and
(2) efficiency,
4. Fair and
(3) physical
criteria in
(4) age,
choosing those
(5) financial
affected (Asian


hardship, or prohibited by law

(6) seniority. or is prejudicial to
(Asian Alcohol his health as well
Corp. v. NLRC, as as to the health
1999) of his co-
employees. (Art.
General Standards: 284)
When retrenchment is (3) Separation pay
preventive rather than equivalent to at
curative least one month
(1) Losses expected pay or at least 1/2
are substantial and month pay for
not merely de every year of
minimis in extent; service, whichever
(2) Apprehended is higher; and
losses are (4) Medical
reasonably certification by a
imminent; competent public
(3) Retrenchment health authority
must be that the disease
reasonably cannot be cured
necessary to within 6 mos even
prevent the with proper
expected losses; medical treatment.
and (IRR Book VI Rule I
(4) Expected or actual Sec. 8)
losses must be
proved by sufficient
and convincing
evidence. (Lopez
Sugar Corp. vs.
Substantive Due Process
Federation of Free
Dismissal for any of the just or authorized
Workers, 1990)
causes under Arts. 282 284
Closure or Cessation of (1) Must be done in
Operations good faith (bona Right to counsel
fide) A very basic requirement of substantive due
(2) 1 month written process; it has to be observed. Indeed, the rights
notice to DOLE and to counsel and to due process of law are two of
Employee the fundamental rights guaranteed by the 1987
(3) Separation pay Constitution to any person under investigation,
equivalent to one be the proceeding administrative, civil, or
month pay or 1/2 criminal. [Salaw v. NLRC, 1991]
month pay for
every year of Procedural Due Process
service, whichever Employee must be given notice with adequate
is higher. opportunity to be heard before he/she is
Disease (1) Employee is notified of his/her actual dismissal for Cause.
suffering from any [Fujitsu v. CA, 2005]
(2) His continued ER may NOT substitute the required prior notice
employment is & opportunity to be heard with the mere


payment of 30 days' salary. [PNB v. Cabanag, + Due Process * if

2005] reinstatement
NOT possible =
First notice notice specifying the grounds
No Just or Dismissal Reinstatement
for which dismissal is sought
Authorized invalid + Full
Second notice notice of the decision to Cause + No Backwages
dismiss Due Process * if
Procedure to be observed in termination cases NOT possible =
separation pay
Basis for termination Requirements
Just or Dismissal valid Liable for
Just cause Art. 282 1. Notice specifying the Authorized damages due
grounds for which Cause + No to non-
dismissal is sought Due Process compliance
2. Hearing or with
opportunity to be heard procedural
3. Notice of the req'ts
decision to dismiss *separation
(Art. 277(b)) pay if for
Authorized Cause Notice to:
Arts. 283 & 284 1. Employee, &
to the effectivity of the BE HEARD
separation A formal or trial type hearing is not at all
times and in all instances essential to due
Requisites process; it is enough to that the parties are
(a) Notice not needed when Employee afforded fair and reasonable opportunity to
consented to the retrenchment or explain their side of the controversy.
voluntarily applied for one. [International [Mendoza vs. NLRC, 1991]
Hardware Inc. vs. NLRC, 1989] Summary proceeding may be conducted;
(b) Notice must be individual, not collective. written explanations, affidavits, position
[Shoppers Gain Supermart vs. NLRC, 1996]; papers or other pleadings may be used as
(c) Voluntary arbitration satisfies notice well; what is essential is the ample
requirement for authorized causes [Revidad opportunity to be heard. [Homeowners
vs. NLRC, 1995] Savings and Loan Assoc. Inc. vs. NLRC, 1996]
No formal hearing necessary when the
Consequences for non-compliance Employee already admitted his
responsibility for the act he was accused of.
Situation Effect Liability of ER [Magos v. NLRC, 1998]
What the law requires, as held in De Leon v.
Just or Dismissal valid No liability NLRC, cited by petitioners, is for the employer to
Authorized * separation inform the employee of the specific charges
Cause + Due pay if for against him and to hear his side or defenses.
Process authorized This does not however mean a full adversarial
cause proceeding. Litigants may be heard thru: (1)
No Just or Dismissal Reinstatement pleadings, written explanations, position
Authorized invalid + Full papers, memorandum; (2) oral argument. In
Cause Backwages both instances, the employer plays an active


role he must provide the employee the Serrano v. NLRC, 2000 Dismissal is valid.
opportunity to present his side and answer the EE is entitled to the
charges, in substantial compliance with due payment of full
process. Actual adversarial proceeding becomes backwages -
necessary only for clarification or when there is a Computed from the
need to propound searching questions to time of dismissal until
unclear witnesses. This is a procedural right the Court finds the
which the employee must, however, ask for it is dismissal to be for just
not an inherent right, and summary proceedings cause.
may be conducted. This is to correct the
common but mistaken perception that Current rule: Agabon v. Dismissal is valid (NO
procedural due process entails lengthy oral NLRC, 2004 reinstatement and
arguments. Hearing in administrative backwages)
proceedings and before quasi-judicial agencies BUT Employer to
are neither oratorical contests nor debating indemnify Employee in
skirmishes where cross examination skills are the form of nominal
displayed. Non-verbal devices such as written damages
explanations, affidavits, position papers or other
pleadings can establish just as clearly and Indemnity is stiffer than
concisely aggrieved parties' predicament or Wenphil Corp. vs.
defense. What is essential is ample opportunity NLRC to discourage
to be heard, meaning, every kind of assistance the practice of dismiss
that management must accord the employee to now, pay later.
prepare adequately for his defense. [as cited in Prior to 1989 Illegal dismissal
Manggagawa ng Komunikasyon sa Pilipinas v.
Burden of Proof DISMISSAL
The burden of proof is upon the employer. A finding of illegal dismissal entitles the
Employer must comply with due process Employee to:
requirements before any termination is (1) reinstatement without loss of seniority rights
done. [Gothong Lines, Inc. v. NLRC, 1999] and privileges, and
Unsubstantiated suspicions and baseless (2) full backwages inclusive of allowances and
conclusions by employers are not legal to benefits or their monetary equivalent
from the time withheld up to actual
justification for dismissing employees.
reinstatement [Art. 279]
[Maranaw Hotel and Resort Corp. v. NLRC,
Degree of Proof It is the restoration of an employee who was
Substantial evidence; proof beyond reasonable unjustly dismissed to the position from
doubt not required. [Manila Electric Co., Inc. v. which he was removed, that is, to his status
NLRC, 1991] quo ante dismissal [Santos vs. NLRC, 1987]
Note: An offer by Employer to re-employ the
Agabon doctrine Employee did not cure the vice of earlier
Prior to 1989 Illegal dismissal arbitrary dismissal. [Ranara v. NLRC, 1992]
An order for reinstatement must be
Wenphil Corp. v. NLRC, Dismissal isvalid (NO specifically declared and cannot be
1989 reinstatement and presumed; like back wages, it is a separate
- Belated Due Process backwages) and distinct relief given to an illegally
Rule BUT Employer to dismissed employee. [Gold City Integrated
indemnify Employee Port Service, Inc. v. NLRC, 1995]
for damages


Alternative to Reinstatement reinstatement would only exacerbate the

In lieu of reinstatement, Employee is entitled to tension and strained relations between the
separation pay of 1 month pay per year of parties or where the relationship between
service. [Gaco vs. NLRC, 1994] the employer and employee has been
unduly strained by reason of their
General Rule: Reinstatement is a matter of right irreconcilable differences, particularly where
to an illegally dismissed Employee. the illegally dismissed employee held a
managerial or key position in the company,
Exceptions: it would be more prudent to order payment
(1) Closure of business [Retuya vs. Dumarpa, of separation pay instead of reinstatement
2003] [Quijano v. Mercury Drug Corp.,1998]
(2) Economic business conditions: The
reinstatement remedy must always be Kinds of separation pay
adapted to economic-business conditions. (1) SP as a statutory requirement for authorized
[Union of Supervisors, etc. v. Sec. of Labor, causes
1984] (2) SP as financial assistance found in the next
(3) EEs unsuitability [Divine World High School section
vs. NLRC, 1986] (3) SP in lieu of reinstatement where
(4) EEs Retirement/Coverage [Espejo vs. NLRC, reinstatement is not feasible; and
1996] (4) SP as a benefit in the CBA or company policy

Prescription Period Computation

An action for reinstatement by reason of illegal SP as a statutory requirement is computed
dismissal is one based on an injury which may by integrating the basic salary with regular
be brought within 4 years from the time of allowances employee has been receiving
dismissal. [Art. 1146 of the Civil Code] [Planters Products Inc. v. NLRC, 1989);
allowances include transportation and
REINSTATEMENT PENDING APPEAL emergency living allowances [Santos v.
Art. 223 is clear that an award for reinstatement NLRC, 1987]
shall be immediately executory even pending Commissions may not be included since
appeal and the posting of a bond by the they must be earned by actual market
employer shall not stay the execution for transactions by employee [Soriano v. NLRC,
reinstatement. 1989]
A dismissed employee who has accepted
Reinstatement ordered by Labor Arbiter is self- separation pay is not necessarily estopped
executory; reinstatement ordered by NLRC is from challenging the validity of his or her
not and, though immediately executory, still dismissal. Neither does it relieve the
requires writ of execution. [Panuncillo vs. CAP employer of legal obligations. [Anino v.
Phil. Inc., 2007] NLRC, 1998]
According to St. Theresas School of Novaliches
Foundation v. NLRC (1998), backwages are
Strained Relation rule
earnings lost by a worker due to his illegal
If reinstatement is not feasible, expedient, dismissal; a form of relief that restores the
or practical, as where there is strained income lost by reason of such unlawful
relations between the parties, particularly dismissal; it is not private compensation or
where the illegally dismissed employee held damages; nor is it a redress of a private right
a managerial or key position [Quijano v. but, rather, in the nature of a command to the
Mercury Drug Corp. 1998] employer to make a public reparation for
Where reinstatement is not feasible, illegally dismissing an employee.
expedient or practical, as where


appertaining to him prior to his dismissal,

Effect of failure to order backwages but the award of backwages was limited to
A plain error which may be rectified, even if only one year considering the mitigating
employee did not bring an appeal regarding the circumstance of good faith attributed to the
matter [Aurora Land v. NLRC, 1997] employer. [San Miguel Corporation v. Javate,
Jr., 1992]
COMPUTATION The employee was terminated for her
Without deduction for their earnings elsewhere continuous absence without permission.
during the layoff [Bustamante v. NLRC, 1996] Although the Court found that the
employee was indeed guilty of breach of
Awards including salary differentials are not trust and violation of company rules, it still
allowed [Insular Life Assurance Co. v. NLRC, declared the employees dismissal illegal as
1987] it was too severe a penalty considering that
she had served the employer company for
21 years, it was her first offense, and her
The salary base properly used should be the leave to study the French language would
basic salary rate at the time of dismissal plus ultimately benefit the employer who no
the regular allowances; allowances include: longer had to spend for translation services.
Emergency cost of living allowances The Court awarded the said employee
(ECOLA), transportation allowances, 13th backwages limited to a period of two years,
month pay [Paramount Vinyl Product Corp. given that the employer acted without
v. NLRC, 1990] malice or bad faith in terminating the
Also included are vacation leaves, service employees services. [Dolores v. NLRC, 1992]
incentive leaves, and sick leaves
The effects of extraordinary inflation are not (2) Delay of the EE in filing the case for illegal
to be applied without an official declaration dismissal
thereof by competent authorities [Lantion v. The employee filed his ULP charge with
NLRC, 1990] reinstatement and back wages about two
years and fifteen days after his separation
LIMITATED BACKWAGES on April 10, 1961. The shortest prescriptive
period for the filing of all other actions for
General rule which the statute of limitations does not fix
An illegally dismissed employee is entitled to a period, is four years. The period of delay in
full backwages. instituting this ULP charge with claim for
reinstatement and back wages, although
Exceptions within the prescriptive period, should be
deducted from the liability of the employer
(1) The Court awarded limited backwages where to him for back wages. In order that the
the employee was illegally dismissed but the employee however should be relieved from
employer was found to be in good faith. proving his income during the period he was
out of the service and the employer from
The Court affirmed the consistent findings submitting counter-proofs, which may delay
and conclusions of the Labor Arbiter, the execution of the decision, the employer
(NLRC), and CA that the employee was was directed to the employee back wages
illegally dismissed since he was still fit to equivalent to one year, eleven months, and
resume his work; but the employers liability fifteen days without further
was mitigated by its evident good faith in disqualifications. [Mercury Drug Co., Inc. v.
terminating the employees services based CIR, 1974]
on the terms of its Health, Welfare and
Retirement Plan. Hence, the employee was Rationale
ordered reinstated to his former position Feati University Club vs. Feati University (1974)
without loss of seniority and other privileges adopted a consensus policy of pegging the


amount of backwages to their total equivalent (1) Bona fide suspension of the operation of a
for three years (depending on the circumstances) business or undertaking exceeding 6
without deduction or qualification. months [Valdez v. NLRC, 1998]
The rationale for the policy was stated in the (2) Floating status of more than 6 months [Agro
following words: Commercial Security Services v. NLRC, 1989]

As has been noted, this formula of awarding An involuntary resignation is resorted to 1) when
reasonable net backwages without deduction or continued employment is rendered impossible,
qualification relieves the employees from unreasonable, or unlikely; 2) when there is a
proving or disproving their earnings during their demotion in rank and/or a diminution in pay; 3)
lay-off and the employers from submitting or when a clear discrimination, insensibility or
counterproofs, and obviates the twin evils disdain by an employer becomes unbearable to
of Idleness on the part of the employee who the employee. [Phil. Wireless, Inc. v. NLRC, 1998]
would "with folded arms, remain inactive in the
expectation that a windfall would come to him" If an employee was forced to remain without
[Itogon Suyoc Mines, Inc. vs. Sangilo-Itogon work or assignment for a period exceeding 6
Workers Union (1968), as cited in Diwa ng months, then he is in effect constructively
Pagkakaisa vs. Filtex International Corp. (1972)] dismissed [Valdez v. NLRC, 1998]
and attrition and protracted delay in satisfying
such award on the part of unscrupulous
employers who have seized upon the further Management Prerogative
proceedings to determine the actual earnings of
the wrongfully dismissed or laid-off employees This Court held that the employers right to
to hold unduly extended hearings for each and conduct the affairs of his business, according to
every employee awarded backwages and its own discretion and judgment, is well-
thereby render practically nugatory such award recognized. An employer has a free reign and
and compel the employees to agree to enjoys wide latitude of discretion to regulate all
unconscionable settlements of their backwages aspects of employment. This is a management
award in order to satisfy their dire need. [See La prerogative, where the free will of management
Campana Food Products, Inc. vs. CIR, (1969) and to conduct its own affairs to achieve its purpose
Kaisahan ng Mga Manggagawa vs. La Campana takes form. [Torreda vs. Toshiba, 2007]
Food Products, Inc., (1970)].
So long as a companys management
prerogatives are exercised in good faith for the
PREVENTIVE SUSPENSION advancement of the employers interest and not
Preventive Suspension is a disciplinary for the purpose of defeating or circumventing
measure for the protection of the company's the rights of the employees under special laws
property pending investigation of any or under valid agreements, this Court will
alleged malfeasance or misfeasance uphold themEven as the law is solicitous of
committed by the employee. The employer the welfare of the employees, it must also
may place the worker concerned under protect the right of an employer to exercise
preventive suspension if his continued what are clearly management prerogatives. The
employment poses a serious and imminent free will of management to conduct its own
threat to the life or property of the employer business affairs to achieve its purpose cannot be
or of his co-workers. [PAL v. NLRC, 1998] denied. [Ernesto G. Ymbong vs. ABS-CBN
Preventive suspension is limited to 30 days; Broadcasting Corp., 2012]
any more than that amounts to constructive
dismissal. [Pido vs. NLRC, 2007] DISCIPLINE
The employers right to conduct the affairs of his
business, according to its own discretion and
The following constitute constructive dismissal:
judgment, includes the prerogative to instill
discipline in its employees and to impose


penalties, including dismissal, upon erring (2) The Employer has the right to transfer or
employees. This is a management prerogative assign Employees from one area of
where the free will of management to conduct operation to another, or one office to
its own affairs to achieve its purpose takes form. another or in pursuit of its legitimate
The only criterion to guide the exercise of its business interest,
management prerogative is that the policies, (3) Provided there is no demotion in rank or
rules and regulations on work-related activities diminution of salary, benefits and other
of the employees must always be fair and privileges and not motivated by
reasonable and the corresponding penalties, discrimination or made in bad faith, or
when prescribed, commensurate to the offense effected as a form of punishment or
involved and to the degree of the infraction. demotion without sufficient cause. [Westin
[Consolidated Food Corporation vs. NRLC, 1999] Phil. Plaza Hotel v. NLRC, 1999]
[St. Michaels Institute vs. Santos, 2001]
This prerogative extends to the managements
Right to dismiss or otherwise impose right to regulate, according to its own discretion
disciplinary sanctions upon an employee for just and judgment, all aspects of employment,
and valid cause, pertains in the first place to the including the freedom to transfer and reassign
employer, as well as the authority to determine employees from one are to another in order to
the existence of said cause in accordance with meet the requirements of the business is,
the norms of due process. [Makati Haberdashery, therefore, not general constitutive of
Inc. v. NLRC, 1989] constructive dismissal. Thus, the consequent
transfer of Trycos personnel, assigned to the
Management has the prerogative to discipline Production Department was well within the
its employees and to impose appropriate scope of its management prerogative.
penalties on erring workers pursuant to
company rules and regulations. [Jose P. Artificio When the transfer is not unreasonable, or
vs. NLRC, 2010] inconvenient, or prejudicial to the employee,
and it does not involve a demotion in rank or
It is obvious that the company overstepped the diminution of salaries, benefits, and other
bounds of its management prerogative in the privileges, the employee may not complain that
dismissal of Mauricio and Camacho. It lost sight it amounts to a constructive dismissal. [Bisig ng
of the principle that management prerogative Manggagawa sa TRYCO v. NLRC, 2008]
must be exercised in good faith and with due
regard to the rights of the workers in the spirit of It is management prerogative for employers to
fairness and with justice in mind. [Philbag transfer employees on just and valid grounds
Industrial Manufacuring Corp. vs. Philbag such as genuine business necessity. [William
Workers Union-Lakas at Gabay ng Barroga vs. Data Center College of the
Manggagawang Nagkakaisa, 2012] Philippines, 2011]

Although we recognize the right of employers to Even though transfers or reassignments per se
shape their own work force, this management are indeed valid and fall within the ambit of
prerogative must not curtail the basic right of management prerogatives, the exercise of these
employees to security of tenure [Alert Security & rights must remain within the boundaries of
Investigation Agency, Inc. vs. Saidali Pasawilan, justice and fair play. [Michelle T. Tuason vs. Bank
et. al., 2011]. of Commerce, 2012]


(1) An Employees right to security of tenure The employer has the right to demote and
does not give him such a vested right in his transfer an employee who has failed to observe
position as would deprive the company of proper diligence in his work and incurred
its prerogative to change his assignment or habitual tardiness and absences and indolence
transfer him where he will be most useful.


in his assigned work. [Petrophil Corporation vs. give it. [Kimberly-Clark Philippines, Inc. vs.
NLRC, 1986] Dimayuga, 2009]

In the consolidated cases of Leonardo vs. NLRC CHANGE OF WORKING HOURS

[G. R. No. 125303, June 16, 2000] and Fuerte vs. Further, management retains the prerogative,
Aquino [G. R. No. 126937, June 16, 2000], the whenever exigencies of the service so require, to
employer claimed that the employee was change the working hours of its employees. So
demoted pursuant to a company policy long as such prerogative is exercised in good
intended to foster competition among its faith for the advancement of the employers
employees. Under this scheme, its employees interest and not for the purpose of defeating or
are required to comply with a monthly sales circumventing the rights of the employees
quota. Should a supervisor such as the under special laws or under valid agreements,
employee fail to meet his quota for several this Court will uphold such exercise. [Sime
consecutive months, he will be demoted, Darby Pilipinas Inc. v. NLRC, 1998]
whereupon his supervisors allowance will be
withdrawn and be given to the individual who RULES ON MARRIAGE BETWEEN
takes his place. When the employee concerned EMPLOYEES OF COMPETITOR-EMPLOYERS
succeeds in meeting the quota again, he is re- In the recent case of Duncan Association of
appointed supervisor and his allowance is Detailman-PTGWO and Pedro Tecson v. Glaxo
restored. The Supreme Court held that this Wellcome Philippines, Inc., we passed on the
arrangement is an allowable exercise of validity of the policy of a pharmaceutical
company rights since an employer is entitled to company prohibiting its employees from
impose productivity standards for its workers. In marrying employees of any competitor
fact, non-compliance may be visited with a company. We held that Glaxo has a right to
penalty even more severe than demotion. guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential
GRANT OF BONUS programs and information from competitors.
A bonus is a gratuity or act of liberality of the We considered the prohibition against personal
giver which the recipient has no right to demand or marital relationships with employees of
as a matter of right [Aragon vs. Cebu Portland competitor companies upon Glaxos employees
Cement Co., 61 O.G. 4597]. It is something reasonable under the circumstances because
given in addition to what is ordinarily received relationships of that nature might compromise
by or strictly due the recipient. The granting of the interests of Glaxo. In laying down the
a bonus is basically a management prerogative assailed company policy, we recognized that
which cannot be forced upon the employer Glaxo only aims to protect its interests against
who may not be obliged to assume the onerous the possibility that a competitor company will
burden of granting bonuses or other benefits gain access to its secrets and procedures. [Star
aside from the employees basic salaries or Paper Corp. vs. Simbol, 2006]
wages xxx [Kamaya Point Hotel vs. National
Labor Relations Commission, Federation of Free POST-EMPLOYMENT BAN
Workers and Nemia Quiambao, G.R. No. 75289, In cases where an employee assails a contract
August 31, 1989]. [Traders Royal Bank vs. NLRC, containing a provision prohibiting him or her
1990] from accepting competitive employment as
against public policy, the employer has to
With regard to the private respondents claim adduce evidence to prove that the restriction is
for the mid-year bonus, it is settled doctrine that reasonable and not greater than necessary to
a grant of a bonus is a prerogative, not an protect the employers legitimate business
obligation of the employer. The matter of giving interests. The restraint may not be unduly harsh
a bonus over and above the workers lawful or oppressive in curtailing the employees
salaries and allowances is entirely dependent legitimate efforts to earn a livelihood and must
on the financial capability of the employer to be reasonable in light of sound public policy.
[Rivera v Solidbank, 2006]


Social Welfare Legislation (3) Employees (previously under compulsory

coverage) already separated from
employment or those self-employed (also
SSS LAW [RA 8282] under compulsory coverage) with no
realized income for a given month, who
COVERAGE chose to continue with contributions to
maintain right to full benefit.
COMPULSORY [Sec. 9 (a); Sec. 9-A]
(1) Employees not over 60 years including NOTE
domestic helpers with at least P1,000 Foreign governments, international
monthly pay; and organizations or their wholly owned
(2) Self-employed as may be determined by the instrumentality employing workers in the
Commission, but not limited to: Philippines may enter into an agreement with
(a) Self-employed professionals the Philippine government to include their
(b) Partners and single proprietors of employees in the SSS except those already
businesses covered by their civil service retirement
(c) Actors and actresses, directors, system.
scriptwriters, and news correspondents
who do not fall within the definition of EXCLUSIONS FROM COVERAGE [Sec.
the term employee under Section 8 (d) 8 (j)]
(d) Professional athletes, coaches, trainers (1) Employment purely casual and not for the
and jockeys purpose of occupation or business of the
(e) Individual farmers and fishermen employer;
(2) Service performed on or in connection with
A domestic worker who has rendered at least an alien vessel by an employee if he is
one (1) month of service shall be covered by the employed when such vessel is outside the
Social Security System (SSS), the Philippine Philippines;
Health Insurance Corporation (PhilHealth), and (3) Service performed in the employ of the
the Home Development Mutual Fund or Pag- Philippine Government or instrumentality or
IBIG, and shall be entitled to all the benefits in agency thereof;
accordance with the pertinent provisions (4) Service performed in the employ of a foreign
provided by law. government or international organization,
or their wholly-owned instrumentalities;
Premium payments or contributions shall be and
shouldered by the employer. However, if the (5) Services performed by temporary and other
domestic worker is receiving a wage of Five employees which may be excluded by SSS
thousand pesos (P5,000.00) and above per regulation. Employees of bona fide
month, the domestic worker shall pay the independent contractors shall not be
proportionate share in the premium payments deemed employees of the employer
or contributions, as provided by law. engaging the services of said contractors.

The domestic worker shall be entitled to all BENEFITS

other benefits under existing laws. [Sec. 30,
Kasambahay Law (RA 1036)] (1) Monthly pension [Sec. 12]
Computation of monthly pension
VOLUNTARY [Sec. 9] The monthly pension shall be the highest of the
(1) Spouses who devote full time to managing following amounts:
household and family affairs, unless they (a) P300 + [20% x (ave. monthly credit)] + [2% x
are also engaged in other vocation or (ave. monthy credit) x (# of cash credited
employment (which is subject of years of service in excess of 10 years)]; or
compulsory coverage); (b) 40% x (ave. monthly credit); or
(2) OFWs recruited by foreign-based employers;


(c) P1,000; provided, that the monthly pension difference is that the pension is paid directly to
shall in no case be paid for an aggregate the member.
amount of less than 60 months. In case the permanently disabled member dies,
(d) Notwithstanding the abovementioned, it would be given the same treatment as a
minimum pension is P1,200 for members retiree dying.
with at least 10 years credit service, P2,400
for those with 20 years. For permanent partial disability, the pension is
not lifetime. (e.g. loss of thumb entitles member
(2) Dependents pension [Sec. 12-A] to only 10 months of pension, while loss of arm
(a) Paid when member dies, retires or with 50 months). It shall be paid in lump sum if the
permanent total disability; period is less than 12 months.
(b) Paid to each child conceived on or prior to
contingency, but not exceeding 5, beginning For multiple partial disabilities, they shall be
with the youngest and preferring the additive when related or deteriorating the
legitimate; percentage shall be equal to the number of
(c) Amount is either P250 or 10% of the monthly months the partial disability is entitled to
pension as computed above, whichever is divided by 75 months. (e.g. loss of sight in one
higher. eye 25/75; loss of arm 50/75; if both
occur due to same cause, then 25/75 + 50/75 =
(3) Retirement benefits [Sec. 12-B] 100% so treated as if it were permanent total
(a) 120 monthly contributions; (5) Death benefits [Sec. 13]
(b) Age
(i) 65 years old; or ELIGIBILITY REQUIREMENT
(ii) A member who has reached 60 years 36 monthly contributions prior to the semester
may also avail if he is already separated of death.
from employ-ment or has ceased to be self-
employed. BENEFIT
Monthly pension to primary or secondary
BENEFIT beneficiaries.
Entitlement to monthly pension from retirement
Lump sum benefit which shall be the higher
Lump Sum Alternative Member may opt to between the two:
receive his first 18 monthly pensions in lump (1) (monthly pension) x 12; or
sum but such is discounted at a preferential rate (2) (monthly pension) x (# of monthly
of interest. contributions)

Lump Sum Eligible A 60 year old member (Funeral benefits [Sec. 13-B]
with less than 120 monthly contributions who is P12,000 in cash or in kind, upon death of
no longer employed or self-employed, and who member
is not continuing contributions independently,
he is entitled to a lump sum equal to his total (6) Loan
contributions paid.
Social Security Commission Resolution No. 669.
(4) Permanent disability benefits [Sec. 13-A] Moreover, several SSS-issued circulars such as
Circular No. 21-P and No. 52 pertain to the
ELIGIBILITY REQUIREMENT treatment of salary loans, sometimes providing
36 monthly contributions prior to the semester for more flexible payment terms or condonation
of disability; same as death benefit; only for delinquent payers; [Santiago v. CA and SSS,
GR # L-39949 (1984)] resolved an issue


involving the treatment of salary loan

repayments; SSS website also shows loans SECONDARY
Shall only receive when the primary
(7) Sickness benefits [Sec.14] beneficiaries are absent
(1) Dependent parents
(1) Inability to work due to sickness or injury Shall only receive when the primary and
(2) Confined for at least 4 days either in a secondary beneficiaries are absent
hospital or elsewhere with SSS approval; (1) Any other person designated by member as
(3) At least 3 months of contributions in the 12 his/her secondary beneficiary.
month period immediately before the
semester of sickness or injury has been paid; GSIS [RA 8291]
(4) All company sick leaves with pay for the
current year has been used up; COVERAGE
(6) Maximum of 120 days per 1 calendar year (so All public sector employees below the
maximum permissible for the same sickness compulsory retirement age of 65, irrespective of
and confinement is 240 days for 2 employment status.
consecutive years);
(7) The employer has been notified, or, if a EXCLUSIONS FROM COVERAGE
separated, voluntary or self-employed (1) AFP and PNP;
member, the SSS directly notified within 5 (2) Members of the Judiciary and Constitutional
days of confinement; Commissions who are covered only by life
(8) Notice to employer or SSS not needed when insurance as they have separate retirement
confinement is in a hospital; notice to schemes;
employer not required as well when (3) Contractual employees with no employer-
Employee became sick or injured while employee relationship with the agency they
working or within premises of the employer. serve.
Daily cash allowance paid for the number of
days a member is unable to work due to
(1) Monthly pension
sickness or injury equivalent to 90% x (average
The amount shall be:
daily salary credit)
(a) 37.5% x (revalued ave. monthly
(1) Maternity leave benefits [Sec. 14-A]
(b) Plus 2.5 x (revalued ave. monthly
Limited only to first four deliveries or
compensation) x (years in service in excess
of 15 years).
NOTE: All of these benefits are tax-exempt.
The monthly pension shall not exceed 90% of
the average monthly compensation.
It shall not be less than P2,400 for those with
PRIMARY 20 years of service and not less than P1,300 for
Dependent spouse until remarriage [See everyone else.
(1) Dependent children (legitimate, legitimated, (2) Retirement benefits
legally adopted, and illegitimate) [See above];
illegitimate children are entitled only to 50% of ELIGIBILITY REQUIREMENTS
the share of legitimate children unless there are (a) 15 years service;
no legitimate children, in which case, they get (b) 60 years of age; and


(c) Not receiving pension benefit from

permanent total disability. TO THE INELIGIBLE
If member has rendered at least 3 years of
NOTE service, then he shall receive cash payment
Retirement is compulsory for employees 65 equal to 100% of ave. monthly compensation
years of age who have rendered at least 15 for each year of service (essentially total amount
years of service; if employee has less than 15 of contributions made) or P12,000 whichever is
years of service, he may be allowed to higher.
continue in accordance with civil service laws.
BENEFIT Paid according to GSIS prescribed schedule
Choice between (this is similar to the scheme used by SSS; refer
(1) 60 x (basic monthly pension) lump sum to section II subsection D-3 above); member
payment at the time of retirement plus availing of permanent partial disability must
basic monthly pension payable monthly for satisfy condition E.1.a. above regarding the
life after expiry of the 5-year guaranteed disability not being due to his own fault and
period which is already covered by the lump either E.1.b.i. or E.1.b.ii. regarding employment
sum; or status and services rendered.
(2) Cash payment equivalent to 18 x (basic
monthly pension) plus monthly pension for (4) Death Benefits
life immediately but with no 5-year When member dies, the primary beneficiaries
guarantee are entitled to only one of the following:
(1) Survivorship pension
(3) Permanent disability benefits (a) If he was in the service when he died; or
(b) Even if separated from the service, he
ELIGIBILITY REQUIREMENTS FOR has at least 3 years of service and has
PERMANENT TOTAL DISABILITY paid 36 monthly contributions within
(a) Disability not due to employees own grave the 5 years immediately preceding
misconduct, notorious negligence, habitual death; or
intoxication, or willful intention to kill (c) Even if separated from the service, he
himself or another; has paid 180 monthly contributions
(b) Employee is: in service at the time of prior to death.
disability; or b) even if separated, he has (1) Survivorship pension plus cash payment of
paid at least 36 monthly contributions 100% ave. monthly compensation for every
within the 5-year period immediately prior year of service (so essentially, pension plus
to disability or has paid a total of at least total contributions made)
180 monthly contributions prior to disability; (a) If he was in the service when he died;
and and
(c) Member is not enjoying old-age retirement (b) With 3 years of service.
benefit. (2) Cash payment equivalent to 100% ave.
monthly compensation for each year of
BENEFIT FOR PERMANENT TOTAL service he paid contributions or P12,000
DISABILITY whichever is higher
Monthly income benefit for life equal to basic (a) With 3 years of service; and
monthly pension This is effective from date of (b) He has failed to qualify in the prior 2
disability; schemes.

If member is in service at the time of disability (5) Funeral benefits

and he has paid at least 180 monthly Fixed by GSIS rules and regulations
contributions, in addition to the monthly income
benefit, he shall receive an additional cash Entitled to this are the following:
payment of 18 times basic monthly pension. (1) Active member;


(2) Member separated from service but still essentially, the total amount of all
entitled to funeral benefit; contributions paid) or P12,000 whichever is
(3) Pensioner; higher.
(4) Retiree who at the time of retirement was of (2) Below 60 years of age and at least 15 years
pensionable age but opted to retire under of service: cash payment equivalent to 18 x
RA 1616. (monthly pension) at the time of resignation
or separation plus an old-age pension
(6) Loan benefit equal to basic monthly pension.
GSIS website provides for this
(9) Unemployment benefits [Sec. 11]
(7) Temporary disability benefits (similar to
(a) Employee separated from service due to
ELIGIBILITY REQUIREMENTS AND OTHER abolition of his office or position; and
CONDITIONS (b) Employee has been paying integrated 60
(a) Employee must be contributions for at least 1 year prior to
(i) in service at the time of disability; or separation.
(ii) if separated, he has rendered at least 3
years of service and paid at least 6 BENEFIT
monthly contributions in the 12 month Monthly cash payments of 50% of average
period immediately prior to disability; monthly compensation for a duration which is
(b) All sick leave credits including CBA sick proportional to years rendered, ranging from 2
leaves for the current year has been used months to 6 months.
up; and
(c) Maximum of 120 days per 1 calendar year (10) Survivorship benefits
(so maximum permissible for the same Beneficiaries are entitled to the following:
sickness and confinement is 240 days for 2 (1) Basic survivorship pension which is 50% of
consecutive years). basic monthly pension; and
(2) Dependent childrens pension not
BENEFIT exceeding 50% of the basic monthly
75% of the current daily compensation for every pension.
day or fraction thereof of disability or P70
whichever is higher. (11) Life insurance benefits

(8) Separation benefits NOTE

Judiciary and Constitutional Commissions are
ELIGIBILITY REQUIREMENTS entitled to life insurance only.
(1) 60 years of age, or separation from service
with at least 3 years but not over 15 years BENEFICIARIES
(2) Below 60 years of age, but at least 15 years PRIMARY
of service rendered. (1) Dependent spouse until remarriage;
(2) Dependent children (legitimate,
BENEFIT legitimated, legally adopted, and
(1) For 60 years of age or separated from illegitimate) but RA 8291 does not
service with 3 to 15 years of service: cash distinguish share of legitimate and
payment of 100% of ave. monthly illegitimate children.
compensation for each year of service (so
SECONDARY (1) Dependent parents
Shall only receive when the primary (2) Legitimate descendants, subject to the
beneficiaries are absent restrictions on dependent children


Enabling law
RA 1161 as amended by RA 8282: Social Security Act RA 8291 amending PD 1146
of 1997

Definition of Terms
Employer any person, natural or juridical, Employer National government, its political
domestic or foreign, who carries on in the subdivisions, branches, agencies or
Philippines any trade business, industry, instrumentalities, including government-owned or
undertaking, and uses the services of another controlled corporations and financial institutions
person who is under his orders as regards the with original charters (GOCCs); constitutional
employment, except those considered as employer commissions; and judiciary
under the GSIS. A self-employed person shall be
both employer and employee at the same time. Employee any person receiving compensation
while in service of an employer whether by election
Employee any person who performs services for or appointment, irrespective of status of
an employer in which either or both mental and appointment; baranggay officials; and sangguniang
physical efforts are used and who receives officials
compensation for such services, where there is an
employer-employee relationship; also, a self- Note: No counterpart for self-employed.
employed person who is both employee and
employer at the same time

Self-employed any person whose income is not

derived from employment, including, but not
limited to: (a) self-employed professionals; (b)
partners and single proprietors of businesses; (c)
actors, directors, scriptwriters, news correspondents
not considered as employees under the above
definition; (d) athletes, coaches, trainers, jockeys;
and individual farmers and fishers.
Dependents: Same except that a child here is below 18
(1) Legal spouse entitled by law to receive support;
(2) Child unmarried, not gainfully employed, and
below 21 or
(3) Child over 21 if he or she became permanently
incapacitated and incapable of self-support,
physically or mentally; child may be legitimate,
legitimated, legally adopted, or illegitimate;
Parent who is receiving regular support.
Beneficiaries Same except that RA 8291 does not distinguish
(1) Primary share of legitimate and illegitimate children
(a) Dependent spouse until remarriage [See
(b) Dependent children (see above); illegitimate
children are entitled only to 50% of the share of
legitimate children unless there are no
legitimate children, in which case, they get

PAGE 100

(2) Secondary shall only receive when the primary
beneficiaries are absent: Dependent parents
(3) Other any other person designated by the
member as his/her secondary beneficiary.
Compensation all actual remuneration for Compensation basic pay received excluding per
employment, including living allowance, as well as diems, bonuses, overtime, honoraria, allowances
the cash value of any remuneration paid in any and other emoluments not integrated into the basic
medium other than cash except that portion pay under existing laws.
already above the max salary credit under Sec. 18 of
the Act.
Compulsory Public sector employees below the compulsory
Employers as defined above; retirement age of 65.
Employees not over 60 years including household
helpers with at least P1,000 monthly pay; and Exceptions:
Self-employed. (1) AFP and PNP;
(2) Members of the Judiciary and Constitutional
Voluntary Commissions who are covered only by life insurance
Spouses who devote full time to managing as they have separate retirement schemes;
household and family affairs; Contractual employees with no employee-employer
relationship with the agency they serve.
OFWs recruited by foreign-based employers;
Employees already separated from employment
or those self-employed with no realized income
for a given month, who chose to continue with
contributions to maintain right to full benefit.

Note: Foreign governments, international

organizations or their wholly owned instrumentality
employing workers in the Philippines may enter into
an agreement with the Philippine government to
include their employees in the SSS except those
already covered by their civil service retirement
Effective Date of Coverage
Employer: 1 day of operation
Employee: 1st day at work
Self-employed: upon registration with SSS
Summary of Benefits
(1) Monthly pension (1) Monthly pension
(2) Dependents pension (2) Retirement benefits
(3) Retirement benefits (3) Permanent disability benefits
(4) Permanent disability benefits (4) Death Benefits
(5) Death benefits (5) Funeral benefits
(6) Funeral benefits (6) Loan GSIS website provides for this
(7) Loan Social Security Commission Resolution (7) Temporary disability benefits (similar to
No. 669. Moreover, several SSS-issued circulars sickness)
such as Circular No. 21-P and No. 52 pertain to (8) Separation benefits

PAGE 101

the treatment of salary loans, sometimes (9) Unemployment benefits Sec 11

providing for more flexible payment terms or (10) Survivorship benefits
condonation for delinquent payers; [Santiago v. (11) Life insurance benefits
CA and SSS, GR # L-39949 (1984)] resolved an
issue involving the treatment of salary loan Note: Judiciary and Constitutional Commissions are
repayments; SSS website also shows loans entitled to life insurance only.
(8) Sickness benefits
(9) Maternity leave benefits
Effects of separation from employment
(1) Employers contribution, and Continued membership for the unemployed
(2) Employees obligation to pay contribution both member; and entitlement to whatever benefits he
cease at the end of the month of separation; has qualified to in the event of any compensable
(3) EE shall be credited with all contributions paid contingency.
on his behalf and entitled to all benefits set
forth by the law.

Dispute Settlement
Social Security Commission CA (Rule 43; GSIS CA [Rule 43] SC [Rule 45]; appeal does
questions of law and fact) SC (Rule 45; questions not stay execution.
of law only)
Prescriptive Period
20 years 4 years

PAGE 102

LIMITED PORTABILITY LAW [RA by both Systems. [Sec. 2, IRR of Title II, Book
IV of LC]
7699] (5) Filipinos working abroad in the service of an
employer as defined in Section 3 hereof
COVERAGE shall be covered by the System, and entitled
(1) Workers who transfer employment from one to the same benefits as are provided for
sector to another; or employees working in the Philippines. [Sec.
(2) Those employed in both sectors (public and 5, IRR of Title II, Book IV of LC]
PROCESS Coverage of employees shall take effect on the
The covered worker shall have his credible first day of employment. [Sec. 6]
services or contributions in both Systems
credited to his service or contribution record in WHEN COMPENSABLE
each of the Systems and shall be totalized for Grounds:
purposes of old-age, disability, survivorship and (1) For the injury and the resulting disability or
other benefits in case the covered member does death to be compensable, the injury must
not qualify for such benefits in either or both be the result of accident arising out of and in
systems without totalization: Provided, however, the course of the employment.
That overlapping periods of membership shall (2) For the sickness and the resulting disability
be credited only once for purposes of or death to be compensable, the sickness
totalization [Sec. 3] must be the result of an occupational
disease listed under Annex A of these
Totalization shall refer to the process of Rules with the conditions set therein
adding up the periods of creditable services or satisfied, otherwise, proof must be shown
contributions under each of the Systems, for that the risk of contracting the disease is
purposes of eligibility and computation of increased by the working conditions.
benefits [Sec. 2e].
Overlapping periods of membership in case of No compensation shall be allowed to the
those employed in both sectors at once are to employee or his dependents when the injury,
be counted only ONCE for purposes of sickness, disability, or death was occasioned by
totalization to be able to satisfy eligibility any of the following:
requirements of benefits provided for by either (1) His intoxication;
SSS or GSIS. (2) His willful intention to injure or kill himself
or another; or
EMPLOYEES COMPENSATION (3) His notorious negligence
(4) As otherwise provided by law.
(1) Every employer shall be covered.
(2) Every employee not over sixty (60) years of
age shall be covered.
(3) An employee over sixty (60) years of age
shall be covered if he had been paying
contributions to the System prior to age
sixty (60) and has not been compulsorily
(4) An employee who is coverable by both the
GSIS and SSS shall be compulsorily covered

PAGE 103

Labor Relations Law mutual aid and protection. Whether employed

for a definite period or not, any employee shall
be considered as such, beginning on his first day
RIGHT TO SELF-ORGANIZATION of service, for purposes of membership in a
Basis of Right labor union. [UST Faculty Union v Bitonio]
1987 Constitution
Infringement of Right to Self-Organization
Art. III Sec. 8. The right of the people,
including those employed in the public and It shall be unlawful for any person to
private sectors, to form unions, associations, restrain, coerce, discriminate against or
or societies for purposes not contrary to law unduly interfere with employees and
shall not be abridged. workers in their exercise of the right to self-
organization.xxx [Art. 252]
Art. XIII Sec. 3. The state shall afford full The BLR correctly observed that the
protection to labor, local and overseas, recognition of the tenets of the [INC] sect
organized and unorganized, and promote full xxx should not infringe on the basic right to
employment opportunities for all. It shall self-organization granted by the
guarantee the rights of all workers to self- constitution to workers, regardless of
organization, collective bargaining and religious affiliation. [Kapatiran sa Meat and
negotiations, and peaceful concerted Canning Division v Calleja, 1988]
activities, including the right to strike in
Scope of Right to Self-Organization
accordance with law.
Right to form, join and assist labor
Labor Code organizations of their own choosing for the
Art. 249: All persons employed in commercial, purpose of collective bargaining through
industrial and agricultural enterprises and in representatives [Art. 252];
religious, charitable, medical, or educational Right to engage in lawful concerted
institutions, whether operating for profit or not, activities for the same purpose or for their
shall have the right to self-organization and mutual aid and protection [Art. 252];
to form, join, or assist labor organizations of Subsumed in the right to join, affiliate with,
their own choosing for purposes of collective or assist any union is the right NOT to join,
bargaining. affiliate with, or assist any union; or to leave
a union and join another one. [Heritage
Ambulant, intermittent, and itinerant workers, Hotel Manila v. PIGLAS-Heritage, 2009]
self-employed people, rural workers and The right of the employees to self-
those without any definite employers may organization is a compelling reason why
form labor organizations for their mutual aid their withdrawal from the cooperative must
and protection. be allowed. As pointed out by the union, the
resignation of the member-employees is an
Art. 250. Employees of government expression of their preference for union
corporations established under the membership over that of membership in the
corporation code shall have the right to cooperative. [Central Negros Electric
organize and to bargain collectively with their Cooperative v SOLE, 1991]
respective employers.
Right to Self-Organization: A Fundamental OF COLLECTIVE BARGAINING
Right (1) All employees (general rule)
Self-organization is a fundamental right (2) Government employees in civil service and of
guaranteed by the Philippine Constitution and government corporations under the Corporation
the Labor Code. Employees have the right to Code
form, join or assist labor organizations for the (3) Supervisors
purpose of collective bargaining or for their (4) Aliens with valid working permits

PAGE 104

(5) Security personnel Rationale - Supervisory employees, while in

the performance of supervisory functions,
(1) ALL Employees become the alter ego of the management in
Any employee, whether employed for a the making and the implementing of key
definite period or not, shall, beginning on decisions. It would be difficult to find unity
his first day of service, be considered as an or mutuality of interests in a bargaining unit
employee for purposes of membership in consisting of a mixture of rank-and-file and
any labor union. [Art. 283 (c)] supervisory employees. [Toyota Motor Phil.
Employees of non-profit organizations are Corp. v Toyota Motor Phil. Corp. Labor Union,
allowed to join, form and/or assist labor 1997]
organizations [FEU-Dr. Nicanor Reyes
Medical Foundation Inc. v Trajano, 1992] Effect of Mixed Membership
Art. 251-A. The inclusion as union members of
(2) Government Corporate Employees employees outside the bargaining unit shall
(Corporations created under the Corporation not be a ground for the cancellation of the
Code) registration of the union. Said employees are
The right to self-organization shall not be automatically deemed removed from the list
denied to government employees. [1987 of membership of said union.
Constitution, Art. IX-B, Sec. 2 (5)]
Same Federation or National Union
Art. 250. Employees of government Art. 251. The rank and file union and the
corporations established under the supervisors union operating the same
Corporation Code shall have the right to establishment may join the same federation
organize and to bargain collectively with their or national union.
respective employers. All other employees in
the civil service shall have the right to form (4) Aliens
associations for purposes not contrary to law. General rule: All aliens are strictly prohibited
from engaging directly or indirectly in all forms
All government employees can form, join, or of trade union activities.
assist employees organizations of their own
choosing for the furtherance and protection Exception: Aliens working in the country with
of their interests. They can also form, in valid permits issued by the DOLE are
conjunction with appropriate government nationals of a country which grants the same or
authorities, labor-management similar rights to Filipino workers. [Art. 275]
committees, work councils and other forms
of workers participation schemes to achieve The DFA provides the certification on the
the same objectives. [EO 180 Section 2] requirement of reciprocity. [Book V, Rule II, Sec.
2, Par. 1, 3rd sentence]
(3) Supervisory Employees
Art. 218 (m). Supervisory employees are those (5) Security Guards
who, in the interest of the employer, The security guards and other personnel
effectively recommend such managerial employed by the security service contractor
actions if the exercise of such authority is not shall have the right:
merely routinary or clerical in nature but (1) To form, join, or assist in the formation of
requires the use of independent judgment. a labor organization of their own choosing
Art. 251. Supervisory employees shall not be for purposes of collective bargaining and
eligible for membership in a labor (2) To engage in concerned activities which
organization of the rank-and-file employees are not contrary to law including the right to
but may join, assist or form separate labor strike. [D.O. No. 14 Series of 2001 Guidelines
organizations of their own. Governing the Employment and Working
Conditions of Security Guards and Similar

PAGE 105

Personnel in the Private Security Industry] (b) the supervisor must handle the
In Dec 1986, President Aquino issued EO prescribed responsibilities relating to labor
No. 111 which eliminated the provision on relations. [San Miguel Supervisors and
the disqualification of security guards and Exempt Union v Laguesma, 1997]
with that security guards were thus free to Rationale of Exclusion of Confidential
join a rank and file organization. Under the Employees - By the very nature of their
old rule, security guards were barred from functions, they assist and act in a
joining labor organizations of the rank-and- confidential capacity to, or have access to
file but under RA 6715, they may now freely confidential matters of, persons who
join a labor organization with the rank-and- exercise managerial functions in the field of
file or the supervisory union, depending on labor relations. (Thus there is a fiduciary and
their rank. [Manila Electric Co. v. SOLE, 1991] confidential relationship between manager
and employer.) It is not far-fetched that in
WHO CANNOT FORM, JOIN OR ASSIST the course of CB, they might jeopardize that
LABOR ORGANIZATIONS interest which they are duty bound to
(1) Managerial employees protect. [Metrolab Industries Inc. v. Roldan-
(2) Confidential employees Confessor, 1996]
(3) Non-employees The disqualification of managerial and
(4) Member-employee of a cooperative confidential employees from joining a
(5) Employees of international organizations bargaining unit for rank and file employees
(6) High-level government employees is already well-entrenched in jurisprudence.
(7) Members of the AFP, police officers, While Article 245 of the Labor Code limits
policemen, firemen and jail guards the ineligibility to join, form and assist any
labor organization to managerial
(1) Managerial Employees employees, jurisprudence has extended this
Art. 218 (m). Supervisory employees are those prohibition to confidential employees or
who, in the interest of the employer, those who by reason of their positions or
effectively recommend such managerial nature of work are required to assist or act
actions if the exercise of such authority is not in a fiduciary manner to managerial
merely routinary or clerical in nature but employees and hence, are likewise privy to
requires the use of independent judgment. sensitive and highly confidential records.
[Standard Chartered Bank Employees Union
Art. 251. Supervisory employees shall not be v SCB, 2008]
eligible for membership in a labor Function Test: nomenclature is not
organization of the rank-and-file employees controlling - The mere fact that an employee
but may join, assist or form separate labor is designated manager does not ipso facto
organizations of their own. make him one. Designation should be
reconciled with the actual job description of
(2) Confidential employees the employee. [Paper Indurstries Corp. of the
Those who assist or act in a confidential Philippines. v. Laguesma, 2000]
capacity persons who formulate, determine
and effectuate management policies in the (3) Non-Employees
field of labor relations (Nature of Access Respondents are found not to be employees
Test). of the Company, they are not entitled to the
The two criteria are cumulative, and both constitutional right to join or form a labor
must be met if an employee is to be organization for purposes of collective
considered a confidential employee that bargaining. Citing La Suerte Cigar and
is, Cigarette Factory v. Director of Bureau of
(a) the confidential relationship must exist Labor Relations the court here reiterated,
between the employees and his supervisor, The question of whether employer-
and employee relationship exists is a primordial

PAGE 106

consideration before extending labor the organization of rank-and-file government

benefits under the workmen's employees. [E.O. 180 Sec. 3].
compensation, social security, medicare,
termination pay and labor relations law. (7) Members of the AFP, Policemen, Police
Failure to establish this juridical relationship Officers, Firemen and Jailguards
between the union members and the E.O. 180 Guidelines for the exercise of the right
employer affects the legality of the union to organize of government employees section 4
itself. [Singer Sewing Machine Co. v. Drilon, excludes them from coverage.
Since the persons involved are not BARGAINING UNIT
employees of the company, they are not Bargaining Unit refers to a group of employees
entitled to the constitutional right to join or sharing mutual interests within a given
form a labor organization for purposes of employer unit, comprised of all or less than all
collective bargaining. [Republic Planters v. of the entire body of employees in the employer
Laguesma, 1996] unit or any specific occupational or
geographical grouping within such employer
(4) Employee-Member of Cooperative unit. [Book V, Rule 1, Sec. 1(d)]
Members of cooperatives are not eligible to
form, assist or join a labor org for the A group of employees of a given employer
purpose of CB, even though they do not comprised of all or less than all of the entire
participate in the actual management of the body of employees, which the collective
cooperative. Irrespective of their degree of interests of all the employees indicate to be best
participation, they are still co-owners. Thus suited to serve reciprocal rights and duties of
they cannot invoke the right to collective the parties consistent with equity to the
bargain because an owner cannot bargain employer [Belyca Corp. v. Calleja, 1988]
with himself or his co-owners. [Benguet
Electric Cooperative v. Ferrer-Calleja, 1989] Functions of an Appropriate Bargaining Unit
Exception: Employees who withdrew their (1) An ELECTORAL DISTRICT. It marks the
membership from the cooperative are boundaries of those who may participate in a
entitled to form or join a labor union for the certification election.
negotiations of a CBA. [CENECO v. DOLE, (2) An ECONOMIC UNIT. They are a group of
1991] employees with community of interests.
(3) A SOVEREIGN BODY. It selects the sole
(5) Employees of International Organizations and exclusive bargaining agent.
International organizations are endowed
with some degree of international legal Role of a bargaining unit 67
personality. They are granted jurisdictional The labor organization designated or
immunity. selected by the majority of the employees in
A certification election cannot be conducted an appropriate collective bargaining unit
in an international organization which the shall be the exclusive representative of the
Philippine Government has granted employees in such a unit for the purpose of
immunity from local jurisdiction. collective bargaining.
[International Catholic Migration Exception: However, an individual employee
Commission v. Calleja, 1990] or group of employees shall have the right at
any time to present grievances to their
(6) High-level or managerial employees employer. Any provision of law to the
High-level employees whose functions are contrary notwithstanding, workers shall
normally considered as policy-making or have the right, to participate in the policy
managerial or whose duties are of a highly and decision-making processes of the
confidential nature shall not be eligible to join establishment where they are employed
insofar as said processes will directly affect

PAGE 107

their rights, benefits and welfare. For this conglomeration of companies is a positive
purpose, workers and employers may form proof that a corporation is endowed with a
labor-management councils: Provided, that legal personality DISTINCTLY ITS OWN,
the representatives of the workers in such independent and separate from other
labor-management councils shall be corporations.
elected by at least the majority of all (3) Separate legitimate purposes militate
employees in said establishment. [Art. 261] against treating one corporation as an
adjunct or alter ego of the other.
CBA Coverage (4) The fact that the businesses are related,
When there has been a factual determination by that some of the employees are the same
the Labor Arbiter that the petitioners were persons working in the other company and
regular employees, said employees shall fall the physical plants, offices and facilities are
within the coverage of the bargaining unit and in the same compound are NOT sufficient to
are therefore entitled to CBA benefits as a justify piercing the corporate veil. In Umali
matter of law and contract. [Farley Fulache, et a. vs CA, legal corporate entity is disregarded
v ABS-CBN, 2010] only if it is sought to hold the officers and
stockholders directly liable for a corporate
Effect of Prior Agreement debt or obligation. [Indophil Textile Mills
Prior agreement as to the inclusion or Workers Union v. Calica, 1992; Diatagon
exclusion of workers in a bargaining unit or Labor Federation v. Ople, 1980]
prohibition from forming their own union
agreed upon by the corporation with the Spun-off corporations
previous bargaining representatives can The transformation of companies is a
never bind subsequent federations. [General management prerogative and business
Rubber & Footwear Corp. v BLR, 1987] judgment which the courts cannot look into
Rationale - It is a curtailment of the right to unless it is contrary to law, public policy or
self-organization. During the freedom morals. If, considering the spin-offs, the
period, the parties may not only renew the companies would consequently have their
existing collective bargaining agreement respective and distinctive concerns in terms of
but may also propose and discuss nature of work, wages, hours of work and other
modifications or amendments thereto. conditions of employment. The nature of their
[DLSU v. DLSUEA, 2000] products and scales of business may require
different skills, volumes of work, and working
Corporate Entities conditions which must necessarily be
Two companies having separate juridical commensurate by different compensation
personalities shall NOT be treated as a packages. [San Miguel Union v Confesor, 1996]
single bargaining unit.
Exception: Pervasive Unitary Aspect of TEST TO DETERMINE THE CONSTITUENCY
Management Doctrine - The cross-linking of OF AN APPROPRIATE BARGAINING UNIT
the agencies command, control, and 4 Factors:
communication systems indicate their (1) Will of the Employees (Globe Doctrine)
unitary corporate personality. [Philippine (2). Affinity and unity of employees interest
Scouts Veterans v. Torres] (3) Prior collective bargaining history
Principles in determining whether to establish (4) Employment status [UP v. Ferrer-Calleja,
separate bargaining units 1992]
(1) The existence of a bona fide business
relationship between the 2 companies is not Other factors:
proof of being a single corporate entity, (5) Geography and Location
especially when the services provided by the (6) Policy of avoiding fragmentation of the
other company are merely auxiliary. bargaining unit
(2) The fact that there are as many
bargaining units as there are companies in a (1) Globe Doctrine: Concept

PAGE 108

A practice designated as the "Globe basic test of an asserted bargaining unit's

doctrine," which sanctions the holding of a acceptability is whether or not it is
series of elections, not for the purpose of fundamentally the combination which will
allowing the group receiving an over all best assure to all employees the exercise of
majority of votes to represent all employees, their collective bargaining rights. [Belyca
but for the specific purpose of permitting Corp. v. Calleja, 1988]
the employees in each of the several
categories to select the group which each (5) Geography Location
chooses as a bargaining unit. [Kapisanan ng Geography and location only play a
mga Manggagawa sa Manila Road Co. v. significant role if:
Yard Crew Union, 1960] (a) The separation between the camps and
Rationale - Highly skilled or specialized the different kinds of work in each all 66
technical workers may choose to form their militate in favor of the system of separate
own bargaining unit because they may be in bargaining units;
better position to bargain with the employer (b) When the problems and interests of the
considering the market value of their skills. workers are peculiar in each camp or
(2) Community or Mutuality of Interests (c) The system of having one collective
The basic test of an asserted bargaining bargaining unit in each camp has operated
units ACCEPTABILITY is whether or not it is satisfactorily in the past. [Benguet
fundamentally the combination which will Consolidated Inc. and Balatok Mining Co. v.
best assure to all employees the exercise of Bobok Lumberjack Assn.,1958]
their CB rights. This is related to the policy
of the law in ensuring the right to collective (6) Policy of avoiding fragmentation of the
bargain. [UP-Ferrer-Calleja, 1992] bargaining unit
Rationale There are greater chances of It bears noting that the goal of the DOLE is
success for the collective bargaining geared towards "a single employer wide
process. The bargaining unit is designed to unit which is more to the broader and
maintain the mutuality of interest among greater benefit of the employees working
the employees in such unit. force." The philosophy is to avoid
Dissolve, change or expand a certain fragmentation of the bargaining unit so as
bargaining unit: When the interest between to strengthen the employees bargaining
groups has changed over time. power with the management. To veer away
from such goal would be contrary, inimical
(3) Prior Collective Bargaining History and repugnant to the objectives of a strong
The existence of a prior collective and dynamic unionism. [Phil. Diamond Hotel
bargaining history is neither decisive nor and Resort Inc v Manila Diamond Hotel and
conclusive in the determination of what Employees Union, 2006]
constitutes an appropriate bargaining unit. Since the confidential employees are very
[San Miguel Corp. v. Laguesma, 1994] few in number and are by practice and
tradition identified with the supervisors in
(4) Employment status their role as representatives of management
Among the factors to be considered are: vis--vis the rank and file employees, such
employment status of the employees to be identity of interest has allowed their
affected, that is the positions and categories inclusion in the bargaining of supervisors for
of work to which they belong, and the unity purposes of collective bargaining in turn as
of employees' interest such as substantial employees in relation to the company as
similarity of work and duties. In any event, their employer. This identity of interest
whether importance is focused on the logically calls for their inclusion in the same
employment status or the mutuality of bargaining unit and at the same time fulfills
interest of the employees concerned the the laws objective of insuring to them the
full benefit of their right to self-organization

PAGE 109

and to collective bargaining, which could All accompanying documents of the notice
hardly be accomplished if the respondent for voluntary recognition shall be certified
associations membership were to be under oath by the employer representative
broken up into five separate ineffective tiny and president of the recognized labor union.
units. Creating fragmentary units would not The employer may voluntarily recognize the
serve the interest of industrial peace. The representation status of a union in
breaking up of bargaining units into tiny unorganized establishments. In this case,
units will greatly impair their organizational however, the company [SLECC] was not an
value. [Filoil Refinery Corp. v Filoil unorganized establishment when it
Supervisory and Confidential Employees voluntarily recognized SMSLEC as its
Union, 1972] exclusive bargaining representative. Prior
to the voluntary recognition, another union
VOLUNTARY RECOGNITION [CLUP-SLECC] has already filed a petition
Voluntary Recognition refers to the process by for certification election. Thus, the
which a legitimate labor union is recognized by companys voluntary recognition of SMSLEC
the employer as the exclusive bargaining is void. [SLECC v Sec. of Labor, 2009]
representative or agent in a bargaining unit,
reported with the Regional office in accordance CERTIFICATION ELECTION
to Rule VII, Sec 2 of these Rules. [Book V, Rule I,
Certification election is the process of
Sec. 1 (bbb)]
determining, through secret ballot, the sole
and exclusive bargaining agent of the
employees in an appropriate bargaining
Substantive Requirements
unit, for purposes of collective bargaining.
(1) Unorganized establishment;
[Book V Rule I Sec. 1 (x)]
(2) Only one union asking for recognition;
(3) The members of the bargaining unit did not The certification election is the best method
object to the projected recognition of the union. of determining the will of the workers on the
[Book V, Rule VII, Sec. 2] crucial question of who shall represent
them in their negotiations with the
Procedural Requirements management for a collective bargaining
agreement that will best protect and
The notice of voluntary recognition shall be
promote their interests. It is essential that
accompanied by the original copy and two
there be no collusion against this objective
(2) duplicate copies of the following
between an unscrupulous management and
a union covertly supporting it while
(1) A joint statement under oath of voluntary
professing its loyalty to labor, or at least
recognition attesting to the fact of
that the hopes of labor be not frustrated
voluntary recognition
because of its representation by a union
(2) Certificate of posting of the joint
that does not enjoy its approval and
statement of voluntary recognition for
support. It is therefore sound policy that any
fifteen (15) consecutive days in at least
doubt regarding the real representation of
two (2) conspicuous places in the
the workers be resolved in favor of the
establishment or bargaining unit where
holding of the certification election. This is
the union seeks to operate;
preferable to the suppression of the voice of
(3) The approximate number of employees
the workers through the prissy observance
in the bargaining unit, accompanied by
of technical rules that will exalt procedure
the names of those who support the
over substantial justice. [Port Workers Union
voluntary recognition comprising at
of the Philippines v Laguesma, 1992]
least a majority of the members of the
bargaining unit; and Purpose
(4) A statement that the labor union is the The purpose of a certification election is
only legitimate labor organization precisely the ascertainment of the wishes of the
operating within the bargaining unit. majority of the employees in the appropriate

PAGE 110

bargaining unit: to be or not to be represented labor union that has the support and
by a labor organization, and in the affirmative confidence of the majority of the workers
case, by which particular labor organization. and is thus entitled to represent them in
[Reyes v Trajano, 1992] bargaining for the terms and conditions of
their employment. [Port Workers Union v.
Nature of proceeding DOLE, 1992]
It is not litigation, but a mere investigation Thus it should not be circumvented. There
of a non-adversary character. The object of should be no obstacle in conducting the
the proceedings is merely the determination Certification election. [George & Peter Lines,
of proper bargaining units and the Inc. v. Associated Labor Union, 1985]
ascertainment of the will and choice of the
employees in respect of the selection of the Who may vote
bargaining representative. The All employees whether union members or not,
determination of the proceeding does not as long as they belong to the appropriate
entail the entry of remedial orders or bargaining unit can vote.
redress of rights, but culmination solely in
an official designation of bargaining units Who may file a petition for certification election
and an affirmation of the employees (1) Legitimate labor organization (registered w/
expressed choice of bargaining agent. DOLE)
[Young Men Labor Union Stevedores v CIR, (2) Unregistered local chapter with charter
1965] certificate from national union or federation
It is the most democratic and most (3) National union or federation in behalf of its
efficacious/ effective way of determining the local/chapter
will of the bargaining unit. [Samahang (4) Employer (when requested to bargain
Manggagawa sa Permex v Sec. of Labor, collectively and no existing CBA)
It is a statutory policy. [Belyca Corp. v. Ferrer- Legitimate labor organization
Calleja, 1998] Art. 218 (f). "Legitimate labor organization"
means any labor organization duly registered
Certification Election Union Election with the Department of Labor and
Employment, and includes any branch or local
To determine the To elect union officers thereof.
Exclusive Bargaining
Agent Unregistered local/chapter with charter
All members of the Only union members certificate
appropriate bargaining may vote. Art 240-A, introduced by RA 9481. A duly
unit may vote. registered federation or national union may
directly create a local chapter by issuing a
Certification election is the fairest and most charter certificate indicating the
effective way of determining which labor establishment of the local chapter. The
organization can truly represent the working chapter shall acquire legal personality only for
force. It is a fundamental postulate that the purposes of filing a petition for certification
will of the majority given expression in an election from the date it was issued a charter
honest election with freedom on the part of certificate.
the voters to make their choice, is
controlling. [PLUM Federation of Industrial National union/federation
and Agrarian Workers v Noriel, 1978] Art. 263. In any establishment where there is
Implications no certified bargaining agent, a certification
election shall automatically be conducted by
Technical rules and objections should not
the Med-Arbiter upon filing of a petition by
hamper the correct ascertainment of the
any legitimate labor organization, including a

PAGE 111

national union or federation which has already Certification Election In an Unorganized

issued a charter certificate to its local/chapter Establishment
participating in the certification election, or a
local/chapter which has been issued a charter Procedure
certificate by the national union or federation. (1) A petition for certification shall be filed by a
In cases where the petition was filed by a legitimate labor organization.
national union or federation, it shall not be (2) Upon filing of the petition, the Med- Arbiter
required to disclose the names of the local shall automatically conduct a certification
chapters officers and members. election.

Employer Filing of petition is by a legitimate labor

Art. 264. When requested to bargain It cannot be an unregistered labor
collectively, an employer may petition the organization. This is best read in relation to
Bureau for an election. Art. 242 which enumerates the rights
granted to a legitimate labor organization
Bystander rule and one of those rights is the right to be
The employer shall not be considered a chosen as the exclusive bargaining
party in the petition with a concomitant representative. This is one way the law
right to oppose a petition for certification encourages union registration.
election. The employers participation shall
be limited to: Venue
(1) being notified or informed of petitions of BLR Regional Office which issued the
such nature petitioning unions certificate of registration or
(2) submitting the list of employees during certificate of creation of chartered local.
the pre-election conference should the
Med-arbiter act favorably on the petition Certification Election In an Organized
[Art 258-A introduced by RA 9481] Establishment
A companys interference in the CE creates Procedure
a suspicion that it intends to establish a (1) A verified petition questioning the majority
company union. [Oriental Tin Can Labor status shall be filed by a legitimate labor
Union v. Secretary of Labor, 1998] organization
The employer is not a party to a certification (2) It must be filed within the 60-day period
election, which is the sole or exclusive before expiration of CBA (freedom period)
concern of the workers. The only instance (3) Supported by written consent of at least
when the employer may be involved in that 25% of ALL employees in the bargaining unit
process is when it is obliged to file a petition (substantial support)
for certification election on its workers
request to bargain collectively pursuant to Substantial support rule
Art. 258. [Hercules Industries, Inc. v Sec. of In organized establishments, the incumbent
Labor, 1992] sole bargaining agent should not be easily
Employer is a total stranger in the process replaced for that would disturb industrial
of certification election. Employer has no peace. To justify the disturbance, it must
standing to file a motion to dismiss. [PT&T v appear that at least a substantial number
Laguesma, 1993] (25% requirement) seeks to have a new
exclusive bargaining unit.
Venue for filing the petition A union that is merely filing a MOTION FOR
BLR Regional Office which issued the INTERVENTION in a CE filed by another
petitioning unions certificate of registration or union need NOT present substantial
certificate of creation of chartered local. support. The substantial support is only
needed when filing for a petition for

PAGE 112

certification election. [Port Workers Union v. ground that the rules and regulations or parts
DOLE, 1992] established by the Secretary of Labor for the
conduct of election have been violated.
Double majority requirement (voters, valid votes) Organized vs. Unorganized Establishment
Art. 262. To have a valid election, at least a Art. 256 Art. 257
majority of all eligible voters in the unit must Organized Unorganized
have cast their votes. The labor union
receiving the majority of the valid votes cast Bargaining Existing, has None
shall be certified as the exclusive bargaining agent one
agent of all the workers in the unit. Petition filed Has to be a No need to be
VERIFIED verified
Discretionary rule petition
If the petition does not comply with the Freedom No petition for Not applicable.
substantial support requirement, the BLR may Period Certification
exercise its discretion in determining whether or election No freedom
not a certification election must be conducted. EXCEPT within period.
(Scout Albano Memorial College v. Noriel, 1978) 60 days before Can file
the expiration petition
Effect of withdrawal of signatures of the collective anytime.
The employees withdrawal from a labor bargaining
union made before the filing of the petition agreement
for certification election is presumed (See Art. 253 &
voluntary, while withdrawal after the filing 253-A)
of such petition is considered to be
involuntary and does not affect the petition. Take note how
[S.S. Ventures International vs. S.S. Ventures SC interpreted
Labor Union, 2008] the term
If performed after the filing of the petition, WITHIN.
the withdrawal is presumed to be
involuntary and that it was procured What is the
through duress, coercion, or for a valuable rationale of
consideration. [Oriental Tin Can Labor Union freedom period
v. Secretary of Labor and Employment, 1998] in Organized
Forced Intervenor why is there
The incumbent bargaining agent shall none in
automatically be one of the choices in the unorganized
certification election as forced intervenor. [Book establishments?
V Rule VIII Sec. 7] It has
69 something to
Substantial support not necessary in intervention do with
The requisite written consent representing industrial
substantial support of the workers in the peace
bargaining unit [as required in Art. 256 applies
to petitioners for certification only, and not to Substantial Must be duly NO substantial
motions for intervention. [PAFLU v Calleja, 1989] support rule supported by support rule.
25% of ALL WHY?
Appeal from order of Med-Arbiter holding THE MEMBERS Intention of law 71
certification election OF THE is to bring in
APPROPRIATE the union, to
Art. 265. Appeal to Secretary of Labor on the BARGAINING implement

PAGE 113

UNIT. policy behind A petition for certification election may be

Percentage Art. 211a. filed anytime, EXCEPT:
base: all xxx when a bargaining deadlock to which an
members of an incumbent or certified bargaining agent is a
appropriate party had been submitted to conciliation or
bargaining arbitration or had become the subject of a
unit. valid notice of strike or lockout [Book V, Rule
What is intent VIII, Sec. 3 (c)]
and purpose of A deadlock is defined as the counteraction
law for requiring of things producing entire stoppage; a state
the substantial of inaction or of neutralization caused by
support rule? the opposition of persons or of factions (as
Law wants to in government or voting body); standstill.
know the [Divine World University v Sec of Labor and
intention of the Employment, 1992]
employees. If
they really (4) Contract Bar Rule
want a CE, Art. 238. The Bureau shall not entertain any
since they petition for certification election or any other
already have a action which may disturb the administration
bargaining of duly registered existing collective
agent. bargaining agreements affecting the parties
except under Articles 253, 253-A and 256 of
Bars to certification election this code.
(1) One year bar rule
(2) Negotiation bar rule The contract bar rule shall not apply:
(3) Deadlock bar rule (1) When the petition is filed during the
(4) Contract bar rule freedom period in Articles 253, 253-A, and
(1) One year bar rule (2) When the CBA is incomplete
No certification election may be held within (3) When the CBA is substandard
1 year from the fact that voluntary (4) When the CBA is prematurely renewed
recognition has been entered, or a valid (5) When the CBA is unregistered
certification, consent or run-off election has No petition for certification election may be
been conducted within the bargaining unit. filed after the lapse of the freedom period.
If appealed, the reckoning period is the date The old CBA is extended until a new one is
when the decision becomes final and agreed upon by the parties. [Colegio de San
executory. [Book V, Rule VIII, Sec 3 (a)] Juan de Letran v. Assoc., 2000]
(2) Negotiation bar rule Freedom Period
A petition for certification election may be The last 60 days in a Collective Bargaining
filed anytime EXCEPT: Agreement (CBA) is referred to as the
(1) When the duly certified union has freedom period when rival union
commenced and sustained negotiations in representation can be entertained during
good faith with the employer the existence of a CBA. It is during this
(2) In accordance with Art. 250 of the Labor particular period when the majority status
Code of the incumbent bargaining agent can be
(3) Within one year after the certification challenged. [Tanduay Distillery Labor Union
election. [Book V, Rule VIII, Sec 3 (b)] v. NLRC, 1987]
The purpose of the prohibition against the
(3) Deadlock bar rule filing of a petition for certification election

PAGE 114

outside the so-called freedom period is to that until decided, shall suspend or bar
ensure industrial peace between the proceedings for certification election.
employer and its employees during the If it were a labor organization objecting to
existence of the CBA. [Republic Planters the participation in a certification election of
Bank Union v. Laguesma, 1996] a company-dominated union, as a result of
The premature renewal of a CBA cannot bar which a complaint for an unfair labor
the holding of a certification election by practice case against the employer was
virtue of a bona fide petition filed within the filed, and when the court finds that said
freedom period if the clear intention was to union is employer-dominated in the unfair
frustrate the constitutional right of the labor practice case, the union selected
employees to self-organization. [Associated would be decertified and the whole election
Labor Union v. Calleja, 1989] proceedings would be rendered useless and
What is prohibited is the filing of the nugatory.' There would be an impairment of
petition for certification election outside the the integrity of the collective bargaining
60-day freedom period. The signing of the process if a company-dominated union
authorization to file was merely preparatory were allowed to participate in a certification
to the filing of the PCE, or an exercise of the election. [United CMC Textile Workers Union
right to self-organization. [PICOP Resources v. BLR, 1984]
Inc. v. Ricardo Dequita, 2011]
Certification Election; Other Requirements
Petition for cancellation of union registration Posting of Notice
does not bar certification election Who: Election Officer shall cause the
Certification election can be conducted despite posting
pendency of a petition to cancel the union What: notice of election
registration certificate. For the fact is that at the Where: 2 conspicuous places in company
time the union, whose registration certificate is premises
sought to be cancelled, filed its petition for When: at least 10 days before actual
certification, it still had legal personality to election
perform such act absent an order directing its
cancellation. [Samahan ng mga Manggagawa v Contents of Notice
Laguesma, 1997] (a) Date and Time of election;
(b) Names of all contending unions;
Suspension of Election: Prejudicial Question (c) Description of the bargaining unit
Rule (d) List of eligible and challenged Voters.
Formal charge of ULP against the employer
for establishing a company union triggers The posting of the notice of election, the
suspension. [B.F. Goodrich Phils. Marikina v. information required to be included therein and
B.F. Goodrich Confidential and Salaried the duration of the posting cannot be waived by
Employees Union] the contending unions or the employer. [Book V
Note: The ONLY party who could ask for the Rule IX Sec 6, IRR]
suspension of the CE is the labor union
which filed a complaint for ULP against the Voting List and Voters
employer. The basis of determining voters may be agreed
Rationale - If there is a union dominated by upon by the parties (i.e. the use of payroll).
the company, to which some of the workers [Acoje Workers Union v NAMAWU, 1963]
belong, an election among workers and
employees of the company would not All Employees entitled to vote
reflect the true sentiment and wishes of the All rank-and-file employees in the
said workers and employees because the appropriate bargaining unit. The Code
votes of the members of the dominated makes no distinction as to their
union would not be free. Such charge of employment status. All they need to be
company domination is a prejudicial question

PAGE 115

eligible to support the petition is to belong Requirements

to a bargaining unit. [Airtime Specialists, Inc. (1) majority of the bargaining unit voted (first
v Director of BLR, 1990] majority of the double majority rule)
Employees who have been improperly laid (2) three or more choices (note: no union is a
off but who have a present, unabandoned choice)
right to or expectation of reemployment, are (3) not one of the choices receives a majority of
eligible to vote in certification elections. If the valid votes cast
the dismissal is under question, employees (4) total number of votes for all contending
concerned could still qualify to vote in the unions is at least 50% of the total number of
elections. [Philippine Fruits v Torres, 1992] votes cast (this means that at least 50% of the
bargaining unit wants to have a union)
Rationale for Non-Distinction Policy (5) the run-off election shall be conducted
Collective bargaining covers all aspects of the between the labor unions receiving the two
employment relation and the resultant CBA highest number of votes
binds all employees in the bargaining unit. All
rank and file employees, probationary or Illustration
permanent, have a substantial interest in the The CBU has 100 members and eighty of
selection of the bargaining representative. [Reyes which voted. Union A= 30; Union B= 15;
v. Trajano, 1992] Union C=15 and No Union= 20. There
were no invalid votes. Since none got the
Effect of Non-participation in previous election majority of the 80 valid votes and the
Failure to take part in previous elections is no contending unions obtained 60 votes, which
bar to the right to participate in future elections. even exceed one-half (), a run-off election
No law, administrative rule or precedent is proper. The run-off will be between the
prescribes forfeiture of the right to vote by labor unions receiving the two highest
reason of neglect to exercise the right in past number of votes. The rematch is NOT
cases. [Reyes v. Trajano, 1992] between two unions but between two
highest votes. Thus the run-off will be
Challenge Voter among Union A, B and C. [Azucena]
An employer has no standing to question a
certification election since this is the sole At the expiration of the freedom period, the
concern of the workers but may question the employer shall continue to recognize the
inclusion of any disqualified employee in the majority status of incumbent bargaining
certification election during the exclusion- agent where no petition for certification
inclusion proceedings before the representation election is filed.
officer. [Phil. Telephone & Telegraph Co. v
Laguesma, 1993] RE-RUN ELECTION
A motion for the immediate holding of another
Voting Day certification or consent election can be filed
The election shall be set on a regular business within six (6) months from the date of the
day. [Book V Rule IX Sec. 2, IRR] declaration of failure of election. [Book V, Rule IX
Sec 18]
Run-Off refers to an election between the labor CONSENT ELECTION
unions receiving the two (2) higher number of Consent Election means the election
voters when a certification election which voluntarily agreed upon by the parties to
provides for three (3) or more choices results in determine the issue of majority
no choice receiving a majority of the valid votes representation of all the workers in the
cast, where the total number of votes for all appropriate collective bargaining unit.
contending unions is at least fifty percent (50%) The contending unions may agree to the
of the number of votes cast. holding of an election. In which case, it shall

PAGE 116

be called a consent election. The Med- Independent Union A labor organization

Arbiter shall forthwith call for the consent operating at the enterprise level that required
election reflecting the parties agreement legal personality through independent
and the call in the minutes of the registration under Art. 234 of the Labor Code
conference. [Book V RVIII Sec 10] and Rule III Sec. 2-A of the IRR. [Book V Rule 1
Sec. 1 (w)]
Certification Consent
election Election Chartered Local (Local Chapter) - A labor
organization in the private sector operating at
Purpose Aimed at Merely to
the enterprise level that acquired legal
determining determine the
personality through the issuance of a charter
the sole and issue of
certificate by a duly registered federation or
exclusive majority
national union, and reported to the Regional
bargaining representation
Office in accordance with Rule III Sec. 2-E of the
agent of all of all the
IRR. (Book V Rule 1 Sec. 1 (i)])
employees in workers in the
an appropriate appropriate
National Union or Federation a group of
bargaining unit collective
legitimate labor unions in a private
for the purpose bargaining unit
establishment organized for collective
of collective
bargaining or for dealing with employers
concerning terms and conditions of
employment for their member union or for
1st Level of
participating in the formulation of social and
Choice: Yes
employment policies, standards and programs,
Union or No
registered with the BLR in accordance with Rule
III Sec. 2-B of the IRR. [Book V Rule 1 Sec. 1 (kk)]
2nd Level of
Purpose of affiliation
Choice: If Yes
Union wins, To foster the free and voluntary
WHICH union. organization of a strong and united labor
(UST Faculty movement [Art 211, LC]
Union v. The sole essence of affiliation is to increase,
Bitonio, 1999) by collective action, the common bargaining
power of local unions for the effective
Conduct Ordered by the Voluntarily enhancement and protection of their
DOLE agreed upon by interests. Admittedly, there are times when
the parties, without succor and support local unions
with or w/o may find it hard, unaided by other support
intervention groups, to secure justice for themselves.
from DOLE [Philippine Skylanders v. NLRC, 1992]


LOCAL UNION FROM THE MOTHER UNION The mother union, acting for and in behalf of its
Affiliate An affiliate is an independent union affiliate, had the status of an agent while the
affiliated with a federated, national union or a local remained the basic unit of the association,
chartered local which was subsequently granted free to serve the common interest of all its
independent registration but did not disaffiliate members, subject only to restraints imposed by
from its federation, reported to the Regional the constitution and by the by-laws of the
Office and the Bureau in accordance with Rule association. The same is true even if the local is
III Secs. 6 and 7 of the IRR. [Book V Rule 1 Sec. 1 not a legitimate labor organization. [Filipino
(a)] Pipe and Foundry Corp v. NLRC, 1998]

PAGE 117

Effect of Affiliation Art. 247 (d). The members shall determine by

Locals remain the basic units of association, secret ballot, after due deliberation, any
free to serve their own and the common question of major policy affecting the entire
interest of all. Inclusion of FFW in the membership of the organization, unless the
registration is merely to stress that they are nature of the organization or force majeure
its affiliates at the time of registrations. It renders such secret ballot impractical, in
does not mean that said local unions cannot which case, the board of directors of the
stand on their own. Affiliation does not organization may make the decision.
mean they lost their own legal personality.
[Adamson v CIR, 1984] Effect of disaffiliation
Note: A rank-and-file union and a A registered independent union retains its legal
supervisory union may be affiliated with the personality while a chartered local loses its
same federation. legal personality unless it registers itself.

Disaffiliation Substitutionary doctrine

General rule: Local unions may disaffiliate from The "substitutionary" doctrine provides that
the mother union. the employees cannot revoke the validly
executed collective bargaining contract with
Limitations: their employer by the simple expedient of
Terms of the affiliation agreement (e.g. changing their bargaining agent. And it is in
agreement may require 2/3 vote to the light of this that the phrase "said new
disaffiliate instead of a majority) [Phil. agent would have to respect said contract"
Skylanders v. NLRC] must be understood. It only means that the
A local union, being a separate and employees, thru their new bargaining agent,
voluntary association, is free to serve the cannot renege on their collective bargaining
interests of all its members. It has the right contract, except of course to negotiate with
to disaffiliate or declare its autonomy from management for the shortening thereof.
the federation to which it belongs when [Benguet Consolidated v. BCI Employees and
circumstances warrant, in accordance with Workers Union-PAFLU, 1998]
the constitutional guarantee of freedom of Conditions:
association, and such disaffiliation cannot (a) change of bargaining agent (through
be considered disloyalty. [Malayang affiliation, disaffiliation, or other means)
Samahan ng mga Manggagawa v. Ramos, (b) existing CBA with the previous
2000] bargaining agent
The locals are separate and distinct units Effects:
primarily designed to secure and maintain (1) new bargaining agent cannot revoke and
an equality of bargaining power between must respect the existing CBA
the employer and their employee-members; (2) it may negotiate with management to
and the association of the locals into the shorten the existing CBAs lifetime
national union was in furtherance of the
same end. These associations are UNION DUES AND SPECIAL ASSESSMENTS
consensual entities capable of entering into Union dues are payments to meet the unions
such legal relations with their member. The general and current obligations. The payment
essential purpose was the affiliation of the must be regular, periodic, and uniform.
local unions into a common enterprise to [Azucena]
increase by collective action the common
bargaining power in respect of the terms
and conditions of labor. [Tropical Hut
Employees Union v. Tropical Hut Food
Market Inc., 1990]
Disaffiliation Must be by a Majority Decision

PAGE 118

Art. 247 (h). Every payment of fees, dues or Art. 228 (b). No attorneys fees, negotiation
other contributions by a member shall be fees or similar charges of any kind arising
evidenced by a receipt signed by the officer or from any collective bargaining negotiations or
agent making the collection and entered into conclusion of the collective agreement shall
the record of the organization to be kept and be imposed on individual member of
maintained for the purpose. contracting union. Provided, however, that
attorneys fees may be charged against union
Special assessments payments for a special funds in an amount to be agreed upon by the
purpose, especially if required only for a limited parties. Any contract, agreement or
time. [Azucena] arrangement of any sort to the contrary shall
be null and void.
Art. 247 (n). No special assessment or other
extraordinary fees may be levied upon the General Rule: attorneys fees, negotiation fees,
members of a labor organization unless and similar charges should be charged against
authorized by a written resolution of a the union funds and not as a special
majority of all the members of a general assessment. However, if a special assessment is
membership meeting duly called for the required to pay such fees, then the
purpose. requirements above must be satisfied.

Art. 247 (o). Other than for mandatory Strict compliance for special assessment
activities under the Code, no special There must be strict and full compliance with
assessments, attorneys fees, negotiation fees the requisites. Substantial compliance is not
or any other extraordinary fees may be enough. [Palacol v. Ferrer-Calleja]
checked off from any amount due to an
employee without an individual written Jurisdiction over Check-off disputes
authorization duly signed by the employee. The Bureau of Labor Relations has
The authorization should specifically state the jurisdiction to hear, decide and to mete out
amount, purpose and beneficiary of the punishment any reported violation under
deduction. Article 241
Note: Sec of Labor or his duly authorized
Requirements for validity representative may inquire into financial
(1) Authorization by written resolution of activities of legitimate labor orgs UPON
majority of ALL the members at the general filing of complaint under oath and
membership meeting called for that purpose supported by written consent of at least
(2) Secretarys record of the minutes of the 20% of total membership, Provided, such
meetings attested to by the president. inquiry shall not be conducted during (60)-
(3) Individual written authorization for check-off day freedom period nor within the thirty (30)
duly signed by the employees concerned. days immediately preceding the date of
election of union officials [Art. 274].
Check-off A process or device whereby the
employer, on agreement with the Union, AGENCY FEES
recognized as the proper bargaining Agency fee an amount, equivalent to union
representative, or on prior authorization from dues, which a non-union member pays to the
the employees, deducts union dues or agency union because he benefits from the CBA
fees from the latters wages and remits them negotiated by the union. [Azucena]
directly to the Union. [Marino v Gamilla, 2009]
Rationale for allowing agency fees
Attorneys fees, negotiation fees, and similar Avoiding unjust enrichment on the part of non-
charges union members who benefit from the union's
efforts without paying any fee therefor, unlike
the members of the bargaining agent.

PAGE 119

Art. 217 (a). To promote and emphasize the

Requisites for assessment primacy of free collective bargaining and
Art. 254 (e). Employees of an appropriate negotiations, including voluntary arbitration,
bargaining unit who are not members of the mediation and conciliation, as modes of
recognized collective bargaining agent may setting labor or industrial disputes.
be assessed a reasonable fee equivalent to
the dues and other fees paid by members of Book V Rule XVI Sec. 1. It is the policy of the
the recognized collective bargaining agent, if State to promote and emphasize the primacy
such non-union members accept the benefits of free and responsible exercise of the right to
under the collective bargaining agreement: self-organization and collective bargaining,
Provided, that the individual authorization either through single enterprise level
required under Article 242, paragraph (o) of negotiations or through the creation of a
this Code shall not apply to the non-members mechanism by which different employers and
of the recognized collective bargaining agent. recognized certified labor unions in their
establishments bargain collectively.
(1) Non-member of SEBA
(2) Member of Collective Bargaining Unit Definition
(3) Reasonable fee equivalent to the dues and Collective bargaining, which is defined as
other fees paid by member negotiations towards a collective
agreement, is one of the democratic
RIGHT TO COLLECTIVE frameworks under the New Labor Code,
designed to stabilize the relation between
BARGAINING labor and management and to create a
climate of sound and stable industrial
DUTY TO BARGAIN COLLECTIVELY peace. It is a mutual responsibility of the
employer and the Union and is
Art. 258. The performance of a mutual characterized as a legal obligation.
obligation to meet and convene promptly and
So much so that Article 249, par. (g) of the
expeditiously in good faith for the purpose of
Labor Code makes it an unfair labor practice
negotiating an agreement with respect to
for an employer to refuse "to meet and
wages, hours of work and all other terms and
convene promptly and expeditiously in good
conditions of employment including
faith for the purpose of negotiating an
proposals for adjusting any grievances or
agreement with respect to wages, hours of
questions arising under such agreement and
work, and all other terms and conditions of
executing a contract incorporating such
employment. [Kiok Loy v. NLRC, 1986]
agreement if required by either party but such
duty does not compel any party to agree to a
Nature and Purpose of Collective Bargaining
proposal or to make any concession.
The institution of collective bargaining is a
prime manifestation of industrial democracy at
The State shall guarantee the rights of work. The two parties to the relationship, labor
workers to collective bargaining and and management, make their own rules by
negotiations. coming to terms to govern themselves in
The State shall promote the principle of matters that really count. [United Employees
shared responsibilities between workers and Union of Gelmart Industries v. Noriel, 1975]
employers and the preferential use of
voluntary modes in settling disputes, When employers may be compelled to bargain
including conciliation, and shall enforce collectively
their mutual compliance therewith to foster (1) Majority representation by the representative
industrial peace. (1987 Constitution, Art. XIII, labor organization (exclusive bargaining agent)
Sec. 3) (2) Demand by the labor organization [Art. 250

PAGE 120

Labor and Employment within the sixty-day

An employer asked by a labor organization to period before the expiration of the collective
bargain collectively may file a petition for bargaining agreement, the Med-Arbiter
certification election to ascertain the will of the shall automatically order an election by
bargaining unit or it may voluntarily recognize secret ballot when the verified petition is
the labor organization in proper circumstances. supported by the written consent of at least
twenty-five percent (25%) of all the
Waiver of right to collectively bargain employees in the bargaining unit to
The right to free collective bargaining includes ascertain the will of the employees in the
the right to suspend it. [Rivera v. Espiritu, 2000] appropriate bargaining unit.
xxx At the expiration of the freedom period,
Rights of the parties during bargaining the employer shall continue to recognize
Art. 248 (c). To be furnished by the employer, the majority status of the incumbent
upon written request, with its annual audited bargaining agent where no petition for
financial statements, including the balance certification election is filed. [Art. 256]
sheet and the profit and loss statement,
within thirty (30) calendar days from the date COLLECTIVE BARGAINING
of receipt of the request, after the union has AGREEMENT)
been duly recognized by the employer or Collective bargaining agreement refers to the
certified as the sole and exclusive bargaining negotiated contract between a legitimate labor
representative of the employees in the organization and the employer concerning
bargaining unit, or within sixty (60) calendar wages, hours of work and all other terms and
days before the expiration of the existing conditions of employment in a bargaining unit,
collective bargaining agreement, or during including mandatory provisions for grievances
the collective bargaining negotiation. and arbitration machineries. [Book V Rule I
Section 1(j)]
Book V Rule XVI Sec 2. The parties may agree
to make available such up-to-date financial CBA impressed with public policy
information which is normally submitted to A CBA, as a labor contract within the
relevant government agencies material and contemplation of Article 1700 Civil Code
necessary for meaningful negotiations. They which governs the relations between labor
may also agree to the condition that the and capital, is not merely contractual in
information be kept confidential. nature but impressed with public interest,
thus, it must yield to the common good.
WHEN THERE IS ABSENCE OF A CBA [Davao Integrated Port Stevedoring Services
Art. 257. In the absence of an agreement or v. Abarquez, 1993]
other voluntary arrangement providing for a The relations between capital and labor are
more expeditious manner of collective not merely contractual. They are so
bargaining, it shall be the duty of employer impressed with public interest that labor
and the representatives of the employees to contracts must yield to the common good.
bargain collectively in accordance with the Therefore, such contracts are subject to the
provisions of this Code. special laws on labor unions, collective
bargaining, strikes and lockouts, closed
WHEN THERE IS A CBA shop, wages, working conditions, hours of
The duty to bargain collectively shall also labor and similar subjects. [Art. 1700, Civil
mean that neither party shall terminate nor Code]
modify such agreement during its lifetime.
Exception: In organized establishments, Substandard CBA
when a verified petition questioning the A CBA that falls below the minimum
majority status of the incumbent bargaining standards required by law is prohibited.
agent is filed before the Department of Nonetheless, RA 9481 removed

PAGE 121

substandard CBAs as a ground for the A CBA, just like any other contract, is
cancellation of registration of union respected as the law between the
registration. contracting parties and compliance in good
A substandard CBA cannot bar a petition faith is mandated. Similarly, the rules
for certification election under the contract- embodied in the Civil Code [Art. 1700) on
bar rule. the proper interpretation of contracts can
very well govern.
Confidentiality of registered CBA or parts thereof General Rule: If the terms of the contract
are clear, the literal meaning of the
General rule: CBA is not confidential stipulations shall control. 80
Exception: If the words appear to be
Exceptions: contrary to the evident intention of the
(1) confidentiality authorized by Secretary of parties, the latter shall prevail over the
Labor former. [Kimberly Clark Phils. V. Lorredo,
(2) when it is at issue in any judicial litigation 1993]
(3) public interest or national security requires
[Art. 231] Bargaining Procedure: (Book V, Rule XVI)

Effect of unregistered CBA (1) Private Procedure

An unregistered CBA is binding upon the parties The parties may provide for their own
but cannot serve as a bar to a petition for procedures in collective bargaining. The law
certification election under the contract-bar only requires that these procedures be more
rule. expeditious than the procedure in Art. 250.
[Art 251]
Beneficiaries of the CBA Rationale - It is the policy of the state to
The CBA benefits all workers in a collective promote the primacy of free collective
bargaining unit. When a collective bargaining [Art. 211 (a)]
bargaining contract is entered into by the
union representing the employees and the (2) Labor Code Procedure [Art. 250)
employer, even the non-member employees (a) Written notice and statement of proposals.
are entitled to the benefits of the contract. When a party desires to negotiate an
[New Pacific Timber and Supply v. NLRC, agreement, it shall serve a written notice upon
2000] the other party with a statement of its
To accord its benefits only to members of proposals.
the union without any valid reason would (b) Reply. The other party shall make a reply
constitute undue discrimination against thereto not later than ten (10) calendar days
non-members. from receipt of such notice.
(c) Conference. Should differences arise on the
Nature of Contract and Contract Interpretation basis of such notice and reply, either party may
The terms and conditions of a collective request for a conference which shall begin not
bargaining contract constitute the law later than ten (10) calendar days from the date
between the parties. [Mactan Workers Union of request.
vs. Aboitiz, 1972] (d) Board intervention and conciliation. If the
Those who are entitled to its benefits can dispute is not settled, the Board shall intervene
invoke its provisions. In the event that an upon request of either or both parties or at its
obligation therein imposed is not fulfilled, own initiative and immediately call the parties
the aggrieved party has the right to go to to conciliation meetings. The Board shall have
court for redress. [Babcock-Hitachi (Phils.) v. the power to issue subpoenas requiring the
Babcock-Hitachi, 2005] attendance of the parties to such meetings. It
shall be the duty of the parties to participate
Contract Interpretation: Interpretation Tools fully and promptly in the conciliation meetings
the Board may call;

PAGE 122

(e) Voluntary arbitration. The Board shall exert Art. 233. Information and statements made at
all efforts to settle disputes amicably and conciliation proceedings shall be treated as
encourage the parties to submit their case to a privileged communication and shall not be
voluntary arbitrator. used as evidence in the Commission.
(f) Prohibition against disruptive acts. During the Conciliators and similar officials shall not
conciliation proceedings in the Board, the testify in any court or body regarding any
parties are prohibited from doing any act which matters taken up at conciliation proceedings
may disrupt or impede the early settlement of conducted by them.
the disputes.
Rationale a person is entitled to buy his or
Period to reply; bad faith - The period to her peace without danger of being
reply is merely procedural, and non- prejudiced in case his or her efforts fail
compliance cannot be automatically
offers for compromise are irrelevant
deemed to be an act of ULP. [National
because they are not intended as
Union of Restaurant Workers vs. CIR, 1964]
admissions by the parties making them
The companys refusal to make a counter- [Pentagon Steel v. CA, 2009]
proposal to the unions proposed CBA is an
indication of its bad faith. Where the Mandatory bargainable issues
employer did not even bother to submit an (1) Wages
answer to the bargaining proposals of the (2) Hours of work
union, there is a clear evasion of the duty to (3) All other terms and conditions of
bargain collectively. The employers employment including proposals for adjusting
actuations show a lack of sincere desire to any grievances or questions arising under such
negotiate, rendering it guilty of unfair labor agreement [Art. 252]
practice. [Colegio de San Juan de Letran vs.
Association, 2000] Permissive Issues:
Failure to reply as indicia of bad faith Unilateral benefits extended by the
GMCs failure to make a timely reply to the employer [cf., Union of Filipro Employees-
proposal sent by the union is indicative of its Drug v. Nestle, 2008]
utter lack of interest in bargaining with the A collective bargaining agreement refers to
union. Its excuse that it felt the union no the negotiated contract between a
longer represented the workers was mainly legitimate labor organization and the
dilatory as it turned out to be utterly employer concerning wages, hours of work
baseless. GMCs refusal to make a counter- and all other terms and conditions of
proposal is an indication of its bad faith. employment in a bargaining unit, including
Where the employer did not even bother to mandatory provisions for grievances and
submit an answer to the bargaining arbitration machineries. As in all other
proposals of the union, there is a clear contracts, the parties in a CBA may
evasion of the duty to bargain collectively. establish such stipulations, clauses, terms
It is guilty of ULP. [General Milling Corp. v. and conditions as they may deem
CA, 2004] convenient provided they are not contrary to
law, morals, good customs, public order or
Conciliation / Preventive Mediation Privileged public policy. [Manila Fashions v. NLRC,
communication 1996]

Test for Mandatory Bargainable Issues: NEXUS

Between the Nature of Employment and the
Nature of the Demand.
The other terms and conditions of
employment to become a mandatory

PAGE 123

bargainable issue must have a connection Grievances arising from the interpretation or
between the proposal and the nature of the implementation of the CBA are subjects of
work. the grievance procedure. [Navarro III v.
Importance of determining whether an issue Damasco, 1995]
is a mandatory bargaining issue or only a It should be remembered that a grievance
permissive bargaining issue The question procedure is part of the continuous process
as to what are mandatory and what are of collective bargaining. It is intended to
merely permissive subjects of collective promote a friendly dialogue between labor
bargaining is of significance on the right of a and management as a means of
party to insist on his position to the point of maintaining industrial peace. [Master Iron
stalemate. A party may refuse to enter into Labor Union v. NLRC, 1993]
a collective bargaining contract unless it No particular setup for a grievance
includes a desired provision as to a matter machinery is required by law. Art. 260 of, as
which is a mandatory subject of collective incorporated by R.A. 6715, only mandates
bargaining. But a refusal to contract unless that the parties to the CBA establish a
the agreement covers a matter which is not machinery to settle problems arising from
a mandatory subject is in substance a "interpretation or implementation of their
refusal to bargain about matters which are collective bargaining agreement and those
mandatory subjects of collective bargaining; arising from the interpretation or
and it is no answer to the charge of refusal enforcement of company personnel policies.
to bargain in good faith that the insistence [Caltex Refinery Employees Association v.
on the disputed clause was not the sole Brillantes, 1997]
cause of the failure to agree or that
agreement was not reached with respect to Voluntary arbitration
other disputed clauses.
Such refusal will not be deemed as an Constitutional basis
unfair labor practice. However, if a party The State shall promote the principle of shared
refuses to contract based on an issue which responsibility between workers and employers
is not a mandatory bargainable issue, the and the preferential use of voluntary modes in
party will be guilty of ULP. [Samahang settling disputes, including conciliation, and
Manggagawa sa Top Form v. NLRC, 1998] shall enforce their mutual compliance therewith
to foster industrial peace. [Art. XIII Section 3]
Automatic referral if grievance machinery fails
Grievance procedure Art. 266. All grievances submitted to the
The parties to a Collective Bargaining
grievance machinery which are not settled
Agreement shall include therein: within 7 calendar days from the date of its
(1) Provisions that will ensure the mutual submission shall automatically be referred to
observance of its terms and conditions. voluntary arbitration prescribed in the CBA.
(2) A machinery for the adjustment and
resolution of grievances arising from:
Voluntary arbitration provision in the CBA
(a) the interpretation or implementation of
(1) Parties to a CBA shall:
their CBA; and
(a) Name and designate in advance a
(b) those arising from the interpretation or
Voluntary Arbitrator or panel of Voluntary
enforcement of company personnel policies.
Arbitrators, OR
(3) All grievances submitted to the grievance
(b) Include in the agreement a procedure for
machinery which are not settled within 7
the selection of such Voluntary Arbitrator or
calendar days from the date of its submission
panel of Voluntary Arbitrators preferably
shall be automatically referred to voluntary
from the listing of qualified Voluntary
arbitration prescribed in the CBA. [Art. 260]
Arbitrators duly accredited by the Board.

PAGE 124

(2) In case the parties fail to select a Voluntary adequate prerogative is aimed at
Arbitrator or panel of Voluntary Arbitrators, the accomplishing the rationale of the law on
Board shall designate the Voluntary Arbitrator voluntary arbitration speedy labor justice.
or panel of Voluntary Arbitrators, as may be [Goya, Inc. vs. Goya, Inc. Employees Union-
necessary, pursuant to the selection Voluntary FFW, 2013]
Arbitrator or panel of Arbitrators procedure
agreed upon in the CBA, which shall act with Powers of the voluntary arbitrators
the same force and effect as if the has been (1) hold hearings
selected by the parties as described above. [Art. (2) receive evidence
260] (3) take whatever action is necessary to resolve
the issue or issues subject of dispute, including
Voluntary arbitration as a condition precedent efforts to effect a voluntary settlement between
The stipulation to refer all future disputes to an parties
arbitrator or to submit an ongoing dispute to (4) determine attendance of any third parties
one is valid. Being part of a contract between (5) determine exclusion of any witness
the parties, it is binding and enforceable in court (6) issue writ of execution for sheriff of NLRC or
in case one of them neglects, fails or refuses to regular courts to execute the final decision,
arbitrate. Going a step further, in the event that order, or award [Art 262-A]
they declare their intention to refer their
differences to arbitration first before taking Finality of the final decision, order, or award
court action, this constitutes a condition Art 268-A. Award or decision of the voluntary
precedent, such that where a suit has been arbitrator shall be final and executory after 10
instituted prematurely, the court shall suspend days from receipt of the copy of the award or
the same and the parties shall be directed decision by the parties.
forthwith to proceed to arbitration. A court
action may likewise be proper where the No motion for reconsideration
arbitrator has not been selected by the parties. The voluntary arbitrator lost jurisdiction over the
[Chung Fu Industries v. CA, 1992] case submitted to him the moment he rendered
his decision. Therefore, he could no longer
Arbitrable issues entertain a motion for reconsideration of the
(1) interpretation or implementation of the CBA decision for its reversal or modification.
[Art. 261) (Solidbank v. BLR)
(2) interpretation or enforcement of company
personnel policies [Art. 261)
(3) gross violations of CBA provision Appeal
(flagrant/malicious refusal to comply with the While there is an express mode of appeal
economic provisions of the CBA [Art. 261) from the decision of a labor arbiter,
(4) all other labor disputes including ULP and Republic Act No. 6715 is silent with respect
bargaining deadlock, if the parties agree [Art. to an appeal from the decision of a
262] voluntary arbitrator.
Assuming arguendo that the voluntary
In general, the arbitrator is expected to arbitrator or the panel of voluntary
decide those questions expressly stated and arbitrators may not strictly be considered as
limited in the submission agreement. a quasi-judicial agency, board or
However, since arbitration is the final resort commission, still both he and the panel are
for the adjudication of disputes, the comprehended within the concept of a
arbitrator can assume that he has the power "quasi-judicial instrumentality." A fortiori,
to make a final settlement. The VA has the decision or award of the voluntary
plenary jurisdiction and authority to arbitrator or panel of arbitrators should
interpret the CBA and to determine the likewise be appealable to the Court of
scope of his or her own authority. Subject to
judicial review, this leeway of authority and

PAGE 125

Appeals. [Luzon Development Bank v. Assoc

of Luzon Devt Employees, 1995] DURATION
Art. 259-A. Any Collective Bargaining
Costs Agreement that the parties may enter into
The parties to a Collective Bargaining shall, insofar as the representation aspect is
Agreement shall provide therein a concerned, be for a term of five (5) years. No
proportionate sharing scheme on the cost of the petition questioning the majority status of the
voluntary arbitration including the Voluntary incumbent bargaining agent shall be
Arbitrators fee. [Art. 262-B] entertained and no certification election shall
be conducted by the Department of Labor
Voluntary arbitrator's fee and Employment outside of the sixty-day
The fixing of the fee of the Voluntary Arbitrators, period immediately before the date of expiry
whether shouldered wholly by the parties or of such five-year term of the Collective
subsidized by the special voluntary arbitration Bargaining Agreement. All other provisions of
fund, shall take into account the following the Collective Bargaining Agreement shall be
factors: renegotiated not later than three (3) years
(1) nature of the case after its execution. Any agreement on such
(2) time consumed in hearing the case other provisions of the Collective Bargaining
(3) professional standing of the voluntary Agreement entered into within six (6) months
arbitrator from the date of expiry of the term of such
(4) capacity to pay of the parties. other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the
No strike-no lockout clause day immediately following such date. If any
A "no strike, no lock-out" provision in the CBA is such agreement is entered into beyond six
a valid stipulation although the clause may be months, the parties shall agree on the
invoked by an employer only when the strike is duration of retroactivity thereof. In case of a
economic in nature or one which is conducted to deadlock in the renegotiation of the Collective
force wage or other concessions from the Bargaining Agreement, the parties may
employer that are not mandated to be granted exercise their rights under this Code.
by the law itself. It would be inapplicable to
prevent a strike which is grounded on unfair For economic provisions
labor practice. [Panay Electric Co. v. NLRC, 1995; 3 years.
Malayang Samahan ng mga Manggagawa sa
Greenfield v. Ramos, 2000] For non-economic provisions
5 years for representational or political issues.
Labor management council
Art. 255. Any provision of law to the contrary Freedom period
notwithstanding, workers shall have the right, No petition questioning the majority status of
subject to such rules and regulations as the the incumbent bargaining agent shall be
Secretary of Labor and Employment may entertained and no certification election shall be
promulgate, to participate in policy and conducted by the DOLE outside of the sixty-day
decision-making processes of the period immediately before the date of the expiry
establishment where they are employed of such five year term of the Collective
insofar as said processes will directly affect Bargaining Agreement. (Contract-bar rule)
their rights, benefits and welfare. For this
purpose, workers and employers may form CBA Effectivity
labor-management councils: Provided, That If it is the first ever CBA, the effectivity date
the representatives of the workers in such is whatever date the parties agree on.
labor-management councils shall be elected If it is renegotiated CBA, the effectivity date
by at least the majority of all employees in depends upon the duration of conclusion.
said establishment. (i) If it is concluded within 6 months from

PAGE 126

the expiry date, the new CBA will retroact to provision insofar as the need to await the
the date following the expiry date creation of a new agreement will not apply.
(Illustration: expiry date: December 13; Otherwise, it will create an absurd situation
effectivity date: December 14). where the union members will be forced to
(ii) If the renegotiated CBA is concluded maintain membership by virtue of the union
beyond 6 months from the expiry date, the security clause existing under the CBA and,
matter of retroaction and effectivity is left thereafter, support another union when
with the parties. filing a petition for certification election. If
Art. 253-A serves as the guide in we apply it, there will always be an issue of
determining when the CBA at bar is to take disloyalty whenever the employees exercise
effect. It provides that the representation their right to self-organization. The holding
aspect of the CBA is to be for a term of 5 of a certification election is a statutory policy
years. All other provisions of the CBA shall that should not be circumvented, or
be renegotiated not later than 3 years after compromised. [PICOP Resources, Inc. v.
its execution. Any agreement on such other Taneca et al., 2010]
provision of the CBA entered into within 6
months from the date of expiry of the term Arbitrated CBA
of such other provisions as fixed in such In the absence of an agreement between
Collective Bargaining Agreement shall the parties, an arbitrated CBA takes on the
retroact to the day immediately following nature of any judicial or quasi-judicial
such date. If such agreement is entered into award. It operates and may be executed
beyond 6 months, the parties shall agree on only prospectively unless there are legal
the duration of the effectivity thereof. If no justifications for its retroactive application.
agreement is reached within 6 months from [Manila Electric Company vs. Quisumbing,
the expiry date of the 3 years that follow the 1999]
CBA execution, the law expressly gives the CBA in this case, on the other hand, is part
parties not anybody else the discretion of an arbitral award. As such, it may be
to fix the effectivity of the agreement. The made retroactive to the date of expiration of
law does not specifically cover the situation the previous agreement. Therefore, in the
where 6 months have elapsed but no absence of a specific provision of law
agreement has been reached with respect prohibiting retroactivity of the effectivity of
to effectivity. In this eventuality, any arbitral awards issued by the Secretary of
provision of law should then apply. [Manila Labor pursuant to Art. 263(g), the latter is
Electric Co. v. Quisumbing, 1999] deemed vested with plenary and
discretionary powers to determine the
Hold Over Principle effectivity thereof. [Manila Central Line Corp.
v. Manila Central Line Free Workers Union,
Art. 259. In the absence of a new CBA, the
parties must maintain the status quo and
must continue in full force and effect the CBA and 3rd Party Applicability
terms and conditions of the existing
Labor contracts such as employment
agreement during the sixty (60) day period
contracts and CBAs are not enforceable
and/or until a new agreement is reached.
against a transferee of an enterprise, labor
contracts being in personam, is binding only
The last sentence of Article 253, which between the parties. As a general rule, there
provides for automatic renewal pertains is no law requiring a bona fide purchaser of
only to the economic provisions of the CBA, the assets of an on-going concern to absorb
and does not include representational in its employ the employees of the latter.
aspect of the CBA. An existing CBA cannot However, although the purchaser of the
constitute a bar to a filing of petition for assets or enterprise is not legally bound to
certification election. When there is a absorb in its employ the employees of the
representational issue, the status quo seller of such assets or enterprise, the

PAGE 127

parties are liable to the employees if the

transaction between the parties is colored Types
or clothed with bad faith. [Sundowner Devt. (1) Closed shop
Corp. v Drilon, 1989] (2) Maintenance of membership shop
General Rule: An innocent transferee of a (3) Union shop
business establishment has no liability to (4) Modified union shop
the employees of the transferor to continue (5) Agency shop
employing them. Nor is the transferee liable
for past unfair labor practices of the UNION SECURITY CLAUSES; CLOSED SHOP;
(1) when the liability therefore is assumed by
the new employer under the contract of Closed shop
sale, or Defined as an enterprise in which, by
(2) when liability arises because of the new agreement between the employer and his
owner's participation in thwarting or employees or their representatives, no
defeating the rights of the employees. person may be employed in any or certain
The most that the transferee may do, for agreed departments of the enterprise
reasons of public policy and social justice, is unless he or she is, becomes, and, for the
to give preference to the qualified separated duration of the agreement, remains a
employees in the filling of vacancies in the member in good standing of a union
facilities of the purchaser. [Manlimos v. entirely comprised of or of which the
NLRC, 1995] employees in interest are a part. [GMC v.
Casio, 2010]
UNION SECURITY Only union members can be hired by the
Art. 254 (e). Nothing in this Code or in any company and they must remain as
other law shall stop the parties from requiring members to retain employment in the
membership in a recognized collective company. [Azucena]
bargaining agent as a condition for Due process in termination under closed shop
employment, except those employees who are provision. The requirements laid down by
already members of another union at the time the law in determining whether or not an
of the signing of the collective bargaining employee was validly terminated must still
agreement. be followed even if it is based on a closed-
shop provision of a CBA, i.e. the substantive
as well as the procedural due process
Union security is any form of agreement
requirements. [Del Monte v. Saldivar, 2007]
which imposes upon employees the
obligation to acquire or retain union Construction The closed shop provision is
membership as a condition affecting the most prized achievement of unionism.
employment. [GMC v. Casio, 2010] However it can also be a potent weapon
wielded by the union against the workers
Purpose whom the union is supposed to protect in
To safeguard and ensure the existence of the the first place. Hence, any doubt as to the
union and thus, promote unionism in general as existence of a closed shop provision in the
a state policy. CBA will be resolved in favor of the
nonexistence of the closed shop provision.
Maintenance of membership shop
Art. 254 (e). Employees who are already
There is maintenance of membership shop
members of another union at the time of the
when employees, who are union members
signing of the collective bargaining
as of the effective date of the agreement, or
agreement may not be compelled by any
who thereafter become members, must
union security clause to join any union.

PAGE 128

maintain union membership as a condition collectively, making it liable for unfair labor
for continued employment until they are practice. [GMC v. CA, 2004]
promoted or transferred out of the
bargaining unit or the agreement is REFUSAL TO BARGAIN
terminated. [GMC v. Casio, 2010] Implied refusal. The school is guilty of unfair
No employee is compelled to join the union, labor practice when it failed to make a timely
but all present or future must, as a reply to the proposals of the union more than
condition of employment, remain in good one month after the same were submitted by
standing in the union. [Azucena] the union. In explaining its failure to reply, the
school merely offered a feeble excuse that its
Board of Trustees had not yet convened to
Union shop discuss the matter. Clearly, its actuation showed
There is union shop when all new regular a lack of sincere desire to negotiate. [Colegio de
employees are required to join the union San Juan de Letran v. Association, 2000]
within a certain period as a condition for
their continued employment. [GMC v. Casio, INDIVIDUAL BARGAINING
2010] It is an unfair labor practice for an employer
Non-members may be hired, but to retain operating under a CBA to negotiate with his
employment, they must become union employees individually. That constitutes
members after a certain period. The interference because the company is still
requirement applies to present and future under obligation to bargain with the union
employees. [Azucena] as the bargaining representative.
Individual bargaining contemplates a
Modified union shop Employees who are not situation where the employer bargains with
union members at the time of signing the the union through the employees instead of
contract need not join the union, but all hired the employees through the union. [The
workers thereafter must join. [Azucena] Insular Life Assurance Co. Ltd., Employees
Assn. v. Insular Life Assurance Co. Ltd, 1971]
Agency shop An agreement whereby
employees must either join the union or pay to BLUE SKY BARGAINING
the union as exclusive bargaining agent a sum Blue-Sky Bargaining is defined as "unrealistic
equal to that paid by the members. [Azucena] and unreasonable demands in negotiations by
either or both labor and management, where
UNFAIR LABOR PRACTICE IN neither concedes anything and demands the
COLLECTIVE BARGAINING impossible." It actually is not collective
Unfair Labor Practice in collective bargaining bargaining at all. [Harold S. Roberts, Roberts
Both employers and labor organizations can Dictionary of Industrial Relations (Revised
commit acts of unfair labor practices in Edition, 1971, p. 51) footnote in (Standard Bank
collective bargaining. However, the labor Chartered Employees Union v. Confesor, 2004)]
organization must be the representative of the
employees before any act it does may be SURFACE BARGAINING
considered as a violation of the duty to bargain Surface bargaining is defined as "going through
collectively. [Art. 248 (g) and Art. 249 (c)] the motions of negotiating," without any real
intent to reach an agreement. It violates the
BARGAINING IN BAD FAITH Act's requirement that parties negotiate in
GMCs refusal to make a counter-proposal to "good faith." It is prohibited because, as one
the unions proposal for CBA negotiation on the commentator explained: The bargaining status
excuse that it felt the union no longer of a union can be destroyed by going through
represented the workers is an indication of bad the motions of negotiating almost as easily as
faith. xxx Failing to comply with the mandatory by bluntly withholding recognition As long as
obligation to submit a reply to the unions there are unions weak enough to be talked to
proposals, GMC violated its duty to bargain death, there will be employers who are tempted

PAGE 129

to engage in the forms of collective bargaining

without the substance. [K-MART Corporation v Parties not estopped from raising ULP by
NLRB, 1980 626 F.2d 704] eventual signing of the CBA
The eventual signing of the CBA does not
UNFAIR LABOR PRACTICE (ULP) operate to estop the parties from raising unfair
Unfair labor practice refers to acts that violate labor practice charges against each other.
the workers right to organize. The prohibited [Standard Chartered Bank Union v. Confesor,
acts are related to the workers right to self- 2004]
organization and to the observance of a CBA.
Without that element, the acts, no matter how Statutory Construction
unfair, are not unfair labor practices. The only The Labor Code does not undertake the
exception is Art. 248 (f) [i.e. to dismiss, impossible task of specifying in precise and
discharge or otherwise prejudice or discriminate unmistakable language each incident which
against an employee for having given or being constitutes an unfair labor practice. Rather, it
about to give testimony under this Code]. leaves to the court the work of applying the
[Philcom Employees Union v. Phil. Global, 2006] law's general prohibitory language in light of
infinite combinations of events which may be
Nature of ULP charged as violative of its terms. [HSBC
(1) inimical to the legitimate interests of both Employee Union V. NLRC, 1997]
labor and management, including their right to
bargain collectively and otherwise deal with ULP of employers
each other in an atmosphere of freedom and
mutual respect (1) Interference/ Restraint/ Coercion
(2) disrupt industrial peace The act of ULP must interfere with, restrain or
(3) hinder the promotion of healthy and stable coerce employees in the exercise of their right to
labor-management relations self-organization.
(4) violations of the civil rights of both labor and
management but are also criminal offenses [Art. Interrogation
247] General rule: employer may interrogate its
employees regarding their union affiliation for
Purpose of the policy against ULPs legitimate purposes and with the assurance
Protection of right to self-organization and/or that no reprisals would be taken against the
collective bargaining: unionists.
(1) The employee is not only protected from the
employer but also from labor organizations. Exception: when interrogation interferes with or
(2) Employer is also protected from ULP restrains employees' right to self-organization.
committed by a labor organization. [Phil. Steam Navigation Co. v. Phil. Marine
(3) The public is also protected because it has Officers Guild, 1965]
an interest in continuing industrial peace.
Employer-employee relationship required; The subjection by the company of union to
exception vilification and its participation in soliciting
An unfair labor practice may be committed only membership for a competing union is also
within the context of an employer-employee ULP act. [Phil. Steam Navigation Co. v. Phil.
relationship [American President Lines v. Clave, Marine Officers Guild, 1965]
1982] Employer may not send letters containing
promises or benefits, nor of threats of
Exception: yellow dog condition: to require as obtaining replacements to individual
a condition of employment that a person or an workers while the employees are on strike
employee shall not join a labor organization or due to a bargaining deadlock. This is
shall withdraw from one to which he belongs. tantamount to interference and is not
[Art. 248 (b)] protected by the Constitution as free

PAGE 130

speech. [Insular Life Assurance Co. Example: giving out financial aid to any
Employees Assn. v. Insular Life Assurance union's supporters or organizers.
Co. Ltd, 1971]
(5) Discrimination Encourage/Discourage
Espionage Unionism
Espionage and/or surveillance by the employer General rule: it is ULP to discriminate in
of union activities are instances of interference, regard to wages, hours of work and other
restraint or coercion of employees in connection terms and conditions of employment in
with their right to organize, form and join unions order to encourage or discourage
as to constitute unfair labor practice. xxx The membership in any labor organization.
information obtained by means of espionage is Exception (union security clause): Nothing in
invaluable to the employer and can be used in a this Code or in any other law shall stop the
variety of cases to break a union. [Insular Life parties from requiring membership in a
Assurance Co. Employees Assn. v. Insular Life recognized collective bargaining agent as a
Assurance Co. Ltd, 1971] condition for employment.
Exception to exception: Those employees
(2) Yellow dog contracts who are already members of another union
Yellow dog contracts require as a condition at the time of the signing of the collective
of employment that a person or an bargaining agreement. [Art. 254 (e)]
employee shall not join a labor organization
or shall withdraw from one to which he (6) Testimony
Art. 254 (f). It is an act of ULP by an employer
Examples to dismiss, discharge or otherwise prejudice or
(1) a representation by the employee that he discriminate against an employee for having
is not a member of a labor organization given or being about to give testimony under
(2) a promise by the employee that he will this Code.
not join a union
(3) a promise by the employee that upon (7) Violate duty to bargain collectively
joining a labor organization, he will quit his Duty to bargain collectively is a continuous
employment process, non-compliance constitutes ULP.
Collective bargaining does not end with the
(3) Contracting out execution of an agreement, being a continuous
General rule: contracting out is not ULP process, the duty to bargain necessarily
imposing on the parties the obligation to live up
Exception: to the terms of such a collective bargaining
(1) contracted-out services or functions are agreement if entered into, it is undeniable that
performed by union members AND non-compliance therewith constitutes an unfair
(2) contracting out will interfere with, restrain, or labor practice. [Shell Oil Workers Union v Shell
coerce employees in the exercise of their right to Co., 1971]
self-organization. [Art. 248 (c)]
(8) Payment of negotiation or attorney's fees
(4) Company union Sweetheart contracts
Company union means any labor Sweetheart contracts are favorable both to the
organization whose formation, function or union and the employer at the expense of the
administration has been assisted by any act employees. The settlement of bargaining issues
defined as unfair labor practice by this must be made by fair bargaining in good faith,
Code. [Art. 212[i]) and not through the payment of negotiation or
The employer commits ULP if it initiates, attorney's fees which will ultimately lead to
dominates, or otherwise interferes with the sweetheart contracts.
formation or administration of any labor
organization. (9) To violate a collective bargaining agreement

PAGE 131

Flagrant and/or malicious refusal required

Flagrant and/or malicious refusal required Violations of collective bargaining agreements,
Violations of collective bargaining except flagrant and/or malicious refusal to
agreements, except flagrant and/or comply with its economic provisions, shall not
malicious refusal to comply with its be considered unfair labor practice and shall
economic provisions, shall not be not be strikeable. [IRR]
considered unfair labor practice and shall
not be strikeable. [IRR] RIGHT TO PEACEFUL
Note: The list in Art. 254 LC is not
exhaustive. Other acts which are analogous
to those enumerated can be ULP. Art. 269 (b). Workers shall have the right to
The alleged violation of the CBA, assuming engage in concerted activities for purposes of
it was malicious and flagrant, is not a collective bargaining or for their mutual
violation of an economic provision, thus not benefit and protection. The right of legitimate
an Unfair Labor Practice. [BPI Employees labor organizations to strike and picket and of
Union-Davao FUBU v. BPI, 2013] employers to lockout, consistent with the
national interest, shall continue to be
ULP OF LABOR ORGANIZATIONS recognized and respected. However, no labor
union may strike and no employer may
(1) Restraint, or coercion declare a lockout on grounds involving inter-
Interfere is not included in Art. 249 simply union and intra-union disputes.
because any act of a labor organization
amounts to interference to the right of self- A concerted activity is one undertaken by two or
organization. more employees to improve their terms and
conditions of work.
(2) Discrimination Encourage/Discourage
Unionism Constitutional basis
The state shall guarantee the rights of all
General rule: it is ULP for a labor organization to workers to xxx peaceful concerted activities,
cause an employer to discriminate against an including the right to strike in accordance with
employee law. [Art. XIII Section 3]

Exception: provisions of a valid union security Right to self-organization includes the right to
clause and other company policies applicable to engage in lawful concerted activities and may
all employees. not be abridged
Art. 252. It shall be unlawful for any person to
(3) Violate duty to bargain or the CBA restrain, coerce, discriminate against or
Please refer to part B.4 for some examples. unduly interfere with employees and workers
in their exercise of the right to self-
(4) Exaction (Featherbedding) organization. Such right shall include the
Featherbedding or make-work by the union is right to form, join, or assist labor
the practice of the union asking (exacting) for organizations for the purpose of collective
money or other things of value from the bargaining through representatives of their
employer in return for services which are not own choosing and to engage in lawful
performed or are not to be performed. concerted activities for the same purpose or
for their mutual aid and protection, subject to
(5) Asking or accepting negotiation and other the provisions of Article 264 of this Code.
attorney's fees
See counterpart in ULP by employers (sweetheart Concerted activities must be in accordance with
contracts). law
(6) Violate a collective bargaining agreement

PAGE 132

The strike is a powerful weapon of the working General rule: Striking employees are not entitled
class. Precisely because of this, it must be to the payment of wages for un-worked days
handled carefully, like a sensitive explosive, lest during the period of the strike pursuant to the
it blow up in the workers own hands. Thus, it no work-no pay principle.
must be declared only after the most thoughtful
consultation among them, conducted in the Exception: Agreement to the contrary.
only way allowed, that is, peacefully, and in
every case conformably to reasonable Reinstatement after a lawful strike
regulation. Any violation of the legal When strikers abandon the strike and apply
requirements and strictures will render the for reinstatement despite the existence of
strike illegal, to the detriment of the very valid grounds but the employer either:
workers it is supposed to protect. [Batangas (1) refuses to reinstate them or
Laguna Tayabas Bus Co. v NLRC, G.R. No. (2) imposes upon their reinstatement new
101858, 1992] conditions
then the employer commits an act of ULP.
Forms of concerted activities The strikers who refuse to accept the new
(1) Strike conditions and are consequently refused
(2) Picketing reinstatement are entitled to the losses of
Employer's economic weapon: Lockout pay they may have suffered by reason of the
employers discriminatory acts from the
(1) Strike time they were refused reinstatement.
Art. 218 (o). A strike is any temporary stoppage
of work by the concerted action of employees Forms of strikes
as a result of an industrial or labor dispute. As to legality
(1) Legal strike one called for a valid purpose
Strikes not limited to work stoppages and conducted through means allowed by law.
The term strike shall comprise not only (2) Illegal strike one staged for a purpose not
concerted work stoppages, but also slowdowns, recognized by law, or if for a valid purpose,
mass leaves, sit-downs, attempts to damage, conducted through means not sanctioned by
destroy or sabotage plant equipment and law.
facilities, and similar activities. (Samahang
Manggagawa v. Sulpicio Lines, 2004) As to grounds
(1) Economic strike one staged by workers to
As coercive measure by employees force wage or other economic concessions from
A strike is a coercive measure resorted to by the employer which he is not required by law to
laborers to enforce their demands. The idea grant [Consolidated Labor Association of the
behind a strike is that a company engaged in a Phil. v. Marsman and Company 1964]
profitable business cannot afford to have its
production or activities interrupted, much less, (2) ULP strike called against a company's
paralyzed. [Phil. Can Co. v. CIR, 1950] unfair labor practice to force the employer to
desist from committing such practices.
No severance of employer-employee relationship
during lawful strike As to how committed
Although during a strike the worker renders no (1) Slowdown strike one by which workers,
work or service and receives no compensation, without a complete stoppage of work, retard
yet his relationship as an employee with his production or their performance of duties and
employer is not severed or dissolved. [Elizalde functions to compel management to grant their
Rope Factory, Inc. v. SSS, 1972] demands.

Payment of wages during lawful strikes A slowdown is inherently illicit and unjustifiable
because while the employees continue to work,
they, at the same time, select what part of their

PAGE 133

duties they perform. In essence, they work on Picketing is the right of workers to peacefully
their own terms. [Ilaw at Buklod ng march to and fro before an establishment
Manggagawa v. NLRC, 1991] involved in a labor dispute generally
accompanied by the carrying and display of
(2) Wild-cat strike one declared and staged signs, placards and banners intended to inform
without filing the required notice of strike and the public about the dispute. [NCMB Manual,
without the majority approval of the recognized Sec. 1]
bargaining agent.
(3) Sit-down strike one wherein workers take LOCKOUT
over possession of the property of such business
to cease production and to refuse access to Who may declare a strike (Book V, Rule XXII, Sec.
owners. 6)
(1) certified or duly recognized bargaining
(4) Sympathetic strike one in which the striking representative
workers have no demands of their own, but (2) any legitimate labor organization in the
strike to make common cause with other strikers absence of #1, but only on grounds of ULP
in other establishments.
Who may declare a lockout (Book V, Rule XXII,
Conversion from economic to ULP strike Sec. 6)
It is possible for a strike to change its character (1) employer
from an economic to a ULP strike. In the instant
case, initially, the strike staged by the Union was
meant to compel the Company to grant it
A valid strike must have a lawful ground and
certain economic benefits set forth in its
must conform to the procedural requirements
proposal for collective bargaining. However, the
set by law.
strike changed its character from the time the
Company refused to reinstate complainants
Substantial Requirements/Grounds [Art. 263 [c])
because of their union activities after it had
A strike or lockout may be declared in cases of:
offered to admit all the strikers and in fact did
(a) Bargaining deadlocks
readmit the others. It was then converted into
(b) ULP
an unfair labor practice strike. [Consolidated
Labor Assoc. of the Phil. v. Marsman and
When violations of collective bargaining
Company, 1964]
strikeable as ULP
Strike cannot be converted to a lockout by a Violations of collective bargaining agreements
must be flagrant and/or there must be
return to work offer
malicious refusal to comply with its economic
A strike cannot be converted into a pure and
simple lockout by the mere expedient filing
before the trial court a notice of offer to return
When no lawful strike can be declared
to work during the pendency of the labor
(1) Ground is an inter-union or intra-union
dispute between the union and the employer.
[Rizal Cement Workers Union v. CIR, 1962]
(2) No notice of strike
(3) No lock-out vote obtained and reported to
(2) Picketing
the NCMB
Art 269 (b). The right of legitimate labor (4) After assumption or certification by the
organizations to strike and picket and of Secretary of Labor
employers to lockout, consistent with the
national interest, shall continue to be Procedural requirements
recognized and respected. (a) Effort to bargain
(b) Filing and service of notice of strike

PAGE 134

(c) Observance of cooling-off period (d) Proof of a request for conference to settle
(d) Strike vote the differences.
(e) Strike vote report
(f) Observance of the waiting period In cases of ULP:
(a) Statement of Acts complained of
(a) Effort to bargain (b) Efforts taken to resolve the dispute amicably.
Art. 270 (a). No labor organization or
employer shall declare a strike or lockout Action on notice [Book V Rule XXII Sec. 9]
without first having bargained collectively in Upon receipt of a valid notice of strike or
accordance with Title VII of this Book. lockout, the NCMB, through its Conciliator-
Mediators, shall call the parties to a
(b) Filing and service of notice of strike conference the soonest possible time in
Bargaining deadlocks order to actively assist them to explore all
possibilities for amicable settlement.
Art. 269(c). The duly certified or recognized The Conciliator-Mediator may suggest/offer
bargaining agent may file a notice of strike or proposals as an alternative avenue for the
the employer may file a notice of lockout with resolution of their disagreement/conflict
the Department at least 30 days before the which may not necessarily bind the parties.
intended date thereof.
If conciliation/mediation fails, the parties
shall be encouraged to submit their dispute
Unfair labor practice; union busting
for voluntary arbitration.
Art. 269 (c). In cases of unfair labor practice,
the period to file notice of strike shall be 15 (c) Observance of cooling-off periods
days. However, in cases of union busting Cooling off periods
(dismissal of duly elected union officers from bargaining deadlock 30 days
employment), the cooling period shall not ULP but not union busting 15 days
apply. ULP and union busting no cooling-off
Note: the notice must be served to the
employer. Failure to do so will constitute Purpose of cooling-off period
noncompliance with the procedural
requirements and will result to an illegal strike. Art. 269 (e). During the cooling-off period, it
Rationale: due process. (IRR) shall be the duty of the Ministry to exert all
efforts at mediation and conciliation to effect
Contents of notice of strike (Book V Rule XXII a voluntary settlement. Should the dispute
Sec. 8) remain unsettled until the lapse of the
(a) Names and addresses of the employer and requisite number of days from the mandatory
the union involved filing of the notice, the labor union may strike
(b) Nature of the industry to which the employer or the employer may declare a lockout.
(c) Number of union members and of workers in The purpose of the cooling-off period is to
the bargaining unit provide an opportunity for mediation and
(d) Such other relevant data as may facilitate conciliation. [National Federation of Sugar
the settlement of the dispute. Workers v. Ovejera, 1982]

Additional Requirements (d) Strike vote [Art. 263 (f)]

In cases of bargaining deadlocks: Requirements for a declaration of a strike in a
(a) Statement of Unresolved issues in the strike vote
bargaining negotiations (a) approval by a majority of the total union
(b) Written Proposals of the union Membership in the ABU
(c) Counterproposals of the employer (b) approval is obtained by secret ballot in a
meeting/referendum called for the purpose

PAGE 135

requirement shall be counted from the day

Duration of the validity of the strike-vote following the expiration of the cooling off
The decision shall be valid for the duration of period.
the dispute based on substantially the same (2) Coexistent periods. The cooling-off period
grounds considered when the strike or lockout and the 7-day requirement may coexist. After
vote was taken. all, the purpose of the 7-day requirement is to
give time for the DOLE to verify if the projected
Department of Labor and Employment strike is supported by the majority. There is no
intervention reason to add it to the cooling-off period.
The Department may, at its own initiative or
upon the request of any affected party, REQUISITES FOR A VALID LOCKOUT
supervise the conduct of the secret balloting.
Lockout by the employer
(e) Strike Vote Report [Art. 263(f)]
Art. 218 (p). Lockout is the temporary refusal
In every case, the union or the employer shall
of an employer to furnish work as a result of
furnish the Department the results of the voting
an industrial or labor dispute.
at least 7 days before the intended strike or
lockout, subject to the cooling-off period herein
provided. No lockout based on intra or inter union disputes
Art. 269 (b). No labor union may strike and no
(f) Observance of the waiting period employer may declare a lockout on grounds
The waiting period, on the other hand, is involving inter-union and intra-union disputes
intended to provide opportunity for the
members of the union or the management to Grounds
take the appropriate remedy in case the strike or Similar to a strike, the proper grounds for a
lockout vote report is false or inaccurate. lockout are
(National Federation of Sugar Workers v. Ovejera, (1) bargaining deadlock
1982) (2) ULP by labor organizations

Compliance with both cooling-off and waiting Requisites

periods; rationale (a) Effort to bargain
The observance of both periods must be (b) Filing and service of notice of lockout
complied with, although a labor union may take (c) Observance of cooling-off period
a strike vote and report the same within the (d) Lockout vote
statutory cooling-off period. The cooling-off and (e) Report of lockout vote
7-day strike ban provisions of law constitute a (f) Observance of the waiting period
valid exercise of police power of the State.
[National Federation of Sugar Workers v. Ovejera, (a) Effort to bargain
1982] Art. 270 (a). No labor organization or
employer shall declare a strike or lockout
Strike-vote reported within the cooling-off period without first having bargained collectively in
When the strike-vote is reported within the accordance with Title VII of this Book.
cooling-off period, the phrase at least 7 days
before the intended strike or lockout, subject to (b) Filing and service of notice of lockout
the cooling-off period herein provided. in
Article 263 (f) admits two interpretations: Bargaining deadlock
(1) Mutually exclusive periods (used in the NCMB
Manual). The cooling off period and the 7-day Art. 269 (c). The notice of lockout may be filed
period are mutually exclusive. Thus, in the case by the employer at least 30 days before the
of Capitol Medical Center v. NLRC, the Court intended date thereof.
held that when the strike vote is conducted
within the cooling-off period, the 7-day ULP

PAGE 136

Art. 269 (c). In cases of unfair labor practice, Art. 269 (f). A decision to declare a lockout
the period of notice shall be 15 days. must be approved by a majority of the board
of directors of the corporation or association
Note: the notice must be served to the or of the partners in a partnership, obtained
employees through the representative union. by secret ballot in a meeting called for that
Contents of notice
(a) Names and addresses of the employer and The decision shall be valid for the duration of
the union involved the dispute based on substantially the same
(b) Nature of the industry to which the employer grounds considered when the strike or lockout
belongs vote was taken.
(c) Number of union members and of workers in
the bargaining unit (e) Report of lockout vote
(d) Such other relevant data as may facilitate Art. 269 (f). In every case, the union or the
the settlement of the dispute. employer shall furnish the Ministry the results
of the voting at least seven days before the
Additional Requirements intended strike or lockout, subject to the
In cases of bargaining deadlocks cooling-off period herein provided.
(a) Statement of unresolved issues in the
bargaining negotiations (f) Observance of waiting period (7 days)
(b) Written proposals of the union See notes under strike.
(c) Counterproposals of the employer
(d) Proof of a request for conference to settle Effect of Illegal Lockout
the differences.
Art. 270 (a), par. 3, 1st sentence. Any worker
In cases of ULP whose employment has been terminated as a
(a) Statement of acts complained of consequence of any unlawful lockout shall be
(b) Efforts taken to resolve the dispute amicably. entitled to reinstatement with full backwages.


Upon receipt of a valid notice of strike or PICKETING
lockout, the NCMB, through its Conciliator- Prohibited activities in picketing [Art. 264)
Mediators, shall call the parties to a (1) By any person. No person shall obstruct,
conference the soonest possible time in impede, or interfere with, by force, violence,
order to actively assist them to explore all coercion, threats or intimidation, any peaceful
possibilities for amicable settlement. picketing by employees during any labor
The Conciliator-Mediator may suggest/offer controversy or in the exercise of the right to self-
proposals as an alternative avenue for the organization or collective bargaining, or shall
resolution of their disagreement/conflict aid or abet such obstruction or interference.
which may not necessarily bind the parties. [Art. 264 (b)]
If conciliation/mediation fails, the parties (2) By police force. The police force shall keep
shall be encouraged to submit their dispute out of the picket lines unless actual violence or
for voluntary arbitration. [Book V Rule XXII other criminal acts occur therein: Provided, That
Sec. 9] nothing herein shall be interpreted to prevent
any public officer from taking any measure
(c) Observance of cooling-off periods necessary to maintain peace and order, protect
Lockout cooling-off periods: life and property, and/or enforce the law and
based on bargaining deadlock 30 days legal order. [Art. 264 (d)]
based on ULP 15 days (3) By person engaged in picketing. No person
engaged in picketing shall commit any act of
(d) Lockout vote violence, coercion or intimidation or obstruct the

PAGE 137

free ingress to or egress from the employers

premises for lawful purposes, or obstruct public ASSUMPTION OF JURISDICTION BY
thoroughfares. [Art. 264 (e)]
Picketing as part of freedom of CERTIFICATION OF THE LABOR
speech/expression; limitations DISOUTE TO THE NLRC FOR
General rule: picketing enjoys constitutional COMPULSORY ARBITRATION
protection as part of freedom of speech and/or
expression. Conditions for the assumption/certification
Exceptions/limitations: (1) labor dispute in an industry indispensable to
(1) when picketing is coercive rather than the national interest
persuasive [Security Bank Employees Union v. (2) such dispute is causing or is likely to cause a
Security Bank] strike or lockout
(2) when picketing is achieved through illegal
means [Mortera v. CIR] Powers of the Secretary of Labor (alternative)
(3) courts may confine the (1) Assumption of jurisdiction. The Secretary of
communication/demonstration to the parties to Labor will decide the labor dispute
the labor dispute [PCIB v. Philnabank Employees himself/herself.
Association] (2) Certification for compulsory arbitration. The
(4) Innocent bystander rule - Courts may Secretary of Labor will certify the labor dispute
insulate establishments or persons with no to the NLRC for compulsory arbitration.
industrial connection or having interest totally
foreign to the context of the dispute [PCIB v. Powers of the President (not precluded by the
Philnabank Employees Association] powers of the Secretary of Labor)
(1) determine the industries indispensable to the
Innocent bystander rule; test national interest
An "innocent bystander," who seeks to enjoin a (2) assume jurisdiction over any such labor
labor strike, must satisfy the court that aside dispute to settle or terminate such dispute
from the grounds specified in Rule 58 of the
Rules of Court, it is entirely different from, Who determines industries indispensable to the
without any connection whatsoever to, either national interest
party to the dispute and, its interests are totally Art. 263 (g), last paragraph. It is in the
foreign to the context thereof. [MSF Tire and discretion of the Secretary of Labor to
Rubber Inc. v. CA, 1999] determine which industries are indispensable
to the national interest. However, the
Picketing and libel President may determine such industries
Libel laws are not applied strictly considering himself:
that there is emotional tension in the picket
lines and expected discourteous and impolite The foregoing notwithstanding, the President
exchanges between the employees and the
of the Philippines shall not be precluded from
employer. [PCIB v. Philnabank Employees determining the industries that, in his opinion,
Association, 1981]
are indispensable to the national interest, and
from intervening at any time and assuming
Peaceful picketing is legal even in the absence of jurisdiction over any such labor dispute in
employer-employee relationship order to settle or terminate the same.
Picketing, peacefully carried out, is not illegal
even in the absence of employer-employee
relationship, for peaceful picketing is a part of NATURE OF ASSUMPTION OF
the freedom of speech guaranteed by the ORDER OR CERTIFICATION ORDER
Constitution. [De Leon v. National Labor Union,
1957] (1) Automatic injunction

PAGE 138

(2) Return-to-work and admission maintain an effective skeletal workforce of

(3) Immediately executory medical and other health personnel, whose
movement and services shall be unhampered
(1) Automatic injunction of intended of and unrestricted, as are necessary to insure
impending strike or lockout the proper and adequate protection of the life
Art. 269 (g), 2nd sentence. Such assumption or and health of its patients, most especially
certification shall have the effect of emergency cases, for the duration of the strike
automatically enjoining the intended or or lockout.
impending strike or lockout as specified in the
assumption or certification order. In such cases, therefore, the Secretary of
Labor and Employment may immediately
(2) Return-to-work and readmission if strike or assume, within twenty four (24) hours from
lockout has already taken place knowledge of the occurrence of such a strike
Art. 269 (g), 3rd sentence. If one has already or lockout, jurisdiction over the same or certify
taken place at the time of assumption or it to the Commission for compulsory
certification, all striking or locked out arbitration.
employees shall immediately return-to-work
and the employer shall immediately resume Rationale
operations and readmit all workers under the Highest respect accorded to the right of
same terms and conditions prevailing before patients to life and health.
the strike or lockout.
Nature of return-to-work order ASSUMPTION OF ASSUMPTION OR
It is also important to emphasize that the CERTIFICATION ORDERS
return-to-work order not so much confers a
Art. 270 (a). No strike or lockout shall be
right as it imposes a duty; and while as a right it
declared after assumption of jurisdiction by
may be waived, it must be discharged as a duty
the President or the Minister or after
even against the worker's will. Returning to
certification or submission of the dispute to
work in this situation is not a matter of option or
compulsory or voluntary arbitration or during
voluntariness but of obligation. The worker
the pendency of cases involving the same
must return to his job together with his co-
grounds for the strike or lockout.
workers so the operations of the company can
be resumed and it can continue serving the
public and promoting its interest. That is the Strike/lockout becomes illegal
real reason such return can be compelled. So A strike undertaken despite the issuance by the
imperative is the order in fact that it is not even Secretary of Labor of an assumption or
considered violative of the right against certification order becomes a prohibited activity
involuntary servitude. [Kaisahan ng Mga and thus, illegal, pursuant to Article 264 (a) of
Manggagawa sa Kahoy v. Gotamco Sawmills, the Labor Code. [Allied Banking v. NLRC, 1996]
See notes on liabilities of employer, union officers,
Immediately executory and ordinary workers under illegal strike.
The assumption and certification orders are
executory in character and must be strictly Summary of liabilities of participants in an illegal
complied with by the parties. [Allied Banking v. strike/lockout [Art. 264)
NLRC, 1996] Employer in an illegal lockout workers
terminated due to illegal lockout shall be
Strikes and lockouts in hospitals, clinics and entitled to reinstatement plus full
similar medical institutions backwages.
Art. 269 (g). It shall be the duty of the striking
union or locking-out employer to provide and

PAGE 139

Union officers who participated in illegal vote, strike vote report). [Grand Boulevard
strike deemed to have lost their Hotel v. GLOWHRAIN, 2003]
employment Good faith strike requires rational basis A
Union officers who participated in illegal acts mere claim of good faith would not justify
during a lawful strike deemed to have lost the holding of a strike under the aforesaid
their employment. exception as, in addition thereto, the
Ordinary workers deemed to have lost circumstances must have warranted such
their employment only if they participated in belief. It is, therefore, not enough that the
illegal acts. union believed that the employer
committed acts of ULP when the
Stricter penalties for non-compliance with circumstances clearly negate even a prima
orders, prohibitions, and/or injunctions issued by facie showing to sustain such belief.
the Secretary of Labor in strikes involving (Interwood Employees Assoc. v. Intl
hospitals, clinics, and similar medical institutions Hardwood, 1956)
(1) immediate disciplinary action against both
union and employer (3) Noncompliance with procedural
(2) dismissal/loss of employment for members requirements
of the striking union See notes under procedural requirements of a
(3) payment by employer of backwages, valid strike.
damages, and other affirmative relief
(4) criminal prosecution against either or both A strike which does not strictly comply with the
the union and employer procedural requirements set by law and the
rules is an unlawful/illegal strike.
Reasons for being illegal Good faith strike must still comply with
(1) Prohibited by law procedural requirements
(2) Improper grounds Even if the union acted in good faith in the belief
(3) Noncompliance with procedural that the company was committing an unfair
requirements labor practice, if no notice of strike and a strike
(4) Unlawful means and methods vote were conducted, the said strike is illegal.
(5) Violation of injunction order [Grand Boulevard Hotel v. GLOWHRAIN, 2003]
(6) No strike/lockout provisions in the CBA
(4) Unlawful means and methods
(1) Prohibited by law
Government employees. While the Constitution Purpose and means test
guarantees the right of government employees There must be concurrence between the
to organize, they are otherwise not allowed to validity of the purpose of the strike and the
strike. means of conducting it.
A strike is a legitimate weapon in the
(2) Improper grounds universal struggle for existence. It is
A legal strike must be based on a considered as the most effective weapon in
bargaining deadlock and/or a ULP act only. protecting the rights of the employees to
Intra-union and inter-union disputes are not improve the terms and conditions of their
proper grounds to strike. employment. But to be valid, a strike must
be pursued within legal bounds. The right to
Good faith strike - Good faith may be used
strike as a means for the attainment of
as a defense if the strike is held on the basis
social justice is never meant to oppress or
of an act of ULP by the employer even if it
destroy the employer. The law provides limits
turned out that there was no act of ULP.
for its exercise. Among such limits are the
However, the mandatory procedural
prohibited activities under Art. 264,
requirements cannot be dispensed with
particularly paragraph (e), which states that
(notice of strike, cooling-off period, strike
no person engaged in picketing shall:

PAGE 140

(1) commit any act of violence, coercion, or that individual liability be incurred by those
intimidation or guilty of such acts of violence that call for loss of
(2) obstruct the free ingress to or egress employee status. Such an approach is reflected
from the employer's premises for lawful in our recent decisions. [Shell Oil Workers Union
purposes or v. Shell Co. of the Phils, 1971]
(3) obstruct public thoroughfares.
[Association of Independent Unions in the (5) Violation of injunction order
Philippines (AIUP), et. al. v NLRC, 1999] An automatic injunction under Article 263 (g) or
a valid injunction order under the exceptions to
A legal strike may turn into an illegal strike Article 254 must be complied with. Otherwise,
Even if the strike is valid because its objective or the strike becomes illegal.
purpose is lawful, the strike may still be
declared invalid where the means employed are (6) No strike/lockout provisions in the CBA
illegal. [Phil. Diamond Hotel and Resort, Inc. v. A no strike, no lock-out is a valid provision in
Manila Diamond Hotel Employees Union, 2006] the CBA. However, it only applies to economic
provisions. It cannot prevent a strike which is
Examples of unlawful means and methods grounded on unfair labor practice. [Malayang
(1) Acts of violence and terrorism Samahan ng mga Manggagawa sa Greenfield v.
(2) Destruction of property Ramos, 2000]

Guidelines and Balancing of Interest LIABILITY OF UNION OFFICERS

(1) A strike otherwise valid, if violent in character, Any union officer who knowingly
may be placed beyond the pale. participates in an illegal strike and any
worker or union officer who knowingly
(2) Care is to be taken especially where an unfair participates in the commission of illegal
labor practice is involved, to avoid stamping it acts during a strike may be declared to have
with illegality just because it is tainted by such lost his employment status.
acts. To avoid rendering illusory the recognition Note: Mere participation in an illegal strike
of the right to strike, responsibility in such a by a union officer is sufficient ground to
case should be individual and not collective. terminate his employment. In case of a
(3) A different conclusion would be called for if lawful strike, the union officer must commit
the existence of force while the strike lasts is illegal acts during a strike for him to be
pervasive and widespread, consistently and terminated.
deliberately resorted to as a matter of policy. It
could be reasonably concluded then that even if LIABILITY OF ORDINARY WORKERS
justified as to ends, it becomes illegal because General rule: Participation by a worker in a
of the means employed'. lawful strike is not ground for termination of his
(4) This is not by any means to condone the
utilization of force by labor to attain its Exception: When the worker participated in
objectives. It is only to show awareness that in illegal acts during the strike.
labor conflicts, the tension that fills the air as
well as the feeling of frustration and bitterness When the strike is or becomes illegal, the
could break out in sporadic acts of violence. workers who participate in it are not deemed to
have lost their employment status by express
If there be in this case a weighing of interests in omission in the second sentence of the third
the balance, the ban the law imposes on unfair paragraph of Art. 264. Only the union officers
labor practices by management that could are deemed to have lost their employment
provoke a strike and its requirement that it be status.
conducted peaceably, it would be, to repeat,
unjustified, considering all the facts disclosed, LIABILITY OF EMPLOYERS
to stamp the strike with illegality. It is enough

PAGE 141

Any worker whose employment has been staged by the respondent and defend the
terminated as a consequence of any unlawful validity of its termination of the
lockout shall be entitled to reinstatement with employment of the members of the
full backwages. respondent who staged a strike. It must be
underscored that a waiver to be valid and
WAIVER OF ILLEGALITY OF STRIKE effective must be couched in clear and
When defense of illegality of strike is deemed unequivocal terms which leave no doubt as
waived to the intention of a party to give up a right
In this case, the Company alleged that the strike or benefit which legally pertains to him.
was illegal as the notice of intention to strike [Filcon Manufacturing Corp v. Lakas
was not sent directly to it. However, it reinstated Manggagawa sa Filcon-Lakas Manggagawa
its striking workers who expressed their desire to Labor Center]
return to work. On the illegality of the strike, the
Court declared: INJUNCTIONS
xxx it is claimed that the strike was
illegal. Admitting for the sake of argument that General rule: injunction prohibited
the strike was illegal for being premature, this
Art. 260. No temporary or permanent
defense was waived by the Bisaya Land
injunction or restraining order in any case
Transportation Company, when it voluntarily
involving or growing out of labor disputes
agreed to reinstate the radio operators. [Bisaya
shall be issued by any court or other entity,
Land Transportation Co., Inc. v. CIR, 1957]
except as otherwise provided in Articles 218
and 264 of this Code.
When defense of illegality of strike is not deemed
The ruling cited in the Bisaya case that the
General Rule: is that injunctions are prohibited
employer waives his defense of illegality of
in labor disputes. The exceptions are provided in
the strike upon reinstatement of strikers is
Art. 224 (Powers of NLRC) in connection with
applicable only to strikers who signified
Art. 270 (Prohibited Activities) of the Labor
their intention to return to work and were
accepted back xxx
Truly, it is more logical and reasonable for Requisites for injunction to issue [Art. 224(e)
condonation to apply only to strikers who Powers of the NLRC]
signified their intention to return and did (a) actual or threatened commission of a
return to work. The reason is obvious. These prohibited or unlawful act OR requirement of
strikers took the initiative in normalizing performance of a particular act in a labor
relations with their employer and thus dispute
helped promote industrial peace. However, (b) if unrestrained or unperformed, the act will
as regards the strikers who decided to cause grave or irreparable damage to any party
pursue with the case, as in the case of the OR render ineffectual any decision in favor of
114 strikers herein, the employer could not such party
be deemed to have condoned their strike,
because they had not shown any willingness Prohibited activities [Art. 270)
to normalize relations with it. [Philippine (a) No labor organization or employer shall
Inter-Fashion, Inc. v. NLRC, 1982] declare a strike or lockout without first having
Considering the terms of the compromise bargained collectively in accordance with Title
agreement (the parties merely agreed to VII of this Book or without first having filed the
maintain the status quo before the notice required in the preceding Article or
commencement of the complaints filed by without the necessary strike or lockout vote first
them without prejudice to the resolution by having been obtained and reported to the
the Labor Arbiter), it cannot thereby be Ministry.
concluded that the petitioner waived its
right to assail the illegality of the strike

PAGE 142

No strike or lockout shall be declared after intimidation or obstruct the free ingress to or
assumption of jurisdiction by the President or egress from the employers premises for lawful
the Minister or after certification or submission purposes, or obstruct public thoroughfares.
of the dispute to compulsory or voluntary
arbitration or during the pendency of cases INNOCENT BYSTANDER RULE
involving the same grounds for the strike or An innocent by-stander is entitled to
lockout. injunction if it is affected by the activities of
a picketing union where no connection or
Any worker whose employment has been interest exists between the union and the
terminated as a consequence of any unlawful innocent by-stander.
lockout shall be entitled to reinstatement with The right [to picket] may be regulated at the
full backwages. Any union officer who knowingly instance of third parties or `innocent
participates in an illegal strike and any worker bystanders' if it appears that the inevitable
or union officer who knowingly participates in result of its exercise is to create an
the commission of illegal acts during a strike impression that a labor dispute with which
may be declared to have lost his employment they have no connection or interest exists
status: Provided, That mere participation of a between them and the picketing union or
worker in a lawful strike shall not constitute constitute an invasion of their rights.
sufficient ground for termination of his (Liwayway Publishing v. Permanent Concrete
employment, even if a replacement had been Worker's Union, 1981)
hired by the employer during such lawful strike.

No person shall obstruct, impede, or interfere

with, by force, violence, coercion, threats or Procedure and Jurisdiction
intimidation, any peaceful picketing by
employees during any labor controversy or in LABOR ARBITER
the exercise of the right to self-organization or
collective bargaining, or shall aid or abet such
obstruction or interference.
Except as otherwise provided under the Code
the Labor Arbiters shall original and exclusive
(b) No employer shall use or employ any strike-
breaker, nor shall any person be employed as a jurisdiction to hear and decide:
(1) Unfair labor practices cases;
(2) Termination disputes;
(c) No public official or employee, including (3) If accompanied with a claim for
officers and personnel of the New Armed Forces reinstatement, those cases that workers
may file involving wages, rates of pay, hours
of the Philippines or the Integrated National
of work and other terms and conditions of
Police, or armed person, shall bring in,
introduce or escort in any manner, any
individual who seeks to replace strikers in (4) Claims for actual, moral, exemplary and
entering or leaving the premises of a strike area, other forms of damages arising from the
or work in place of the strikers. The police force employer-employee relations;
shall keep out of the picket lines unless actual (5) Cases arising from any violation of Art. 264
violence or other criminal acts occur therein: of this Code, including questions involving
the legality of strikes and lockouts;
Provided, That nothing herein shall be
(6) Except claims for Employees Compensation,
interpreted to prevent any public officer from
Social Security, Medicare and maternity
taking any measure necessary to maintain
peace and order, protect life and property, benefits, all other claims, arising from
employer-employee relations, including
and/or enforce the law and legal order.
those of persons in domestic or household
(d) No person engaged in picketing shall service, involving an amount exceeding five
commit any act of violence, coercion or thousand pesos (P5,000) regardless of

PAGE 143

whether accompanied with a claim for Nature of Proceeding: Non-litigious. The

reinstatement. [Art. 217] Labor Arbiter is not bound by the technical
(7) Money claims arising out of employer- rules of procedure.
employee relationship or by virtue of any The Labor Arbiter shall use every and all
law or contract, involving claims for actual, reasonable means to ascertain the facts in
moral, exemplary an other forms of each speedily and objectively. [Art. 221]
damages, as well as employment Employer-employee relationship is a
termination of OFWs; jurisdictional requisite, absent of which, the
(8) Wage distortion disputes in unorganized NLRC has no jurisdiction to hear and decide
establishments not voluntarily settled by the case. (Hawaiian-Philippine Company v.
the parties. [Art. 124] Gulmatico)
(9) Enforcement of compromise agreements Venue: Regional Arbitration Branch (RAB)
when there is non-compliance by any of the having jurisdiction over the workplace of the
parties. [Art. 227] complainant or petitioner.
(10) Other cases as may be provided by law.
Workplace place or locality where the
employee is regularly assigned at the time
Exclusive and Original Jurisdiction subject to
the cause of action arose.
Articles 261 and 262.
A case under Art 217 may be lodged instead In the case of field employees, ambulant or
with a voluntary arbitrator. The policy of the law itinerant workers, their workplace is (a)
is to give primacy to voluntary modes of settling where they are regularly assigned or (b)
dispute. where they are supposed to regularly
receive their salaries and wages or work
VERSUS REGIONAL DIRECTOR instructions from, and report the results of
their assignment to their employers.
Jurisdiction on Money Claims (Labor Arbiter vs.
Regional Director) Some Rules on Venue
(1) Exclusion. Where 2 or more Regional
A money claim arising from employer-
Arbitration Branches have jurisdiction over the
employee relations, except SSS,
workplace of the complainant, that first which
ECC/Medicare claims, is within the
acquired jurisdiction over the case shall exclude
jurisdiction of a labor arbiter if:
(1) The claim, regardless of amount, is
(2) Waiver. When venue is not objected to before
accompanied with a claim of reinstatement;
the filing of position papers, such issue shall be
deemed waived.
(2) The claim exceeds P5,000, whether or
(3) Transfer. Venue of an action may be
not there is a claim for reinstatement.
transferred to a different Regional Arbitration
The Regional Director has jurisdiction if: Branch upon written agreement of the parties or
(1) the money claim is not accompanied by upon order of the LA in meritorious cases and
reinstatement AND on motion of the proper party.
(2) the claim does not exceed P5,000 (4) OFW Cases. Cases involving overseas Filipino
workers may be filed before the RAB having
Notes: jurisdiction over the place where the
The money claim must arise from law or complainant resides or where the principal
contracts other than CBA. office of any of the respondents is situated.
Money arising from an implementation of
the CBA Voluntary Arbitrator or Panel of REINSTATEMENT PENDING APPEAL
Voluntary Arbitrators have jurisdiction An order for reinstatement entitles an employee
Money claims which does not arise from ER- to receive his accrued backwages from the
EE relations Regular Courts have moment the reinstatement order was issued up
jurisdiction. to the date when the same was reversed by a
higher court without fear of refunding what he

PAGE 144

had received. [Garcia v. Philippine Airlines, Inc., (4) If serious errors in the findings of fact are
G.R. No.164856, 2009] raised which, if not corrected, would cause
grave or irreparable injury to the appellant
Requirements to perfect appeal to NLRC
(a) The appeal should be filed within the It is clear from the NLRC Rules of Procedure
reglementary period; that appeals must be verified and certified
(b) The Memorandum of Appeal should be against forum-shopping by the parties-in-
under oath; interest themselves. The purpose of verification
(c) The appeal fee should be paid; is to secure an assurance that the allegations in
(d) There should be posting of cash or surety the pleading are true and correct and have been
bond, if judgment involves monetary award; and filed in good faith. [Antonio B. Salenga, et al. v.
(e) There should be proof of service to the CA, 2012]
adverse party.
COMMISSION (NLRC) Even if the order of reinstatement of the
Labor Arbiter is reversed on appeal, it is
JURISDICTION obligatory on the part of the employer to
reinstate and pay the wages of the
NLRC divisions dismissed employee during the period of
(a) Original Jurisdiction: Over petitions for appeal until reversal by the higher court.
injunction or temporary restraining order under On the other hand, if the employee has
Art. 218 (e). been reinstated during the appeal period
(b) Exclusive Appellate Jurisdiction: over all and such reinstatement order is reversed
cases decided by labor arbiters (Art 217[b]) and with finality, the employee is not required to
the DOLE regional directors under Art 129. reimburse whatever salary he received for
he is entitled to such, more so if he actually
Period of Appeal (2005 NLRC Rules of rendered services during the period. [Garcia
Procedure) v. Philippine Airlines, Inc., G.R. No.164856,
From Labor Arbiter to NLRC: Decisions and
resolutions of the Labor Arbiter shall be
final and executory unless appealed to the REMEDIES
Commission by any or both parties within Requisites for Perfection of Appeal to the Court
(10) calendar days from receipt thereof of Appeals (Rule 43)
From Regional Director to NLRC pursuant to (1) The appeal shall be:
Art. 129: Decisions and resolutions of the Filed within the reglementary period;
Regional Director shall be final and Verified by the appellant himself in
executory unless appealed within 5 days accordance with Section 4, Rule 7 of the
from receipt thereof. Rules of Court;
Note: If the 5th or 10th day falls on a In the form of a memorandum of appeal
Saturday, Sunday, or a holiday, the last day which shall state the grounds relied upon
shall be the next working day. and the arguments in support thereof, the
relief prayed for, and with a statement of
Grounds of Appeal the date the appellant received the
(1) If there is prima facie evidence of abuse of appealed decision, resolution or order;
discretion on the part of the Labor Arbiter or In three (3) legibly typewritten or printed
Regional Director; copies; and
(2) If the decision, resolution or order was Accompanied by (a) proof of payment of
secured through fraud or coercion, including the required appeal fee; (b) posting of a
graft and corruption; cash or surety bond as provided in Section
(3) If made purely on questions of law; and/or 6 of the 2005 NLRC Rules, (c) a certificate

PAGE 145

of non-forum shopping; and (d) proof of that its action would not only serve the interests
service upon the other parties. of the parties alone, but would also have
(2) A mere notice of appeal without complying favorable implications to the community and to
with the other requisites aforestated shall not the economy as a whole. This is the clear
stop the running of the period for perfecting an intention of the legislative body in enacting Art.
appeal. 263 paragraph (g) of the Labor Code, as
(3) The appellee may file with the Regional amended by Section 27 of R.A. 6175 [Union of
Arbitration Branch or Regional Office where the Filipino Employees v. NLRC, 1990]
appeal was filed, his answer or reply to
appellants memorandum of appeal, not later Effects of Certification
than 10 calendar days from receipt thereof. (1) Upon certification, the intended or
Failure on the part of the appellee who was impending strike or lockout is automatically
properly furnished with a copy of the appeal to enjoined, notwithstanding the filing of any
file his answer or reply within the said period motion for reconsideration of the
may be construed as a waiver on his part to file certification order nor the non-resolution of
the same. any such motion which may have been duly
(4) Subject to the provisions of Article 218 of the submitted to the Office of the Secretary of
Labor Code, once the appeal is perfected in Labor and Employment.
accordance with these Rules, the Commission (2) If a work stoppage has already taken place
shall limit itself to reviewing and deciding only at the time of the certification, all striking or
the specific issues that were elevated on appeal. locked out employees shall immediately
return to work and the employer shall
CERTIFIED CASES immediately resume operations and
Certified labor disputes are cases certified to readmit all workers under the same terms
the Commission for compulsory arbitration and conditions prevailing before the strike
under Art. 263 (g) of the Labor Code. [Sec. or lockout.
2, The 2011 NLRC Rules and Procedures] (3) All cases between the same parties, except
When, in his opinion, there exists a labor where the certification order specifies
dispute causing or likely to cause a strike or otherwise the issues submitted for
lockout in an industry indispensable to the arbitration which are already filed or may be
national interest, the Secretary of Labor and filed, and are relevant to or are proper
Employment may assume jurisdiction over incidents of the certified case, shall be
the dispute and decide it or certify the same considered subsumed or absorbed by the
to the Commission for compulsory certified case, and shall be decided by the
arbitration. Such assumption or certification appropriate Division of the Commission.
shall have the effect of automatically (4) The parties to a certified case, under pain of
enjoining the intended or impending strike contempt, shall inform their counsels and
or lockout as specified in the assumption or the Division concerned of all cases pending
certification order. [Art. 263] with the Regional Arbitration Branches and
the Voluntary Arbitrators relative or incident
Function of the NLRC to the certified case before it.
When sitting in a compulsory arbitration (5) When a certified labor dispute involves a
certified to by the Secretary of Labor, the NLRC business entity with several workplaces
is not sitting as a judicial court but as an located in different regions, the Division
administrative body charged with the duty to having territorial jurisdiction over the
implement the order of the Secretary. Its principal office of the company shall acquire
function only is to formulate the terms and jurisdiction to decide such labor dispute;
conditions of the CBA and cannot go beyond unless the certification order provides
the scope of the order. Moreover, the otherwise. [Section 3, 2011 NLRC Rules and
Commission is further tasked to act within the Procedures]
earliest time possible and with the end in view

PAGE 146

Effects of Defiance Execution of judgment

Non-compliance with the certification order Upon issuance of the entry of judgment, the
of the SOLE shall be considered as an Commission motu proprio or upon motion by
illegal act committed in the course of the the proper party, may cause the execution of the
strike or lockout and shall authorize the judgment in the certified case. [Sec. 6, 2011
Commission to enforce the same under pain NLRC Rules and Procedures]
of immediate disciplinary action, including
dismissal or loss of employment status or BUREAU OF LABOR RELATIONS
payment by the locking-out employer of
backwages, damages and/or other MED-ARBITERS
affirmative relief, even criminal prosecution
against the liable parties. JURISDICTION (ORIGINAL AND
The Commission may also seek the APPELLATE)
assistance of law enforcement agencies to Art. 232. The Bureau of Labor Relations and
ensure compliance and enforcement of its the Labor Relations Divisions in the regional
orders and resolutions. [Sec. 4, 2011 NLRC offices of the Department of Labor and
Rules and Procedures] Employment shall have original and exclusive
The Secretary's assumption and certification authority to act, at their own initiative or upon
orders being executory in character are to request of either or both parties, on all inter-
be strictly complied with by the parties even union and intra-union conflicts, and all
during the pendency of a petition disputes, grievances or problems arising from
questioning their validity for this or affecting labor-management relations in
extraordinary authority given by law to the all workplaces whether agricultural or non-
Secretary of Labor is "aimed at arriving at a agricultural, except those arising from the
peaceful and speedy solution to labor implementation or interpretation of collective
disputes, without jeopardizing national bargaining agreements which shall be the
interests." [Union of Filipro Employees v. subject of grievance procedure and/or
NLRC, 1990] voluntary arbitration.

Procedure in certified cases The Bureau shall have fifteen (15) calendar
(a) When there is no need to conduct a days to act on labor cases before it, subject to
clarificatory hearing, the Commission shall extension by agreement of the parties.
resolve all certified cases within 30 calendar
days from receipt by the assigned Appellate Jurisdiction
Commissioner of the complete records, which (1) BLR has the power to review the decision of
shall include the position papers of the parties the Regional Director
and the order of the SOLE denying the motion (2) Decisions rendered through its appellate
for reconsideration of the certification order, if power are final and executory. Hence, the
any. remedy of the aggrieved party is to seasonably
(b) Where a clarificatory hearing is needed, the avail of the special civil action of certiorari under
Commission shall, within 5 calendar days from Rule 65 of the Rules of Court.
receipt of the records, issue a notice to be
served on the parties through the fastest means
available, requiring them to appear and submit NATIONAL CONCILIATION AND
additional evidence, if any. All certified cases MEDIATION BOARD
shall be resolved by the Commission within 60
calendar days from receipt of the complete NATURE OF PROCEEDINGS
records by the assigned Commissioner. Conciliation and mediation is non-litigious/non-
(c) No motion for extension or postponement adversarial, less expensive, and expeditious.
shall be entertained. [Sec. 5, 2011 NLRC Rules Under this informal set-up, the parties find it
and Procedures] more expedient to fully ventilate their respective

PAGE 147

positions without running around with legal

technicalities and, in the course thereof, afford Small money claims
them wider latitude of possible approaches to Recovery of wages, simple money claims
the problem. and other benefits. Upon complaint of
any interested party, the Regional Director
CONCILIATION VS. MEDIATION of the Department of Labor and
Employment or any of the duly authorized
Conciliation A mild form of intervention by a hearing officers of the Department is
neutral third party, the Conciliator-Mediator, empowered, through summary proceeding
relying on his persuasive expertise, takes an and after due notice, to hear and decide any
active role in assisting parties by trying to keep matter involving the recovery of wages and
disputants talking, facilitating other procedural other monetary claims and benefits,
niceties, carrying messages back and forth including legal interest, owing to an
between the parties, and generally being a good employee or person employed in domestic
fellow who tries to keep things calm and or household service or househelper under
forward-looking in a tense situation. this Code, arising from employer-employee
relations: Provided, That such complaint
Mediation A mild intervention by a neutral does not include a claim for reinstatement:
third party, the Conciliator-Mediator, wherein Provided, further, That the aggregate
the CM advises the parties or offers solutions or money claims of each employee or
alternatives to the problems with the end in househelper do not exceed five thousand
view of assisting them towards voluntarily pesos (P5,000).
reaching their own mutually acceptable The Regional Director or hearing officer
settlement of the dispute. shall decide or resolve the complaint within
thirty (30) calendar days from the date of
the filing of the same.
Conciliation Mediation
Any sum thus recovered on behalf of any
C-M facilitates C-M assists parties to employee or househelper pursuant to this
disputants to keep voluntarily reach Article shall be held in a special deposit
things calm, delivers mutually acceptable account by, and shall be paid, on order of
messages back and settlement. the Secretary of Labor and Employment or
forth between the the Regional Director directly to the
parties. employee or househelper concerned.
Any such sum not paid to the employee or
househelper, because he cannot be located
PREVENTIVE MEDIATION after diligent and reasonable effort to locate
Preventive mediation case refers to the him within a period of three (3) years, shall
potential or brewing labor dispute which is the be held as a special fund of the Department
subject of a formal or informal request for of Labor and Employment to be used
conciliation and mediation assistance sought by exclusively for the amelioration and benefit
either or both parties in order to remedy, of workers.
contain or prevent its degeneration into a full xxx The Secretary of Labor and Employment
blown dispute through amicable settlement. or his duly authorized representative may
supervise the payment of unpaid wages and
other monetary claims and benefits,
DOLE REGIONAL DIRECTORS including legal interest, found owing to any
employee or househelper under this Code.
[Art. 129)

PAGE 148

representative is hereby empowered to inquire

DOLE SECRETARY into the financial activities of legitimate labor
organizations upon the filing of a complaint
under oath and duly supported by the written
VISITORIAL AND ENFORCEMENT consent of at least twenty percent (20%) of
POWERS the total membership of the labor
Art. 128. The Secretary of Labor and organization concerned and to examine their
Employment or his duly authorized books of accounts and other records to
representatives, including labor regulation determine compliance or non-compliance
officers, shall have access to employers with the law and to prosecute any violations of
records and premises at any time of the day or the law and the union constitution and by-
night whenever work is being undertaken laws: Provided, That such inquiry or
therein, and the right to copy therefrom, to examination shall not be conducted during
question any employee and investigate any the sixty (60)-day freedom period nor within
fact, condition or matter which may be the thirty (30) days immediately preceding the
necessary to determine violations or which date of election of union officials.
may aid in the enforcement of this Code and
of any labor law, wage order or rules and POWER TO SUSPEND/EFFECTS OF
regulations issued pursuant thereto. TERMINATION
Art. 283 (b). The Secretary of the Department
Notwithstanding the provisions of Articles 129
of Labor and Employment may suspend the
and 217 of this Code to the contrary, and in
effects of the termination pending resolution
cases where the relationship of employer-
of the dispute in the event of a prima facie
employee still exists, the Secretary of Labor
finding by the appropriate official of the
and Employment or his duly authorized
Department of Labor and Employment before
representatives shall have the power to issue
whom such dispute is pending that the
compliance orders to give effect to the labor
termination may cause a serious labor dispute
standards provisions of this Code and other
or is in the implementation of a mass lay-off.
labor legislation based on the findings of
labor employment and enforcement officers
or industrial safety engineers made in the ASSUMPTION OF JURISDICTION
course of inspection. The Secretary or his duly Art. 269 (g). When in his opinion, there exist a
authorized representatives shall issue writs of labor dispute causing or likely to cause a
execution to the appropriate authority for the strike or lockout in an industry indispensable
enforcement of their orders, except in cases to the national interest, the SOLE may
where the employer contests the findings of assume jurisdiction over the dispute and
the labor employment and enforcement decide it or certify the same to the
officer and raises issues supported by Commission for compulsory arbitration.
documentary proofs which were not
considered in the course of inspection. APPELLATE JURISDICTION
Orders issued by the duly authorized
Art. 37. The Secretary of Labor or his duly representative of the SOLE under Art. 128
authorized representatives may, at any time, may be appealed to the latter.
inspect the premises, books of accounts and
Denial of application for union registration
records of any person or entity covered by this
or cancellation of union registration
Title, require it to submit reports regularly on
originally rendered by the BLR may be
prescribed forms, and act on violation of any
appealed to the SOLE (if originally rendered
provisions of this Title.
by the Regional Office, appeal should be
made to the BLR)
Art. 280. The Secretary of Labor and
Employment or his duly authorized Decisions of the Med-Arbiter in certification
election cases are appealable to the SOLE

PAGE 149

(decisions of med-arbiters in intra-union with the economic provisions of such

disputes are appealable to the BLR) [Art. agreement.
Art. 267. The Commission, its Regional Offices
VOLUNTARY ARBITRATION POWERS and the Regional Directors of the DOLE shall
Art. 269 (h). Before or at any stage of the not entertain disputes, grievances or matters
compulsory arbitration process, the parties under the exclusive and original jurisdiction of
may opt to submit their dispute to voluntary the Voluntary Arbitrator or panel of Voluntary
arbitration. Arbitrators and shall immediately dispose and
refer the same to the grievance machinery or
Art. 269 (i). The Secretary of Labor and Voluntary Arbitration provided in the
Employment, xxx shall decide or resolve the Collective Bargaining Agreement.
dispute xxx.
Other labor disputes
GRIEVANCE MACHINERY AND The VA or panel of VAs, upon agreement of
the parties, shall also hear and decide all
VOLUNTARY ARBITRATION other labor disputes including ULP and
bargaining deadlocks. [Art. 268)
SUBJECT MATTER OF GRIEVANCE Even if the specific issue brought before the
arbitrators merely mentioned the question
Grievance is any question by either the ER or the of whether an employee was discharged
union regarding the interpretation or for just cause, they could reasonably
application of the CBA or company personnel assume that their powers extended beyond
policies or any claim by either party that the the determination thereof to include the
other party is violating any provisions of the CBA power to reinstate the employee or to grant
or company personnel policies. back wages. In the same vein, if the specific
issue brought before the arbitrators referred
It is a complaint or dissatisfaction arising from to the date of regularization of the
the interpretation or implementation of the CBA employee, law and jurisprudence gave them
and those arising from interpretation or enough leeway as well as adequate
enforcement of personnel policies prerogative to determine the entitlement of
the employees to higher benefits in
Grievance machinery It refers to the accordance with the finding of
mechanism for the adjustment and resolution of regularization. [Manila Pavilion Hotel, etc. vs.
grievances. It is part of the continuing process of Henry Delada, 2011]
collective bargaining.
All parties to the dispute shall be entitled to
JURISDICTION Jurisdiction attend the arbitration proceedings. The
Exclusive and original jurisdiction over attendance of any third party or the exclusion of
grievances any witness from the proceedings shall be
The VA or panel of VAs shall have original determined by the VA or panel of Vas. Hearing
and exclusive jurisdiction to hear and decide may be adjourned for cause or upon agreement
all unresolved grievances. by the parites.
Violations of a CBA, except those which are
gross in character, shall no longer be Days to render an award/decision
treated as ULP and shall be resolved as Unless the parties agree otherwise, it shall be
grievances under the CBA. mandatory for the VA or panel of Vas to render
Note: Gross violations of CBA shall mean an award or decision within 20 calendar days
flagrant and/or malicious refusal to comply

PAGE 150

from the date of submission of the dispute to such incidental reliefs as law and justice may
voluntary arbitration. require.
Form of award/decision The petition shall be accompanied by a
The award or decision of the VA or panel of Vas certified true copy of the judgment, order or
must state in clear, concise and definite terms resolution subject thereof, copies of all
the facts, the law and/contract upon which it is pleadings and documents relevant and
based. pertinent thereto, and a sworn certification of
non-forum shopping as provided in the third
Finality paragraph of section 3, Rule 46. (1a)
It shall be final and executory after 10 calendar
days from the receipt of the copy of the award or Section 2. Petition for prohibition. When the
decision by the parties. proceedings of any tribunal, corporation,
board, officer or person, whether exercising
Execution of award/decision judicial, quasi-judicial or ministerial functions,
Upon motion of any interested party, the are without or in excess of its or his
Voluntary Arbitrator or panel of Voluntary jurisdiction, or with grave abuse of discretion
Arbitrators or the Labor Arbiter in the region amounting to lack or excess of jurisdiction,
where the movant resides, in case of the and there is no appeal or any other plain,
absence or incapacity of the Voluntary speedy, and adequate remedy in the ordinary
Arbitrator or panel of Voluntary Arbitrators, for course of law, a person aggrieved thereby may
any reason, may issue a writ of execution file a verified petition in the proper court,
requiring either the sheriff of the Commission or alleging the facts with certainty and praying
regular courts or any public official whom the that judgment be rendered commanding the
parties may designate in the submission respondent to desist from further proceedings
agreement to execute the final decision, order in the action or matter specified therein, or
or award. [Art, 262-A, LC] otherwise granting such incidental reliefs as
law and justice may require.
REMEDIES The petition shall likewise be accompanied by
Rule 43 Sec. 1, Rules of Court a certified true copy of the judgment, order or
The decision of a Voluntary Arbitrator or panel resolution subject thereof, copies of all
of Voluntary Arbitrators is appealable by pleadings and documents relevant and
ordinary appeal under Rule 43 of the Rules of pertinent thereto, and a sworn certification of
Civil Procedure directly to the Court of Appeals. non-forum shopping as provided in the third
paragraph of section 3, Rule 46. (2a)
RULE 65, RULES OF COURT Section 3. Petition for mandamus. When any
tribunal, corporation, board, officer or person
Section 1. Petition for certiorari. When any unlawfully neglects the performance of an act
tribunal, board or officer exercising judicial or which the law specifically enjoins as a duty
quasi-judicial functions has acted without or resulting from an office, trust, or station, or
in excess its or his jurisdiction, or with grave unlawfully excludes another from the use and
abuse of discretion amounting to lack or enjoyment of a right or office to which such
excess of jurisdiction, and there is no appeal, other is entitled, and there is no other plain,
or any plain, speedy, and adequate remedy in speedy and adequate remedy in the ordinary
the ordinary course of law, a person aggrieved course of law, the person aggrieved thereby
thereby may file a verified petition in the may file a verified petition in the proper court,
proper court, alleging the facts with certainty alleging the facts with certainty and praying
and praying that judgment be rendered that judgment be rendered commanding the
annulling or modifying the proceedings of respondent, immediately or at some other
such tribunal, board or officer, and granting time to be