0
Introduction 3. Social Legislation –All laws passed by
Labor
It is the exertion by human beings of physical
or mental efforts, or both, towards the
production of goods and services.
Labor law
The law that defines State policies on labor and
employment and governs the rights and duties
of the employer (Er) and employees (Ee) with
respect to:
1. The terms and conditions of
employment, and
2. Labor disputes arising from collective
bargaining or other concerted activity
respecting such terms and conditions.
Classification of Labor Laws
1. Labor standards - law as that which
sets out the least or basic terms,
conditions and benefits of employment
that employers must provide or comply
with and to which employees are
entitled as a matter of legal right. E.g.
rules and regulations relating to wages,
hours of work, cost-of-living
allowance, and other monetary and
welfare benefits, including
occupational, safety, and health
standards.
e.g. 13th month pay
2. Labor relations - defines the status,
rights and duties, and the institutional
mechanisms that govern the individual
and collective interactions of
employers, employees or their
representatives.
e.g.Collective Bargaining Negotiations
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the State to promote public welfare. It
includes statutesintended to enhance
the welfare of the peopleeven where
there is no Er-Ee relationship.
e.g.GSIS Law, SSS Law, Philhealth
benefits, Agrarian Laws
Sources of Labor Laws
1. Primary
a) Philippine Constitution
b) Legislations passed by Congress
c) Decisions of the Supreme Court
d) Implementing Rules and Regulations of
DOLE
e) Decisions of quasi-judicial bodies such as
NLRC
f) ILO conventions
2. Auxiliary
a) Opinions of the Secretary of Labor and
employment
b) Opinions of the secretary of Justice
c) Reports, debates, hearings made and
conducted by Congress
d) Labor law reviews
e) Labor law and social legislation
textbooks
f) Opinions of legal luminaries
g) Foreign laws and decisions
Purpose of Labor Legislation
• To protect the worker from the mighty and to
correct the injustices that are inherent in
employer-employee relationship.
• To provide set of restrictions upon the worker
in his relationship with the employer and vice
versa to maintain industrial peace and
harmony; thereby promoting industrial
democracy.
Topic 1: Fundamental Principles and
Policies
1
 NOTE: Article II provisions are merely statements
of principles and state policies. The provisions are
I. Legal Basis not self-executory and needs enabling laws or
legislative enactments in order to implement them.
Thus, they do not embody judicially enforceable
A. Constitutional Provisions: 1987 constitutional rights but merely guidelines for
Constitution legislation. No case can be filed against these
principles and these provisions cannot give rise to a
Article II (Declaration of Principles and
cause of action in the courts or quasi-judicial bodies.
Policies)
1. Sec. 9 – The State shall promote a just and
dynamic social order that will ensure the
prosperity and independence of the nation Article III (Bill of Rights)
and free the people from poverty through
1. Sec. 1 –No person shall be deprived of life,
policies that provide adequate social
liberty, or property without due process of
services, promote full employment, a
law, nor shall any person be denied
rising standard of living, and an
theequal protection of the laws. (Due
improved quality of life for all.
process and equal protection clause).
2. Sec. 10 – The State shall promote social
2. Sec. 4–No law shall be passed abridging
justice in all phases of national
the freedom of speech, of expression, or
development.
of the press, or the right of the people
3. Sec. 11–The State values the dignity of
peaceably to assembleand petition the
every human person and guarantees full
government for redress of grievances.
respect for human rights.
3. Sec. 7 –The right of the people to
4. Sec. 13– The State recognizes the vital
information on matters of public concern
role of the youth in nation-building and
shall be recognized. Access to official
shall promote and protect their physical,
records, and to documents, and papers
moral, spiritual, intellectual, and social
pertaining to official acts, transactions,
well-being. It shall inculcate in the youth
or decisions, as well as to government
patriotism and nationalism, and encourage
research data used as basis for policy
their involvement in public and civic
development, shall be afforded the citizen,
affairs.
subject to such limitations as may be
5. Sec. 14–The State recognizes the role of
provided by law.
women in nation-building, and shall
4. Sec. 8– The right of the people, including
ensure the fundamental equality before
those employed in the public and
the law of women and men.
privatesectors, to form unions,
6. Sec. 18 –The State affirms labor as a
associations, or societies for purposes not
primary social economic force. It shall
contrary to law shall not be abridged.
protect the rights of workers and
5. Sec. 10– No law impairing the obligation
promote their welfare. (Protection to
of contracts shall be passed. (Non-
labor clause)
impairment clause)
7. Sec. 20 – The State recognizes the
indispensable role of the private sector,
6. Sec. 16 – All persons shall have the right
encourages private enterprise and provide
to a speedy disposition of their cases
incentives to needed investments.

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 before all judicial, quasi-judicial or
administrative bodies.
7. Sec. 18 (2) – No involuntary servitude in
any form shall exist except as a punishment
for a crime whereof the party shall have
been duly convicted. (Prohibition against
involuntary servitude)
Article XIII (Social Justice and Human
Rights)
NOTE:
1. Section 3
The State shall afford full protection to labor,
local and overseas, organized and
unorganized,andpromote full employment
and equality of employment opportunitiesfor
all.
It shall guarantee the rights of all workers to
self-organization, collective bargaining and
negotiations,and peaceful concerted
activities, including the right to strike in
accordance with law.They shall be entitled to
security of tenure, humane conditions of
work,and a living wage.They shall also
participate in policy and decision-making
processes affecting their rights and
benefitsas may be provided by law.
The State shall promote the principle of
shared responsibilitybetween workers and
employers and the preferential use of
voluntary modes in settling
disputes,including conciliation,and shall
enforce their mutual compliancetherewith to
foster industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right
of labor to its just share in the fruits of
production and the right of enterprises to
reasonable returns to investments, and to
expansion and growth.
State policies on labor as found in the
Constitution:
a) Afford full protection to labor
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b) Promote full employment
c) Ensure equal work opportunities regardless
of sex, race, or creed
d) Assure the rights of workers to self-
organization, security of tenure, just and
humane conditions of work, participate in
policy and decision-making processes
affecting their right and benefits
e) Regulate the relations between employers
and workers (Sec. 3(1), Art. XIII)
Basic rights of workers guaranteed by the
Constitution:
a) Security of tenure
b) Living wage
c) Humane working conditions
d) Share in the fruits of production
e) Self-organization
f) Collective bargaining and negotiation
g) Engage in peaceful concerted activities,
including the right to strike
h) Participate in policy and decision-making
processes (Sec. 3(2), Art. XIII)
Principle of co-determination
The principle of co-determination states that it
is a joint responsibility of the employer and
the employee to establish terms and
conditions of employment. In establishing
such terms and conditions of employment, the
employer and the employee must take into
consideration existing laws and regulations.
The formulation of a Code of Discipline among
employees is a shared responsibility of the
employer and the employees, this is by virtue
of the co-determination principle. (PAL v.
NLRC and PALEA, G.R. No. 85985, Aug. 13,
1993)
2. Sec. 1 – Congress shall give highest
priority to the enactment of measures that
protect and enhance the right of all the
people to human dignity, reduce social,
economic, and political inequalities, and
remove cultural inequities by equitably
3
 diffusing wealth and political power for
the common good.
To this end, the State shall regulate the
acquisition, ownership, use, and
disposition of property and its increments.
3. The promotion of social justice shall
include the commitment to create
economic opportunities based on
freedom of initiative and self-reliance.
4. Sec. 13 – The State shall establish a special
agency for disabled persons for their
rehabilitation, self-development and
self-reliance and their integration into the
mainstream of society.
5. Sec. 14– The State shall protect working
women by providing safe and healthful
working conditions, taking into account
their maternal functions, and such
facilities and opportunities that will
enhance their welfareand enable them to
realize their full potential in the service of
the nation.
What are the due process principles applicable
in termination of employment?
1. Constitutional due process is not
applicable to termination of employment.
The employee undergoing investigation
leading to his dismissal cannot invoke
constitutional due process if and when he is
deprived of due process by the employer,
because constitutional due process may only be
invoked against the State or government.
However, after being dismissed, the employee
who files an illegal dismissal case may invoke
constitutional due process in case he is
deprived of due process by the Labor Arbiter,
the NLRC, or theCourt of Appeals since, this
time, it is already the government which may
be said to have deprived him of due process.
2. At the company level investigation leading
to an employee’s dismissal, both the
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following procedural due process must be
complied with:
a) Statutory due process which refers to the
due process provision in the Labor Code
and Implementing Rules. (Jenny Agabon
and VirgilioAgabon v. National Labor
Relations Commission (NLRC), G.R. No.
158693, November 17, 2004)
b) Contractual due process which refers to
the due process prescribed by the employer
itself in its Company rules and regulations
or Code of Discipline. Having prescribed
the due process itself, the employer is
contractually bound to adhere to and
observe it. (Abbott Laboratories,
Philippines v. Pearlie Ann F. Alcaraz, G.R.
No. 192571, July 23, 2013)
Note: Penalty for non-compliance with
either or both statutory or contractual due
process - P30,000.00 indemnity in the form
of nominal damages. (Agabon case)
Is assistance of counsel in termination cases
mandatory and indispensable?
The right to counsel and the assistance of one
in investigations involving termination cases is
neither indispensable nor mandatory, except
when the employee himself requests for one or
that he manifests that he wants a formal hearing
on the charges against him. (Lopez v. Alturias
Group of Companies, G.R. No. 191008, April
11, 2011)
B. New Civil Code
1. Art. 1700 – The relations between capital
and labor are not merely contractual.
They are so impressed with public
interest that labor contracts must yield to
the common good. Therefore, such
contracts are subject to the special laws on
labor unions, collective bargaining, strikes
and lockouts, closed shop, wages, working
conditions, hours of labor and similar
subjects.
4

The supremacy of the law over the
nomenclature of the contract and the
stipulations contained therein is to bring to life
the policy enshrined in the Constitution to
“afford full protection to labor.” Thus, labor
contracts are placed on a higher plane than
ordinary contracts; these are imbued with
public interest and therefore subject to the
police power of the State. (Leyte Geothermal
Power Progressive Employees Union-ALU-
TUCP v. Philippine National Oil Company-
Energy Development Corporation,G.R. No.
170351, March 30, 2011)
2. Art. 1702 –In case of doubt, all labor
legislation and all labor contracts shall
be construed in favor of the safety and
decent living for the laborer.
Other provisions on the Civil Code which
pertains to policies and principles:
1. Art. 1701 – Neither capital nor labor shall
act oppressively against the other, or impair
the interest or convenience of the public.
2. Art. 1703 – No contract which practically
amounts to involuntary servitude, under
any guise whatsoever, shall be valid.
3. Art. 1704 –In collective bargaining, the
labor union or members of the board or
committee signing the contract shall be
liable for non-fulfillment thereof.
4. Art. 1705 –The laborer's wages shall be
paid in legal currency.
5. Art. 1706 – Withholding of the wages,
except for a debt due, shall not be made by
the employer.
6. Art. 1707 –The laborer's wages shall be a
lien on the goods manufactured or the work
done.
7. Art. 1708 –The laborer's wages shall not be
subject to execution or attachment, except
for debts incurred for food, shelter, clothing
and medical attendance.
8. Art. 1709 – The employer shall neither
seize nor retain any tool or other articles
belonging to the laborer.
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9. Art. 1710 – Dismissal of laborers shall be
subject to the supervision of the
Government, under special laws.
10. Art. 19 – Every person must, in the exercise
of his rights and in the performance of his
duties, act with justice, give everyone his
due, and observe honesty and good faith.
Special Laws
1. E.O. 180, Providing guidelines for the
exercise of the Right to Organize of
Government Employees, creating a Public
Sector Labor-Management Council, and
for other purposes
2. R.A. 8291 - Government Service Insurance
Act of 1997
3. 13th Month Pay Law
4. Retirement Pay Law
5. SSS Law
6. Paternity Leave Act
7. Anti – Child Labor Act
8. Anti – Sexual Harassment Act
9. Magna Carta for Public Health Workers
10. Solo Parents Welfare Act of 2000
11. National Health Insurance Act as amended
by R.A. 9241
12. Migrant Workers and Overseas Filipinos
Act of 1995 as amended by RA 10022
13. PERA Act of 2008
14. Home Development Mutual Fund Law of
2009
15. The Magna Carta of Women
16. Comprehensive Agrarian Reform Law as
amended by R.A. 9700
17. Batas Kasambahay
C. Labor Code
Presidential Decree No. 442 otherwise known
as the Labor Code of the Philippines is a decree
instituting a labor Code, thereby revising and
consolidating labor and social laws to afford
protection to labor, promote employment and
human resources development and ensure
industrial peace based on social justice.
5
 “Labor Standards “Labor Relations
Law” Law” Both articles above may be applied to doubts
is that part of labor is that part of labor and ambiguities in:
law which prescribes law (Book V of the
the minimum terms Labor Code) which a) labor contracts (CBAs, employment
and conditions of deals with unionism, contracts, contracts of adhesion)
employment which collective b) evidence presented in labor case
the employer is bargaining, c) Labor Code
required to grant to grievance
its employees. machinery, In termination of employment cases, the
voluntary employer has the burden of proof, but the
arbitration, strike, employee should prove the fact of dismissal.
picketing and (Lilia Labadan v. Forest Hills Academy et. al.,
lockout. G.R. No. 172995, December 23, 2008)

Are they mutually exclusive? This rule applies to:

No, they are complementary to and
interlinked with each other. There are
instances when the subject-matter for labor
standards law which are also covered by labor
relations law. Laws on bargaining, strikes and
lockouts which are covered by labor relations
law necessarily relate to the laws on working
conditions found in Book III.
II. Construction
a) Labor Code and its Implementing Rules
and Regulations (Section 3, Preliminary
Provisions, Rules to Implement the Labor
Code)
b) all workers, whether public or private.
(Land and Housing Development Corp.v.
Esquillo, G.R. No. 152012, 2005)
But this does not applywhen the Labor Code
is clear and leaves no doubt to its interpretation.
(Bonifacio v. GSIS, G.R. No. 62207, 1986)

Labor Code
Article 4. Construction in Favor of Labor. – All
doubts in the implementation and
interpretation of the provisions of this Code,
including its implementing rules and
regulations, shall be resolved in favor of
labor.
New Civil Code
Article 1702. In case of doubt, all labor
legislation and all labor contracts shall be
construed in favor of the safety and decent
living for the laborer.
How are they correlated?
Both the articles speak of the rule on
interpretation and construction provisions of
law and labor contracts.
III. Social Justice
Social justice is “neither communism, nor
despotism, nor atomism, nor anarchy,” but the
humanization of laws and the equalization of
social and economic force by the State so that
justice in its rational and objectively secular
conception may at least be approximated.
Social Justice means the promotion of the
welfare of all the people, the adoption by the
government of measures calculated to
insure economic stability of all the
competent elements of society, through the
maintenance of a proper economic and
social equilibrium in the interrelations of the
members of the community, constitutionally,

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 through the adoption of measures legally
justifiable, or extra-constitutionally, through
the exercise of powers underlying the
existence of all governments on the time-
honored principle of salus populi est suprema
lex (Calalang v. Williams, G.R. No. 47800,
December 2, 1940).
Limitations in invoking the principle of
social justice:
a) Not to undermine property rights
resulting in confiscation (Guido
v.Rural Progress Adm, L-2089,
October 31, 1949).
b) May only protect the laborers who
come to court with clean hands
(Phil.Long Distance Telephone Co. v.
NLRC, G.R. 80609, August 23, 1988).
c) Never result to an injustice or
oppression of the Employer (Phil.
Geothermal Inc. v. NLRC, G.R. No.
106370, September 8, 1994).
d) If it is used to shield wrongdoings.
Q: May social justice as a guiding principle in
labor law be so used by the courts in sympathy
with the working man if it collides with the
equal protection clause of the Constitution?
(2003 Bar Question)
A: Yes. The State is bound under the
Constitution to afford full protection to
Labor and when conflicting interests collide
and they are to be weighed on the scales of
social justice, the law should accord more
sympathy and compassion to the less
privileged workingman (Fuentes v. NLRC,
266 SCRA 24, January 2, 1997).
However, it should be borne in mind that social
justice ceases to be an effective instrument for
the “equalization of the social and economic
forces” by the State when it is used to shield
wrongdoing. (Corazon Jamer v. NLRC, 278
SCRA 632)
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Compassionate justice
Social justice mandates a compassionate
attitude towards the workingman, as a
recognition of them being part a primary social
and economic force and partner for the nation’s
progress and stability. (Garcia v. Philippine
Airlines, G.R. No. 164856, January 20, 2009)
But the Constitution does not condone
wrongdoing by employees, it merely urges a
moderation of sanctions that maybe applied in
the light of the many disadvantages that weigh
heavily on him like an albatross on his neck.
(Gandara Mill Supply and Milagros Sy v.
NLRC and Silvestre Germano, G.R. 126703,
December 29, 1998)
Topic 2: Recruitment and Placement
Worker
Any member of the labor force, whether
employed or unemployed [Art. 13 (a), Labor
Code].
Overseas Filipino Worker (OFW)
A person who is to be engaged, is engaged or
has been engaged in a remunerated activity in a
State of which he or she is not a citizen or on
board a vessel navigating the foreign seas other
than a government ship used for military or
non-commercial purposes or on an installation
located offshore or on the high seas. [Sec. (jj),
Rule II, Omnibus Rules and Regulations
Implementing Migrant Workers Act as
amended by R.A. 10022 (2010)]
NOTE: The term “OFW” is to be used
interchangeably with “migrant worker” as
provided in R.A. 10022.
7
 NOTE: Person to be engaged in a
remunerated activity refers to an applicant
worker who has been promised or assured
employment overseas.
Seafarer
Refers to any person who is employed or
engaged in overseas employment in any
capacity on board a ship other than a
government ship used for military or
noncommercial purposes. The definition shall
include fishermen, cruise ship personnel and
those serving on mobile offshore and drilling
units in the high seas [Sec. 1(ss), Rule II,
Omnibus Rules and Regulations Implementing
Migrant Workers Act as amended by R.A.
10022 (2010)].
Emigrant
Any person, worker or otherwise, who
emigrates to a foreign country by virtue of an
immigrant visa or resident permit or its
equivalent in the country of destination (Art.
13, Labor Code).
Recruitment and placement under Article
13(b) is any act of: (CETCHUP-CRAP)
Canvassing
Enlisting
Transporting
Contracting
Hiring
Utilizing or
Procuring workers and includes;
Contract of Services
Referrals
Advertising for Employment
Promising for employment locally or
abroad, whether for profit or not.
1. Any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring
or procuring workers; and
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2. Includes referrals, contact services,
promising or advertising for employment,
locally or abroad, whether for profit or not
[Art. 13 (b), Labor Code]
* The number of persons dealt with is not the
basis in determining whether an act constitutes
recruitment and placement
Acts Of Referral
The act of referral which is included in
recruitment is "the act of passing along or
forwarding of an applicant for employment
after an initial interview to a selected
employer, placement officer or bureau.
(Rodolfo v. People G. R. No. 146964, 2006)
Essential elements in determining whether
one is engaged in recruitment and placement
It must be shown that:
1. The accused gave the complainant the
distinct impression that he had the power or
ability to send the complainant for work,
2. Such that the latter was convinced to part
with his money in order to be so employed
(People v. Goce, G.R. No. 113161, August
29, 1995).
Persons or entities that may engage in
recruitment and placement
No person or entity other than the public
employment offices, shall engage in the
recruitment and placement of workers.
Exceptions:
1) Construction contractors if authorized by the
DOLE and Construction Industry Authority
2) Other persons or entities as may be
authorized by the SLE
3) Members of the diplomatic corps (but hiring
must go through POEA)
4) Public employment offices
8
5) Private recruitment offices – It is any person Persons who may be issued license and
or association engaged in the recruitment authority
and placement of workers without charging 1. Natural persons – Must be a Filipino
any fee, directly or indirectly, from the 2. Artificial persons – 75% of the capital and
workers or employers. voting stock of which is owned and controlled
6) Private employment agencies – Any person by Filipino.
or entity engaged in the recruitment and
placement of workers for a fee which is Non-licensee / non-holder of authority
charged, directly or indirectly, from the Any person, corporation or entity:
workers or employers or both (Art. 13, LC) 1. Which has not been issued a valid license or
7) Philippine Overseas Employment authority to engage in recruitment and
Administration (POEA) placement by the SLE, or
8) Shipping or manning agents or 2. Whose license or authority has been
representatives – Any person, partnership or suspended, revoked or cancelled by the POEA
corporation duly licensed by DOLE to or the SLE
recruit seafarers for vessels plying
international waters and for related maritime Non-transferability of license or authority
activities. License or authority are non-transferable (Art.
9) Name hires – They are individual 29, LC). License or authority is granted on the
workers who are able to secure contracts for basis of personal qualifications of the grantee.
overseas employment opportunities with Thus, it is beyond the commerce of man.
employers without the assistance or
participation of any agency [Sec. 1(i) of Rule RECRUITMENT AND PLACEMENT
II, Omnibus Rules and Regulations FOR LOCAL EMPLOYMENT
implementing the Migrant Workers and
Overseas Filipinos Act of 1995 as amended Private Recruitment and Placement Agency
by R.A. 10022]. (PRPA)
It refers to any individual, partnership,
LICENSE VS AUTHORITY corporation or entity engaged in the
LICENSE is a AUTHORITY is a recruitment and placement of persons for local
document issued by document issued by employment.
the DOLE the DOLE
authorizing a person authorizing a person Qualifications of PRPA for local
or entity to operate a or association employment
private engaged in
employment recruitment and An applicant for a license to operate a PRPA
agency. placement activities
must possess the following:
as a private
recruitment entity.
1) Must be a Filipino citizen, if single
License requirement proprietorship. In case of a partnership or a
The business of recruitment and replacement is corporation, at least seventy-five percent
regulated by law by requiring them to obtain (75%) of the authorized capital stock must
license and authority. be owned and controlled by Filipino
citizens;

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2) Must have a minimum net worth of
P200,000.00 in the case of single
proprietorship and partnership or a
minimum paid-up capital of P500,000.00 in
the case of a corporation.
3) The owner, partners or the officers of the
corporation must be of good moral
character and not otherwise disqualified by
law;
4) Must have an office space with a
minimum floor area of fifty (50) square
meters
Period of validity of License
The license shall be valid all over the
Philippines for two (2) years from the date of
issuance, upon submission of proof of
publication, unless sooner suspended,
cancelled or revoked by the DOLE Regional
Director.
No license shall be transferred, conveyed or
assigned to any other person or entity.
LICENSING AND REGULATION
FOR OVERSEAS RECRUITMENT AND
PLACEMENT
Overseas employment
It is the employment of a worker outside the
Philippines.
Qualifications Of A Recruiter For Overseas
Employment
Only those who possess the following
qualifications may be permitted to engage in
the business of recruitment and
placement of overseas Filipino workers:
1. Filipino citizens, partnerships or
corporations at least seventy five percent
(75%) of the authorized capital stock of
which is owned and controlled by Filipino
citizens;
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2. A minimum capitalization of Two Million
Pesos (P2,000,000.00) in case of a single
proprietorship or partnership and a minimum
paid-up capital of Two Million Pesos
(P2,000,000.00) in case of a corporation;
Provided, that those with existing licenses
shall, within four (4) years from effectivity
hereof, increase their capitalization or paid up
capital, as the case may be, to Two Million
Pesos (P2,000,000.00) at the rate of Two
Hundred Fifty Thousand Pesos
(P250,000.00) every year; and
3. Those not otherwise disqualified by law or
other government regulations to engage in
the recruitment and placement of workers for
overseas employment.
Disqualifications
The following are not qualified to engage in the
business of recruitment and placement of
Filipino workers overseas:
a) Travel agencies and sales agencies of
airline companies;
b) Officers or members of the Board of any
corporation or members in a partnership
engaged in the business of a travel agency;
c) Corporations and partnerships, when any of
its officers, members of the board or
partners, is also an officer, member of the
board or partner of a corporation or
partnership engaged in the business of a
travel agency;
d) Persons, partnerships or corporations which
have derogatory records, such as, but not
limited to, the following:
1) Those certified to have derogatory record
or information by the NBI or by the Anti-
Illegal Recruitment Branch of
the POEA;
2) Those against whom probable cause or
prima facie finding of guilt for illegal
recruitment or other related cases
exists;
10
 3) Those convicted for illegal recruitment or
other related cases and/or crimes
involving moral turpitude; and
4) Those agencies whose licenses have been
previously revoked or cancelled by the
POEA for violation of R.A.
No. 8042, the Labor Code (PD 442, as
amended), and their implementing rules
and regulations.
All applicants for issuance/renewal of
license shall be required to submit
clearances from the NBI and AntiIllegal
Recruitment Branch of the POEA,
including clearances for their respective
officers and employees.
e) Any official or employee of the DOLE,
POEA, Overseas Workers Welfare
Administration (OWWA), Department of
Foreign Affairs (DFA) and other
government agencies directly involved in
the implementation of R.A. No. 8042
and/or any of his/her relatives within the
fourth (4th) civil degree of consanguinity or
affinity; and
f) Persons or partners, officers and directors of
corporations whose licenses have been
previously cancelled or revoked for
violation of recruitment laws
Period of validity of License
Every license shall be valid for four (4) years
from the date of issuance unless sooner
cancelled, revoked or suspended for violation
of applicable Philippine law, the Rules and
other pertinent issuances. Such license shall be
valid only at the place/s stated therein and when
used by the licensed person, partnership or
corporation.
The license shall not be transferred, conveyed
or assigned to any person, partnership or
corporation. It shall not be used directly or
indirectly by any person, partnership or
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
corporation other than the one in whose favor it
was issued.
I. Illegal Recruitment
Broadly, illegal recruitment may be committed
by any person, regardless of whether such
person is a:
1) Non-licensee
2) Non-holder of authority
3) Licensee or
4) Holder of authority
NOTE: Any person, whether a non-
licensee, non-holder, licensee or holder of
authority, may be held liable for illegal
recruitment. Under R.A. No. 8042, as
amended by R.A. No. 10022, license or
authority of the illegal recruiter is
immaterial.
Illegal Recruitment
Illegal recruitment is defined by law as any
recruitment activities undertaken by non-
licenses or non-holders of authority (People v.
Senoron, G.N. No. 119160, January 30, 1997).
Illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring, procuring workers and
includes referring, contact services, promising
or advertising for employment abroad, whether
for profit or not, when undertaken by a non-
license or non-holder of authority contemplated
under Article 13(f) of Presidential Decree No.
442, as amended, otherwise known as the
Labor Code of the Philippines. Provided, that
such non-license or non-holder, who, in any
manner, offers or promises for a fee
employment abroad to two or more persons
shall be deemed so engaged. It shall likewise
include the following acts, whether committed
by any persons, whether a non-licensee, non-
11
holder, licensee or holder of authority. (Sec. 6,
RA No. 8042)
I. Elements of Illegal Recruitment
1. Offender is a non-licensee or non-holder of
authority to lawfully engage in the
recruitment/placement of workers.
2. Offender undertakes:
a) Any act of canvassing, enlisting,
contracting, transporting, utilizing,
hiring, or procuring workers and includes
referring, contract services, promising or
advertising for employment abroad,
whether for profit or not [Art. 13(f), as
amended by R.A. 10022]; or
b) Any of prohibited practices under Art. 34
of the Labor Code.
3. For complex illegal recruitment, an
additional element that the offender
commits the act against three or more
persons, individually, or as a group (People
v. Baytic, G.R. No. 150530, February
20,2003) or there are three or more
offenders.
II. Prohibited practices in recruitment or
placement
1. Furnishing or publishing any false
notice/information/document related to
recruitment/employment
2. Failure to file reports required by SLE
3. Inducing or attempting to induce a
worker already employed to quit his
employment in order to offer him
another unless the transfer is designed
to liberate a worker from oppressive
terms and conditions
4. Recruitment/placement of workers in
jobs harmful to public health or
morality or to the dignity of the country
5. Engaging directly or indirectly in the
management of a travel agency
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LAONGLAAN NOTES 2017
6. Substituting or altering employment
contracts without approval of DOLE
7. Charging or accepting any amount
greater than that specified by DOLE or
make a worker pay any amount greater
than actually received by him
8. Committing any act of
misrepresentation to secure a license or
authority
9. Influencing or attempting to influence a
person/entity not to employ any worker
who has not applied employment
through his agency
10. Obstructing or attempting to obstruct
inspection by SLE or by his
representatives
11. Withholding or denying travel
documents from applicant workers
before departure for monetary
considerations other than authorized
by law
12. Granting a loan to an overseas Filipino
worker with interest exceeding eight
percent (8%) per annum, which will be
used for payment of legal and
allowable placement fees and make the
migrant worker issue, either personally
or through a guarantor or
accommodation party, postdated
checks in relation to the said loan
13. Refusing to condone or renegotiate a
loan incurred by an OFW after his
employment contract has been
prematurely terminated through no
fault of his or her own
14. For a suspended recruitment/manning
agency to engage in any kind of
recruitment activity including the
processing of pending worker’s
applications; and
15. For recruitment/manning agency or a
foreign principal/employer to pass on
the OFW or deduct from his or her
salary the payment of the cause of fees,
premium or other insurance related
12
 charges, as provided under the
compulsory worker’s insurance
coverage
16. Imposing a compulsory and exclusive
arrangement whereby an OFW is
required to:
a) Avail a loan only from specifically
designated institutions, or entities
or persons.
b) To undergo health examinations
only from specifically designated
medical, entities or persons, except
seafarers whose medical
examination cost is shouldered by
the ship owner
c) To undergo training of any kind
only from designated institutions,
entities or persons, except for
recommendatory trainings
mandated by principals/
shipowners (Sec. 6, R.A. 8042,
Migrant Workers and Overseas
Filipino Act, as amended by R.A.
10022).
III. Types of Illegal Recruitment
A. Simple Illegal Recruitment (may be local
or for migrant workers)
It is the violation of Arts. 13(b) and 34 of the
Labor Code involving less than three recruiters
or victims.
1. Elements (Local) –
a. The person charged with the crime must
have undertaken recruitment services
defined under:
i. Art. 13 (b) or
ii. prohibited activities defined under
Art. 34; and
b. The said person does not have a license or
authority to do so. (Art. 38 Labor Code)
2. Elements (Migrant/OFW) 2 Types
a. 1st Type
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LAONGLAAN NOTES 2017
i. Person charged undertakes any
recruitment activity as defines in Art. 13
(b)
ii. The said person does not have a license
or authority to do so. (Art. 38 LC)
b. 2nd Type
i. Person charged commits any of the
enumerated acts under Sec. 6 of R.A.
8042 as amended by R.A. 10022.
ii. It is immaterial whether he is a holder or
not of any license or authority.
B. Complex Illegal Recruitment
It is the violation of Arts. 13(b) and 34 of the
Labor Code involving at least three recruiters
or victims. It may either be:
1. Committed by a syndicate – Illegal
recruitment in large scale is committed
against three or more persons individually or
as a group. The essential elements of the
crime of illegal recruitment committed by a
syndicate are as follows:
a. There are at least three (3) persons who,
conspiring and/or confederating with one
another, carried out any unlawful or illegal
recruitment and placement activities as
defined under Article 13(b) or committed
any prohibited activities under Article 34
of the Labor Code; and
b. Said persons are not licensed or authorized
to do so, either locally or overseas
2. In large Scale – Illegal recruitment in large
scale is committed against three or more
persons individually or as a group. The
elements of illegal recruitment in large scale,
as distinguished from simple illegal
recruitment, are as follows:
a. The accused engages in the recruitment
and placement of workers as defined
under Article 13(b) or committed any
prohibited activities under Article 34 of
the Labor Code; and
13
 b. The accused commits the same against 2. It is a crime which involves moral
three (3) or more persons, individually or involves moral turpitude
as a group. turpitude
It is not required that Accused defrauded
NOTE: “Illegal recruitment in large scale” it be shown that the another by abuse of
pertains to the number of victims while recruiter wrongfully confidence, or by
“syndicated illegal recruitment” pertains to represented himself means of deceit
the number of recruiters. as a licensed NOTE: It is essential
recruiter that the false
NOTE: It is enough statement or
Illegal recruitment as Economic Sabotage that the victims were fraudulent
deceived as they representation
Article 38 (b) of LC, as amended by PD 2018. relied on the constitutes the very
misrepresentation cause or the only
It is economic sabotage when complex illegal
and motive which induces
recruitment is committed, such that it is
scheme that caused the complainant to
syndicated or done in a large scale. them to entrust their part with the thing of
money in exchange value.
Relevant Principles on Illegal Recruitment of what they later
involving Economic Sabotage discovered was a
vain hope of
1. The number of persons victimized is obtaining
determinative of the crime. A conviction employment abroad.
for large scale illegal recruitment must be Illegal recruitment and estafa cases may be
based on a finding in each case of illegal Filed simultaneously or separately. The filing
recruitment of three (3) or more persons of charges for illegal recruitment does not bar
having been recruited, whether the filing of estafa, and vice versa.
individually or as a group. Double jeopardy will not set in.
2. Failure to prove at least 3 persons recruited
NOTE: A worker who suffers pecuniary
makes the crime a case of simple illegal
damage, regardless of amount, as a result of
recruitment.
previous or simultaneous false pretense
3. There is no illegal recruitment in large scale
resorted to by a non-licensee or non-holder of
based on several informations filed by only
authority, may complain of estafa under Art.
one complainant.
315 par. 2 (a) of the RPC aside from illegal
4. The number of offenders is not material in
recruitment. (People v Calonzo G.R. Nos.
illegal recruitment in large scale.
115150 -55 1996)
5. Recruitment in large scale or by a syndicate
is malum prohibitum and not malum in se.
V. Liability of Local Recruitment Agency
and Foreign Employer
IV. Illegal Recruitment versus Estafa
Illegal Recruitment Estafa
A. Local Recruitment Agency
Malum prohibitum, Malum in se, thus:
thus:
1. Criminal intent is 1.Criminal intent is Liability of the local recruitment agency
not necessary necessary
2. It is a crime which A Local Recruitment Agency shall be jointly
and solidarily liable with its principal or

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 14
 foreign-based employer for any violation of
the recruitment agreement and violation of
contracts of employment [Sec. 10(a)(2)Rule
V, Book I, IRR].
Liability of corporate officers, directors or
partners if the recruitment/ placement
agency is a juridical being
If the recruitment/placement agency is a
juridical being, the corporate officers,
directors or partners as the case may be, shall
themselves be jointly and solidarily liable
with the corporation or partnership for the
claims and damages (Becmen Service
Exporter and Promotion v. Cuaresma, G.R.
Nos. 182978-79, April 7,2009).
B. Foreign Employer
Solidary Liability
Private employment agency and the
principal or foreign-based employer are
jointly and solidarily liable for any violation
of the recruitment agreement and the
contracts of employment.
Theory of Imputed Knowledge
The theory of imputed knowledge is a rule
that any information material to the
transaction, either possessed by the agent at
the time of the transaction or acquired by him
before its completion, is deemed to be the
knowledge of the principal, at least insofar as
the transaction is concerned, even though the
knowledge, in fact, is not communicated to
the principal at all.
“Imputed knowledge” means the knowledge
attributed to a party because of his position,
or his relationship with or responsibility for
another party. Such knowledge is attributed
for the reason that the facts in issue were open
to discovery and it was that person's duty to
apprise him of such facts.
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VI. Termination of Contract of Migrant
Worker Without Just or Valid Cause
Regularity of Employment of OFW
The prevailing rule is that OFWs are
contractual (fixed-term only), not regular,
employees. In fact, they can never
attain regularity of employment.
Relevant Principles
1. Indefinite period of employment of OFWs
is not valid as it contravenes the explicit
provision of the POEA Rules
and Regulations on fixed-period
employment.
2. OFWs do not become regular employees
by reason of nature of work, that is, that
they are made to perform work
that is usually necessary and desirable in
the usual business or trade of the employer.
The exigencies of their work
necessitate that they be employed on a
contractual basis. This notwithstanding the
fact that they have rendered
more than twenty (20) years of service.
3. Regular employment does not result from
the series of re-hiring of OFWs.
4. The fixed-period employment of OFWs is
not discriminatory against them nor does it
favor foreign employers. It is for the mutual
interest of both the seafarer and the
employer why the employment status must
be contractual only
or for a certain period of time. Seafarers
spend most of their time at sea and
understandably, they cannot stay for
a long and an indefinite period of time at
sea. Limited access to shore society during
the employment will have an adverse
impact on the seafarer. The national,
cultural and lingual diversity among the
crew during the contract of employment is
a reality that necessitates the limitation of
its period.
15
5. The expiration of the employment contracts
of OFWs marks its ending.
Employees’ compensation in case of
premature termination of contract
A worker dismissed from overseas
employment without just, valid or authorized
cause as defined by law or contract is entitled
to:
a) full reimbursement of his placement fee
with interest at 12% per annum, plus
b) his salary for the unexpired portion of his
employment contract or for three months
for every year of the unexpired term,
whichever is less (Sec. 7, R.A.
10020,2010).
Some Principles in regard to monetary
awards to OFWs
1. Monetary award to OFW is not in the
nature of separation pay or backwages but
a form of indemnity.
2. Only salaries are to be included in the
computation of the amount due for the
unexpired portion of the contract. Overtime
holiday and leave pay and allowances are
not included. However, this rule on
exclusion of allowance does not apply in
case it is encapsulated in the basic salary
clause.
3. Entitlement to overtime pay of OFWs. -
As far as entitlement to overtime pay is
concerned, the correct criterion in
determining whether or not sailors are
entitled to overtime pay is not whether they
were on board and cannot leave ship
beyond the regular eight (8) working hours
a day, but whether they actually rendered
service in excess of said number of hours.
An OFW is not entitled to overtime pay,
even if guaranteed, if he failed to present
any evidence to prove that he rendered
service in excess of the regular eight (8)
working hours a day.
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LAONGLAAN NOTES 2017
4. In case of unauthorized deductions from
OFW’s salary, he shall be entitled to the
full reimbursement of the deductions
made with interest at twelve percent (12%)
per annum. This is in addition to the full
reimbursement of his placement fee
with the same interest of twelve percent
(12%) per annum plus his salaries for the
unexpired portion of his employment
contract if he is terminated without just,
valid or authorized cause as defined by law
or contract.
VII. Direct Hiring
It is when an employer hires a Filipino worker
for overseas employment without going
through the POEA or entities authorized by the
SLE.
Ban on direct hiring
An employer may only hire Filipino worker for
overseas employment through POEA or
entities authorized by DOLE.
Exceptions: Direct hiring by:
1. International organizations
2. Name hires
3. Members of the diplomatic organizations
4. Other employers as may be allowed by
DOLE
Purposes of the prohibition on direct hiring
1. To ensure the best possible terms and
conditions of employment for the worker.
2. To assure the foreign employer that he
hires only qualified Filipino workers.
3. To ensure full regulation of employment
in order to avoid exploitation.
1. Suspension or cancellation of license
authority
16

the power to suspend or cancel any license or
authority to recruit employees for overseas
employment is concurrently vested with the
POEA and the Secretary of Labor (Art 35,
Labor Code)
POEA with the power granted by the Secretary
of Labor on its own initiative or upon filing of
a complaint of report or upon request for
investigation by any aggrieved person,
authority to conduct the necessary proceedings
for the suspension or cancellation of the license
or authority of any agency or entity for certain
offenses.
The POEA may likewise at any time terminate
or impose a ban on the deployment of migrant
workers. (RA 10022)
Grounds for revocation of license
1. Incurring an accumulated 3 counts of
suspension by an agency based on final and
executory orders within the period of
validity of its license
2. Violations of the conditions of license
3. Engaging in acts of misrepresentation for
the purpose of securing a license or renewal
4. Engaging in the recruitment or placement
of workers to jobs harmful to the public
health or morality or to the dignity of the
country (Sec. 3, Rule I, Book VI, Rules and
Regulations Governing Overseas
Employment).
Grounds for suspension or cancellation of
license
1. Commission of prohibited acts under Art.
34 of Labor Code
2. Publishing job announcements w/o
POEA’s
approval
3. Charging a fee which may be in excess of
the authorized amount before a worker is
employed
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
4. Deploying workers w/o processing through
POEA
5. Recruitment in places outside its authorized
area (Sec. 4, Rule II, Book IV, POEA
Rules).
6. If the employment agency fails to provide
the ticket or PTA within 48 hours from
receipt of the notice [R.A. 10022]
Degree of proof required for the suspension
of license or authority
Administrative determinations require only
substantial proof and not clear and convincing
evidence. In proceedings for cancellation or
suspension of license or authority, no rule
requires that testimonies or complaints be
corroborated by documentary evidence, if the
charge of unlawful exaction is substantially
proven.
2. Regulatory and Visitorial Powers of the
DOLE Secretary
Regulatory and Rule-Making Powers
The Secretary of Labor shall have the power to
restrict and regulate the recruitment and
placement activities of all agencies within the
coverage of this Title and is hereby authorized
to issue orders and promulgate rules and
regulations to carry out the objectives and
implement the provisions of this Title (Art 36,
Labor Code).
Visitorial Powers
The Secretary of Labor or his duly authorized
representatives may, at any time, inspect the
premises, books of accounts and records of any
person or entity covered by this Title, require it
to submit reports regularly on prescribed forms,
and act on violation of any provisions of this
Title (Art 37, Labor Code).
17
Note: the Secretary of DOLE does not have the
power to issue search warrants and warrants of
arrest (Salazar v. Achacoso G.R. No. 81510,
1990)
Instances when the visitorial power of the
SLE may be exercised under the Labor Code
1. Inspect books of accounts and records of
any person or entity engaged in recruitment
and placement; require it to submit reports
regularly on prescribed forms and act in
violations of any provisions of the LC on
recruitment and placement (Art. 37, LC).
2. Have access to employer’s records and
premises to determine violations of any
provisions of the LC on recruitment and
placement (Art. 128, LC).
3. Conduct industrial safety inspections of
establishments (Art. 165, LC).
4. Inquire into the financial activities of
legitimate labor organizations (LLO) and
examine their books of accounts upon the
filing of the complaint under oath and duly
supported by the written consent of
at least 20% of the total membership of the
labor organization concerned
3. Remittance of Foreign Exchange
Earnings
It shall be mandatory for all Filipino workers
abroad to remit a portion of their foreign
exchange earnings to their families,
dependents, and/or beneficiaries in the country
in accordance with rules and regulations
prescribed by the Secretary of Labor (Art 22,
Labor Code).
Individuals EXEMPTED from mandatory
remittance requirement:
1. Immediate family members, dependents,
beneficiaries of migrant workers residing
with the latter abroad.
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
2. Filipino servicemen working within US
military installations.
3. Immigrants and Filipino professionals;
III. Employment of Non-Resident
Aliens
Employment of non-resident aliens
Non-residents alien may be hired if an
employment permit is issued to a non-resident
alien or to the applicant employer after a:
1. Determination of the non-availability of a
person in the Philippines who is competent,
2. Able and willing at the time of application
to
perform the services for which the alien is
desired.
Requirements in employment of non-
resident aliens
Any alien seeking admission to the Philippines
for employment purposes and any domestic or
foreign employer who desires to engage an
alien for employment in the Philippines:
1. Shall obtain an employment permit from the
DOLE.
2. The permit may be issued to a non-resident
alien or to the applicant employer after a
determination of the non-availability of a
person in the Philippines who is competent,
able and willing at the time of application
to perform the services for which the alien
is desired.
3. For an enterprise registered in preferred
areas of investments, said permit may be
issued upon recommendation of the
Government agency charged with the
supervision of said registered enterprise.
18
A. Apprentices and Learners
Apprenticeship
It is practical training on the job supplemented
by related theoretical instruction involving a
contract between an apprentice and an
employer on an approved apprenticeable
occupation.
NOTE: Apprenticeable occupation - Any
trade, form of employment or occupation
which requires more than three (3) months of
practical training with theoretical instruction
officially endorsed by the tripartite body and
approved for apprenticeship by the TESDA.
Apprentice
Any worker who is covered by a written
apprenticeship agreement with an individual
employer or any of the entities recognized
under the Labor Code.
Apprenticeship programs shall be primarily
voluntary.
Exceptions: Compulsory Apprenticeship:
1. National security or economic
development so demand, the President may
require compulsory training
2. Services of foreign technicians are utilized
by private companies in apprenticeable
trades.
Qualifications of an apprentice
1. At least 15 years of age
NOTE: Those below 18 years of age shall not
work in hazardous occupations.
2. Physically fit for the occupation
3. Possess vocational aptitude and capacity
4. Possess:
a. The ability to comprehend, and
b. Follow oral and written instructions
5. The company must have an apprenticeship
program duly approved by the DOLE.
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Employment status of apprentices
They are contractual workers whose length of
service depends on the term provided for in the
apprenticeship agreement. Thus, the employer
is not obliged to employ the apprentice after the
completion of his training.
NOTE: Trade and industry associations may
recommend to the SLE appropriate
educational requirements for different
occupations.
Conditions for employment of an apprentice
1. Should be an apprenticeable trade as
determined by TESDA
2. Prior approval by the DOLE of the
proposed apprenticeship program is a
condition sine qua non before an
apprenticeship agreement can be validly
entered into (Nitto Enterprises v. NLRC,
248 SCRA654)
Learners
1. They are persons hired as trainees in semi-
skilled and other industrial occupations
2. Which are non-apprenticeable and
3. Which may be learned through practical
training on the job in a relatively short
period of time
4. Which shall not exceed 3 months
5. Whether or not such practical training is
supplemented by theoretical instructions
(Sec. 1a,Rule VII, Book II, IRR).
Employment of learner
Learners may be employed when:
1. No experienced worker is available
2. It is necessary to prevent curtailment of
employment opportunities; and
3. Employment does not create unfair
competition in terms of labor costs or
impair or lower working standards.
19
Contents of a learnership agreement
Any employer desiring to employ learners shall
enter into a learnership agreement with them,
which agreement shall include:
1. The names and addresses of the learners;
2. The duration of the learnership period,
which shall not exceed 3 months;
3. The wages or salary rates of the learners
which shall begin at not less than 75% of
the
applicable minimum wage; and
4. A commitment to employ the learners if
they
so desire, as regular employees upon
completion of the Learnership.
B. Disabled Workers
Persons with disability (PWD)
Those whose earning capacity is impaired
by:
1. Physical deficiency
2. Age
3. Injury
4. Disease
5. Mental deficiency
6. Illness
Impairment
“Impairment” refers to any loss, diminution or
aberration of psychological, physiological, or
anatomical structure or function.
Disability
“Disability” means:
1. a physical or mental impairment that
substantially limits one or more
psychological, physiological or anatomical
functions of an individual or activities of
such individual;
2. a record of such an impairment; or
3. being regarded as having such an
impairment.
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LAONGLAAN NOTES 2017
Handicap
“Handicap” refers to a disadvantage for a given
individual, resulting from an impairment or a
disability that limits or prevents the function or
activity that is considered normal given the age
and sex of the individual.
Employment of PWD
1. When their employment is necessary to
prevent curtailment of employment
opportunities; and
2. When it will not create unfair competition
in labor costs or lower working standards
(Art. 79, Labor Code).
Equal Opportunity
No disabled person shall be denied access to
opportunities for suitable employment.
Qualified disabled employees shall be subject
to same terms and conditions of employment
and the same compensation, privileges,
benefits, fringe benefits, incentives or
allowances as qualified able-bodied person.
Discrimination on Employment
No entity, whether public or private, shall
discriminate against a qualified disabled person
by reason of disability in regard to job
application procedures, the hiring, promotion,
or discharge of employees, employee
compensation, job training, and other terms,
conditions, and privileges of employment (Sec
32, RA 7277).
5% of all casual emergency and contractual
positions in the Departments of Social Welfare
and Development; Health; Education, Culture
and Sports; and other government agencies,
offices or corporations engaged in social
development shall be reserved for disabled
persons (R.A. 7277).
Wage Rate of PWDS
20
The wage rate of PWDs is 100% of the
applicable minimum wage.
Wage Rate of PWD if Hired as Apprentice
or Learner
A PWD hired as an apprentice or learner shall
be paid not less than seventy-five percent
(75%) of the applicable minimum wage.
The following constitute acts of
discrimination:
1. Limiting, segregating or classifying a
disabled job applicant in such a manner that
adversely affects his work opportunities;
2. Using qualification standards, employment
tests or other selection criteria that screen
out or tend to screen out a disabled person
unless such standards, tests or other
selection criteria are shown to be jobrelated
for the position on question and are
consistent with business necessity;
3. Utilizing standards, criteria, or methods of
administration that:
a. have the effect of discrimination on the
basis of disability; or
b. perpetuate the discrimination of others
who are subject to common
administrative control;
4. Providing less compensation, such as
salary, wage or other forms of
remuneration and fringe benefits, to a
qualified disabled employee, by reason of
his disability, than the amount to which a
non-disabled person performing the same
work is entitled;
5. Favoring a non-disabled employee over a
qualified disabled employee with respect to
promotion, training opportunities, study
and scholarship grants, solely on account of
the latter’s disability;
6. Re-assigning or transferring a disabled
employee to a job or position he cannot
perform by reason of his disability;
7. Dismissing or terminating the services of a
disabled employee by reason of his
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
disability unless the employer can prove
that he impairs the satisfactory
performance of the work involve to the
prejudice of the business entities; Provided,
however, That the employer first sought
provide reasonable accommodations for
disabled persons;
8. Failing to select or administer in the
effective manner employment tests which
accurately reflect the skills, aptitude or
other factor of the disabled applicant or
employee that such test purports to
measure, rather than the impaired sensory,
manual or speaking skills of such applicant
or employee, if any; and
9. Excluding disabled persons from
membership in labor unions or similar
organization.
Topic 3: Labor Standards
A. CONDITIONS OF EMPLOYMENT
1. SCOPE
All employees in all establishments, whether
profit or not, are covered by the law on labor
standards (LABOR CODE, Book III, Title I -
Working Conditions and Rest Periods).
Excluded employees:
The following are excluded:
1. Government employees;
Note: It refers only to employees of
government agencies, instrumentalities, or
political subdivisions and of government
corporations that are not incorporated under the
Corporation Code, i.e., those which have
original charters because they are governed by
the Civil Service Law.
2. Managerial employees and members of the
managerial staff;
21

Note: Managerial employees, defined. A
managerial employee is one that meets all
the following conditions:
a. Their primary duty consists of the
management and establishment in which
they are employed or a department or
subdivision thereof;
b. They customarily and regularly direct
work or subdivision thereof;
c. They have the authority to hire of fire
other employees of lower rank; or their
suggestions and recommendations as to the
hiring and firing as to the promotion of any
other changes of status other employees are
given particular weight (IRR of LABOR
CODE, Book III, Rule I, Sec. 2, Par. (b)).
3. Members of the family of the employer
who are dependent on him for support;
4. Domestic servants and persons in the
personal service of another if they perform
such services in the employer’s home
which are usually necessary or desirable for
the maintenance and enjoyment thereof, or
minister to the personal comfort,
convenience, or safety of the employer as
well as members of his employer’s
household (Sec. 2. Par. (d));
5. Workers paid by result (Secs. 1 and 2); and
6. Non-agricultural employees (field
personnel) if they regularly perform their
duties away from the principal or branch
office or place of business of the employer
and whose actual hours of work in the field
cannot be determined with reasonable
certainty.
Note: The present Book III of the Labor
Code deals with standards of employment.
Those standards apply only if there exists
between the parties the relationship of
employer-employee (AZUCENA,
Everyone’s Labor Code, (2013) p. 56)
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LAONGLAAN NOTES 2017
[Hereinafter, AZUCENA, Everyone’s
Labor Code].
Managerial staff, defined.
A managerial staff is on that performs the
following duties and responsibilities:
a. The primary duty consists of the performance
of work directly related to management
policies of their employer;
b. Customarily and regularly exercise
discretion and independent judgment by:
i. Regularly and directly assisting a proprietor
or a managerial employee whose primary
duty consists of the management of the
establishment in which he is employed or
subdivision thereof; or
ii. Executes under general supervision work
along specialized or technical lines
requiring special training, experience, or
knowledge; or
iii. Executes under general supervision,
special assignments and tasks; and
c. Who does not devote more than 20% of their
hours worked in a week to activities which are
not directly and closely related to the
performance of the work described in
paragraphs (1), (2), and (3) above (IRR
LABOR CODE, Book III Rule I, Sec. 2,
Par.(c)).
2. HOURS OF WORK
A. Principles in determining hours worked.
The following general principles shall govern
in determining whether the time spent by an
employee is considered hours worked for
purposes of this Rule:
1. All hours are hours worked which the
employee is required to give his
employer, regardless whether or not
such hours are spent in productive labor
or involve physical or mental exertion.
22
 2. An employee need not leave the
premises of the work place in order that
his rest period shall not be counted, it
being enough that he stops working,
may rest completely and may leave his
work place, to go elsewhere, whether
within or outside the premises of his
work place.
3. If the work performed was necessary,
or it be benefited the employer or the
employee could not abandon his work
at the end of his normal working hours
because he had no replacement, all time
spent for such work shall be considered
as hours worked, if the work was with
the knowledge of his employer or
immediate supervisor.
4. The time during which an employee is
inactive by reason of interruptions in
his work beyond his control shall be
considered working time either if the
imminence of the resumption of work
requires the employee’s presence at the
place of work or if the interval is too
brief to be utilized effectively and
gainfully in the employer’s own
interest (IRR of LABOR CODE, Book
III, Rule I, Sec. 4).
B. Normal hours of work.
The normal hours of work an employee shall
not exceed 8 hours a day (LABOR CODE, Art.
83).
The exceptions are as follows:
1. Health Personnel: For health personnel
in citied and municipalities with a
population of at least 1 million or in
hospitals and clinics with a bed
capacity of 100. Regular office hours
shall be 8 hours a day for 5 days a week
or 40 hours a week, exclusive of the
time for meals. In case of exigencies,
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LAONGLAAN NOTES 2017
they may work for 6 days or for 48
hours, but they shall be entitled to an
additional compensation of at least
30% of their regular wage for work
performed on the 6th day (LABOR
CODE, Art.83).
2. Compressed Work Week. Note: The
normal 8 working hours mandated by
law does not always mean continuous
and uninterrupted 8 hours of work. As
may be required by the peculiar
circumstances of employment, it may
mean broken hours of say, 4 hours in
the morning and 4 hours in the evening
or a variation thereof, provided that
total of 8 hours is accomplished within
one “work day” as this term is
understood in law. Hence, the 4-hour
work done in the evening should not be
considered overtime work since the 8-
hour period has not yet been exceeded
(CHAN, supra at 381).
Rationale of normal work hours.
To safeguard the health and welfare of the
laborer and to minimize unemployment by
utilizing different shifts (Manila Terminal Co.
v. CIR, L-4148, July 16. 1952).
Q: May the normal hours fixed in Article 83 of
the Labor Code be reduced by the employer?
Explain.
ANS: Yes. The present article provides that the
normal hours of work of an employee shall not
exceed 8 hours a day. Nonetheless, if by
voluntary practice or policy, the employer for a
considerable period of time has been
employing his employees’ wages due for 8
hours work although the work shift is less than
8 hours it cannot later on increase the working
hours without an increase in the pay of the
employees affected. An employer is not
23
allowed to withdraw a benefit which he has
voluntary given (ALCANTARA, supra at 168).
Q: What are compensable work hours?
ANS: Compensable hours worked shall
include:
1. All the during which an employee is required
to be on duty or to be at prescribed workplace;
and
2. All the during which an employee is suffered
or permitted to work. Rest periods of short
duration during working hours shall be counted
as hours worked (LABOR CODE, Art. 84).
I. Compressed Work Week (CWW)
The CWW scheme is an alternative
arrangement whereby the normal work week is
reduced to less than 6 days, but the total number
of normal hours remains at 48 hours. The
normal workday is increased to more than 8
hours without corresponding overtime
premium. This applies as well to 40-hour or 44-
hours workweek firms (DOLE Advisory No.
02, series of 2004).
Conditions of CWW.
The following are the requisites:
1. It is expressly and voluntary supported
by majority of the employees affected;
2. The work is non-hazardous, or if work
is hazardous, a certification is needed
from an accredited safety organization
or the firm’s safety committee that
work beyond 8 hours is within the
limits or levels of exposure set by
DOLE’s occupational safety and health
standards; and
3. The DOLE is duly notified (DOLE
Advisory No. 02, series of 2004).
Effects of CWW.
A CWW scheme which complies with the
foregoing conditions shall have the following
effects:
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1. Unless there is a more favorable
practice existing in the firm, work
beyond 8 hours will not be
compensable by overtime premium
provided that the total number of hours
worked per day shall not exceed 12
hours. In any case, any work performed
beyond 12 hours a day or 48 hours a
week shall be subject to overtime
premium.
2. Consistent with Article 85 of the Labor
Code, employees under a CWW
scheme are entitled to meal period of
not less than 60 minutes. Nothing,
however, shall impair the right of the
employees to rest days as well as to
holiday pay, rest day or leaves in
accordance with law or applicable
collective bargaining agreement (CBA)
or company practice.
3. Adoption of the CWW scheme shall in
no case result in diminution of existing
benefits. Reversion to the normal eight-
hour work day shall not constitute a
diminution of benefits. The reversion
shall be considered a legitimate
exercise of management prerogative
provided that the employer shall give
the employees prior notice of such
reversion within a reasonable period of
time (CHAN, supra at 379).
II. Power Interruptions or Brown-Outs
Basic rules on power interruptions or
brown-outs.
These rules are:
1. Brown-outs of short duration not
exceeding 20 minutes - compensable
hours worked.
2. Brown-outs running for more than 20
minutes may not be treated as hours
worked provided any of the conditions
are present:
24
a. The employees can leave their workplace or
go elsewhere within or without the work
premises; or
b. The employees can use the time effectively
for their own interest (DOLE Policy Instruction
No. 36).
C. Meal Break
Rules on meal periods.
1. Meal periods should not be less than
60 minutes. It is non-compensable
except when during so-called meal
period, the laborers are required to
standby for emergency work, or said
meal hour is not one of complete rest,
such period is considered overtime
(hours worked) (Pan American World
Airways System v. Pan American
Employees Association, G.R. No. L-
16275, February 24, 1961).
2. Meal periods may be less than 60
minutes, but should not be less than 20
minutes and the shortened meal time
must be with full pay, under the
following circumstances:
a. Where the work is non-manual
work in nature or does not involve
strenuous physical exertion;
b. Where the establishment regularly
operates 16 hours a day;
c. In cases of actual or impending emergencies
or there is urgent work to be performed on
machineries, equipment, or installations to
avoid serious loss which the employer would
otherwise suffer; and
d. Where the work is necessary to prevent
serious loss of perishable goods (IRR of
LABOR CODE, Book III, Rule I, Sec. 7).
3. If less than 20 minutes, it becomes only
a rest period and is considered as work
time, e.g., coffee breaks running from
5-20 minutes are considered
compensable working time (IIR of
LABOR CODE, Book III, Rule I, Sec.
7).
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LAONGLAAN NOTES 2017
D. Waiting Time
Waiting time is considered as working time on
the following situations:
1. Waiting is an integral part of his work;
2. The employee is required or engaged by the
employer to wait and is, thus, compensable;
or
3. Working while on call or when the
employee is required to remain on call in
the employer’s premises or so close thereto
that he cannot use the time effectively and
gainfully for his own purpose (IRR of
LABOR CODE, Book III, Rule I, Sec. 5).
Under the law, the idle time that an employee
may spend for resting and during which he
may leave the spot or place of work through
not the premises of his employer, is not
counted as working time only where the work
is broken or is not continuous. (National
Development Co. v. CIR, 6 SCRA 763)
Travel Time
1. Travel from Home To Work:
A. Definition: Normal travel from home
to work
B. General Rule: Not work time and not
compensable because it is a normal
incident of employment
C. Exceptions:
i. Travel is necessary in
proceeding to the workplace
where employee is made to
work on an emergency call;
ii. Travel is one through a
conveyance provided by the
employer;
iii. Travel is done under the
supervision and control of the
employer; and
iv. Travel is done under vexing and
dangerous circumstances.
2. Travel That Is All in Days Work
25
 A. Definition: This includes travel from
jobsite to jobsite where the travel is
an integral part of the employees
principal activity
B. General Rule: Considered as work
time and is compensable
3. Travel Away from Home
A. Definition: Travel that keeps an
employee away from home overnight
B. General Rule: Travel substitutes for
the hours that the employee should
have been in the office. It is
compensable if it cuts across an
employee’s workday.
Lectures, Meetings, Trainings, and
Programs:
As a general rule, they are considered as
working time. However, it shall NOT be
considered working time if all the following
conditions are met:
1. Attendance is outside of the employee’s
regular working hours;
2. Attendance is in fact voluntary; and
3. The employee does not perform any
productive work during such attendance.
Semestral break of teachers is compensable
hours worked for it is a form of interruption
beyond their control. This applies only for
regular full-time teachers. (University of
Pangasinan Faculty Union v. University of
Pangasinan, G.R. No. 64821-23, 1993)
E. Overtime
Work or services rendered in excess of and in
addition to 8 hours on ordinary working days,
which are prescribes daily work period. (Caltex
Regular Employees at Manila Office v. Caltex,
PHL, G.R. No. 111359, August 15, 1995)
Overtime Pay
Wage paid to an employee for working
overtime. Overtime pay is obtained by
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LAONGLAAN NOTES 2017
multiplying the applicable hourly rate of an
employee by the number of hours that he
worked in excess of 8 hours.
Rationale Behind Overtime Pay
The employee is made to work longer than
what is commensurate with his agreed
compensation for the statutory fixed or
voluntarily agreed hours of labor he is
supposed to do. (PNB v. PEMA and CIR, G.R.
No. L-30279, July 30, 1982) It discourages
employer from requiring such work thus
protecting the health and well-being of the
worker, and also tend to remedy unemployment
by encouraging employers to employ other
workers to do what cannot be accomplished
during the normal hours of work.
Employees Entitled to Overtime Pay
Everyone, except:
1. Government employees whether
employed by the National Government or
any of its political subdivisions,
including those employed in
government-owned and/or controlled
corporations with original charters or
created under special laws;
2. Managerial employees, if they meet all of
the following conditions:
A. Their primary duty is to manage the
establishment in which they are
employed or of a department or
subdivision thereof;
B. They customarily and regularly
direct the work of two or more
employees therein;
C. They have the authority to hire or
fire other employees of lower rank;
or their suggestions and
recommendations as to hiring,
firing, or promotion, or any other
change of status of other employees
are given particular weight.
26
3. Officers or members of a managerial
staff, if they perform the following duties
and responsibilities:
A. Primarily perform work directly
related to management policies of
their employer;
B. Customarily and regularly exercise
discretion and independent
judgment;
C. Duties such as:
i. Regularly and directly assist a
proprietor or managerial
employee in the management
of the establishment or
subdivision thereof in which he
or she is employed; or
ii. Execute, under general
supervision, work along
specialized or technical lines
requiring special training,
experience, or knowledge; or
iii. Execute, under general
provision, special assignments
and tasks; and
D. Do not devote more than twenty
percent (20%) of their hours
worked in a workweek to activities
which are not directly and closely
related to the performance of the
work described in paragraphs 3.1,
3.2, and 3.3 above.
4. Househelpers and persons in the personal
service of another;
5. Worker who are paid by results,
including those who are paid on piece
rate, takay, pakyaw, or task basis, and
other non-time work, if their output rates
are in accordance with the standards
prescribed in the regulations, or where
such rates have been fixed by the
Secretary of Labor and Employment.
6. Field personnel, if they regularly perform
their duties away from the principal or
branch office or place of business of the
employer and whose actual hours of work
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LAONGLAAN NOTES 2017
in the field cannot be determined with
reasonable certainty.
Q: What is the Difference of Overtime Pay
from Premium Pay?
A: Overtime pay is the additional
compensation for work performed beyond 8
hours on ordinary days. Premium pay is the
additional compensation for work performed
within 8 hours on days when normally he
should not be working (on non-working days,
such as rest days and special days.) But the
additional compensation for work rendered in
excess of 8 hours during these days is also
considered overtime pay.
Overtime Pay Rates
PAY RATES
OT during a regular working day
Additional compensation of 25% of the
regular wage
OT during holiday or a rest day
If done on a special holiday OR rest day:
Plus 30% of the basic hourly rate which
includes the 30% additional compensation
If done on a special holiday AND rest day:
Plus 30% of the basic hourly rate which
includes the 50% additional compensation
If done on a regular holiday:
Plus 30% of the basic hourly rate which
includes 100% additional compensation
If done on a regular holiday AND rest day:
Plus 30% of the basic hourly rate which
includes 160% of the additional
compensation
Q: In lieu of overtime pay, may permission
to leave be given to the employee instead?
A: No. Permission given to the employee to go
on leave on some other day of the week shall
not exempt the employer from paying
27
additional compensation required because it
will prejudice the employee, for he will be
deprived of the additional pay for the overtime
work he has rendered and which is utilized to
offset the undertime he may have incurred.
Undertime could be charged against the
employee’s accrued leave.
Q: Can an employee be compelled to render
overtime work?
A: The general rule is that an employee cannot
be compelled to render overtime work. The
exceptions are enumerated under Article 89 of
the Labor Code as follows:
1. When the country is at war or when any
other national or local emergency has been
declared by the National Assembly or the
Chief Executive;
2. When it is necessary to prevent loss of life
or property or in case of imminent danger
to public safety due to an actual or
impending emergency in the locality
caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic, or other
disaster or calamity;
3. When there is urgent work to be performed
on machines, installations, or equipment, in
order to avoid serious loss or damage to the
employer or some other cause of similar
nature;
4. When the work is necessary to prevent loss
or damage to perishable goods; and
5. Where the completion or continuation of
the work started before the eighth hour is
necessary to prevent serious obstruction or
prejudice to the business or operations of
the employer.
Q: Can an employer dismiss an employee
who refuses to perform overtime work in the
instances provided under Article 89 of the
Labor Code?
A: Yes. It would be an act of insubordination
on the part of the worker if he unjustifiably
refuses to render such work. It would be the
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
highest form of disloyalty against the country if
such work is needed to meet a national
emergency. (1 POQUIZ, Labor Standards Law
with Notes and Comments, (2012) p. 191, citing
a DOLE Opinion dated March 21, 1969)
Q: Can the right to overtime pay be waived?
A: As a general rule, the right to overtime
cannot be waived expressly or impliedly. Any
contrary stipulation is null and void as it is
intended to benefit laborers and employees.
However, there are exceptions such as:
1. When the waiver is made in consideration
of benefits and privileges which may be
more than what will accrue to them in
overtime pay. (Meralco Workers Union v.
Manila Electric Company, G.R. No. L-
11876, May 29, 1959); and
2. Compressed work week (Bisig
Manggagawa sa Tryco &/or Francisco
Siquig v. NLRC, G.R. No. 151309, October
15, 2008)
Overtime Pay in a Compressed Workweek
Scheme
Any work performed beyond 12 hours a day or
48 hours a week shall be subject to Overtime
Premium.
Q: What is the difference of overload work
from overtime work?
A: Overload work or additional work is
work performed within 8 hours of a normal of
computing 13th month pay. Overtime work is
work rendered in excess of 8 hours on a normal
working day.
F. Night Shift Differential
Night Work
Any and all work rendered between 6 pm and 6
am (National Rice & Corn Corp. v. NARIC,
105 Phil 891).
Night Worker
28
Any employed person whose work requires
performance of a substantial number of hours
of night work which exceeds a specified limit.
This limit shall be fixed by the SLE after
consulting the workers’ representatives / labor
organizations and employers. (Art. 154,
Chapter V, Labor Code, as amended by R.A.
10151)
Q: Who are covered by the provisions on
night work under R.A. 10151?
A: The general rule is all persons who shall be
employed or permitted or suffered to work at
night. However, the exceptions are those who
work in agriculture, stock raising, fishing,
maritime transport and inland navigation,
during a period of not less than 7 consecutive
hours, including the interval from midnight to
5 in the morning, to be determined by the SLE
after consulting the workers’
representatives/labor organizations and
employers.
Employability of Women for Night Work
R.A. 10151 repealed Arts. 130 and 131 of the
LC on Night Work prohibition with regard to
women workers. However, measures shall be
taken to ensure that an alternative to night work
is available to women workers who would
otherwise be called upon to perform such work:
1. Before and after childbirth, for a period
of at least 16 weeks, which shall be
divided between the time before and
after childbirth;
2. For additional periods, in respect of
which a medical certificate is produced
stating that said additional periods are
necessary for the health of the mother or
child:
a. During pregnancy;
b. During a specified time beyond the
period after childbirth is fixed
pursuant to number 1, the length of
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LAONGLAAN NOTES 2017
which shall be determined by the
DOLE after consulting the labor
organizations and employers.
Note: During the periods referred in Art. 158 in
RA10151:
1. A woman worker shall not be dismissed or
given notice of dismissal, except for just or
authorized causes provided for in the Code
that are not connected with pregnancy,
childbirth and childcare responsibilities.
2. A woman worker shall not lose the benefits
regarding her status, seniority, and access
to promotion which may attach to her
regular night position.
Condition for Pregnant Women and
Nursing Mothers to be Allowed to Work at
Night
They are allowed if a competent physician,
other than the company physician, shall certify
their fitness to render night work, and specify,
in the case of pregnant employees, the period
of the pregnancy that they can safely work.
Facilities Required from Employers under
RA 10151:
1. Suitable first-aid facilities, including
arrangements where such workers, where
necessary, can be taken immediately to a
place for appropriate treatment.
2. Safe and healthful working conditions and
adequate or reasonable facilities, i.e.
sleeping or resting quarters in the
establishment, and transportation from the
work premises to the nearest point of their
residence subject to exceptions and
guidelines to be provided by the DOLE.
Night Shift Differential (NSD)
The additional compensation of not less than
10% of an employee’s regular wage for every
hour worked between 10PM to 6AM whether
or not such period is apart of the worker’s
regular shift.
29
 Plus 10%
Q: Who are entitled to NSD? of the
A: All employees are entitled, except: overtime
Plus 10% of
1. Those provided in the Article 82 of the hourly rate
the
Labor Code: on an
overtime
A. Government employees; ordinary
Night shift hourly rate
B. Managerial employees; day or a
(10PM to on a rest
C. Field personnel; total of
6AM) work is day or
D. Members of the family of the employer 100% of
overtime work special
who are dependent on him for support; the
holiday or
E. Domestic helpers; overtime
regular
F. Persons in the personal service of hourly rate
holiday
another; and on an
G. Workers who are paid by results as ordinary
determined by the Secretary of Labor. day
2. Employees of retail and service Overtime
establishments regularly employing not work in the
Plus 10% of
more than 5 workers. (IRR of Book III, Rule night shift Plus 10%
130% of
II, Sec. 1 [b]) (Since of the
regularly
overtime is not 125% of
hourly rate
Q: What are the Rules on Night Shift usually 8 the basic
on said day
Differential? hours, the hourly rate
or a total of
A: Every employee shall be paid a night shift compensation or a total of
110% of
differential of not less than 10% of his regular for overtime 110% of
130% of the
wage for each hour of work performed between night shift 125% of
applicable
10PM and 6AM of the next day (Art. 86, Labor work is also the basic
regular
Code). computed on hourly rate
hourly rate
the basis of the
Rest day, hourly rate).
Special
Ordinary
Holiday, or Part-time Work
day
Regular Part-time work is not prohibited. The Labor
Holiday Code merely provides for the maximum
Plus 10% of number of hours and not the minimum. Under
the regular Art. 124, as amended by R.A. 6727, wage
hourly rate proportionate to part-timework is recognized.
Plus 10%
on a rest
of the basic
Night shift day, special G. Rest periods
hourly rate
(10PM to holiday or
or a total of
6AM) work is regular Weekly Rest Day
100% of
regular work holiday or a Every employer shall give his employees a rest
the basic
total of period of not less than 24 consecutive hours
hourly rate
100% of the after every 6 consecutive normal work days
regular (Sec 3, Rule III, Book III, IRR)
hourly rate

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Scope of Weekly Rest Days
It shall apply to all employers whether
operating for profit or not, including public
utilities operated by private persons. (Sec 1,
Rule III, Book III, IRR)
Q: Who Determines the Weekly Rest Day?
A: The general rule is that the employer shall
determine and schedule the weekly rest day of
his employee but it shall be subject to the
following:
1. Collective Bargaining Agreement
2. Rules and regulations issued by the
Secretary of Labor; and
3. Employee’s preference based on
religious grounds.
Right of the Employee to Know the Schedule
of their Weekly Rest Days
The employer shall make known the rest period
by means of:
1. Written notice
2. Posted conspicuously in the workplace
3. At least 1 week before it becomes
effective (Sec 5, Rule III, Book III, IRR)
Emergency Rest Day Work
The general rule is that the employee cannot be
compelled to work by the employer to work on
his rest day. The exceptions are:
1. Urgent work to be performed on the
machinery, equipment or installation,
to avoid serious loss which the
employer would otherwise suffer;
2. Nature of work requires continuous
operations for 7 days a week or more
and stoppage of the work may result
irreparable injury or loss to the
employer;
3. Abnormal pressure of work due to
special circumstances, where the
employer cannot be ordinarily expected
to resort to other measures;
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
4. Actual or impending emergencies
(serious accident, fire, flood, typhoon,
earthquake, etc.);
5. Prevent loss or damage to perishable
goods;
6. Analogous or similar circumstances as
determined by the Secretary of Labor;
or
7. Work is necessary to avail of favorable
weather or environmental conditions
where performance or quality of work
is dependent thereon.
Employee Volunteers to Work on His Rest
Day under Other Circumstances
He shall express it in writing subject to
additional compensation. (Sec. 6(2), Rule III,
Book III, IRR)
Premium Pay
It is the additional compensation for work
rendered by the employee on days when
normally he should not be working such as
special holidays and weekly rest days.
Employer and Employee can agree on the
rate of premium pay other than that
provided my law
Nothing shall prevent the employer and his
employee or their representatives from entering
into any agreement with terms more favorable
to the employees; Provided, it shall not be used
to diminish any benefit granted to the
employees under existing laws, agreements and
voluntary employer practices. (Sec. 9, Rule III,
Book III, IRR)
H. Holiday pay
A form of premium accorded to an employee
who does not work on regular holidays. If he
works on said regular holidays, he is entitled to
an additional compensation over his regular or
basic remuneration known as premium pay. (1
POQUIZ, p. 199)
31
Rationale of Holiday Pay establishments operating within the designated
The purpose of the holiday pay is to prevent Muslim provinces and cities are required to
diminution of the monthly income of the observe Muslim holidays.
workers on account of work interruptions. In
other words, although the worker is forced to National Special Days Date
take a rest, he earns what he should earn, that All Saints Day November 1
is, his holiday pay. (Jose Rizal College v. Last Day of the Year December 31
NLRC, G.R. No. 65482, December 1, 1987) Ninoy Aquino Day August 21
Other days declared by
Regular Holidays law:
They are compensable whether worked or November 2
unworked subject to certain conditions. They 1. Special Non- December 24
are also called legal holidays. The following are working Days
considered regular holidays: 2. Special Public
Holidays
Regular Holidays Date 3. Special National February 25
New Year’s Day January 1 Holiday
Maundy Thursday According to their 4. Special Holiday
Good Friday respective dates in (for all schools)
the calendar A. EDSA
After the Revolution
Eid’l Fitr determination of Anniversary
Eid’l Adha approximate dates Local Special Days
of the Islamic Those declared by:
holidays in 1. Law, or e.g. Manila Day
accordance with the 2. Ordinance (in Manila only)
Islamic calendar, or
upon Islamic Q: Who are excluded from the payment of
astronomical holiday pay?
calculations A: The following are not entitled to holiday
Araw ng April 9 pay:
Kagitingan 1. Government employees;
Labor Day May 1 2. Managerial employees;
Independence Day June 12 3. Field personnel;
National Heroes Last Monday of 4. Members of the family of the employer
Day August who are dependent on him for support;
Bonifacio Day November 30 5. Domestic helpers, persons in the personal
Christmas Day December 25 service of another;
Rizal Day December 30 6. Workers who are paid by results as
determined by the Secretary of Labor in
Muslim Holidays appropriate regulations (Art. 82, Labor
Muslim Holidays are those observed in Code); and
specified Muslim areas. All private 7. Employees of retail and service
corporations, offices, agencies and entities or establishments regularly employing not

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 32
 more than 10 workers (IRR of Labor
Code, Book III, Rule IV, Sec. 1)
Q: What are the rules on holiday pay of
teachers, piece workers, seafarers, seasonal
workers, etc.?
A: The following are the rules:
1. Private school teachers, including faculty
members of colleges and universities,
may not be paid for regular holidays
during semestral vacations. They shall,
however, be paid for the regular holidays
during Christmas vacation;
2. Where a covered employee is paid by
results or output, such as payment on
piece work, his holiday pay shall not be
less than I daily average earnings for the
last seven actual working days precluding
the regular holiday; Provided, However,
that in no case shall the holiday pay be
less than the applicable statutory
minimum wage rate;
3. Seasonal workers may not be paid the
required holiday pay during off-season
when they are not at work; and
4. Workers who have no regular working
days shall be entitled to the benefits
provided in this Rule (IRR of Labor
Code, Book III, Rule IV, Sec. 8)
Q: What is the rule on holiday pay of
teaching personnel paid per lecture hour?
A: Faculty members paid by the hour by virtue
of their teaching contracts:
1. They are NOT entitled to payment of
holiday pay because they are paid only
for work actually done. Since regular
holidays are known to both school and
faculty members as “no class days;”
certainly the latter do not expect payment
for said unworked days, and this was
clearly in their minds when they entered
into the teaching contracts,
2. They are however entitled to their regular
hourly rate on days declared as special
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
holidays or when classes are called off or
shortened on account of typhoons, floods,
rallies, and the like because the faculty
member, although forced to take a rest,
does not earn what he should earn on that
day. (Jose Rizal College v. NLRC, G.R.
No. L-65482, December 1, 1987)
13th Month Pay
It is the one-twelfth (1/12) of the basic salary of
an employee within a calendar year (P.D. No.
851, Sec. 2, Par. (a))
Basic Salary (in relation to 13th month pay)
It includes all the remuneration or earnings paid
by an employer to an employee including cost-
of-living allowances. It does not include
allowances and monetary benefits which are
not considered, or integrated, as a part of the
regular, or basic, salary, such as the cash
equivalent of unused vacation and sick leave
credits, overtime, premium, night differential,
and holiday pay.
Payment of 13th Month Pay
The general rule is that it should be paid not
later than December 24 of every year.
However, the exceptions are as follows:
1. The employer may give to his employees
½ of the required 13th month pay before
the opening of the regular school year and
the other half on or before the 24th of
December of every year. (DOLE Labor
Advisory No. 12, Series of 2013);
2. If otherwise provided in the collective
bargaining agreement; or
3. If otherwise provided in any other
agreement, i.e., employment contract
Q: Are extras, casual, and seasonal workers
entitled to 13th month pay?
A: Yes. All rank-and-file employees regardless
of their designation or employment status;
irrespective of the method by which their
wages are paid are entitled to 13th month pay,
33
provided that they have worked for at least one
month during a calendar year. They are entitled
to the proportionate 13th month pay (In Re:
Bagong Pilipino World’s Fashion Workers
Union, Opinion of the Bureau or Working
Conditions, December 19, 1987 citing P.D. No.
851 as amended by Memorandum Order No.
28)
Q: Is 13th month pay part of the retirement
benefits?
A: Yes. Thirteenth month is included as part of
the retirement benefits that a retiring employee
is entitled to under Article 289 of the Labor
Code. It is provided therein that a retiring
employee is entitled to a retirement pay
equivalent to at least six (6) months being
considered as one whole year. The term “1/2
month salary” shall mean 15 days plus 2.5 days
(representing 1/12 of the 13th month pay and the
cash equivalent of not more than five days of
service incentive leaves or a total of 22.5 days.
(IRR of the Retirement Pay Law, Rule II, Sec.
5.2; Capitol Wireless, Inc. v. Confesor, G.R.
No. 117174, November 13, 1996)
th
Form of the 13 month pay
1. Christmas Bonus
2. Midyear Bonus
3. Profit Sharing Scheme
4. Other Cash bonuses amounting to not
less than 1/12 of its basic salary
Employers covered by the 13th month pay
under P.D. 851
The general rule is that the payment of 13th
month pay applies to all employers. However,
the exceptions are:
1. Distressed employers:
A. Currently incurring substantial losses;
or
B. In the case of non-profit institutions
and organizations, where their income,
whether from donations, contributions,
grants and other earnings from any
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
source, has consistently declined by
more than 40% of their normal income
for the last 2 years, subject to the
provision of Sec. 7 of P.D. 851;
2. The Government and any of its political
subdivisions including GOCC’s, except
those corporations operating essentially as
private subsidiaries of the Government;
3. Employers already paying their
employees13th month pay or more in a
calendar year of its equivalent at the time of
this issuance:
A. It’s equivalent shall include
i. Christmas Bonus
ii. Midyear Bonus
iii. Profit Sharing Scheme
iv. Other Cash bonuses amounting to
not less than 1/12 of its basic
salary
B. It shall not include:
i. Cash and stock dividends;
ii. COLA
iii. All other allowances regularly
enjoyed by the employee, as well
as non-monetary benefits
4. Employers of household helpers and
persons in the personal service of another
in relation to such workers; and
5. Employers of those who are paid on a
purely commission, bound army, or task
basis, and those who are paid a fixed
amount for performing a specific work,
irrespective of the time consumed in the
performance thereof, except where the
workers are paid on a piece-rate basis in
which case the employer shall be covered
by this issuance insofar as such workers are
concerned. (Sec. 3, P.D. 851)
Options of covered Employers
1. Pay ½ of the 13th month pay required before
the opening of the regular school year and
the other half on or before the 24th day of
December of every year
34
2. In any establishment where a union has
been recognized or certified as the CB
agent of the employee, the periodicity or
frequency of payment of the 13th month pay
may be the subject of agreement.
Separation Pay
Separation pay refers to the amount due to the
Ee who has been terminated from service for
causes authorized by law such as the
installation of labor-saving losses or the closing
or cessation of operation of the establishment
or undertaking.
Purpose for providing separation pay
Separation pay is intended to provide the Ee
with the wherewithal during the period he is
looking for another employment (Gabuay v.
Oversea Paper Supply, G.R. No. 148837,
August 13, 2004).
Circumstances when an employee is entitled
to separation pay:
1. When the termination of employment
is due to causes authorized by law (Art.
284, LC).
2. When the severance of employment is
caused by a disease, particularly when
the Ee is found to be suffering from any
disease and whose continued
employment is prohibited by law or is
prejudicial to his health and of his co-
Ees (Art. 284, LC)
3. When the termination from service has
been declared illegal, but his
reinstatement to his former position is
no longer feasible for some valid
reason (Gabuay v. Oversea Paper
Supply, G.R. No. 148837, August 13,
2004)
4. In case of pre-termination of
employment contract in job-
contracting arrangement (D.O 18-02,
Rules Implementing Art. 106–109,
LC).
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
5. Where separation pay is awarded as a
measure of social or compassionate
justice (PLDT v. NLRC, G.R. No. L-
80609, August 23, 1988).
I. Service Charge
There are charges collected by hotels,
restaurants and similar establishments at the
rate of 85% for covered employees equally
distributed among them, and 15% for the
management to answer for losses and
breakages.
Covered employees
All employees of establishments collecting
service charges are covered regardless of their
position, designation, employment status,
irrespective of the method by which their
wages are paid, except managerial employees.
(IRR of Labor Code, Book III, Rule VI, Secs.
1&2)
Establishments required to award service
charges to their employees
It only applies to establishments collecting
service charges such as hotels, restaurants,
lodging houses, night clubs, cocktail lounge,
massage clinics, bars, casinos, and gambling
houses, and similar enterprises, including those
entities operating primarily as private
subsidiaries of the government (IRR of Labor
Code, Book III, Rule VI, Sec. 1&2)
Difference of service charge and tips
Service charges are collected by the
management from the customers. Tips are
voluntary payments made by the customers to
the employees for excellent service.
Applicable rule when service charge is
abolished
35
If the service charge is abolished, the share of
the covered employees shall be considered
integrated in their wages on the basis of the
average monthly share of each employee for
the past 12 months immediately preceding the
abolition. (IRR of Labor Code, Book III, Rule
VI, Sec. 5)
B. WAGES
Wage versus salary
Wages is remuneration or earnings, however
designated, capable of being expressed in terms
of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other
method of calculating the same, payable by an
Er to an Ee under a written or unwritten
contract of employment
a. For work done or to be done, or for
services rendered or to be rendered; and
includes
b. Fair and reasonable value of board,
lodging, or other facilities customarily
furnished by the Er to the Ee as
determined by SLE
Fair and reasonable value means it shall not
include any profit to the Er or to any person
affiliated with the Er
PAMANTASAN NG LUNGSOD NG MAYNILA
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Minimum wage
Set by law or wage order issued by the
Regional Tripartite Wages and Productivity
Boards (RTWPB) or the rate which may be
fixed by the employer provided the same is not
lower than the legally mandated minimum
wage for agricultural or non-agricultural
workers.
Reason for fixing a minimum wage
The legislature was entitled to adopt measures
to reduce the evils of the “sweating system,”
the exploiting of workers at wages so low as to
be insufficient to meet the bare cost of living,
thus making their very helplessness the
occasion of a most injurious competition. The
legislature had the right to consider that its
minimum wage requirements would be an
important aid in carrying out its policy of
protection.
There is also an additional and compelling
consideration which recent economic
experience has brought into a strong light. The
exploitation of a class of workers who are in an
unequal position with respect to bargaining
power and are thus relatively defenseless
against the denial of a living wage is not only
detrimental to their health and well-being but
36
casts a direct burden of their support upon the
community. What these workers lose in wages
the taxpayers are called upon to pay. The bare
cost of living must be met [West Coast Hotel v.
Parrish, 300 US 79].
Criteria for minimum wage setting
In the determination of such regional minimum
wages, the Regional Board shall, among other
relevant factors consider the following-
1) The demand for living wages
2) Wage adjustment vis-à-vis the
consumer price index
3) The cost of living and changes or
increases therein
4) The needs of workers and their families
5) The need to induce industries to invest
in the countryside
6) Improvements in standards of living
7) The prevailing wage levels
8) Fair return on the capital invested and
capacity to pay by Ers
9) Effects on employment generation and
family income
10) The equitable distribution of income
and wealth along the imperatives of
economic and social development
The following persons are exempted from
the coverage of fixing a minimum wage:
the rule on wages applies to ALL workers.
(SLL Intl Cables, G.R. No. 17216, March 2,
2011).
Exemptions: (FDcB- CHR)
i. Farm tenancy- leasehold
ii. Domestic service
iii. Persons working in homes or cottage
industry
iv. Barangay micro business enterprise
v. Cooperatives
vi. Homeworkers
vii. Retail with 10 workers
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Salary Ceiling Method
A method of minimum wage adjustment
whereby the wage adjustment is applied to Ees
receiving a certain denominated salary ceiling.
In other words, workers already being paid
more than the existing minimum wage are also
to be given a wage increase (ECOP v.NWCP,
G.R. No. 96169, September 24, 1991).
Floor Wage Method
Involves the fixing of a determinate amount to
be added to the prevailing statutory minimum
wage rates.
No Work No Pay Principle
If there are no work performed by the
employee, there can be no wage or pay unless
the laborer was able, willing, and ready to work
but was prevented by the management or was
locked out.
Equal Pay for Equal Work
Persons who work with substantially equal
qualifications, skill, effort, and responsibility,
under similar conditions, should be paid similar
salaries.
Minimum Wage
Republic Act No. 6727 (also known as the
“Wage Rationalization Act”) mandates the
fixing of the minimum wages applicable to
different industrial sectors, namely, non-
agriculture, agriculture plantation, and
nonplantation, cottage/handicraft, and
retail/service, depending on the number of
workers or capitalization or annual gross sales
in some sectors.
The Rules Implementing RA 6727 define the
industrial sectors as follows:
i. Agriculture” refers to farming in all its
branches and, among others, includes the
cultivation and tillage of the soil,
production, cultivation, growing and
37
 harvesting of any agricultural or
horticultural commodities, dairying, raising
of livestock or poultry, the culture of fish
and other aquatic products in farms or
ponds, and any activities performed by a
farmer or on a farm as an incident to or in
conjunction with such farming operations,
but does not include the manufacturing
and/or processing of sugar, coconut, abaca,
tobacco, pineapple, aquatic or other farm
products.
ii. “Retail Establishment” is one principally
engaged in the sale of goods to end-users for
personal or household use. A retail
establishment that regularly engages in
wholesale activities loses its retail character.
iii. “Service Establishment” is one principally
engaged in the sale of service to individuals
for their own or household use and is
generally recognized as such.
Regions where Regional Tripartite Wages
and Productivity Boards (RTWPBs)
authorized to determine the daily minimum
wage rates:
National Capital Region (NCR) or Metro
Manila
Cordillera Administrative Region (CAR)
Region 1 - Northern Luzon or Ilocos
Region 2 - Cagayan Valley
Region 3 - Central Luzon
Region 4-A - CALABARZON (Cavite,
Laguna, Batangas, Rizal, Quezon)
Region 4-B - MIMAROPA (Mindoro,
Marinduque, Romblon, Palawan)
Region 5 - Bicol
Region 6 - Western Visayas
Region 7 - Central Visayas
Region 8 - Eastern Visayas
Negros Island Region – (Negros Oriental &
Negros Occidental) a
Region 9 - Western Mindanao or Zamboanga
Peninsula
Region 10 - Northern Mindanao
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LAONGLAAN NOTES 2017
Region 11 - Southern Mindanao or Davao
Region 12 - Central Mindanao or
SOCCSKSARGEN (South
Cotabato, North Cotabato, Sultan Kudarat
Sarangani, General Santos)
Region 13 - Caraga
Autonomous Region in Muslim Mindanao
(ARMM)
Basis
The basis of the minimum wage rates
prescribed by law shall be the normal working
hours of eight (8) hours a day.
Monthly-Paid Employees and Daily-Paid
Employees
Monthly-paid employees are those who are
paid every day of the month, including
unworked rest days, special days, and regular
holidays. Factor 365 days in a year is used in
determining the equivalent monthly salary of
monthly-paid employees.
Daily-paid employees are those who are paid
on the days they actually worked and on
unworked regular holidays.
Computation of the Estimated Equivalent
Monthly Rate (EEMR) of Monthly-Paid and
Daily-Paid Employees
I. For monthly-paid employees:
Factor 365 days in a year is used in determining
the equivalent annual and monthly salary of
monthly-paid employees. To compute their
Estimated Equivalent Monthly Rate (EEMR),
the procedure is as follows:
38
 II. For daily-paid employees:
The following factors and formula may be used
in computing the EEMR of different groups of
daily-paid employees for purposes of
entitlement to minimum wages and allied
benefits under existing laws:
Without prejudice to existing company
policies, practices and/or agreements, the
above formula are merely suggestions and may
be used as guides in determining the equivalent
monthly minimum wage rates.
Minimum wage of Workers paid by results
1. Workers paid by results
All workers paid by result, including those
who are paid on piecework, takay,
pakyaw, or task basis, shall receive not less
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
the prescribed wage rates per eight hour of
work a day, or a proportion thereof for
working less than eight hours.
2. Apprentices
Wage rates of apprentices conform to the
rules issued by Secretary of Labor. Wages
shall in no case be 75% of the applicable
minimum wage. (Art. 124, Labor Code)
3. Learners
Wages of learners shall begin at not less
than 75% of the applicable minimum
wage. (Art. 75, Labor Code)
4. Persons with Disability
A qualified disabled employee shall be
subject to same terms and conditions of
employment and compensation,
privileges, benefits, fringe benefits or
allowances as qualified, able bodied
persons. (Sec 5, RA 7277)
Effect of Reduction of Workdays on Wages
In situations where the employer has to reduce
the number of regular working days to prevent
serious losses, such as when there is a
substantial slump in the demand for his/her
goods or services or when there is lack of raw
materials, the employer may deduct the wages
corresponding to the days taken off from the
workweek, consistent with the principle of “no
work, no pay.”
This is without prejudice to an agreement or
company policy which provides otherwise.
Wage deduction
As a general rule: No employer, in his own
behalf or in behalf of any person, shall make
any deduction from the wages of his employees
(Art. 113, LC).
Except:
1. Deductions under Art. 113 of the LC for
insurance premiums.
39
2. Union dues in cases where the right of the
worker or his union to check off has been
recognized by the Er or authorized in
writing by the individual worker concerned
(Art. 113, LC).
3. Deductions for SSS, PhilHealth and Pag-
ibig premium
4. Taxes withheld pursuant to the Tax Code
5. Deductions under Art. 114 of the LC for loss
or damage to tools, materials or equipment
6. Deductions made with the written
authorization of the Ee for payment to a
third person (Sec 13, Rule VIII, Book III of
the IRR)
7. Deductions as disciplinary measures for
habitual tardiness (Opinion dated March 10,
1975 of the Labor Secretary).
8. Agency fees under Art. 248(e)of the
LC9.Deductions for value of meals and
facilities freely agreed upon
9. Deductions for value of meals and facilities
freely agreed upon
10. In case where the Ee is indebted to the Er
where such indebtedness has become due
and demandable (Art. 1706, NCC)
11. In court awards, wages may be subject of
execution or attachment, but only for debts
incurred for food, shelter, clothing, and
medical attendance (Art. 1703, NCC).
12. Salary deduction of a member of a legally
established cooperative (R.A. 6938, Art. 59,
LC)
Penalty and Double Indemnity for Violation
of the Prescribed Increases or Adjustments
in the Wage Rates (RA 8188)
Any person, corporation, trust, firm,
partnership, association or entity which refuses
or fails to pay any of the prescribed increases
or adjustments in the wage rates made in
accordance with RA 6727, shall be punished by
a fine of not less than Twenty-five Thousand
Pesos (P25,000.00) nor more than One
Hundred Thousand Pesos (P100,000.00) or
imprisonment of not less than two (2) years nor
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
more than four (4) years, or both such fine and
imprisonment at the discretion of the court:
Provided, That any person convicted hereof
shall not be entitled to the benefits provided for
under the Probation Law.
The employer concerned shall be ordered to
pay an amount equivalent to double the unpaid
benefits owing to the employees: Provided, that
payment of indemnity shall not absolve the
employer from the criminal liability imposable
hereof.
If the violation is committed by a corporation,
trust, firm, partnership, association or any other
entity, the penalty of imprisonment shall be
imposed upon the entity’s responsible officers,
including, but not limited to, the president,
vice-president, chief executive officer, general
manager, managing director or partner.
Coverage from Income Tax of Minimum
Wage Earners
Effective July 6, 2008, minimum wage earners
(MWEs) are exempt from income tax.
The following income of MWEs shall also be
exempt from income tax:
1. Statutory Minimum Wage (SMW) inclusive
of the COLA;
2. Holiday pay;
3. Overtime pay;
4. Night shift differential pay; and
5. Hazard pay
Commission
A fee paid based on a percentage of the sale
made by an Ee or agent, as distinguished from
regular payments of wages or salary.
When commissions be included in the
computation of basic salary:
1. If the commission is comprised of a
pre-determined percentage of the
selling price of the goods–Included in
the basic salary
40
 2. If the commission were paid as
productivity bonuses or closely
resemble profit-sharing, or when it has
no clear, direct or necessary relation
Time of payment
Wages shall be paid at least once every two (2)
weeks or twice a month at intervals not
exceeding sixteen (16) days. In case of force
majeure or circumstances beyond the
employer’s control, payment of wages on or
within the time herein provided cannot be
made, the employer shall pay the wages
immediately after such force majeure or
circumstances have ceased.
No employer shall make payment with less
frequency than once a month.
The payment of wages of employees engaged
to perform a task which cannot be completed in
two (2) weeks shall be subject to the following
conditions, in the absence of a collective
bargaining agreement or arbitration award:
(1) That payments are made at intervals not
exceeding sixteen (16) days, in proportion to
the amount of work completed;
(2) That final settlement is made upon
completion of the work.
Place of payment
Payment of wages shall be made at or near the
place of undertaking, except as otherwise
provided by such regulations as the Secretary
of Labor and Employment may prescribe under
conditions to ensure greater protection of
wages (Art. 104, Labor Code).
Wages shall be paid directly to the workers
to whom they are due, except:
(a) In cases of force majeure rendering such
payment impossible or under other special
circumstances to be determined by the
Secretary of Labor and Employment in
appropriate regulations, in which case, the
worker may be paid through another person
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
under written authority given by the worker for
the purpose; or
(b) Where the worker has died, in which case,
the employer may pay the wages of the
deceased worker to the heirs of the latter
without the necessity of intestate proceedings.
The claimants, if they are all of age, shall
execute an affidavit attesting to their
relationship to the deceased and the fact that
they are his heirs, to the exclusion of all other
persons. If any of the heirs is a minor, the
affidavit shall be executed on his behalf by his
natural guardian or next-of-kin. The affidavit
shall be presented to the employer who shall
make payment through the Secretary of Labor
and Employment or his representative. The
representative of the Secretary of Labor and
Employment shall act as referee in dividing the
amount paid among the heirs. The payment of
wages under this Article shall absolve the
employer of any further liability with respect to
the amount paid. (Art. 105, Labor Code)
In case of bankruptcy of employer:
In the event of bankruptcy or liquidation of an
employer’s business, his workers shall enjoy
first preference as regards their wages and other
monetary claims, any provisions of law to the
contrary notwithstanding. Such unpaid wages
and monetary claims shall be paid in full before
claims of the government and other creditors
may be paid. (As amended by Section 1,
Republic Act No. 6715, March 21, 1989).
Attorney’s fees in case of unlawful
withholding of wages and demand for
recovery:
(a) In cases of unlawful withholding of wages,
the culpable party may be assessed attorney’s
fees equivalent to ten percent of the amount of
wages recovered.
(b) It shall be unlawful for any person to
demand or accept, in any judicial or
administrative proceedings for the recovery of
wages, attorney’s fees which exceed ten
41
percent of the amount of wages recovered. (Art.
111, Labor Code).
Non-interference in disposal of wages
1. No employer shall limit or otherwise
interfere with the freedom of any employee
to dispose of his wages.
2. He shall not in any manner force, compel, or
oblige his employees to purchase
merchandise, commodities or other property
from any other person, or otherwise make
use of any store or services of such
employer or any other person.
Deposits for loss or damage
No employer shall require his worker to:
a) General rule:
make deposits from which deductions shall be
made for the reimbursement of loss of or
damage to tools, materials, or equipment
supplied by the employer,
b) Exception:
when the employer is engaged in such trades,
occupations or business where the practice
of making deductions or requiring deposits
is a recognized one, or is necessary or
desirable as determined by the Secretary of
Labor and Employment in appropriate rules
and regulations.
Kickbacks
It is unlawful for any person, directly or
indirectly, to withhold any amount from the
wages of a worker or induce him to give up
any part of his wages by force, stealth,
intimidation, threat or by any other means
whatsoever without the worker’s consent.
Non-diminution of benefits
General Rule:
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Benefits being given to Ees cannot be taken
back or reduced unilaterally by the Er because
the benefit has become part of the employment
contract, whether written or unwritten
Exception:
When diminution of benefits is done to correct
an error.
Wage Distortion (WD)
A situation where an increase in wage results in
the elimination or severe contraction of
intentional quantitative differences in wage or
salary rates between and among the Ee-groups
in an establishment as to effectively obliterate
the distinctions embodied in such wage
structure based on skills, length of service or
other logical bases of differentiation
Elements of Wage Distortion
1) An existing hierarchy of positions with
corresponding salary rates
2) A significant change or increase in the
salary rate of a lower pay class without
a corresponding increase in the salary
rate of a higher one;
3) The elimination of the distinction
between the 2 groups or classes;
and4.The WD exists in the same region
of the country (Alliance Trade Unions
v. NLRC, G.R. No. 140689, February
17, 2004).
National Wages and Productivity
Commission
National Wages and Productivity Commission,
hereinafter referred to as the Commission,
which shall be attached to the Department of
Labor and Employment (DOLE) for policy and
program coordination. (As amended by
Republic Act No. 6727, June 9, 1989).
Powers and functions of the Commission
(a) To act as the national consultative and
advisory body to the President of the
42
Philippines and Congress on matters relating to
wages, incomes and productivity;
(b) To formulate policies and guidelines on
wages, incomes and productivity improvement
at the enterprise, industry and national levels;
(c) To prescribe rules and guidelines for the
determination of appropriate minimum wage
and productivity measures at the regional,
provincial, or industry levels;
(d) To review regional wage levels set by the
Regional Tripartite Wages and Productivity
Boards to determine if these are in accordance
with prescribed guidelines and national
development plans;
(e) To undertake studies, researches and
surveys necessary for the attainment of its
functions and objectives, and to collect and
compile data and periodically disseminate
information on wages and productivity and
other related information, including, but not
limited to, employment, cost-of-living, labor
costs, investments and returns;
(f) To review plans and programs of the
Regional Tripartite Wages and Productivity
Boards to determine whether these are
consistent with national development plans;
(g) To exercise technical and administrative
supervision over the Regional Tripartite Wages
and Productivity Boards;
(h) To call, from time to time, a national
tripartite conference of representatives of
government, workers and employers for the
consideration of measures to promote wage
rationalization and productivity; and
(i) To exercise such powers and functions as
may be necessary to implement this Act.
Commission shall be composed of:
1) Secretary of Labor and Employment as ex-
officio chairman,
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
2) Director-General of the National
Economic and Development Authority
(NEDA) as ex-officio vice-chairman,
3) two (2) members each from workers and
employers sectors who shall be appointed
by the President of the Philippines upon
recommendation of the Secretary of Labor
and Employment to be made on the basis
of the list of nominees submitted by the
workers and employers sectors,
respectively, and who shall serve for a
term of five (5) years.
4) The Executive Director of the
Commission shall also be a member of the
Commission.
5) Commission shall be assisted by a
Secretariat to be headed by an Executive
Director and two (2) Deputy Directors,
who shall be appointed by the President of
the Philippines, upon the recommendation
of the Secretary of Labor and
Employment.
NOTE: The Executive Director shall have the
same rank, salary, benefits and other
emoluments as that of a Department Assistant
Secretary, while the Deputy Directors shall
have the same rank, salary, benefits and other
emoluments as that of a Bureau Director.
The members of the Commission representing
labor and management shall have the same
rank, emoluments, allowances and other
benefits as those prescribed by law for labor
and management representatives in the
Employees’ Compensation Commission. (As
amended by Republic Act No. 6727, June 9,
1989).
Regional Tripartite Wages and Productivity
Board
The Regional Boards, in all regions, including
autonomous regions as may be established by
law. The Commission shall determine the
43
offices/headquarters of the respective Regional
Boards.
Regional Boards powers and functions:
(a) To develop plans, programs and projects
relative to wages, incomes and productivity
improvement for their respective regions;
(b) To determine and fix minimum wage rates
applicable in their regions, provinces or
industries therein and to issue the
corresponding wage orders, subject to
guidelines issued by the Commission;
(c) To undertake studies, researches, and
surveys necessary for the attainment of their
functions, objectives and programs, and to
collect and compile data on wages, incomes,
productivity and other related information and
periodically disseminate the same;
(d) To coordinate with the other Regional
Boards as may be necessary to attain the policy
and intention of this Code;
(e) To receive, process and act on applications
for exemption from prescribed wage rates as
may be provided by law or any Wage Order;
and
(f) To exercise such other powers and functions
as may be necessary to carry out their mandate
under this Code.
Freedom to bargain
No wage order shall be construed to prevent
workers in particular firms or enterprises or
industries from bargaining for higher wages
with their respective employers. (As amended
by Republic Act No. 6727, June 9, 1989).
Non-diminution of benefits.
No wage order issued by any regional board
shall provide for wage rates lower than the
statutory minimum wage rates prescribed by
Congress. (As amended by Republic Act No.
6727, June 9, 1989).
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Subsidized Meals and Snacks
The employer may provide subsidized meals
and snacks to his employees provided that the
subsidy shall not be less than 30% of the fair
and reasonable value of such facilities. In such
case, the employer may deduct from the wa ges
of the employees not more than 70% of the
value of the meals and snacks enjoyed by the
employees, provided further that such
deduction is with the written authorization of
the employees concerned. (Sec. 4 Rule VII-A,
Book III of the Rules Implementing the Labor
Code). For the computation of the fair and
reasonable value of the meals given, the
employer may seek assistance from concerned
Regional Tripartite Wages and Productivity
Board (RTWPBs).
Salary of Kasambahay who works as
salesclerk
A Kasambahay who works as salesclerk should
receive salary in accordance with the
prescribed minimum wage which is applicable
in the retail and service establishments, under
existing Wage Orders.
1. Service Incentive Leaves
Right to Service Incentive Leave
- It is 5 days leave with pay for every
employee who has rendered at least 1 year
of service. It is commutable to its money
equivalent if not used or exhausted at the
end of the year
“At least for 1 year of service” – be it
continuous or broken from the date the
employee started working, including
authorized absences and paid regular holidays
unless the working days in the establishment as
a matter of practice or policy, or that provided
44
in the employment contract is less than 12
hours, in which case said period shall be
considered as one year (sec. 3, Rule V, Book
III, IRR)
GENERALLY, Service Incentive Leave is
applicable to an employee who has rendered
1 year of service
EXCEPTIONS ARE AS FOLLOWS:
1. Government employees and any of its
political subdivisions including GOCCs
2. Those already enjoying the benefit
3. Domestic helpers and persons in the
personal services of another
4. Those already enjoying vacation leave
with pay of at least 5 days
5. Managerial employees
6. Field personnel and other employees
whose performance is unsupervised by
the employers
7. Employed in establishments regularly
employing less than 10 workers
8. Exempt establishments
9. Engaged with a task or contract basis,
purely commission basis, or those who
are paid in a fixed amount of performing
work irrespective of the time consumed
in the performance thereof [Art. 95(b),
LC].
Part-time workers are entitled to the full
benefit of the yearly 5-day service incentive
leave.
A part-time worker is entitled to service
incentive leave whether the service within 12
months is continuous or broken or where the
working days in the employment contract as a
matter of practice or policy is less than 12
months. The availment and commutation
of the same can be proportionate to the daily
work rendered and the regular daily salary.
(DOLE’s explanatory Bulletin on Part-time
Employment, January 2, 1996).
Entitlement of piece-rate workers to Service
Incentive Leave.
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Piece-rate workers are entitled to the full
benefit of the yearly 5-day service incentive
leave. Under P.D. 851 or the SIL Law, the
exclusion from its coverage of workers who are
paid on a purely commission basis is only with
respect to field personnel. Employees engaged
on task or contract basis or paid on purely
commission basis are not automatically
exempted from the grant of SIL, unless, they
fall under the classification of field personnel
(Serrano v. Severino Santos, G.R. No.187698,
August09, 2010)
Manner of availment
The service incentive leave may be used for
sick and vacation leave purposes. And, at the
end of the year, the unused SIL may be
commuted to cash.
Commutability to cash
Under the Omnibus Rules, the unused service
incentive leave is commutable to its money
equivalent at the end of the year. [N.B. Not
found in the LC.]
Accumulation of Leave Credits
Instead of using up SIL, the employee may
accumulate it and opt for its commutation to
cash upon his resignation or separation from
employment.
Computation of SIL
In computing
SIL, the basis MATERNITY LEAVE
shall be the
salary rate at the date of commutation. The
availment and commutation of this benefit may
be on a pro rata basis. (DOLE Handbook)
3-year Prescription Rule
In Auto Bus Transport Systems, Inc. v.
Bautista (G.R. No. 156367, 16 May 2005), the
issue on the service incentive leave was
whether the entitlement only extends to the last
45
3 years following the 3-year prescription for
monetary claim in the Labor Code. The answer
was in the negative. Otherwise stated, the
service incentive leave shall be accrued from
date “the employer fails to pay such amount at
the time of his resignation or separation from
employment.”
The case provided for the following rules:
1. If the employee entitled to service incentive
leave does not use or commute the same, he is
entitled upon his resignation or separation from
work to the commutation of his accrued service
incentive leave.
2. SIL is also commutable to its money
equivalent if not used or exhausted at the end
of the year. In other words, an employee who
has served for one year is entitled to it. He may
use it as leave days or he may collect its
monetary value.
3. If the employee wishes to accumulate his
leave credits and opts for its commutation upon
his resignation or separation from employment,
his cause of action to claim the whole amount
of his accumulated service incentive leave shall
arise when the employer fails to pay such
amount at the time of his resignation or
separation from employment.
4. Thus, the three (3)-year prescriptive period
commences, not at the end of the year when the
employee becomes entitled to the commutation
of his service incentive leave, but from the time
when the employer refuses to pay its monetary
equivalent after demand of commutation or
upon termination of the employee’s services, as
the case may be
A covered female employee who has paid at
least three monthly maternity contributions in
the twelve-month period preceding the
semester of her childbirth, abortion, or
miscarriage and who is currently employed
shall be paid a daily maternity benefit
equivalent to one hundred per cent of her
present basic salary, allowances and other
PATERNITY LEAVE BENEFITS
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
benefits or the cash equivalents of such benefits
for sixty days subject to the following
conditions:
(a) That the employee shall have notified
her employer of her pregnancy and the
probable date of her childbirth which notice
shall be transmitted to the SSS in
accordance with the rules and regulations it
may provide;
(b) That the payment shall be advanced by
the employer in two equal installments
within thirty days from the filing of the
maternity leave application;
(c) That in case of caesarian delivery, the
employees shall be paid the daily maternity
benefit for seventy-eight days;
(d) That payment of daily maternity
benefits shall be a bar to the recovery of
sickness benefits provided by this Act for
the same compensable period of sixty days
for the same childbirth, abortion, or
miscarriage;
(e) That the maternity benefits provided
under this section shall be paid only for the
first four deliveries after March 13, 1973;
(f) That the SSS shall immediately
reimburse the employer of one hundred per
cent of the amount of maternity benefits
advanced to the employee by the employer
upon receipt of satisfactory proof of such
payment and legality thereof; and
(g) That if an employee should give birth or
suffer abortion or miscarriage without the
required contributions having been
remitted for her by her employer to the
SSS, or without the latter having been
previously notified by the employer of time
of the pregnancy, the employer shall pay to
the SSS damages equivalent to the benefits
which said employee would otherwise have
been entitled to, and the SSS shall in turn
46
 pay such amount to the employee
concerned. (As amended by Sec. 7, P.D.
No. 1202, S-1977; Sec. 11, P.D. No. 1636,
S-1979; and R.A. 7322)
Paternity leave It refers to the benefits granted
to a married male Ee allowing him not to report
for work for 7 days but continues to earn the
compensation therefore, on the condition that
his spouse has delivered a child or suffered a
miscarriage for purposes of enabling him to
effectively lend support to his wife in her
period of recovery and/or in the nursing of the
newly-born child. Concept of paternity leave
benefits Every married male Ee in the private
and public sectors shall be entitled to a
paternity leave of 7 days with full pay for the
first 4 deliveries of the legitimate spouse with
whom he is cohabiting. Conditions for
entitlement to paternity leave The male Ee is:
1. Legally married to, and is cohabiting with the
woman who delivers the baby; 2. Ee of private
or public sector; 3. Maybe availed of only for
the first 4 deliveries of the legitimate spouse
with whom he is cohabiting; and 4. Notify his
Er of the pregnancy of his legitimate spouse
and the expected date of such delivery
NOTE: Delivery shall include childbirth or
any miscarriage.
PATERNAL LEAVE
Leave benefits granted to a solo parent to
enable him/her to perform parental duties and
responsibilities - where physical presence is
required. In addition to leave privileges under
existing laws, parental leave of not more than 7
working days every year shall be granted to any
solo parent Ee who has rendered service of at
least 1 year (Sec. 8).
Conditions for entitlement of parental leave
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
1. He or she must fall among those referred to
as a solo parent.
2. Must have the actual and physical custody of
the child or children.
3. Must have at least rendered service of one
year to his or her employer.
4. He or she must remain a solo parent.
Persons considered a solo parent entitled to
parental leave
Any individual who falls under any of the
following categories:
1. A woman who gives birth as a result of
rape and other crimes against chastity
even without a final conviction of the
offender; Provided, That the mother keeps
and raises the child;
2. Parent
SERVICES CHARGES
left solo
or alone
with the responsibility of parenthood due
to: a. Death of spouse; b. Detention or
service of sentence of spouse for a criminal
conviction for at least 1 year; c. Physical
and/or mental incapacity of spouse d. Legal
separation or de facto separation from
spouse for at least 1 year as long as he/she is
entrusted with the custody of the children; e.
Nullity or annulment of marriage as decreed
by a court or by a church as long as he/she
is entrusted with the custody of the children;
f. Abandonment of spouse for at least 1 yr;
3. Unmarried mother/father who has
preferred to keep and rear his or her
child/children instead of: a. having others
care for them or b. give them up to a welfare
institution;
4. Any other person who solely provides: a.
parental care and b. support to a child or
children;
5. Any family member who assumes the
responsibility of head of family as a result
of the: a. death, b. abandonment, c.
disappearance or d. prolonged absence of
the parents or solo parent.
47
NOTE: A change in the status or XPN: Managerial Ees (Sec. 2, Rule VI, Book
circumstance of the parent claiming benefits III, IRR) Period to distribute the share of Ee
under this Act, such that he/she is no longer The period is not less than once every 2 weeks
left alone with the responsibility of or twice a month at intervals not exceeding 16
parenthood, shall terminate his/her days.
eligibility for these benefits. (Sec.3)
Service charge v. Tips
Service charges are collected by the
LEAVES FOR VICTIMS OF management from the customers. Tips are
VIOLENCE AGAINST WOMEN and voluntary payments made by the customers to
their CHILDREN (R.A. 9262) the Ees for excellent service.
A female Ee who is a victim of violence Applicable rule when service charge is
(physical, sexual, or psychological) is entitled abolished
to a paid leave of 10 days in addition to other
paid leaves (R.A. 9262, Anti- VAWC Act). If it is abolished, the share of the covered Ees
This is known as the battered woman leave. shall be considered integrated in their wages on
the basis of the average monthly share of each
Ees for the past 12 months immediately
SPECIAL LEAVE BENEFIT FOR preceding the abolition.
WOMEN
NOTE: Service charges form part of the award
A woman Ee having rendered continuous in illegal dismissal cases.
aggregate employment service of at least 6
months for the last 12 months shall be entitled Special Group of Workers
to a special leave benefit of 2 months with full
pay based on her gross monthly compensation.
It shall be used after a surgery due to 1. Women
gynecological disorders for a maximum of 2 a. Discrimination
months. b. Stipulation against marriage
c. Prohibited acts
Service charges These are charges collected by d. Sexual harassment
hotels, restaurants and similar establishments at 2. Minors
the rate of 85% for covered Ees equally 3. Kasambahay
distributed among them, and 15% for the 4. Homeworkers
management to answer for losses and 5. Night workers
breakages. Covered employees 6. Apprentice and Learners
GR: All Ees are covered, regardless of their 7. PWD
position, designation, and employment status,
irrespective of the method by which their A. Women
wages are paid. Provisions against discrimination
The State condemns discrimination against
NOTE: Applies only to hotels, restaurants and women in all its forms and pursues by all
similar establishment collecting service appropriate means and without delay the policy
charges. of eliminating discrimination against women in
keeping with the Convention on the
Elimination of All Forms of Discrimination

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 48
Against Women (CEDAW) and other
international instruments consistent with
Philippine law. The State shall accord women
the rights, protection, and opportunities
available to every member of society (Sec. 2,
R.A. 9710 or the Magna Carta of Women).
The State shall take steps to review and, when
necessary, amend and/or repeal existing laws
that are discriminatory to women within 3 years
from the effectivity of this Act (Sec. 12, R.A.
9710).
Discriminatory acts against women
Under the Labor Code
1. Discrimination with respect to the terms and
conditions of employment solely on account of
sex
a. Payment of lesser compensation to a
female Ee as against a male Ee for work of
equal value
b. Favoring a male Ee with respect to
promotion, training opportunities, study and
scholarship grants on account of gender
(Art. 135, LC).
c. Favoring a male applicant with respect to
hiring where the particular job can equally
be handled by a woman
d. Favoring a male Ee over a female Ee with
respect to the dismissal of personnel.
2. Stipulating, whether as a condition for
employment or continuation of employment:
a. That a woman Ee shall not get married, or
b. That upon marriage, such woman Ee shall be
deemed resigned or separated (Art. 136, LC).
3. Dismissing, discriminating or otherwise
prejudice a woman Ee by reason of her being
married (Art. 136, LC).
4. Art. 137 of the LC
Under the Magna Carta of women
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
1. Any gender-based distinction, exclusion, or
restriction which impairs or nullify the
recognition, enjoyment, or exercise by
woman, irrespective of their marital status,
on a basis of equality of men and women, of
human rights and fundamental freedoms in
the political, economic, social, cultural, civil
or any other field;
2. Any act or omission whether directly or
indirectly excludes or restricts women in the
recognition and promotion of their rights
and their access to enjoyment of
opportunities, benefits or privileges;
3. Discrimination compounded by or;
4. Intersecting with other grounds, status, or
condition, such as ethnicity, age, poverty or
religion (RA 9710, Sec. 4).
Stipulation Against Marriage (Art. 136, LC)
It shall be unlawful for the Er to:
1. Require as a condition for employment or
continuation of employment that a woman
employee shall not get married.
2. Stipulate that upon getting married a
woman employee shall be deemed resigned
or separated.
3. Actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee
merely by reason of her marriage.
No- spouse employment policy
- A policy banning spouses from
working in the same company.
GR: It may not facially violate Art. 136 of the
LC but it creates a disproportionate effect and
the only way it could pass judicial scrutiny is
by showing that it is reasonable despite the
discriminatory and disproportionate effect.
XPN: Bona fide occupational qualification rule
(BFOQR)
To justify a BFOQ, the Er must prove two
factors:
49
1. That the employment qualification is
reasonably related to the essential Acts penalized by Anti-Sexual Harassment
operation of the job involved; and Act:
2. That there is a factual basis for believing The law punishes sexual harassment act if the
that all or substantially all persons meeting same is:
the qualification would be unable to 1. Work-related; or
properly perform the duties of the job (Star 2. Education-related; or
Paper v. Simbol, G.R. No. 164774, April 12, 3. Training-related
2006).
Persons who may be held liable for sexual
PROHIBITED ACTS (ART. 137, Labor harassment:
Code) In a work, education or training-related
environment Sexual Harassment may be
It shall be unlawful for any Er to: committed by an:
1. Deny any woman Ee benefits provided by 1. Manager
law. 2. Employer
2. Discharge any woman for the purpose of 3. Employee
preventing her from enjoying any of the 4. Professor
benefits provided by law. 5. Agent of the Employer
3. Discharge such woman on account of her 6. Teacher
pregnancy, or while on leave or in 7. Instructor
confinement due to her pregnancy. 8. Supervisor
4. Discharge or refuse the admission of such 9. Coach
woman upon returning to her work for fear 10. Trainer
that she may again be pregnant. 11.Any other person who, having authority,
5. To discharge any woman or child or any influence or moral ascendancy over another in
other Ee for having filed a complaint or a work or training or education environment:
having testified or about to testify under the a. Demands
Code; and b. Requests or
c. Requires
ANTI-SEXUAL HARASSMENT ACT
(R.A. 7877) -any sexual favor from the other, regardless of
whether the demand, request or requirement for
State policy in enacting the Anti-Sexual submission is accepted by the object of R.A.
Harassment Law 7877 (Sec. 3, R.A. 7877).

The State shall: Gravamen of the Offense

1. Value the dignity of every individual
2. Enhance the development of its human
resources
3. Guarantee full respect for human rights, and
4. Uphold the dignity of workers, Ees,
applicants for employment, students or those
undergoing training, instruction or education
(Sec. 2, R.A. 7877).
-is not the violation of the Ee sexually but the
abuse of power by the employer
Places where sexual harassment are
committed
Specifically:
1. In a work-related or employment
environment:

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 50
a. The sexual favor is made as a condition in the
hiring or in the employment, re-employment
or continued employment of said individual,
or in granting said individual favorable
compensation, terms, conditions,
promotions, or privileges; or the refusal to
grant the sexual favor results in limiting,
segregating or classifying the Ee which in a
way would discriminate, deprive or
diminish employment opportunities or
otherwise adversely affect said Ee;
b. The above acts would impair the Ees’ rights
or privileges under existing labor laws; or
c. The above acts would result in an
intimidating, hostile, or offensive
environment for the Ee.
2. In an education or training environment
sexual harassment is employed:
a. Against one who is under the care, custody
or supervision of the offender;
b. Against one whose education, training,
apprenticeship or tutorship is entrusted to
the offender;
c. When sexual favor is made a condition to the
giving of a passing grade, or the granting of
honors and scholarships, or the payment of
a stipend, allowance or other benefits,
privileges, or considerations; or
d. When sexual advances result in an
intimidating, hostile or offensive
environment for the student, trainee or
apprentice.
Liability of the Er, head of office,
educational or training institution
-They shall be solidary liable for damages
arising from the acts of sexual harassment
committed if the Er or head of office,
educational or training institution is informed
of such acts by the offended party and no
immediate action is taken thereon (R.A. No.
7877, Sec. 5).
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Three-fold liability rule in sexual
harassment cases
-An act of Sexual Harassment may give rise to
civil, criminal and administrative liability on
the part of the offender, each proceeding
independently of the others.
Prescription of action
The civil, criminal and administrative action
shall prescribe in 3 years.
B. MINORS
Child – refers to a (a) person below 18 years of
age or (b) one who is over but is unable to fully
take care of or protect themselves from neglect,
cruelty, exploitation or discrimination because
of a physical or mental disability or condition
(RA 7610, Sec. 3).
Rules on employment of minor workers
GR:
1. No person under 18 years of age will be
allowed to be employed in an undertaking
which is hazardous or deleterious in nature.
2. No Er shall discriminate against any person
in respect to terms and conditions of
employment on account of his age.
XPN:
A. Below 15 yrs. Old
1. The child works directly under the sole
responsibility of his parents or legal guardian
and where only members of the family are
employed, subject to the following conditions:
a. Employment does not endanger the
child’s safety, health and morals
b. Employment does not impair the child’s
normal development
c. Er-parent or legal guardian provides the
child with the primary and/or secondary
education prescribed by the Department of
Education
51
2. The child’s employment or participation in
public entertainment or information through
cinema, theater, radio or television is essential
provided:
a. Employment contract is concluded by the
child’s parents or legal guardian,
b. With the express agreement of the child
concerned, if possible, and
c. The approval of DOLE, the following
must be complied with:
i. The employment does not involve
advertisement or commercials promoting
alcoholic beverages, intoxicating drinks,
tobacco and its by-products or exhibiting
violence
ii. There is a written contract approved
by DOLE
iii. The conditions provided in the first
instance are met
B. Above 15 but below 18 – May be employed
in any non-hazardous work
C. Above 18 – No prohibition
Requirement before engaging a minor into
employment
- The Er shall first secure a work permit from
the DOLE which shall ensure observance of the
requirements (Sec. 12, R.A. 7160).
Rule in the issuance of work certificates/
permits to children at least 15 but below 18
years of age
The issuance of a DOLE Certificate to youth
aged 15 to below 18 years of age is not required
by law. No Er shall deny opportunity to any
such youth applying for employment merely on
the basis of lack of work permit or certificate of
eligibility for employment. Any young person
aged 15 to below 18 years of age may present
copy of this DOLE advisory to any Er, job
provider, government authority, or his/her
representative when seeking employment or
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
anytime during employment (DOLE
Department Advisory No. 01-08).
Non-hazardous work
- It is any work or activity in which the
Ee is not exposed to any risk which constitutes
an imminent danger to his safety and health.
Act Against Child Labor (R.A. 9231) And
Child Abuse Law (R.A. 7610)
Child Labor – is any work or economic
activity performed by a child that subjects
him/her to any form of exploitation or is
harmful to his health and safety or physical,
mental or psychosocial development.
Working child
Any child engaged as follows:
1. When the child is below 18 years of age in a
work or economic activity that is not child
labor; or
2. When the child is below 15 years of age:
a. In work where he/she is directly under the
responsibility of his/her parents or legal
guardian and where only members of the
child’s family are employed; or
b. In public entertainment or information
Hours of work of a working child:
A. below 15 years of age - not more than 20
hours a week, provided that the work shall
not be more than 4 hours at any given day;
B. 15 years of age but below 18 – not more
than 8 hours a day, and in no case beyond 40
hours a week;
C. No child below 15 years of age shall be
allowed to work between 8:00 pm and 6:00
am of the following day and no child more
than 15 years of age but below 18 shall be
allowed to work between 10:00 pm and 6:00
am of the following day (R.A. No. 9231,
Sec. 3).
Employment of child in public
52
entertainment:
1. The employment contract is concluded by
the child’s parent/legal guardian, with the
express agreement of the child concerned, and
if possible, the approval of DOLE.
2. The following requirements are compiled:
a. Er shall ensure protection, health, morals,
and normal development of the child;
b. Er shall institute measures to prevent child
exploitation.
c. Er shall formulate and implement a
continuing program for training and skill
acquisition of the child.
Prohibitions on the employment of children
in certain advertisements
Employment of child models in all commercial
advertisements promoting the following shall
be prohibited:
1. Alcoholic beverage
2. Intoxicating drinks
3. Tobacco and it’s by products
4. Gambling
5. Violence
6. Pornography
C. KASAMBAHAY
R.A. No. 10361, otherwise known as the
Domestic Workers Act or Batas Kasambahay.
-This Act shall apply to all domestic workers
employed and working within the country.
DOMESTIC WORKER or
KASAMBAHAY
- refers to any person engaged in domestic work
within an employment relationship such as, but
not limited to the following: general househelp,
nursemaid or “yaya”, cook, gardener, or
laundry person, but shall exclude who performs
domestic work only occasionally or
sporadically and not on occupational basis.
Benefits accorded to House helpers
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LAONGLAAN NOTES 2017
1. Standard of Treatment – shall not be
subjected to any kind of abuse nor inflict
any form of physical violence or
harassment or any act tending to degrade
his/her dignity;
2. Board, Lodging, and Medical Attendance
– Er shall provide for the basic necessities
of the domestic worker and to include at
least 3 adquate meals per day and humane
sleeping arrangement;
3. Er shall provide rest and assistance to the
domestic worker in case of illness and
injuries sustained during service without
loss of benefits;
4. Guarantee of Privacy;
5. Access to Outside Communication
6. At no instance shall Er withdraw or hold in
abeyance the provision of the basic
necessities as punishment or disciplinary
action;
7. Right to education and training
8. Prohibition against privileged information
– all communication and information
pertaining to Er or members of the
household shall be treated as privileged
and confidential in nature;
9. Daily Rest Period – 8 hours per day
10. Weekly Rest Period – entitled to at least
twenty four consecutive hours of rest in a
week.
11. Assignment to Non-household Work – no
domestic worker shall be assigned to work
in a commercial, industrial or agricultural
enterprise at a wage rate lower than that
provided;
12. Leave Benefits – Sec.29;
13. Special and other Benefits;
14. Premium payments or contributions shall
be shouldered by the employer unless the
domestic worker receives a wage of
P5,000 and above to which he shall pay for
the proportionate share;
15. Other benefits under existing laws;
16. Rescue and Rehabilitation of Abused
Domestic Workers
53

Pre-Employment Requirements
1. Medical Certificate,
2. Barangay and police clearance
3. NBI clearance
4. Duly authenticated birth certificate or if
not available, any document showing
his/her age such as voter’s ID, baptismal
record, or passport.
Employable age for a kasambahay
The employable age for a kasambahay is 15
years old and above.
NOTE: The employment of children 15 but
below 18 years of age may be made under the
following conditions:
1. They shall not be allowed to work for more
than 8 hours a day, and in no case beyond 40
hours a week;
2. They shall not be allowed to work between
10 p.m. to 6 a.m. of the following day;
3. They shall not be allowed to do hazardous
work; and
4. They shall not be denied access to education
and training.
The consent of the parent/guardian of working
children is required in the employment
contract.
Monthly minimum wage of a kasambahay
For those employed in:
1. National Capital Region –Php 2,500.00
2. Cities and 1st class municipalities –Php
2,000.00
3. Other municipalities –Php 1,500.00 (Sec. 24,
R.A. 10361).
TERMINATION
Termination of employment;
A. Initiated by the domestic worker
1. Verbal or emotional abuse by the Er;
2. Inhuman treatment including physical abuse
from the Er;
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LAONGLAAN NOTES 2017
3. Commission of a crime or offense against
the domestic worker by the Er;
4. Violation by the employer of terms and
condition of employment contract;
5. Any disease prejudicial to the health of the
domestic worker, the employer, or members
of the household;
6. Other causes analogous to the foregoing
Note: If the domestic worker leaves without
justifiable reason, any unpaid salary due not
exceeding the equivalent of 15 days’ work shall
be forfeited. In addition, the employer may
recover from the domestic worker costs
incurred related to the deployment expenses,
provided that the service has been terminated
within 6 months from the employment.
B. Initiated by the employer
1. Misconduct or willful disobedience of the
domestic worker;
2. Gross or habitual neglect or inefficiency of
the domestic worker in the performance of
duties;
3. Fraud or willful breach of trust;
4. Commission of a crime or offense by the
domestic worker against the Er or any of
his immediate family member;
5. Violation of the domestic worker of the
Employment Contract
6. Any disease prejudicial to the health of the
domestic worker, the employer, or
members of the household;
7. Other causes analogous to the foregoing
Note: Relief for unjust termination – If the
domestic worker is unjustly dismissed, he/she
shall be paid the compensation already earned
plus the equivalent of 15 days’ work by way of
indemnity.
D. Homeworkers
They are those who perform in or about his own
home any processing or fabrication of goods or
materials, in whole or in part, which have been
54
furnished directly or indirectly, by an employer
and sold thereafter to the latte.
Househelpers v. Homeworkers
HOUSEHELPERS HOMEWORKERS
Performs in or about
his own home any
processing or
Minister to the fabrication of goods
personal needs and or materials, in whole
comfort of his or in part, which have
employer in the been furnished
latter's home directly or indirectly,
by an employer and
sold thereafter to the
latter.
Employer of a homeworker
Includes any person, natural or artificial who,
for his account or benefit, or on behalf of any
person residing outside the country, directly or
indirectly, or through an employee, agent
contractor, subcontractor or any other person:
1. Delivers or causes to be delivered, any
goods, articles or materials to be processed
or fabricated in or about a home and
thereafter to be returned or to be disposed of
or distributed in accordance with his
directions.
2. Sells any goods, articles or materials to be
processed or fabricated in or abut a home
and then rebuys them after such processing
or fabrication, either by himself or through
some other person.
Duty of the employer in case he contracts
with another in the performance of his work
It shall be the duty of the employer to provide
in such contract that the employees or
homeworkers of the contractor and the latter's
subcontractor shall be paid in accordance with
the Labor Code.
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LAONGLAAN NOTES 2017
Liability of the employer if the contractor or
subcontractor fails to pay the wages or
earnings of his employees
Employer shall be jointly and severally liable
with the contractor or sub-contractor to the
workers of the latter to the extent that such
work is performed under such contract, in the
same manner as if the employees or
homeworkers were directly engaged by the
employer.
Right of industrial homeworkers to form
labor organizations
DO No. 5, replacing Rule XIV of the IRR Book
3 of the Labor Code, authorizes the formation
and registration of labor organization of
industrial homeworkers. It also makes explicit
the employer’s duty to pay and remit SSS,
PHILHEALTH and ECC premiums.
Prohibitions against homework
The following shall be prohibited as
homework:
1. Explosives, fireworks and similar articles;
2. Drugs and poisons; and
3. Other articles, the processing of which
requires exposure to toxic substances (Sec.
13, Rule Book 111, IRR).
Prohibition of any deduction from the
homeworkers earnings due to loss or
damage
The employer, contractor or subcontractor shall
not make any deduction from the homeworker's
earnings for the value of materials which have
been lost, destroyed, soiled or otherwise
damage.
Unless the ff. conditions are met:
1. The homeworker is clearly shown to be
responsible for the loss or damage;
55
2. The employer is given reasonable
opportunity to show cause why deductions
should not be made;
3. The amount of such deduction is fair and
reasonable and shall not exceed the actual
loss or damages; and
4. The deduction is made at such rate that the
amount deducted does not exceed 20% of
the homeworker's earnings in a week.
E. Night Workers
R.A. No.10151
-An Act Allowing the Employment of Night
Workers. Thereby Repealing Articles 130 and
131 of Presidential Decree No. 422, as
amended, otherwise known as the Labor Code
of the Philippines, 2011.
-This new R.A. provides that women can now
work on nighttime.
Coverage
- All persons who shall be employed or
permitted or suffered to work at night.
Exception
-Those employed in agriculture, stock raising,
fishing, maritime transport and inland
navigation during a period of not less than 7
consecutive hours, including the interval from
midnight to 5 o’clock in the morning, to be
determined by the Secretary of Labor and
Employment, after consulting the workers’
representatives / labor organizations and
employers.
Night Worker
-means any employed person whose work
requires performance of substantial number of
hours of night work which exceeds a specified
limit. This limit shall be fixed by the Secretary
of Labor after consulting the workers’
representatives / labor organizations and
employers.
Health Assessment
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LAONGLAAN NOTES 2017
-At their request, workers shall have the right
to undergo a health assessment without charge
and to receive advice in how to reduce or avoid
health problems associated with their work.
1. Before taking up an assignment as night
worker;
2. At regular intervals during such an
assignment; and
3. If they experience health problems during
such an assignment which are not caused by
factors other than the performance of night
work.
Exception
-finding of unfitness for a night work, the
findings of such assessment shall not be
transmitted to others without the worker’s
consent and shall not be used to their detriment
Compensation
-The compensation of night workers in the
form of working time, pay or similar benefits
shall recognize the exceptional nature of night
work.
Night Work Schedules
-Before introducing work schedules requiring
the services of night workers, the Er shall
consult the workers’ representative / labor
organizations concerned on the details of such
schedules and the forms of organization of
night work that are best adapted to the
establishment and its personnel, as well as on
the occupational health measures and social
services which are required. In establishments
employing night workers, consultation shall
take place regularly.
CBA provision vis-a-vis overtime work
1. CBA may stipulate highers overtime pay rate
2. The basis of computation of overtime pay
beyond that required by Art. 87 of the Labor
Code must be the collective agreement. It is not
for the court to impose upon the parties
56
 anything beyond what they have agreed upon
which is not tainted with illegality. On the other
hand, where the parties fail to come to an
agreement on a matter not legally required, the
court abuses its discretion when it obliges any
of them to do more than what is legally obliged.
(PNB v PNB Employee’s Assoc., G.R. No. L-
30279, 1982).
F. APPRENTICES AND LEARNERS
Apprenticeship
It is practical training on the job supplemented
by related theoretical instruction involving a
contract between an apprentice and an
employer on an approved apprenticeable
occupation.
Apprentice
Any worker who is covered by a written
apprenticeship agreement with an individual
employer or any of the entities recognized
under the Labor Code.
General Rule: Apprenticeship programs shall
be primarily voluntary.
Exception: Compulsory Apprenticeship
1. National security or economic development so
demand, the President may require compulsory
training.
2. Services of foreign technicians are utilized by
private companies in apprenticeable trades.
Qualifications of an apprentice
1. At least 15 years of age
NOTE: Those below 18 years of age shall not
work in hazardous occupations
2. Physically fit for the occupation.
3. Possess vocational aptitude and capacity
4. Possess:
a. The ability to comprehend, and
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
b. Follow oral and written instructions
5. The company must have an apprenticeship
program duly approved by the DOLE.
NOTE: Trade and industry associations may
recommend to the SLE appropriate educational
requirements for different occupations.
Apprenticeable occupation
Any trade, form of employment or occupation
which requires more than three (3) months of
practical training with theoretical instruction
officially endorsed by the tripartite body and
approved for apprenticeship by the TESDA.
On the job training (OJT)
It is practical work experience through actual
participation in productive activities given to or
acquired by an apprentice.
Highly technical industries
Highly technical industries are those which are
engaged in the application of advanced
technology.
NOTE: Prior approval by TESDA (formerly
DOLE) of the proposed apprenticeship
program is a condition sine qua non. Otherwise,
an apprentice becomes a regular employee
(Nitto Enterprises v. NLRC, 248 SCRA 654).
When occupation deemed hazardous
1. Nature of work exposes worker to
dangerous environmental elemental
contaminants or work conditions
2. Workers are engaged in construction work,
logging, fire fighting, mining, quarrying,
blasting, stevedoring, deep-sea fishing, and
mechanized farming
3. Workers are engaged in the manufacture or
handling of explosives and other
pyrotechnic products
4. Workers use, or are exposed to heavy or
power driven machinery or equipment.
57
Employers of apprentices
1. Only employers in highly technical
industries and
2. Only in apprenticeable occupations
approved by Secretary of Labor.
Employment status of apprentices
They are contractual workers whose length of
service depends on the term provided for in the
apprenticeship agreement. Thus, the employer
is not obliged to employ the apprentice after the
completion of his training.
Conditions for employment of an apprentice
1. Should be an apprenticeable trade as
determined by TESDA
2. Prior approval by the DOLE of the proposed
apprenticeship program is a condition sine
qua non before an apprenticeship agreement
can be validly entered into (Nitto
Enterprises v. NLRC, 248 SCRA 654).
NOTE: One of the objectives of Title Il
(Training and Employment of Special
Workers) of the Labor Code is to establish
apprenticeship standards for the protection of
apprentices. An apprenticeship program should
first be approved by the DOLE before an
apprentice may be hired, otherwise a person
hired will be considered a regular employee.
(Century Canning corp. v. CA, 530 SCRA 501)
Period of apprenticeship
Apprenticeship must not exceed 6 months.
NOTE:
1. 2 months/400 hours: Trades or occupations
which normally require 1 year or more for
proficiency
2. 1 month/200 hours: Occupations and jobs
which require more than 3 months but less
than 1 year for proficiency (Sec 19, Rule W,
Book 11, IRR).
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LAONGLAAN NOTES 2017
Status of an apprentice after the lapse of the
period of apprenticeship
He is deemed a regular employee. He cannot be
hired as a probationary employee since the
apprenticeship is deemed the probationary
period.
Compensation of an apprentice
It Starts at not less than 75% of the statutory
minimum wage for the 1st 6 months (except
OJT); thereafter, shall be paid in full minimum
wage, including the full COLA.
However, Art. 72 of the LC provides that the
Secretary of Labor may authorize the hiring of
apprentices without compensation whose
training on the job is required:
1. By the school or;
2. By a training program curriculum or;
3. As requisite for graduation or
4. As requisite for board examination.
Rules regarding apprenticeship agreements
Apprenticeship agreements, including the wage
rates of apprentices, shall:
1. Conform to the rules issued by Secretary of
Labor.
2. The period of Apprenticeship shall not
exceed 6 months.
3. Apprenticeship agreements providing for
wage rates below the legal minimum wage,
which in no case shall start below 75% of
the applicable minimum wage, may be
entered into only in accordance with
Apprenticeship programs duly approved by
the Secretary of Labor.
4. The DOLE shall develop standard model
programs of Apprenticeship (Sec. 18, Rule
VI, Book 11, IRR).
Every apprenticeship agreement shall be
signed by
1. The Employer or his agent, or
58
2. An authorized representative of any of the
recognized organizations, associations or
groups, and
3. The apprentice.
Apprenticeship agreement with a minor
An apprenticeship agreement with a minor
shall be signed in his behalf by:
1. His parent or guardian, or if the latter is not
available,
2. An authorized representative of the DOLE.
Rules on working scholars
There is no Employer-Employee relationship
between students on one hand, and schools,
where there is written agreement between them
under which the former agree to work for the
latter in exchange for the privilege to study free
of charge. The student is not considered an
employee (Sec. 14, Rule IX, Book Ill, IRR).
Procedure for the termination of
apprenticeship
The party terminating shall:
1. Serve a written notice on the other at least 5
days before actual termination,
2. Stating the reason for such decision; and
3. A copy of said notice shall be furnished to
the Apprenticeship Division concerned.
Party who can terminate an apprenticeship
agreement
1. Either party may terminate an
agreement after the apprenticeship period but
only for a valid cause
2. It may be initiated by either party upon
filing a complaint or upon DOLE's own
initiative.
Party who may appeal the decision of the
authorized of the DOLE
It may be appealed by any aggrieved person to
the Secretary of Labor 5 days from receipt of
the decision.
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
NOTE: The decision of the Secretary of Labor
shall be final and executory.
Principle of Exhaustion of Administrative
Remedies In case of breach of
apprenticeship agreement
Exhaustion of Administrative Remedies is a
condition precedent to the institution of an
action for enforcing application of agreement.
Duty of the plant apprenticeship committee
The plant apprenticeship committee shall have
the initial responsibility for settling differences
arising out of Apprenticeship agreement (Sec.
32b, Rule VI, Book 11, IRR).
Learners
1. They are persons hired as trainees in semi-
skilled and other industrial occupations
2. Which are non-apprenticeable and
3. Which may be learned through practical
training on the job in a relatively short
period of time
4. Which shall not exceed 3 months
5. Whether or not such practical training is
supplemented by theoretical instructions
(Sec. la, Rule WI, Book 11, IRR).
Employment of learners
Learners may be employed when:
1. No experienced worker is available
2. It is necessary to prevent curtailment of
employment opportunities; and
3. Employment does not create unfair
competition in terms of labor costs or impair
or lower working standards.
Contents of a learnership agreement
Any employer desiring to employ learners shall
enter into a learnership agreement with them,
which agreement shall include:
1. The names and addresses of the learners;
2. The duration of the learnership period,
which shall not exceed 3 months;
59
3. The wages or salary rates of the learners With commitment to
which shall begin at not less than 75% of the employ the learner as
applicable minimum wage; and a regular employee if No commitment to
4. A commitment to employ the learners if he desires upon hire
they so desire, as regular employees upon completion of
completion of the Learnership. learnership
In case of pre-termination of contract
Employment of minors as learners
Considered a regular Worker not
A learner must be at least 15 years of age.
employee if pre- considered as
termination occurs regular
NOTE: Those below 18 years of age shall not
after 2 months of
work in hazardous occupations.
training and the
dismissal is without
Persons who may employ learners
fault of the Learner.
Only employers in semi-skilled and other
industrial occupations which are non- Coverage
apprenticeable may employ learners. Highly technical
Semi-
industries and only
skilled/lndustrial
Status of learners who have been allowed or in industrial
occupations
suffered work during the first 2 months occupation
If training is terminated by the employers There is a list of
before the end of the stipulated period through learnable trades by No list
no fault of the Learner, they shall deemed TESDA
regular employees (Sec. 4, Rule VIC Book Il, Written agreement
IRR). Requires
Requires learnership
apprenticeship
Learnership v. Apprenticeship agreement
agreement

Learnership Apprenticeship
Nature G. PERSONS WITH DISABILITY (R.A.
Training on the job in Training in trades 7277 as amended by R.A. 9442)
semi-skilled and other which are
industrial occupation apprenticeable, that Persons with disability (PWD)
or trades which are is, practical training Those whose earning capacity is impaired by:
nonapprenticeable and on the job 1. Physical deficiency
which may be learned supplemented by 2. Age
thru practicat training related theoretical 3. Injury
on the job in a instruction for more 4. Disease
relatively short period than 3 months. 5. Mental Deficiency
of time. 6. Illness
Duration of training
Employment of PWD
Min: 3 months
Max: 3 months 1. When their employment is necessary to
Max: 6 months
prevent curtailment of employment
Commitment to employ opportunities; and

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LAONGLAAN NOTES 2017 60
2. When it will not create unfair competition in
labor costs or lower working standards (Art.
79, LC).
Employment period of PWD
There is no minimum or maximum duration. It
depends on the agreement but it is necessary
that there is a specific duration stated.
PWD as apprentices or learners
PWD may be hired as apprentices or learners if
their disability is not such as to effectively
impede the performance of job operations in
the particular occupations for which they are
hired (Art. 81, LC).
Persons with disability can be a regular
employee
Persons with disability can be a regular
employee if work is usually or necessarily
desirable to the business (Bernardo v. NLRC,
G.R No. 122917, July 12, 1999).
Persons who may employ persons with
disability
Employers in all industries: Provided, the
disability is not such as to effectively impede
the performance of job operations in the
particular occupations for which they are hired.
Not all workers with a disability are
considered disabled workers
The mere fact that a worker has a disability
does not make him a disabled worker because
his disability may not impair his efficiency or
the quality of his work. If despite his disability
he can still efficiently perform his work, he
would be considered a qualified disabled
worker entitled to the same treatment as
qualified able bodied workers (Bernardo v.
NLRC, G,R. No. 122917, July 12, 1999).
Rights of Persons with Disability
1. Equal opportunity for employment
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LAONGLAAN NOTES 2017
2. Sheltered employment (the Government
shall endeavor to provide them work if
suitable employment for disabled persons
cannot be found through open employment)
3. Apprenticeship
4. Vocational rehabilitation (means to develop
the skills and potentials of disabled workers
and enable them to compete in the labor
market)
5. Vocational guidance and counseling
PROHIBITIONS ON DISCRIMlNATlON
AGAINST PERSONS WITH DISABILITY
No disabled person shall be denied access to
opportunities for suitable employment. A
qualified disabled employee shall be subject to
the same terms and conditions of employment
and the same compensation, privileges,
benefits, fringe benefits, incentives or
allowances as a qualified able-bodied person.
NOTE: 5% of all casual emergency and
contractual positions in the Departments of
Social Welfare and Development; Health;
Education, Culture and Sports; and other
government agencies, offices or corporations
engaged in social development shall be
reserved for disabled persons (R.A. 7277).
INCENTIVES FOR EMPLOYERS
Incentives of Er who are employing disabled
workers
1. Entitled to an additional deduction,
from their gross income, equivalent to 25% of
the total amount paid as salaries and wages to
disabled persons: Provided, however, that such
entities present proof as certified by the DOLE
that disabled persons are under their employ:
Provided further, That the disabled employee is
accredited with the DOLE and the Department
of Health as to his disability, skills and
qualifications.
61
2. Private entities that improve or modify Employable only No restrictions on
their physical facilities in order to provide when necessary employment.
reasonable accommodation for disabled to prevent Must get equal
persons shall also be entitled to an additional curtailment of opportunity and no
deduction from their net taxable income, employment unfair competition.
equivalent to 50% of the direct costs of the opportunity.
improvements or modifications (Sec, 8, R.A.
7277).
Topic 4: Post-Employment
Persons with Disability vs. Differently abled
Persons EMPLOYER-EMPLOYEE
RELATIONSHIP
Persons with Existence of an employment relationship
Differently Abled
Disability
Employment relationship is determined by law
Refers to all
and not by contract (Insular Life Assurance Co.
suffering from
Ltd. v. NLRC, G.R. No. 119930, March 12,
restriction of
1998).
Earning capacity different abilities as
is impaired by a result of mental, NOTE: Taxi or jeepney drivers under the
age, or physical physical or sensory “boundary” system are Ee’s of the taxi or
or mental impairment to jeepney owners/operators; so also the
deficiency or perform an activity passenger bus drivers and conductors (Jardin v.
injury. in the manner or NLRC and Goodman Taxi, G.R. No. 119268,
within range February 23, 2000).
considered normal
for a human being. Er-Ee relation is a question of law
Covers only Covers all activities An employment contract which stipulates that
workers. or endeavors. there is no Er-Ee relationship between the
Basis: Basis: range of parties is invalid. The existence of an Er-Ee
loss/impairment activity which is relation is a question of law and being such, it
of earning normal for a human cannot be made the subject of agreement
capacity. being . (Tabas v. California Manufacturing Co., G.R.
Loss due to Restriction due to No. L-80680, January 26, 1989).
injury or physical impairment of FOUR –FOLD TEST
or mental defect mental/physical/
or age. sensory defect. Factors determining the existence of an
If hired, entitled employer-employee relationship
If qualified, entitled
to 75% of The four–fold test:
to all terms and
minimum
conditions as 1. Selection and engagement of the employee;
Subject to
qualified able- 2. Payment of wages;
definite periods
bodied person.
of employment.
3. Power of dismissal; and
4. Power of control (Azucena, Vol. I).

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LAONGLAAN NOTES 2017 62
Control test
Under the control test, there is an Er-Ee
relationship when the person for whom the
services are performed reserves the right to
control not only the end achieved but also the
manner and means used to achieve that end
(Television and Production Exponents Inc.
v.Servana,542 SCRA 578).
Kinds of control exercised by an Er
Not all forms of control are indicative of Er-Ee
relationship. Where the degree of control is
both the result and the means, there is an
employer-employee relationship. Where the
control is merely to results, there is only an
independent contractor relationship. If there is
a degree of control for compliance with a
government regulation –that is not the control
referred to (Insular life v. NLRC, G.R.
No.119930, March 12, 1998).
NOTE:However, in certain cases the control
test is not sufficient to give a complete picture
of the relationship between the parties, owing
to the complexity of such a relationship where
several positions have been held by the worker.
The better approach is to adopt the two-tiered
test(Francisco v. NLRC, G.R. No. 170087,
August 31, 2006).
This two-tiered test would provide us with a
framework of analysis, which would take into
consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially
appropriate in this case where there is no
written agreement or terms of reference to base
the relationship on and due to the complexity of
the relationship based on the various positions
and responsibilities given to the worker over
the period of the latter’s employment
(Francisco v. NLRC, G.R. No. 170087, August
31, 2006).
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LAONGLAAN NOTES 2017
Two-tiered test
1.The putative Er’s power to control the Ee
with respect to the means and methods by
which the work is to be accomplished; and
2.The underlying economic realities of the
activity or relationship.
Proper standard for economic dependence
The proper standard is whether the worker is
dependent on the alleged Er for his continued
employment in that line of business.
The determination of the relationship between
Er and Ee depends upon the circumstances of
the whole economic activity, such as:
1.The extent to which the services performed
are an integral part of the Er’s business
2.The extent of the worker’s investment in
equipment and facilities;
3.The nature and degree of control exercised by
the Er;
4.The worker’s opportunity for profit and loss;
5.The amount of initiative, skill, judgment, or
foresight required for the success of the
claimed independent enterprise;
6.The permanency and duration of the
relationship between the worker and Er; and
7.The degree of dependency of the worker upon
the Er for his continued employment in that
line of business(Francisco v. NLRC, G.R.
No. 170087, August 31, 2006).
Application of the four-fold test and the two-
tiered test
Present Philippine law recognizes a two-tiered
test. The first tier of the test is the four-fold test.
The second tier is the economics of the
relationship test. But the latter test is used if and
only if there is going to be harshness in the
results because of the strict application of the
four-fold test (Francisco v. NLRC, G.R. No.
170087, August 31, 2006)
63
KINDS OF EMPLOYMENT
PROBATIONARY EMPLOYMENT
Probationary employment
Employment where the Ee, upon his
engagement:
1.Is made to undergo a trial period
2.During which the Er determines his fitness to
qualify for regular employment,
3.Based on reasonable standards made known
to the Ee at the time of engagement (Sec 6,
Rule I, Book VI, IRR).
Characteristics of probationary employment
1 .It is an employment for a trial period;
2. It is a temporary employment status prior to
regular employment;
3. It arises through a contract with the
following elements:
a. The Ee must learn and work at a particular
type of work
b. Such work calls for certain qualifications
c. The probation is fixed
d. The Er reserves the power to terminate
during or at the end of the trial period
e.And if the Ee has learned the job to the
satisfaction of the Er, he becomes a
regular Ee.
Rules on probationary employment
1. Er shall make known to the Ee at the time he
is hired, the standards by which he will
qualify as a regular Ee;
2. An Ee allowed to continue work after the
probationary period shall be considered a
regular Ee;
3.During the probationary period, the Ee enjoys
security of tenure; his services can only be
terminated for just or authorized causes
Period of probationary employment
GR:It shall not exceed 6 months.
XPNs:
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LAONGLAAN NOTES 2017
1.Covered by an Apprenticeship or Learnership
agreement stipulating a different period
2.Voluntary agreement of parties (especially
when the nature of work requires a longer
period)
3.The Er gives the Ee a second chance to pass
the standards set (Mariwasa Manufacturing,
Inc. v. Leogardo, Jr., G.R. No. 74246,January
26, 1989).
4.When the same is required by the nature of
the work, e.g. the probationary period set for
professors, instructors and teachers is 3
consecutive years of satisfactory service
pursuant to DOLE Manual of Regulations for
Private Schools.
5.When the same is established by company
policy.
NOTE: Period of probation shall be reckoned
from the date the Ee actually started working
[Sec.6 (b), Rule I, Book VI, IRR]. Probationary
Ees may be dismissed for cause before end of
the probationary period.
After the lapse of the probationary period (6
months), Ee becomes regular.
Purpose of the probation period
The purpose of the probation period is to afford
the Er an opportunity to observe the fitness of a
probationary Ee at work.
Extension of the probationary period
beyond six months
The Er and Ee may validly agree to extend the
probationary period beyond six months. Such
an extension may be lawfully agreed upon,
despite the restrictive language of Art. 281. A
voluntary agreement extending the original
probationary period to give the Ee a second
chance to pass the probation standards
constitutes a lawful exception to the statutory
limit (Mariwasa Manufacturing, Inc. v.
64
Leogardo , Jr., G.R. No. 74246,January 26,
1989).
NOTE:By voluntarily agreeing to such an
extension, the Ee waived any benefit attaching
to the completion of the period if he still failed
to make the grade during the period of
extension [Mariwasa Mfg.Inc. v. Hon.
Leogardo, G.R. No. 74246, January 26,1989)
Instances when extension of probationary
period is allowed
Extension is allowed only when:
1. Nature of the job requires a longer period, or
2. If it is a company policy that the period of
probationary employment should be an
extended period
NOTE:The extension of period should always
be reasonable; Such that, the nature of the work
so requires and that it is the amount of time
required for an ordinary worker to learn the job.
Essence of the prohibition on double or
successive probation
The evil sought to be prevented is to discourage
scheming Ers from using the system of double
or successive probation to circumvent the
mandate of the law on regularization and make
it easier for them to dismiss their Ees (Holiday
Inn Manila v. NLRC, G.R. No. 109114,
September 14, 2003)
Instances when a probationary Ee is deemed
to be a regular Ee
1.If he is allowed to work after a probationary
period(Art. 281, LC).
2.If no standards, under which he will qualify
as a regular Ee, are made known to him at the
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LAONGLAAN NOTES 2017
time of his engagement [Sec. 6 (d), Rule I,
Book VI, IRR].
Grounds for terminating a probationary
employment
1.Just/authorized causes
2.When he fails to qualify as a regular Ee in
accordance with reasonable standards made
known by the Er to the Ee at the time of his
engagement (ICMC v. NLRC, G.R. No. 72222,
January 30, 1989) (see Art. 281, LC).
NOTE: If pre-termination of probationary
contract is due to the valid causes, the Er is not
liable to pay the monetary value of the
unexpired portion of the employment. While
probationary Ee’s do not enjoy permanent
status, they are afforded the security of tenure
protection of the Constitution. Consequently,
they cannot be removed from their positions
unless for cause. Such constitutional
protection, however, ends upon the expiration
of the period stated in their probationary
contract of employment. Thereafter, the parties
are free to renew the contract or not (CSA v.
NLRC, G.R. No. 87333,September 6, 1991).
Limitations on the Er’s power to terminate
a probationary employment contract
1.The power must be exercised in accordance
with the specific requirements of the contract;
2.If a particular time is prescribed, the
termination must be within such time and if
formal notice is required, then that form must
be used;
3.The Er’s dissatisfaction must be real and in
good faith, not feigned so as to circumvent the
contract or the law; and
4.There must be no unlawful discrimination in
the dismissal.
65
NOTE: The probationary Ee is entitled to activity exists [Sec. 5 (b), Rule I, Book VI,
procedural due process prior to dismissal from IRR].
service.
NOTE: Regularization is not a management
prerogative; rather, it is the nature of
employment that determines it. It is a mandate
Period of probationary employment of
of the law (PAL v. Pascua,G.R. No. 143258,
privateschool teachers
August 15, 2003).
The probationary employment of academic
Regular employment does not mean permanent
teaching personnel shall not be more than a
employment. A probationary Ee becomes a
period of 6 consecutive semesters or 9
regular Ee after 6 months. The service of
consecutive trimesters of satisfactory service,
aregular Ee may only be terminated for
as the case may be (Sec. 117 of the Manual of
just/authorized causes.
Regulations for Private Higher Education).
The practice of entering into employment
NOTE:An academic teaching personnel, who
contracts which would prevent the workers
does not possess the minimum academic
from becoming regular should be struck down
qualifications under Section35 and 36 of the
as contrary to public policy and morals
Manual of Regulations for Private Higher
(Universal Robina Corp. v. Catapang, G.R. No.
Education shall be considered as a part-time Ee,
164736, October 14, 2005).
and therefore cannot avail of the status and
privileges of a probationary employment. A
part-time Ee cannot acquire a regular
Tests to determine regular employment
permanent status, and hence, may be
terminated when a qualified teacher becomes 1.The primary standard of determining regular
available. (Manual of Regulations for Private employment is the reasonable connection
Higher Education) between the particular activity performed by
the Ee to the usual trade or business of the Er.
The test is whether the former is usually
REGULAR EMPLOYMENT necessary or desirable in the usual business or
trade of the Er (De Leon v. NLRC, G.R. No.
Regular employment
70705, August 21, 1989).
1.An employment shall be deemed to be regular
NOTE: The connection can be determined by
where the Ee has been engaged to perform
considering the nature of the work performed
activities which are usually necessary or
and its relation to the scheme of the particular
desirable in the usual business or trade of the
business or trade in its entirety (Highway Copra
Er, the provisions of written agreements to the
Traders v. NLRC, G.R. No. 108889, July 30,
contrary notwithstanding and regardless of the
1998).
oral agreements of the parties [Sec. 5 (a), Rule
I, Book VI, IRR]. 2.Also, the performance of a job for at least a
year is sufficient evidence of the job’s necessity
2.Any Ee who has rendered at least one year of
if not indispensability to the business. This is
service, whether such service is continuous or
the rule even if its performance is not
broken, shall be considered a regular Ee with
continuous and merely intermittent. The
respect to the activity in which he is employed
employment is considered regular, but only
and his employment shall continue while such

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 66
with respect to such activity and while such
activity exists (Universal Robina Corp. v.
Catapang, G.R. No. 164736, October 14,
2005).
NOTE: The status of regular employment
attaches to the casual Ee on the day
immediately after the end of his first year of
service. The law does not provide the
qualification that the Ee must first be issued a
regular appointment or must first be formally
declared as such before he can acquire a regular
status(Aurora Land Projects Corp. v. NLRC,
G.R. No. 114733, January 2, 1997).
Mode of compensation is not determinative
of regular employment
While the Ees mode of compensation was on a
“per piece basis” the status and nature of their
employment was that of regular Ees(Labor
Congress of the Phils v. NLRC, G.R. No.
123938, May 21,1998)-emplo.
NOTE: Seafarers cannot be considered as
regular Ees. Their employment is governed by
the contracts they sign every time they are hired
and their employment terminated when the
contract expires. Their employment is fixed for
a certain period of time (Ravago v. Esso
Eastern Maritime Ltd., G.R. No. 158324,
March 15, 2005).
In case of OFWs, Art280 of the LC does not
apply.
PROJECT EMPLOYMENT
Project
A "project" has reference to a particular job or
undertaking that may or may not be within the
regular or usual business of the Er. In either
case, the project must be distinct, separate and
identifiable from the main business of the Er,
and its duration must be determined or
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
determinable (PAL v. NLRC, G.R. No.
125792, November 9, 1998).
Project employment
Project employment is employment that has
been fixed for a specific project or undertaking
the completion for which has been determined
at the time of engagement of the Ee (Sec. 5[a],
Rule I, Book VI, IRR). The period is not the
determining factor, so that even if the period is
more than 1 year, the Ee does not necessarily
become regular.
NOTE: Where the employment of a project Ee
is extended long after the supposed project has
been finished, the Ees are removed from the
scope of project Ees and considered as regular
Ees.
Repeated hiring on a project-to-project basis is
considered necessary and desirable to the
business of the Er. The Ee is regular
(Maraguinot v.NLRC,G.R. No. 120969,July
22,1998).
Indicators of project employment
Either one or more of the following
circumstances, among others, may be
considered as indicators that an Ee is a project
Ee(Hanjin v. Ibañez, G.R. No. 170181, June 26,
2008).
a.The duration of the specific/identified
undertaking for which the worker is engaged is
reasonably determinable;
b.Such duration, as well as the specific
work/service to be performed, is defined in an
employment agreement and is made clear to the
Ee at the time of hiring;
NOTE: Absent any other proof that the project
Ees were informed of their status as such, it will
be presumed that they are regular Ees.
67
c.The work/service performed by the Ee is in
connection with the particular project/
undertaking for which he is engaged;
d. The Ee, while not employed and awaiting
engagement, is free to offer his services to any
other Er;
e. The termination of his employment in the
particular project/undertaking is reported to the
DOLE Regional Office having jurisdiction
over the workplace within 30 days following
the date of his separation from work, using the
prescribed form on Ee’s termination, dismissal
or suspensions;
f. An undertaking in the employment contract
by the Er to pay completion bonus to the project
Ee as practiced by most construction
companies
Requisites in determining whether an Eeis a
project Ee
1.The project Ee was assigned to carry out a
specific project or undertaking, and
2.The duration and scope of which were
specified at the time the Ee was engaged for
that project (Imbuido v. NLRC, G.R. No.
114734, May 31, 2000).
3.TheEe must have been dismissed every after
completion of his project or phase
4.Report to the DOLE of Ee’s dismissal on
account of completion of contract (Policy Inst.
No. 20; D.O. 19 1997)
Requisites to acquire regular Ee status of
project Ee or a member of work pool
The following must concur to acquire a status
of a regular Ee status:
1.There is a continuous rehiring of project Ee’s
even after cessation of a project; and2.The tasks
performed by the alleged “project Ee” are vital,
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LAONGLAAN NOTES 2017
necessary and indispensable to the usual
business or trade of the Er (D.M. Consunji, Inc.
v.JAMIN, G.R. No. 192514, April 18, 2012).
NOTE: The length of time during which the Ee
was continuously re-hired is not controlling,
but merely serves as a badge of regular
employment. Enero and Maraguinot have been
employed for a period of not less than 2 years
and have been involved in at least 18 projects.
These facts are the basis in considering them as
regular Ees of the company.
A work pool may exist although the workers in
the pool do not receive salaries and are free to
seek other employment during temporary
breaks in the business, provided that the worker
shall be available when called to report for a
project. Although primarily applicable to
regular seasonal workers, this set-up can
likewise be applied to project workers insofar
as the effect of temporary cessation of work is
concerned. This is beneficial to both the Er and
Ee for it prevents the unjust situation of
“coddling labor at the expense of capital” and
at the same time enables the workers to attain
the status of regular Ees (Maraguinot
v.NLRC,G.R. No. 120969, January 22, 1998).
“Day certain” rule
It states that a project employment that ends on
a certain date does not end on an exact date but
upon the completion of the project.
Entitlement to separation pay
GR:Project Ees are not entitled to separation
pay if their services are terminated as a result
of the completion of project.
XPN:If the projects they are working on have
not yet been completed when their services are
terminated; project Ees also enjoy security of
tenure during the limited time of their
employment (De Ocampo v.NLRC, G.R. No.
81077, June 6, 1990).
68
SEASONAL EMPLOYMENT
Seasonal employment
Employment where the job, work or service to
be performed is seasonal in nature and the
employment is for the duration of the season
[Sec.5 (a), Rule I, Book VI, IRR]
An employment arrangement where an Ee is
engaged to work during a particular season on
an activity that is usually necessary or desirable
in the usual business or trade of the Er.
NOTE: For Seasonal Ees, their employment
legally ends upon completion of the project or
the season. The termination of their
employment cannot and should not constitute
an illegal dismissal (Mercado v. NLRC, G.R.
No. 79869, September 5, 1991).
One-year duration on the job is pertinent in
deciding whether a casual Ee has become
regular or not, but it is not pertinent to a
Seasonal or Project Ee. Passage of time does
not make a seasonal worker regular or
permanent (Mercado v. NLRC, G.R. No.
78969, September 5, 1991).
During off-season, the relationship of Er-Ee is
not severed; the Seasonal Ee is merely
considered on LOA without pay. Seasonal
workers whoare repeatedly engaged from
season to season performing the same tasks are
deemed to have acquired regular employment
(Hacienda Fatima v. National Federation of
Sugarcane Workers-Food and General Trade,
G.R. No. 149440, January 28, 2003).
Entitlement to separation pay
When the business establishment is sold which
effectively terminates the employment of the
seasonal Ees, the latter would be entitled to
separation pay.
Seasonal Ees as regular Ees
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Seasonal Ees can be considered regular Ees.
The fact that Seasonal Ees do not work
continuously for one whole year but only for
the duration of the season does not detract from
considering them in regular employment.
Seasonal workers who are called to work from
time to time and are temporarily laid off during
off-season are not separated from service in
that period, but merely considered on leave
until re-employed.
If the Ee has been performing the job for at least
a year, even if the performance is not
continuous and merely intermittent, the law
deems repeated and continuing need for its
performance as sufficient evidence of the
necessity if not indispensability of that activity
to the business. Hence, the employment is
considered regular, but only with respect to
such activity and while such activity exists
(Benares v. Pancho, G.R. No. 151827, April 29,
2005).
But one-year duration on the job is pertinent in
deciding whether a casual Ee has become
regular or not, but it is not pertinent to a
Seasonal or Project Ee. Passage of time does
not make a seasonal worker regular or
permanent (Mercado v. NLRC, G.R. No.
78969, September 5, 1991).
CASUAL EMPLOYMENT
Casual employment
1. It is an employment where the Ee is engaged
in an activity which is not usually necessary or
desirable in the usual business or trade of the
Er, Provided: such employment is neither
Project nor Seasonal (Art. 281, LC).
NOTE: But despite the distinction between
regular and casual employment, every Ee shall
be entitled to the same rights and privileges,
and shall be subject to the same duties as may
be granted by law to regular Ees during the
period of their actual employment.
69
2.An Ee is engaged to perform a job, work or
service which is merely incidental to the Job is coterminous No termination
business of the Er, and such job, work or with report
service is for a definite period made known to a specific project or required.
the Ee at the time of engagement [Sec. 5 (b), phase thereof. It is
Rule I, Book VI, IRR] required that a
termination report be
Casual Ee becoming a regular Ee submitted at the
nearest employment
If he has rendered at least 1 year of service, office upon
whether such service is continuous or broken, completion
he is considered as regular Ee with respect to of the project or
the activity in which he is employed and his phase.
employment shall continue while such activity
exists.
A casual Ee is only casual for 1 year, and it is FIXED TERM EMPLOYMENT
the passage of time that gives him a regular
Term employment
status (KASAMMA-CCO v. CA, G.R. No.
159828, April 19, 2006). The purpose is to give A contract of employment for a definite period
meaning to the constitutional guarantee of terminates by its own terms at the end of such
security of tenure and right to self-organization period (Brent School v. Zamora, G.R. No. L-
(Mercado v. NLRC, G.R. No. 79868, 48494, February 5, 1990).
September 5, 1991)
NOTE: Term employment is not a
PROJECT EE CASUAL EE circumvention of the law on security of tenure
Employed for a Engaged to perform if it follows the requisites laid down by the
specific a Brent ruling (Romares v. NLRC, G.R. No.
project or job, work or service 122327, August 19, 1998).
undertaking which is incidental to
the completion or the business of the Er Decisive determinant in term employment
termination of which and the definite
is period It is the day certain agreed upon by the parties
determined at the of his employment is for the commencement and the termination of
time made known to him their employment relation.
of his engagement at
Fixed term employment
the time of his
Engagement. It is an employment where a fixed period of
employment was agreed upon:
His work need not be His continued
incidental to the employment after the 1. Knowingly and voluntarily by the parties,
business of the lapse one year makes
2. Without any force, duress or improper
Er and Him a regular Ee.
his employment may pressure being brought to bear upon the Ee and
exceed one year usiness of Er (Philips Semiconductor v.
without necessarily Fadriquela, G.R. No. 141717, April 14, 2004).
making him a regular
Ee.

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JOB CONTRACTING
ARTS. 106 –109, LABOR CODE
Job contracting (independent contracting/
subcontracting)
"Contracting" or "subcontracting" is an
arrangement whereby a principal agrees to put
out or farm out with a contractor the
performance or completion of a specific job,
work or service within a definite or
predetermined period, regardless of whether
such job, work or service is to be performed or
completed within or outside the premises of the
principal (DO 18-A).
Conditions in order to be considered as
legitimate job contracting or subcontracting
1. The contractor must be registered in
accordance with these Rules and carries a
distinct and independent business and
undertakes to perform the job, work or service
on its own responsibility, according to its own
manner and method, and free from control and
direction of the principal in all matters
connected with the performance of the work
except as to the results thereof;
2. The contractor has substantial capital and/or
investment; and
3. The Service Agreement ensures compliance
with all the rights and benefits under Labor
Laws (Sec. 4, DO 18-A).
Labor-only contracting
There is labor-only contracting when:
1.The contractor does not have substantial
capital or investments in the form of tools,
equipment, machineries, work premises,
among others, and the Ees recruited and placed
are performing activities which are usually
necessary or desirable to the operation of the
company, or directly related to the main
business of the principal within a definite or
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
predetermined period, regardless of whether
such job, work or service is to be performed or
completed within or outside the premises of the
principal; or
2. The contractor does not exercise the right to
control over the performance of the work of the
Ee(Sec. 6, DO 18-A).
Factors to consider in determining whether
contractor is carrying on an independent
business
1. Nature and extent of work
2. Skill required
3. Term and duration of the relationship
4. Right to assign the performance of specified
pieces of work
5. Control and supervision of worker
6. Power of Er to hire, fire and pay wages
7. Control of the premises
8. Duty to supply premises, tools, appliances,
materials and labor
9. Mode, manner and terms of payment
(Vinoya v. NLRC, G.R. No. 126586, February
03, 2000).
NOTE: Individuals with special skills,
expertise or talent enjoy the freedom to offer
their services as independent contractors. An
individual like an artist or talent has a right to
render his services without any one controlling
the means and methods by which he performs
his art or craft (Sonza v. ABS-CBN, G.R. No.
138051, June 10, 2004).
Conditions of permissible job contracting
1.The labor contractor must be duly licensed by
the appropriate Regional Office of the DOLE
2.Thereshould be a written contract between
the labor contractor and his client-Er that will
assure the Ees at least the minimum labor
71
standards and benefits provided by existing
laws.
NOTE: The Ees of the contractor or
subcontractor shall be paid in accordance with
the provisions of the LC(Art. 106, LC).
Parties in contracting and subcontracting
1. Contractor/subcontractor–Any person or
entity, including a cooperative, engaged in a
legitimate contracting or subcontracting
arrangement.
2.Contractual Ee–One who is employed by a
contractor or subcontractor to perform or
complete a job, work, or service pursuant to a
service agreement with a principal (D.O. 18-
A).
3.Principal–Any Er who puts out or farms out a
job, service, or work to a contractor or
subcontractor.
Relationship arising from contractual
arrangements
There is a trilateral relationship between the
principal, contractor and Ee. There exists a
contractual relationship between the principal
and the contractor or subcontractor to its Ees.
DEPARTMENT ORDER NO. 18-A
Rights of a contractual Ee
They shall be entitled to all the rights and
privileges as provided for in the LC, as
amended, to include the following:
1. Safe and healthful working conditions;
2. SIL, rest days, OT pay, holiday pay,
13thmonth pay and separation pay;
3. Retirement benefits under SSS or retirement
plans of the contractor;
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LAONGLAAN NOTES 2017
4. Social security and welfare benefits;
5. Self-organization, CBA and peaceful
concerted actions; and
6. Security of tenure (Sec. 8, DO 18-A)
Effects of termination of Contractual Ee to
separation pay and other benefits
1. If caused by the pre-termination of the
Service Agreement not due to authorized
causes under Art. 283 of LC–The right of Ee to
unpaid wages and other unpaid benefits
including unremitted legal mandatory
contributions shall be borne by the party at
fault, without prejudice to the solidary liability
of the parties to the Service Agreement.
2.If the termination results from the expiration
of the service agreement or completion of the
phase of the job–The Ee may opt for payment
of separation benefits as may be provided by
law or the Service Agreement, without
prejudice to his/her entitlement to the
completion bonuses or other emoluments,
including retirement benefits whenever
applicable.
Principal as the Erof the contractual Ee
When:
1.There is labor-only contracting
2.The contracting arrangement falls within the
prohibited acts
Furnishing a bond for wages due to the Ees
in case the contractor or subcontractor fails
to pay the same
The Er or indirect Er may require the contractor
or subcontractor to furnish a bond equal to the
cost of labor under contract to answer for the
72
wages due to Ees in case the contractor or
subcontractor fails to pay the same Liability is limited
(shall
Liability of the principal be solidarily liable Liability extends to
The principal shall be solidarily liable with the with Er only when all
the Er fails to comply those provided under
contractor in the event of any violation of any
with the Labor Standards
provision of the LC, including the failure to pay
requirements as to law
wages. This will not prevent the principal from unpaid wages and
claiming reimbursement from the contractor. other
Essence of the prohibition on labor-only labor standards
violations)
contracting
It gives rise to confusion as to who is the real Permissible, subject
Er of the workers and who is liable to their Prohibited by Law only to certain
claims. It also deprives workers of the conditions
opportunity to become regular Ees.
Has no substantial The contractor has
Bases of the state in prohibiting labor-only capital substantial capital or
contracting or investment investment

1. The Constitution, which provides that the

State shall protect labor and promote its
welfare, and shall guarantee basic labor rights Grounds for cancellation of registration of
including just and humane terms and contractors or subcontractors
conditions of employment and the right to self- 1. Misrepresentation of facts in the application;
organization.
2. Submission of a falsified or tampered
2. Art. 106 of the LC, which allows the SLE to application or supporting documents to the
distinguish between labor-only contracting and application for registration;
job contracting to prevent any violation or
circumvention of the LC. 3. Non-submission of Service Agreement
between the principal and the contractor when
required to do so;
Labor-only contracting v. Job contracting 4. Non-submission of the required semi-annual
report;
LABOR-ONLY JOB 5. Findings through arbitration that the
CONTRACTING CONTRACTING
contractor has engaged in labor-only
Er is treated as direct No Er-Ee
contracting and/or the prohibited activities;
Er of the person relationship exist
recruited in all between the Er and 6. Non-compliance with labor standards and
instance the contractor's Ees working conditions;
except when the
contractor or 7. Findings of violation of Sec. 8 (Rights of
subcontractor fails to Contractor's Employees) or Sec. 9 (Required
pay the wages of the Contracts of DO 18-A)
Ees

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LAONGLAAN NOTES 2017 73
8. Non-compliance with SSS, the HDMF, Pag- It is used to determine the relationship of the
ibig, Philhealth, and ECC laws; and parties if it is independent contracting or labor-
only contracting. This considers the nature of
9. Collecting any fees not authorized by law
the business, substantial capital and the control
and other applicable rules and regulations (Sec.
exercised.
23, DO 18-A).
FACTOR IndependentLabor-Only
TEST Contractor Contractor
EFFECTS OF LABOR-ONLY Nature of The business
No separate
CONTRACTING Business of business
an independent
Effects of finding that there is labor-only independentand distinct
contracting contractor is
from the
entirely principal.
A finding that a contractor is a “labor-only” separate and
May be a
contractor is equivalent to declaring that there “cabo” or an
distinct from
is an Er-Ee relationship between the principal the business
in-house
and the Ees of the “labor-only” contractor of agency
(Assoc. Anglo-American Tobacco Corp. v. the principal
prohibited
Clave, G.R. No. 50915, August 30, 1990). under DO
18-0
NOTE: The principal is considered the “direct” Substantial Has The only
Er of the contractual Ees for purposes of capital OR substantial investment is
enforcing the provisions of the LCand other investment capital or bringing
social legislations. investment. individuals
to work
The contractor/subcontractor is deemed only to Control Control as to Control as to
be the agent of the principal. only BOTH
The principal is solidarily liable with the RESULTS results and
but not the mean
contractor/subcontractor in the event of any
means
violation of any provision of the LC, including
Effect VALID VOID
failure to pay wages.
TRILATERAL RELATIONSHIP IN JOB Right to control
CONTRACTING
It refers to the right reserved to the person for
Trilateral relationship (in legitimate whom the services of the contractual workers
contracting or subcontracting arrangement) is are performed, to determine not only the end to
when: be achieved, but also the manner and means to
1.Er-Ee relationship between the contractor be used in reaching that end (D.O. 18-A)
and the Ees it engaged to perform the specific
job, work or service being contracted; and
TERMINATION OF EMPLOYMENT
2.Contractual relationship between the
principal and the contractor (Sec. 5, DO 18-A). Authorized causes of termination by the Er:
1. Installation of labor-saving devices
Factor Test
(automation/robotics)

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 74
2. Redundancy (superfluity in the performance
of a particular work) – Exists where the
services of an Ee are in excess of what is
reasonably demanded by the actual
requirements of the enterprise (Wiltshire File
Co., Inc. v. NLRC, G.R. No. 82249, February
7, 1991).
NOTE: The redundancy should not have been
created by the Er.
3. Reorganization
NOTE: An Er is not precluded from adopting
a new policy conducive to a more economical
and effective management, and the law does
not require that the Er should be suffering
financial losses before he can terminate the
services of the Ee on the ground of redundancy
(DOLE Phil., Inc. v. NLRC, G.R. No. L-55413,
July 25, 1983).
4. Retrenchment – Cutting of expenses and
includes the reduction of personnel; It is a
management prerogative, a means to protect
and preserve the Er’s viability and ensure his
survival. To be an authorized cause it must be
effected in good faith and for the retrenchment,
which is after all a drastic recourse with serious
consequences for the livelihood of the Ee’s or
otherwise laid-off.
NOTE: The phrase “to prevent losses” means
that retrenchment or termination from the
service of some Ees is authorized to be
undertaken by the Er sometime before the
anticipated losses are actually sustained or
realized. Evidently, actual losses need not set in
prior to retrenchment (Cajucom VII v. TP Phils
Cement Corp., et al, G.R. No. 149090,
February 11, 2005).
5. Closing or cessation of operation of the
establishment or undertaking – Must be done
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
in good faith and not for the purpose of
circumventing pertinent labor laws.
6. Disease –Must be incurable within 6 months
and the continued employment is prohibited by
law or prejudicial to his health as well as to the
health of his co-Ees with a certification from
the public health officer that the disease is
incurable within 6 months despite due to
medication and treatment.
Other authorized causes
1. Total and permanent disability of Ee
2. Valid application of union security clause
3. Expiration of period in term of employment
4. Completion of project in project employment
5. Failure in probation
6. Relocation of business to a distant place
7. Defiance of return-to work-order
8. Commission of Illegal acts in strike
9. Violation of contractual agreement
10. Retirement
Steps required in termination of an Ee’s
employment for authorized causes:
1. Written Notice to DOLE 30 days prior to the
intended day of termination.
Purpose: To enable it to ascertain the veracity
of the cause of termination.
2. Written notice to Ee concerned 30 days prior
the intended date of termination.
3. Payment of separation pay - Serious
business losses do not excuse the Er from
complying with the clearance or report required
in Art. 283 of the LC and its IRR before
terminating the employment of its workers. In
the absence of justifying circumstances, the
failure of the Er to observe the procedural
requirements under Art. 284 of the LC
taints their actuations with bad faith if the lay-
off was temporary but then serious business
75
losses prevented the reinstatement of
respondents, the Er’s should have complied
with the requirements of written notice.
Requisites of a valid redundancy:
1. Written notice served on both the Ees and the
DOLE at least 1 month prior to separation
from work
2. Payment of separation pay equivalent to at
least 1 month pay or at least 1 month pay for
every year of service, whichever is higher
3. Good faith in abolishing redundant position
4. Fair and reasonable criteria in ascertaining
what positions are to be declared redundant:
a. Less preferred status, e.g. temporary Ee
b. Efficiency and
c. Seniority
Q: Ong, a Sales Manager of Wiltshire File
Co., Inc., was informed of the termination of
his employment due to redundancy upon
returning from a trip abroad. Ong
maintains that there can be no redundancy
since he was the only person occupying his
position in the company.
Is there redundancy even though Ong was
the only one occupying his position?
A: Yes. Redundancy in an Er’s personnel does
not necessarily or even ordinarily refer to
duplication of work. The characterization of
Ong’s services as no longer necessary or
sustainable and therefore properly terminable,
was an exercise of business judgment on the
part of Wiltshire. Furthermore, a position is
redundant where it is superfluous, and
superfluity of a position or positions may be the
outcome of a number of factors, such as over
hiring of workers, decreased volume of
business, or dropping of a particular product
line or service activity previously
manufactured or undertaken by the enterprise.
The Er has no legal obligation to keep in its
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
payroll more Ees that are necessary for the
operation of its business (Wiltshire File Co.,
Inc. v. NLRC, G.R. No. 82249, February 7,
1991).
NOTE: The losses which the company may
suffer or is suffering may be proved by
financial statements audited by independent
auditors (Asian Alcohol Corporation v. NLRC,
G.R. No. 131108, March 25, 1999).
Retrenchment is a means of last resort because
in the normal course of business losses are
expected. Er must have taken all measures
necessary to prevent losses and it is the last
measure when you touch the work force.
Requisites of a valid retrenchment:
1. Written notice served on both the Ee and the
DOLE at least 1 month prior to the intended
date of retrenchment
2. Payment of separation pay equivalent to at
least one month pay or at least 1/2 month
pay for every year of service, whichever is
higher
3. Good faith
4. Proof of expected or actual losses
5. The Er used fair and reasonable criteria in
ascertaining who would be retained among
the Ees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship
of certain workers (FASAP v. PAL, G.R. No.
178083, October 2, 2009).
Criteria in selecting Ees to be retrenched:
There must be fair and reasonable criteria to be
used in selecting Ees to be dismissed such as:
1. Less preferred status;
2. Efficiency rating;
3. Seniority (Phil. Tuberculosis Society, Inc. v.
National Labor Union, G.R. No. 115414,
August 25, 1998).
“Last In First Out” (LIFO) Rule
76
It applies in the termination of employment in
the line of work. What is contemplated in the
LIFO rule is that when there are two or more
Ees occupying the same position in the
company affected by the retrenchment
program, the last one employed will necessarily
be the first one to go (Maya Farms Ees’
Organization v. NLRC, G.R. No. 106256,
December 28, 1994).
Q: Is the seniority rule or "last in first out"
policy to be strictly followed in effecting a
retrenchment or redundancy program?
(2001 Bar Question)
A: No. In Asian Alcohol Corp., the SC stated
that with regard the policy of "first in, last out"
in choosing which positions to declare as
redundant or whom to retrench to prevent
further business losses, there is no law that
mandates such a policy. The reason is simple
enough. A host of relevant factors come into
play in determining cost efficient measures and
in choosing the Ees who will be retained or
separated to save the company from closing
shop. In determining these issues, management
plays a pre-eminent role. The characterization
of positions as redundant is an exercise of
business judgment on the part of the Er. It will
be upheld as long as it passes the test of
arbitrariness.
Q: Philippine Tuberculosis Society, Inc.
retrenched 116 Ees after incurring deficits
amounting to 9.1 million pesos. Aside from
retrenching its Ees, the company also
implemented cost cutting measures to
prevent such losses for increasing and
minimizing it. The NLRC ruled that the
retrenchment was not valid on the ground
that the Society did not take the seniority
rule into account in the selection of the
retrenchment. Was the retrenchment done
by the Society not valid for its failure to
follow the criteria laid down by law?
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
A: No. The Society terminated the employment
of several workers who have worked with the
Society for great number of years without
consideration for the number of years of service
and their seniority indicates that they had been
retained for such a long time because of loyal
and efficient service. The burden of proving the
contrary rests on the Society (Phil.
Tuberculosis Society, Inc. v. National Labor
Union, G.R. No. 115414, August 25, 1998).
Q: Due to mounting losses the former
owners of Asian Alcohol Corporation sold
its stake in the company to Prior Holdings.
Upon taking control of the company and to
prevent losses, Prior Holdings implemented
a reorganization plan and other costsaving
measures including the retrenchment of 117
Ees some of which are members of the union
and the majority held by non-union
members. Some retrenched workers filed a
complaint for illegal dismissal alleging that
the retrenchment was a
subterfuge for union busting activities. Was
the retrenchment made by Asian Alcohol
valid and justified?
A: Yes. Even though the bulk of the losses were
suffered under the old management and
continued only under the new management,
ultimately the new management of Prior
Holdings will absorb such losses. The law
gives the new management every right to
undertake measures to save the company from
bankruptcy (Asian Alcohol Corp. v. NLRC,
G.R. No. 131108, March 25, 1999).
Redundancy v. Retrenchment
Redundancy does not involve losses or the
closing or cessation of operations of the
establishment.
On the other hand, retrenchment involves
losses, closures or cessation of operations of
77
establishment or undertaking due to serious
business losses or financial reverses.
Requisites of a valid closure
1. Written notice served on both the Ees and the
DOLE at least 1 month prior to the intended
date of closure
2. Payment of separation pay equivalent to at
least one month pay or at least 1/2 month
pay for every year of service, whichever is
higher, except when closure is due to serious
business losses
3. Good faith
4. No circumvention of the law
5. No other option available to the Er
Test for the validity of closure or cessation of
establishment or undertaking
The ultimate test of the validity of closure or
cessation of establishment or undertaking is
that it must be bonafide in character. And the
burden of proving such falls upon the Er
(Capitol Medical Center, Inc. v. Dr. Meris,
G.R. No. 155098, September 16, 2005).
Payment of separation pay in case of closure
Payment of separation pay is required only
where closure is neither due to serious business
losses nor due to an act of Government (North
Davao Mining Corp v. NLRC, G.R. No.
112546, Mar. 13, 1996; NFL v. NLRC, G.R.
No. 127718, March 2, 2000).
NOTE: Closure contemplated is a unilateral
and voluntary act on the part of the Er to close
the business establishment.
When the closure of the business is due to
serious business loss- there is no obligation to
pay separation pay.
Where closure of business is by compulsion of
law (e.g.: the land where the building is
situated was declared covered by the
Comprehensive Agrarian Reform Law) -
closure of business is not attributed to Er’s
will thus, no obligation to pay.
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Q: Galaxie Steel Corp. decided to close down
because of serious business loses. It filed a
written notice with the DOLE informing its
intended closure and the termination of
employment. It posted the notice of closure
on the corporate bulletin board.
1. Does the written notice posted by Galaxie
on the bulletin board sufficiently comply
with the notice requirement under Art.
283 of the LC?
2. Are Galaxie Ees entitled to separation
pay?
A: 1. No. In order to meet the purpose, service
of the written notice must be made individually
upon each and every Ee of the company.
However, the Court held that where the
dismissal is for an authorized cause,
noncompliance with statutory due process
should not nullify the dismissal, or render it
illegal, or ineffectual. Still, the Er should
indemnify the Ee, in the form of nominal
damages, for the violation of his right to
statutory due process (Galaxie Steel Workers
Union v. NLRC, G.R. No. 165757, October 17,
2006).
2. No. Galaxie had been experiencing serious
financial losses at the time it closed business
operations. Art. 283 of the LC governs the grant
of separation benefits "in case of closures or
cessation of operation" of business
establishments "not due to serious business
losses or financial reverses." Where, the
closure then is due to serious business losses,
the LC does not impose any obligation upon the
Er to pay separation benefits (Galaxie Steel
Workers Union v. NLRC, G.R. No. 165757,
October 17, 2006).
Q: Rank-and-file workers of SIMEX filed a
petition for direct certification and affiliated
with Union of Filipino Workers (UFW).
Subsequently, 36 workers of the company’s
78
“lumpia” department and 16 other workers
from other departments were effectively
locked out when their working areas were
cleaned out. The workers through UFW
filed a complaint for unfair labor practices
against the company. SIMEX then filed a
notice of permanent shutdown/total closure
of all units of operation in the establishment
with the DOLE allegedly due to business
reverses brought about by the enormous
rejection of their products for export to the
United States.
Was the closure warranted by the alleged
business reverses?
A: No. The closure of a business establishment
is a ground for the termination of the services
of any Ee unless the closing is for the purpose
of circumventing the provisions of the law. But,
while business reverses can be a just cause for
terminating Ees, they must be sufficiently
proved. In this case, the audited financial
statement of SIMEX clearly indicates that they
actually derived earnings. Although the
rejections may have reduced their earnings they
were not suffering losses. There is no question
that an Er may reduce its work force to prevent
losses but it must be serious, actual and real
otherwise this ground for termination would be
susceptible to abuse by scheming Ers who
might be merely feigning business losses or
reverses in their business ventures to ease out
Ees (Union of Filipino Workers v. NLRC, G.R.
No. 90519, March 23, 1992).
Q: Carmelcraft Corporation closed its
business operations allegedly due to losses of
Php 1, 603.88 after the Carmelcraft
Employees Union filed a petition for
certification election. Carmelcraft Union
filed a complaint for illegal lockout and ULP
with damages and claim for employment
benefits. Were the losses incurred by the
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
company enough to justify closure of its
operations?
A: No. The determination to cease operations
is a prerogative of management that is usually
not interfered with by the State as no business
can be required to continue operating at a loss
simply to maintain the workers in employment.
That would be a taking of property without due
process of law which the Er has a right to resist.
But where it is manifest that the closure is
motivated not by a desire to avoid further losses
but to discourage the workers from organizing
themselves into a union for more effective
negotiations with management, the State is
bound to intervene. The losses of less than Php
2,000 for a corporation capitalized at Php 3
million cannot be considered serious enough to
call for the closure of the company
(Carmelcraft Corp. v. NLRC, G.R. No. 90634-
35, June 6, 1990).
Q: Is the transferee of the closed corporation
required to absorb the Ees of the old
corporation?
A:
GR: There is no law requiring a bona fide
purchaser of assets of an on-going concern to
absorb in its employ the Ee’s of the latter
except when the transaction between the parties
is colored or clothed with bad faith (Sundowner
Dev’t Corp. v. Drilon, G.R. No. 82341,
December 6, 1989).
XPNs:
1. Where the transferee was found to be merely
an alter ego of the different merging firms
(Filipinas Port Services, Inc. v. NLRC, G.R.
No. 97237, August 16, 1991).
2. Where the transferee voluntarily agrees to do
so (Marina Port Services, Inc. v. Iniego, G.R.
No. 77853, January 22, 1990).
Q: Marikina Dairy Industries, Inc. decided
to sell its assets and close operations on the
79
ground of heavy losses. The unions alleged establishment or to serious business losses
that the financial losses were imaginary and close or abolish a to be regarded as an
the dissolution was a scheme maliciously department or authorized cause for
designed to evade its legal and social section thereof for terminating Ees, it
obligations to its Ees. The unions want the economic reasons, must be proven that the
buyers of the corporations assets restrained such as to losses incurred are
minimize substantial and actual
to operate unless the members of the unions
expenses and or reasonably
are hired to operate the plant under the
reduce imminent; that the
terms and conditions specified in the capitalization. same increased through
collective bargaining agreements. a period of time; and
Is the buyer of a company’s assets required that the condition of the
to absorb the Ees of the seller? company is not likely
A: No. There is no law requiring that the to improve in the near
purchaser of a company’s assets should absorb future.
its Ees and the most that can be done for
reasons of public policy and social justice was Does not obligate LC provides for the
to direct that buyers of such assets to give the Er for the payment of separation
payment of package in case of
preference to the qualified separated Ees in the
separation retrenchment to
filling up of vacancies in the facilities of the package if there is prevent losses.
buyer (MDII Supervisors & Confidential Ees closure of business
Ass’n (FFW) v. residential Assistant on Legal due to serious
Affairs, G.R. Nos. L- 45421-23, September 9, losses.
1977).

Closure v. Retrenchment Disease as a ground for dismissal

When the Ee suffers from a disease, and:
CLOSURE RETTRENCHMENT
1. His continued employment is prohibited by
It is the reversal of Is the reduction of law or prejudicial to his health or to the health
fortune of the Er personnel for the of his coEes (Sec.8, Rule I, Book VI, IRR).
whereby there is a purpose of cutting
complete cessation down 2. With a certification by competent public
of business on costs of operations health authority that the disease is incurable
operations to in terms of salaries and within 6 months despite due medication and
prevent further wages resorted to by an treatment (Solis v. NLRC, GR No. 116175,
financial drain Er because of losses in October 28, 1996).
upon an Er who operation of a business NOTE: The requirement for a medical
cannot pay occasioned by lack of
certification cannot be dispensed with;
anymore his Ees work and considerable
since business has reduction in the otherwise, it would sanction the unilateral and
already stopped. volume of business. arbitrary determination by the Er of the gravity
or extent of the Ee’s illness and thus defeat the
One of the In the case of public policy on the protection of labor (Manly
prerogatives of retrenchment, Express v. Payong, G.R. No. 167462, October
management is the however, for the 25, 2005).
decision to close closure of a business or
the entire a department due to

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 80
Procedure in terminating an Ee’s
employment on the ground of disease
1. The Er shall not terminate his employment
unless:
a. There is a certification by a competent public
health authority
b. That the disease is of such nature or at such
a stage that it cannot be cured within a
period of 6 months even with proper
medical treatment.
2. If the disease or ailment can be cured within
the period, the Er shall not terminate the Ee’s
employment but shall ask the Ee to take a leave.
The Er shall reinstate such Ee to his former
position immediately upon the restoration of
his normal health (Sec. 8, Rule I, Book VI, IRR).
Entitlement to reinstatement
An Ee suffering from a disease is entitled to a
reinstatement. Provided he presents a
certification by a competent public health
authority that he is fit to return to work (Cebu
Royal Plant v. Deputy Minister, G.R. No. L-
58639, August 12, 1987).
Medical Certificate as mandatory
requirement
The requirements of a medical certificate is
mandatory. Only where there is a prior
certification from a competent public authority
that the disease afflicting the Ee sought to be
dismissed is of such nature or at such stage that
it cannot be cured within 6 months even with
proper medical treatment that the latter could
be validly terminated from his job (Tan v.
NLRC, G. R. No. 116807, April 14, 1997).
NOTE: Termination from work on the sole
basis of actual perceived or suspected HIV
status is deemed unlawful (Sec. 35, R.A. 8504
HIV/AIDS Law).
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Q: Anna Ferrer has been working as a
bookkeeper at Great Foods, Inc., which
operates a chain of high-end restaurants
throughout the country, since 1970 when it
was still a small eatery at Binondo. In the
early part of the year 2003, Anna, who was
already 50 years old, reported for work after
a week-long vacation in her province. It was
the height of the SARS scare, and
management learned that the first
confirmed SARS death case in the Phils, a
“balikbayan” nurse from Canada, is a
townmate of Anna. Immediately, a
memorandum was issued by management
terminating the services of Anna on the
ground that she is a probable carrier of
SARS virus and that her continued
employment is prejudicial to the health of
her co-Ees. Is the action taken by the Er
justified? (2004 Bar Question)
A: The Er’s act of terminating the employment
of Anna is not justified. There is no showing
that said Ee is sick with SARS, or that she
associated or had contact with the deceased
nurse. They are merely town mates.
Furthermore, there is no certification by a
competent public health authority that the
disease is of such a nature or such a stage that
it cannot be cured within a period of 6 months
even with proper medical treatment
(Implementing Rules, Book VI, Rule 1, Sec. 8,
LC).
Rules on separation pay with regard to each
cause of termination:
CAUSE OF SEPARATION PAY
TERMINATION
Automation Equivalent to at least
1 month pay or at
least 1 month pay for
every year of service,
whichever is higher
81
 Redundancy Equivalent to at least
1 month pay or at
least 1 month pay for
every year of service,
whichever is higher
Retrenchment Equivalent to 1
month pay or at least
½ month pay for
every year or service
Closures or Equivalent to at least
cessation of 1 month pay or at
operation not due to least 1 month pay for
serious business every year of service
losses/financial (if due to severe
reverses financial losses, no
separation pay
Disease Equivalent to at least
1 month pay or at
least ½ month pay for
every year of service,
whichever is higher
date of retrenchment – and the fact that the Ees
were already on temporary lay-off at the time
notice should have been given to them is not an
excuse to forego the 1-month written notice
(Sebuguero v. NLRC, G.R. No.115394,
September 27, 1995).
Q: DAP Corp. ceased its operation due to the
termination of its distribution agreement
with Int’l Distributors Corp. which resulted
in its need to cease its business operations
and to terminate the employment of its Ees.
Marcial et al. filed a complaint for illegal
dismissal and for failure to give the Ees
written notices regarding the termination of
their employment. On the other hand, DAP
claims that their Ees actually knew of the
termination therefore the written notices
were no longer required. Are written notices
dispensed with when the Ees have actual
knowledge of the redundancy?

NOTE: A fraction of at least 6 months shall be
considered 1 whole year.
There is no separation pay when the closure is
due to an act of the Government.
Purpose of the two notices served to the Ee
and the DOLE 1 month prior to termination
1. To give the Ees some time to prepare for the
eventual loss of their jobs and their
corresponding income, look for other
employment and ease the impact of the loss of
their jobs.
2. To give the DOLE the opportunity to
ascertain the veracity of the alleged cause of
termination (Phil. Telegraph & Telephone
Corp. v. NLRC, G.R. No. 147002, August 15,
2005).
NOTE: Notice to both the Ees concerned and
the DOLE are mandatory and must be written
and given at least 1 month before the intended
A: The Ees’ actual knowledge of the
termination of a company’s distributorship
agreement with another company is not
sufficient to replace the formal and written
notice required by law. In the written notice, the
Ees are informed of the specific date of the
termination, at least a month prior to the date of
effectivity, to give them sufficient time to make
necessary arrangements. In this case,
notwithstanding the Ees knowledge of the
cancellation of the distributorship agreement,
they remained uncertain about the status of
their employment when DAP failed to formally
inform them about the redundancy (DAP Corp.
v. CA, G.R. No. 165811, December 14, 2005).
DUE PROCE
DUE PROCESS TWIN NOTICE
REQUIREMENT
Two-fold requirements of a valid dismissal
for a just cause

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1. Substantive – It must be for a just cause.
2. Procedural – There must be notice and
hearing.
Twin requirements of procedural due
process [Art. 277(b), LC]
1. Notice – “Twin-notice rule”
a. First notice – Necessity of first notice to
inform the worker of the violation and
preparation for the defense
b. Last notice – To give the worker a notice of
the Er’s final decision
2. Hearing – Two fundamental rules:
a. Hearing means ample opportunity to be
heard
b. What the law prohibits is total absence of
opportunity to be heard
If ample opportunity to be heard is given,
there is no violation.
Position paper – A position paper is a valid
alternative because not all cases are of litigation
concerns. It should suffice in matters that only
involve a question of law.
NOTE: When termination is based on just
cause, notice should be givento the Ee applying
the “twin notice rule”
If the termination is based on all of the
authorized causes, notices should be given to
all Ees affected and the DOLE at least one
month before the intended date of termination.
Purpose of notice and hearing
The requirement of notice is intended to inform
the Ee concerned of the Er’s intent to dismiss
him and the reason for the proposed dismissal.
1. On the other hand the requirement of
Hearing affords the Ee the opportunity to
answer his Er’s charges against him and
accordingly to defend himself there from
before dismissal is effected (Salaw v. NLRC,
G.R. No. 90786, September 27, 1991).
NOTE: Failure to comply with the requirement
of the 2 notices makes the dismissal illegal. The
procedure is mandatory (Loadstar Shipping
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LAONGLAAN NOTES 2017
Co. Inc. v. Mesano, G.R. No. 138956, August 7,
2003). And for non-compliance with the due
process requirements in the termination of a
person’s employment, a company is sanctioned
to pay a certain amount as damages (King of
Kings v. Mamac, G.R. No. 166208, June 29,
2007).
Q: Should there exist a valid and just cause,
may the Er depart from giving theEe the
right to be heard?
A: No. Art. 277(b) of the LC mandates that an
Er who seeks to dismiss an Ee must “afford the
latter ample opportunity to be heard and to
defend himself with the assistance of his
representative if he so desires.” Expounding on
this provision, the SC held that “ample
opportunity” connotes every kind of assistance
that management must accord the Ee to enable
him to prepare adequately for his defense
including legal representation (U-BIX Corp. v.
Bravo, G.R. No. 177647, October 31, 2008).
Procedure to be observed by the Er for the
termination of employment based on any of
the just causes for termination
1. A written notice should be served to the
Ee specifying the ground/s for termination and
giving the said Ee reasonable opportunity to
explain.
NOTE: This first written notice must apprise
the Ee that his termination is being considered
due to the acts stated in the notice (Phil. Pizza
Inc. v. Bungabong, G.R. No. 154315, May 9,
2005).
2. A hearingor conference should be held
during which the Ee concerned, with the
assistance of counsel, if the Ee so desires, is
given the opportunity to respond to the charge,
providefor his evidence and present the
evidence offered against him.
3. A written notice of termination – If
termination is the decision of the Er, it should
be served on the Ee indicating that upon due
83
consideration of all the circumstance, grounds
have been established to justify his termination. HEARING; MEANING OF
NOTE: Single notice of termination does not OPPORTUNITY TO BE HEARD
comply with the requirements of the law
(Aldeguer & Co., Inc. v. Honeyline Tomboc,
G.R. No. 147633, July 28, 2008). Coverage of opportunity to be heard
The first written notice to be served on the Ees
Q: Caong, Tresquio and Daluyon were
should contain the specific causes or grounds
employed by Regualos under a boundary
for termination against them, and a directive
agreement, as drivers of his jeepneys. Later
that the Ees are given the opportunity to submit
on, the three were barred by Regualos from
their written explanation within a reasonable
driving the vehicles due to deficiencies in
period. Under the Omnibus Rules, reasonable
their boundary payments. Is the policy of
opportunity means every kind of assistance that
suspending jeepney drivers pending
management must accord to the Ees to enable
payment of arrears in their boundary
them to prepare adequately for their defense.
obligations reasonable?
This should be construed as a period of at least
five (5) calendar days from receipt of the notice
A: Yes. The policy of suspending drivers who
to give the Ees an opportunity to study the
fail to remit the full amount of the boundary
accusation against them, consult a union
was fair and reasonable under the
official or lawyer, gather data and evidence,
circumstances. Notice was given to the drivers
and decide on the defenses they will raise
who were getting lax in remitting their
against the complaint. To enable the Ees to
boundary payments. In fact, Regualos incurred
intelligently prepare their explanation and
a considerable amount of arrears. He had to put
defenses, the notice should contain a detailed
a stop to it as he also relied on these boundary
narration of the facts and circumstances that
payments to raise the full amount of his
will serve as basis for the charge against the
monthly amortizations on the jeepneys.
Ees. A general description of the charge will
Caong, Tresquio and Daluyon were not denied
not suffice. Lastly, the notice should
due process. Due process is not a matter of
specifically mention which company rules, if
strict, rigid or formulaic process. The essence
any, are violated and/or which among the
of due process is simply the opportunity to be
grounds under Art. 282 is being charged against
heard, or as applied to administrative
the Ees.
proceedings, an opportunity to explain one’s
side or an opportunity to seek a reconsideration After serving the first notice, the Ers should
of the action or ruling complained of. A formal schedule and conduct a hearing or conference
or trial type hearing is not at all times and in all wherein the Ees will be given the opportunity
instances essential, as the due process to: (1) explain and clarify their defenses to the
requirements are satisfied where the parties are charge against them; (2) present evidence in
afforded fair and reasonable opportunity to support of their defenses; and (3) rebut the
explain their side of the controversy at hand evidence presented against them by the
(Caong v. Regualos, G.R. No. 179428, January management. During the hearing or
26, 2011). conference, the Ees are given the chance to
defend themselves personally, with the
assistance of a representative or counsel of their
choice. Moreover, this conference or hearing

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LAONGLAAN NOTES 2017 84
could be used by the parties as an opportunity
to come to an amicable settlement (King of
Kings v. Mamac, G.R. No. 166208, June 29,
2007).
Q: The illegal dismissal case was referred to
the LA. Is a formal hearing or trial required
to satisfy the requirement of due process?
A: No. Trial-type hearings are not required in
labor cases and these may be decided on
verified position papers, with supporting
documents and their affidavits.
The holding of a formal hearing or trial is
discretionary with the labor arbiter and is
something that the parties cannot demand as a
matter of right. It is entirely within his authority
to decide a labor case before him, based on the
position papers and supporting documents of
the parties, without a trial or formal hearing.
The requirements of due process are satisfied
when the parties are given the opportunity to
submit position papers wherein they are
supposed to attach all the documents that would
prove their claim in case it be decided that no
hearing should be conducted or was necessary
(Shoppes Manila v. NLRC, 419 SCRA 354).
NOTE: It is not necessary for the affiants to
appear and testify and be cross-examined by
the counsel for the adverse party. It is sufficient
that the documents submitted by the parties
have a bearing on the issue at hand and support
the positions taken by them (C.F. Sharp & Co.
v. Zialcita, 495 SCRA 387).
The essence of due process is simply an
opportunity to be heard, or as applied to
administrative proceedings, an opportunity to
explain one’s side or an opportunity to seek a
reconsideration of the action or ruling
complained of (PLDT v. Bolso, 530 SCRA 550).
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LAONGLAAN NOTES 2017
The burden of proof in termination cases
The burden of proof rest upon the Er to show
that the dismissal of the Ee is for a just cause,
and failure to do so would necessarily mean
that the dismissal is not justified, consonant
with the constitutional guarantee of security of
tenure.
NOTE: Due process refers to the process to be
followed; burden of proof refers to the amount
of proof to be adduced. In money claims, the
burden of proof as to the amount to be paid the
Ees rests upon the Er since he is in custody of
documents that would be able to prove the
amount due, such as the payroll.
Degree of proof required
In administrative or quasi-judicial proceedings,
substantial evidence is considered sufficient in
determining the legality of an Er’s dismissal of
an Ee (Pangasinan III Electric Cooperative,
Inc. v. NLRC, G.R. No. 8987, November 13,
1992).
Q: Perez and Doria were employed by
PT&T. After investigation, Perez and Doria
were placed on preventive suspension for 30
days for their alleged involvement in
anomalous transactions in the shipping
section. PT&T dismissed Perez and Doria
from service for falsifying documents. They
filed a complaint for illegal suspension and
illegal dismissal. The LA found that the
suspension and the subsequent dismissal
were both illegal. The NLRC reversed
theLA’s decision, it ruled that Perez and
Doria were dismissed for just cause, that
they were accorded due process and that
they were illegally suspended for only 15
days (without stating the reason for the
reduction of the period of petitioners’ illegal
suspension). On appeal, thev CA held that
they were dismissed without due process.
Were petitioners illegally dismissed?
85

A: Yes. The Er must establish that the dismissal
is for cause in view of the security of tenure that
Ees enjoy under the Constitution and the LC.
PT&T failed to discharge this burden. PT&T’s
illegal act of dismissing Perez and Doria was
aggravated by their failure to observe due
process. To meet the requirements of due
process in the dismissal of an Ee, an Er must
furnish the worker with 2 written notices: (1) a
written notice specifying the grounds for
termination and giving to said Ee a reasonable
opportunity to explain his side and (2) another
written notice indicating that, upon due
consideration of all circumstances, grounds
have been established to justify the Er's
decision to dismiss the Ee (Perez. v. Phil.
Telegraph and Telephone Company, G.R. No.
152048, April 29, 2009).
Guidelines in determining whether the
penalty imposed on Ee is proper
1. Gravity of the offense
2. Position occupied by the Ee
3. Degree of damage to the Er
4. Previous infractions of the same offense
5. Length of service (ALU-TUCP v. NLRC,
G.R. No. 120450, February 10, 1999); PAL v.
PALEA, G.R. No.L-24626, June 28, 1974)
Q: Felizardo was dismissed from Republic
Flour MillsSelecta Ice Cream Corporation
for dishonesty and theft of company
property for bringing out a pair of boots, 1
piece aluminum container and 15 pieces of
hamburger patties. Is the penalty of
dismissal commensurate with the offense
committed?
A: There is no question that the Er has the
inherent right to discipline its Ees which
includes the right to dismiss. However this
right is subject to the police power of the State.
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LAONGLAAN NOTES 2017
As such, the Court finds that the penalty
imposed upon Felizardo was not commensurate
with the offense committed considering the
value of the articles he pilfered and the fact that
he had no previous derogatory record during
his 2 years of employment in the company.
Moreover, Felizardo was not a managerial or
confidential Ee in whom greater trust is reposed
by management and from whom greater
fidelity to duty is correspondingly expected
(ALU-TUCP v. NLRC, G.R. No. 120450,
February 10, 1999).
Hearing is not an indispensable part of due
process
Art. 277(b) of the LC provides that, in cases of
termination for a just cause, an Ee must be
given “ample opportunity to be heard and to
defend himself.” Thus, the opportunity to be
heard afforded by law to the Ee is qualified by
the word “ample” which ordinarily means
“considerably more than adequate or sufficient.
“In this regard, the phrase “ample opportunity
to be heard” can be reasonably interpreted as
extensive enough to cover actual hearing or
conference. To this extent, Sec. 2(d), Rule I of
the IRR of Book VI of the LC requiring a
hearing and conference during which the Ee
concerned is given the opportunity to respond
to the charge is in conformity with Art. 277(b).
Significantly, Sec. 2(d), Rule I of the IRR of
Book VI of the LC itself provides that the so-
called standards of due process outlined therein
shall be observed “substantially,” not strictly.
This is a recognition that while a formal hearing
or conference is ideal, it is not an absolute,
mandatory or exclusive avenue of due process
(Perez v. PT&T, G.R. No. 152048, April 29,
2009).
Q: If the dismissal is for just or authorized
cause but the requirement of notice and
hearing were not complied with, should the
dismissal be held illegal?
86
 the worker need for a but no notice
A: No, in (Agabon v. NLRC, G.R. No. 158693, that the latter hearing to DOLE.
committed an because due
November 17, 2004), it was held that when
act or process is
dismissal is for just or authorized cause but due omission found in LC
process was not observed, the dismissal should constituting a (Art. 283)
be upheld. cause for not in
termination Constitution
of his according to
The Er, however, should be held liable for employment. Agabon.
noncompliance with the procedural
requirements of due process in the form of
NOTE: in
damages.
Art.277 (b)
PROCEDURAL DUE PROCESS UNDER in relation to
ART. 282-284 OF THE LC AS APPLIED Art. 283, if
IN THE AGABON CASE the closure
of business
Art. 282 Art. 283 Art. 284 will result in
a mass layoff
The Er must The Er must Er may and serious
give the Ee a give the Ee terminate labor
notice and the the services dispute, the
specifying DOLE of his Ee SLE can
the grounds written enjoin the Er
for which notices 30 as
dismissal is days prior to regards mass
sought a the termination
hearing or an effectivity of
opportunity his
to be heard separation RELIEFS FOR ILLEGAL DISMISSAL
and after
hearing or POSSIBLE EFFECT LIABILITY
opportunity SITUATIONS OF ER
to be heard, a a.) With Just or Termination NO Liability
notice of the Authorized VALID
decision to Cause NOTE:
dismiss b.) With Due Separation Pay
Process if for
The Worker is an There is no Authorized
requirement inactive hearing Cause
under Art. party in the requirement a.) Without Termination Reinstatement
277 (b) of cause for in Just or INVALID + Full
notice and termination. diseases but Authorized Backwages
hearing Only notice there is Cause
applies only with dole notice b.) With Due NOTE: If
in Art. 282 and notice to requirement Process Reinstatement
because the worker is to worker, not possible—
Er is accusing required. No Separation Pay

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LAONGLAAN NOTES 2017 87
a.) Without Termination Reinstatement Q: Does the offer to reinstate the illegally
Just or INVALID + Full dismissed Ee affect the liability of the erring
Authorized Backwages Er?
Cause
b.) Without NOTE: If
A: No. At any rate, sincere or not, the offer of
Due Process Reinstatement
not possible— reinstatement could not correct the earlier
Separation Pay illegal dismissal of the Ee. The Er incurred
a.) With Just or Termination Liable for liability under the LC from the moment an Ee
Authorized VALID noncompliance was illegally dismissed, and the liability did not
Cause With abate as a result of the Er's repentance (Ranara
b.) Without procedural v.NLRC, 212 SCRA 631).
Due Process requirements
Q: PAL dismissed strike leader Capt.
NOTE:
Separation Pay Gaston as a result of which the Union
if for resolved to undertake the grounding of all
Authorized PAL planes and the filing of applications for
Cause “protest retirement” of members who had
completed 5 years of continuous service,
and “protest resignation” for those who had
NOTE: The Agabon ruling was modified by
rendered less than 5 years of service in the
(JAKA Food Processing v. Pacot G.R. No.
company. PAL acknowledged receipt of said
151378, March 28, 2005) where it was held
letters and among the pilots whose “protest
that:
resignation or retirement” was accepted by
1. If based on just cause (Art. 282, LC) but the
PAL were Enriquez and Ecarma.
Er failed to comply with the notice
Before their readmission, PAL required
requirement, the sanction to be imposed upon
Enriquez and Ecarma to accept 2 conditions,
him should be tempered because the dismissal
namely: that they sign conformity to PAL’s
process was, in effect, initiated by an act
letter of acceptance of their retirement and
imputable to the Ee; and
or resignation and that they submit an
2. If based on authorized causes (Art. 283, LC)
application for employment as new Ees
but the Er failed to comply with the notice
without protest or reservation. As a result of
requirement, the sanction should be stiffer
this, their seniority rights were lost.
because the dismissal process was initiated by
Are the pilots entitled to the restoration of
Er’s exercise of his management prerogative.
their seniority rights?
RELIEFS FOR ILLEGAL DISMISSAL
Remedies of Ee in case of illegal dismissal
A: No. An Ee has no inherent right to seniority.
In case where the worker is illegally
He has only such rights as may be based on a
terminated, his remedies are:
contract, statute, or an administrative
1. Reinstatement without loss of seniority
regulation relative thereto. Seniority rights
rights
which are acquired by an Ee through long-time
2. Full backwages
employment are contractual and not
NOTE: Full backwages means no deduction
constitutional. The discharge of an Ee thereby
3. Separation pay in lieu of reinstatement
terminating such rights would not violate the
4. Damages, including Attorney’s fees
Constitution. When the pilots tendered their
respective retirement or resignation and PAL

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 88
immediately accepted them, both parties
mutually terminated the contractual
employment relationship between them
thereby curtailing whatever seniority rights and
privileges the pilots had earned through the
years.
Full backwages
The LC as amended by R.A. 6715 points to
"full backwages" as meaning exactly that, i.e.,
without deducting from backwages the
earnings derived elsewhere by the concerned
Ee during the period of his illegal dismissal
(Buenviaje v. CA, G.R. 147806, November 12,
2002).
Separation pay in lieu of reinstatement when
1. Doctrine of Strained Relations (applies to
confidential and managerial Ees only)
2. In case the position has been abolished
(applies to both managerial and rank and file
Ees)
NOTE: Moral and exemplary damages may
also be awarded.
Prescriptive period for filing an action for
illegal dismissal
An action for reinstatement by reason of illegal
dismissal is one based on an injury which may
be brought within 4 years from the time of
dismissal pursuant to Art. 1146 of the NCC
(Azcor Manufacturing v. NLRC, 303 SCRA 26).
REINSTATEMENT PENDING APPEAL
(ART. 223, LC)
TE MENTAPPEAL (ART. 223, LC)
Reinstatement
It is the restoration of the Ee to the state from
which he has been unjustly removed or
separated without loss of seniority rights and
other privileges.
Forms of reinstatement
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LAONGLAAN NOTES 2017
1. Actual or physical –Tthe Ee is admitted back
to work
2. Payroll – The Ee is merely reinstated in the
payroll
NOTE: An order of reinstatement by the LA is
not the same as actual reinstatement of a
dismissed or separated Ee, however it is
immediately executory even pending appeal.
Thus, until the Er continuously fails to actually
implement the reinstatement aspect of the
decision of the LA, their obligation to the
illegally dismissed Ee, insofar as accrued
backwages and other benefits are concerned,
continues to accumulate. It is only when the
illegally dismissed Ee receives the separation
pay (in case of strained relations) that it could
be claimed with certainty that the Er-Ee
relationship has formally ceased thereby
precluding the possibility of reinstatement
(Triad Security & Allied Services, Inc. et al
v.Ortega, G.R. No. 160871, February 6, 2006).
Q: Is an illegally dismissed Ee entitled to
reinstatement as a matter of right?
A: GR: Yes.
XPNs:
Proceeds from an illegal dismissal wherein
reinstatement is ordered but cannot be carried
out as in the following cases:
1. Reinstatement cannot be effected in view of
the long passage of time or because of the
realities of the situation.
2. It would be inimical to the Ers’ interest.
3. When reinstatement is no longer feasible.
4. When it will not serve the best interest of the
parties involved.
5. Company will be prejudiced by
reinstatement.
6. When it will not serve a prudent purpose.
7. When there is resultant strained relation
(applies to both confidential and managerial
Ees only).
89
8. When the position has been abolished
(applies to managerial, supervisory and
rank-and-file Ees).
NOTE: In such cases, it would be more
prudent to order payment of separation pay
instead of reinstatement
(Quijano v. Mercury Drug Corporation, G.R.
No. 126561, July 8, 1998).
Order of reinstatement
It means restoration to a state or condition from
which one had been removed or separated. The
person reinstated assumes the position he had
occupied prior to his dismissal. Reinstatement
presupposes that the previous position from
which one had been removed still exists, or that
there is an unfilled position which is
substantially equivalent or of similar nature as
the one previously occupied by the Ee.
An order for reinstatement entitles an Ee to
receive his accrued backwages from the
moment the reinstatement order was issued up
to the date when the same was reversed by a
higher court without fear of refunding what he
had received (Pfizer v. Velasco, G.R. 177467,
March 9, 2011).
Arts. 223 v. 279 of the LC 223 Art. 279
Art. 223 Art. 279
May be availed of as Presupposes that the
soon as the LA judgment has already
renders a judgment become final and
declaring that the executory.
dismissal of the Ee is Consequently, there
illegal and ordering is nothing left to be
said reinstatement. It done except the
may be availed of execution thereof.
even pending appeal
NOTE: An award or order for reinstatement is
self-executory. It does not require the issuance
of a writ of execution (Pioneer Texturizing
Corp. v. NLRC, G.R. No. 118651, October 6,
1997).
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LAONGLAAN NOTES 2017
Rule on wages during reinstatement pending
appeal
Dismissed Ee whose case was favorably
decided by the LA is entitled to receive wages
pending appeal upon reinstatement, which is
immediately executory. Unless there is a
restraining order, it is ministerial upon the LA
to implement the order of reinstatement and it
is mandatory on the Er to comply therewith.
After the LA’s decision is reversed by a higher
tribunal, the Ee may be barred from collecting
the accrued wages, if it is shown that the delay
in enforcing the reinstatement pending appeal
was without fault on the part of the Er.
The test is two-fold: (1) there must be actual
delay or the fact that the order of reinstatement
pending appeal was not executed prior to its
reversal; and (2) the delay must not be due to
the Er’s unjustified act or omission. If the delay
is due to the Er’s unjustified refusal, the Er may
still be required to pay the salaries
notwithstanding the reversal of the LA’s
decision (Garcia v. PAL, G.R. No. 164856,
August 29, 2009).
Q: PAL dismissed Garcia, for violating
PAL’s Code of Discipline for allegedly
sniffing shabu in PAL’s Technical Center
Tool Room Section. Garcia then filed for
illegal dismissal and damages where the LA
ordered PAL to immediately reinstate
Garcia. On appeal, the NLRC reversed the
decision and dismissed Garcia’s complaint
for lack of merit. Garcia’s motion for
reconsideration was denied by the NLRC. It
affirmed the validity of the writ and the
notice issued by the LA but suspended and
referred the action to the Rehabilitation
Receiver for appropriate action. May
Garcia collect wages during the period
between the LA’s order of reinstatement
pending appeal and the NLRC decision
overturning that of the LA?
90
A: Art. 223(3) of the LC provides that the
decision of the LA reinstating a dismissed or
separated Ee, insofar as the reinstatement
aspect is concerned, shall immediately be
executory, pending appeal.
Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part
of the Er to reinstate and pay the wages of the
dismissed Ee during the period of appeal until
reversal by the higher court. On the other hand,
if the Ee has been reinstated during the appeal
period and such reinstatement order is reversed
with finality, the Ee is not required to reimburse
whatever salary he received for he is entitled to
such, more so if he actually rendered services
during the period.
Q: May the Court order the reinstatement of
a dismissed employee even if the prayer of
the complaint did not include such relief?
A: Yes. So long as there is a finding that the Ee
was illegally dismissed, the court can order the
reinstatement of an Ee even if the complaint
does not include a prayer for reinstatement,
unless, of course the Ee has waived his right to
reinstatement. By law, an Ee who is unjustly
dismissed is entitled to reinstatement among
others. The mere fact that the complaint did not
pray for reinstatement will not prejudice the Ee,
because technicalities of law and procedure are
frowned upon in labor proceedings
(Pheschem Industrial Corp. v. Moldez, G.R.
No. 116158, May 9, 2005).
In any case, Sec.2(c), Rule 7 of the Rules of
Court provides that a pleading shall specify the
relief sought, but may add a general prayer for
such further or other reliefs as may be deemed
just and equitable. Under this rule, a court can
grant the relief warranted by the allegation and
the proof even if it is not specifically sought by
the injured party; the inclusion of a general
prayer may justify the grant of a remedy
different from or together with the specific
remedy sought, if the facts alleged in the
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
complaint and the evidence introduced so
warrant. The prayer in the complaint for other
reliefs equitable and just in the premises
justifies the grant of a relief not otherwise
specifically prayed for (Prince Transport, Inc.
v. Garcia et. al, G.R. No. 167291, January 12,
2011).
Q: A complaining Ee obtained a favorable
decision in an illegal dismissal case. The LA
ordered her immediate reinstatement. The
Er opted payroll reinstatement pending
appeal. The NLRC reversed the decision of
the LA ruled that the dismissal was
valid. The Er stopped the payroll
reinstatement. The Ee elevated the case to
the CA, and eventually to the
SC. The SC upheld the dismissal. Is the Ee
entitled to continued payroll reinstatement
after the NLRC decision?
A: No. The Ee is not entitled to continued
payroll reinstatement. The decision of the
NLRC on appeals from decisions of the LA
shall become final and executory after 10
calendar days from receipt thereof by the
parties. That the CA may take cognizance of
and resolve a petition for certiorari for the
nullification of the decisions of the NLRC on
jurisdictional and due process considerations
does not affect the statutory finality of the
NLRC decision. Since the NLRC decision
which upheld the dismissal became final, the Er
was correct in stopping the payroll
reinstatement of the Ee (Bago v. NLRC, G.R.
No. 170001, April 4, 2007).
Q: Can the Er demand that the Ee
reimburse the amount that had been paid
under the period of payroll reinstatement?
A: No. Even if the order of reinstatement of the
LA is reversed on appeal, it is obligatory on the
part of the Er to reinstate and pay the wages of
the dismissed Ee during the period of appeal
91
until reversal by the higher court.
If the Ee has been reinstated during the appeal
period and such reinstatement order is reversed
with finality, the Ee is not required to reimburse
whatever salary he received for he is entitled to
such, more so if he actually rendered services
during the period (Garcia v. PAL, G.R. No.
164856, June 20, 2009).
Q: What happens if there is an Order of
Reinstatement but the position is no longer
available?
A: The Ee should be given a substantially
equivalent position. If no substantially
equivalent position is available, reinstatement
should not be ordered because that would in
effect compel the Er to do the impossible. In
such a situation, the Ee should merely be given
a separation pay consisting of 1-month salary
for every year of service (Grolier Int’l Inc. v.
ELA, G.R. No. 83523, August 31, 1989).
Q: Can the order of reinstatement be
immediately enforced in the absence of a
motion for the issuance of a writ of
execution? (2009 Bar question)
A: Yes, in Pioneer Texturizing Corp. v. NLRC,
the Court held that an award or order of
reinstatement is self-executory and does not
require a writ of execution to implement and
enforce it. To require the application for and
issuance of a writ of execution as a prerequisite
for the execution of a reinstatement award
would certainly betray and run counter to the
very objective and intent of Art. 223 of the
Labor Code (on the immediate execution of a
reinstatement order).
Alternative Answer:
The decision to reinstate pending appeal is not
self executory. A motion for a writ of execution
is mandatory before an order of reinstatement
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
can be enforced because an Ee needs, the
assistance of the NLRC Sheriff to enforce the
order.
“Strained relations” rule
It is when the Er can no longer trust the Ee and
vice versa or there were imputations of bad
faith to each other, reinstatement could not
effectively serve as a remedy. This rule applies
only to positions which require trust and
confidence (Globe Mackay v. NLRC, G.R. No.
82511, March 3, 1992).
NOTE: Under the circumstances where the
employment relationship has become so
strained to preclude a harmonious working
relationship and that all hopes at reconciliation
are naught after reinstatement, it would be more
beneficial to accord the Ee backwages and
separation pay.
The following must be proven before the
strained relations rule can be applied to a
particular case
1. The Ee concerned occupies a position where
he enjoys the trust and confidence of his Er; and
2. That it is likely if the Ee is reinstated, an
atmosphere of antipathy and antagonism may
be generated as to adversely affect the
efficiency and productivity of the Ee concerned
(Globe Mackay Cable & Wire Corp. v. NLRC
G.R. No. 82511, March 3, 1992).
Q: Does the strained relations rule always
bar reinstatement in all cases?
A: No. The rule should be applied on a case to
case basis, based on each case’s peculiar
conditions and not universally. Otherwise,
reinstatement can never be possible simply
because some hostility is invariably
engendered between the parties as a result of
litigation. That is human nature (Anscor
Transport v. NLRC, G.R. No. 85894,
September 28, 1990).
92
Besides, no strained relations should arise from
a valid and legal act of asserting one's right;
otherwise an Ee who shall assert his right could
be easily separated from the service, by merely
paying his separation pay on the pretext that his
relationship with his Er had already become
strained (Globe Mackay Cable & Wire Corp. v.
NLRC, G.R. No. 82511, March 3, 1992).
SEPARATION PAY IN LIEU OF
REINSTATEMENT
SEP ARATION PAYIN LIEU OF RENT
Separation pay can be viewed
Under present laws and jurisprudence,
separation pay may be viewed in 4 ways:
1. In lieu of reinstatement in illegal dismissal
cases, where Ee is ordered reinstated but
reinstatement is not feasible.
2. As Er’s statutory obligation in cases of legal
termination due to authorized causes under
Arts. 283 and 284 of the LC.
3. As financial assistance, as an act of social
justice and even in case of legal dismissal under
Art. 282 of the LC.
4. As employment benefit granted in CBA or
company policy. (Poquiz, 2005)
Q: Respondents are licensed drivers of
public utility jeepneys owned by Moises
Capili. When Capili assumed ownership and
operation of the jeepneys, the drivers were
required to sign individual contracts of lease
of the jeepneys. The drivers gathered the
impression that signing the contract was a
condition precedent before they could
continue driving. The drivers stopped plying
their assigned routes and a week later filed
with the LA a complaint for illegal dismissal
praying not for reinstatement but for
separation pay. Are the respondents entitled
to separation pay?
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
A: No. When the drivers voluntarily chose not
to return to work anymore, they must be
considered as having resigned from their
employment. The common denominator of
those instances where payment of separation
pay is warranted is that the employee was
dismissed by the Er (Capili v. NLRC, G.R.
117378, March 26, 1997).
Q: Romeo has been an Ee of AAA Company
from 1993 to 1999 but was unable to report
to work due to some illness. Romeo claimed
that he was offered by AAA of Php 15,000
separation pay, on the contrary AAA
claimed Romeo was never terminated and
even told the latter that Romeo could go
back to work anytime but Romeo clearly
manifested that he was no longer interested
in returning to work and instead asked for
separation pay. Is Romeo terminated or
considered resigned? Is Romeo entitled to
separation pay?
A: Romeo is considered resigned. Romeo’s
various pleadings support his intention of not
returning to work on the ground that his health
is failing. Moreover, Romeo did not ask for
reinstatement and rejected AAA Company’s
offer for him to return to work. This is
tantamount to resignation. Resignation is
defined as the voluntary act of an Ee who finds
himself in a situation where he believes that
personal reasons cannot be sacrificed in favor
of the exigency of the service and he has no
other choice but to disassociate himself from
his employment.
Romeo is not entitled to separation pay. There
is no provision in the LC which grants
separation pay to voluntarily resigning Ees. In
fact, the rule is that an Ee who voluntarily
resigns from employment is not entitled to
separation pay, except when it is stipulated in
the employment contract or CBA, or it is
sanctioned by established Er practice or policy.
93
Hence, Romeo is not entitled to separation pay
in the absence of a Labor provision and a
stipulation in his employment contract or CBA
(Romeo Villaruel v. Yeo Han Guan, G.R. No.
169191, June 1, 2011).
Q: Two groups of seasonal workers claimed
separation benefits after the closure of Phil.
Tobacco processing plant in Balintawak and
the transfer of its tobacco operations to
Candon, Ilocos Sur. Phil. Tobacco refused to
grant separation pay to the workers
belonging to the first batch, because they
had not been given work during the
preceding year and, hence, were no longer in
its employ at the time it closed its Balintawak
plant. Likewise, it claims exemption from
awarding separation pay to the second
batch, because the closure of its plant was
due to "serious business losses," as defined
in Art. 283 of the LC. Both labor agencies
held that the two groups were entitled to
separation pay equivalent to 1/2 month
salary for every year of service, provided
that the employee worked at least 1 month in
a given year. Is the separation pay granted
to an illegally dismissed Ee the same as that
provided under Art.283 of the LC in case of
retrenchment to prevent losses?
A: No. The separation pay awarded to Ees due
to illegal dismissal is different from the amount
of separation pay provided for in Art. 283 of the
LC. Prescinding from the above, Phil. Tobacco
is liable for illegal dismissal and should be
responsible for the reinstatement of the first
group and the payment of their backwages.
However, since reinstatement is no longer
possible as Phil. Tobacco have already closed
its Balintawak plant, members of the said group
should instead be awarded normal separation
pay (in lieu of reinstatement) equivalent to at
least one month pay, or one month pay for
every year of service, whichever is higher. It
must be stressed that the separation pay being
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
awarded to the first group is due to illegal
dismissal; hence, it is different from the amount
of separation pay provided for in Art. 283 in
case of retrenchment to prevent losses or in
case of closure or cessation of the Er’s
business, in either of which the separation pay
is equivalent to at least one (1) month or one-
half (1/2) month pay for every year of service,
whichever is higher (Phil. Tobacco Flue-
Curing & Redrying Corp. v. NLRC, G.R. No.
127395, December 10, 1998).
Q: Does separation pay apply in cases of
legal dismissal?
A: It depends. As Er’s statutory obligation in
cases of legal termination due to authorized
causes under Arts. 283 284 of the LC. As
financial assistance, as an act of social justice
and even in case of legal dismissal under Art.
282 of the LC. Art. 223 of the LC concerns
itself with an interim relief, granted to a
dismissed or separated Ee while the case for
illegal dismissal is pending appeal. It does not
apply where there is no finding of illegal
dismissal. On the other hand, an Ee who is
unjustly dismissed from work shall be entitled
to reinstatement without loss of seniority rights
and other privileges and to his full backwages,
inclusive of allowances, and to his other
benefits or their monetary equivalent computed
from the time his compensation was withheld
from him up to the time of his actual
reinstatement (Lansangan v. Amkor
Technology Philippines, Inc., G.R. No. 177026,
(2009).
BACKWAGES
Backwages
It refers to the relief given to an Ee to
compensate him for the lost earnings during the
94
period of his dismissal. It presupposes illegal
termination.
NOTE: Entitlement to backwages of the
illegally dismissed Ee flows from law. Even if
he does not ask for it, it may be given. The
failure to claim backwages in the complaint for
illegal dismissal is a mere procedural lapse
which cannot defeat a right granted under
substantive law (St. Michael’s Institute
v.Santos, G.R. No. 145280, December 4, 2001).
Q: What is the basis of awarding backwages
to an illegally dismissed employee?
A: The payment of backwages is generally
granted on the ground of equity. It is a form of
relief that restores the income that was lost by
reason of the unlawful dismissal; the grant
thereof is intended to restore the earnings that
would have accrued to the dismissed Ee during
the period of dismissal until it is determined
that the termination of employment is for a just
cause. It is not private compensation or
damages but is awarded in furtherance and
effectuation of the public objective of the LC.
Nor is it a redress of a private right but rather in
the nature of a command to the Er to make
public reparation for dismissing an Ee either
due to the former’s unlawful act or bad faith
(Tomas Claudio Memorial College Inc., v. CA,
G.R. No. 152568, February 16, 2004).
Circumstances where financial assistance
are proper
The general rule is that financial assistance is
allowed only in instances where the Ee is
validly dismissed for causes other than serious
misconduct or those reflecting on his moral
character. Nonetheless, financial assistance
may be allowed as a measure of
social justice and exceptional circumstances,
and as an equitable concession for balancing
the interests of the Er with those of the worker.
Where there is neither a dismissal nor
abandonment, it has been previously held that
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
separation pay may be awarded under
appropriate circumstances. Also, in cases
where there is no dismissal, the status quo
between the Ee and Er should be maintained;
and in lieu of reinstatement the grant of
separation pay to Ee is proper (Luna v. Allado
Construction Co., Inc., G.R. No. 175251, May
30, 2011).
Q: What is a floating status? When is an Ee
in a floating status considered to be
constructively dismissed?
A: Pursuant to Art. 286 of the LC, the bona fide
suspension of the operation of a business
undertaking for a period not exceeding 6
months, or the fulfillment by the Ee of a civic
duty shall not terminate employment. In all
such cases the Er shall reinstate the Ee to his
former position without loss of seniority rights
if he indicates his desire to resume his work not
later than one month from the resumption of
operations of his Er or from his relief from the
military or civic duty. Only when such a
"floating status" lasts for more than 6 months
that the Ee may be considered to have been
constructively dismissed (Nippon Housing
Phil. Inc., v. Leynes, G.R. No. 177816, August
3, 2011).
RETIREMENT PAY
Retirement
It is a result of a bilateral act of the parties, a
voluntary agreement between the employer and
the employee whereby the latter after reaching
a certain age agrees and/or consents to sever his
employment with the former (Soberano v.
Secretary of Labor, G.R. No. L-43753-56 and
G.R. No. L-50991, August 29,1980; Ariola v.
Philex Mining Corp, 446 SCRA 152).
Persons covered by retirement benefit
All employees in the private sector;
1. Regardless of their position, designation or
status; and
95
2. Irrespective of the method by which their
wages are paid (Sec. 1 Rule II, Book VI,
IRR).
Persons not covered by retirement benefits
1. Employees of the National Government and
its political subdivisions, including GOCCs
(if they are covered by civil service law)
2. Domestics helpers and persons in the
personal service of another
3. Employees of the retail, service and
agricultural establishments or operations
employing not more than 10 Employees
(SEC 2, Rule II, Book VI, IRR).
Kind of retirement schemes
1. Compulsory and contributory in nature;
2. One set up by the agreement between the
employer and employees in the CBA or
other agreements between them (other
applicable employment contract);
3. One that is voluntarily given by the
employer, expressly as announced company
policy or impliedly as in the failure to
contest the employees claim fir retirement
benefits (Marilyn Odchimar Gertach v.
Reuters Limited Phils., G.R. No. 14854,
January 17, 2005).
Retroactive application of Art. 287 of the LC
(on retirement) as amended by R.A. 7641
Art. 287 of the LC as amended by R.A. 7641
can be applied retroactively, provided that ;
1. The claimant for retirement benefits
was still the employee of the employer
at the time the statue took effect; and
2. The claimant was in compliance with
the requirements for eligibility under
the statute for such retirement benefits
(PSVSIA v. NLRC, G.R. No. 115019,
April 14, 1997).
Provisions of the retirement plan binding as
part of the employment contract
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
The retirement plan forms part of the
employment contract since it is made known to
the employees and accepted by them, and such
plan has an express provision that the company
has the choice to retire an employee regardless
of age, with 20 years of service; said policy is
within the bounds contemplated by the LC.
Moreover, the manner of computation of
retirement benefits depends on the stipulation
provided in the company retirement plan
(Progressive Dev’t Corporation v. NLRC, G.R.
No. 138826, October 30, 2000).
NOTE: Although retirement plan forms part of
the employment contract, before a right to
retirement benefits of pension vests in an
employee, he must have met the stated
conditions of eligibility with respect to the
nature of employment, age, and length of
service. This is a condition precedent to his
acquisition of rights thereunder. SC ruled that
the conditions of eligibility for the retirement
must be met at the time of retirement at which
juncture the right to retirement benefits or
pension, if the employee is eligible, vests in
him.
Again, it has been held that pension and
retirement plans create a contractual obligation
in which the promise to pay benefits is made in
consideration of the continued faithful service
of the employee for the requisite period (Briob
v. South Phil. Union Mission of the Seventh
Day Adventist Church, 307 SCRA 497).
Q: The instant labor dispute between the
petitioners (PAL) stemmed from
petitioner’s act of unilaterally retiring
airline pilot Captain Albino Collantes under
PAL-ALPAP Retirement Plan. The SLE
assailed the order of PAL’s action of
unilaterally retiring Captain
Collantes' retirement benefits should
be Art. 287 of the LC the PAL-ALPAP
Retirement Plan. But PAL contends that the
retirement plan should prevail as it is the
96
agreement between the parties. What should
be the basis of the computation of Captain
Collantes’ retirement benefits?
A: The basis of computation of Collantes’
retirement benefits should be Art. 287 of the
LC. The given retirement benefits under the
retirement plan is low compared to the
retirement benefits provided under Art. 287 of
the LC, an employee retirement benefits under
any collective bargaining and other agreement
shall not be less than those provided in the LC.
Hence, Art. 287 of the LC and not the PAL-
ALPAP Retirement Plan, should govern the
computation of the benefits to be awarded to
Captain Collantes. Moreover, a pilot who
retires after twenty years of service or after
flying 20,000 hours would still be in the prime
of his life and at the peak of his career,
compared to the one who retires at the age of
60 years old. Based on this peculiar
circumstance that PAL piots are in, the parties
provided for a special scheme of retirement
different from that contemplated in the LC.
Conversely, the provisions of Arty. 287 of the
LC could not have contemplated the situation
of PAL’s pilots. Rather, it was intended for
those who have no more plans of employment
after retirement, and are thus in need of
financial assistance and reward for the years
that they have rendered service. (Philippine
Airlines, Inc. v Airline Pilot Association of the
Philippines, G.R. No. 143686, January 15,
2002).
ELIGIBILITY
Retirement age
it is the age of retirement that is specified in the
1. CBA;
2. Employment contract;
3. Retirement plan (Sec. 3, Rule II, Book
VI, IRR); OR
4. Optional retirement age for
underground mining employees
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Retirement age in the absence of a retirement
plan or other applicable agreement
1. Optional- upon reaching 60 years old
provided that the employee has rendered 5
years of service.
NOTE: The option to retire upon reaching the
age of 60 years or more but not beyond 65
is the exclusive prerogative of the employee
if there is no provision on retirement in a
CBA or any other agreement or if the
employer has no retirement plan (R.A.
7641; Capili v. NLRC, G.R No. 117378,
March 26,1997).
2. Compulsory- 65 years old, regardless of
years of service (Sec. 4, Rule II, Book VI,
IRR)
NOTE: Retirement Benefits, where not
mandated by law, may be granted by
agreement of the employees and their
employer or as a voluntary act on the part of
the employer. Retirement benefits are
intended to help the employee enjoy the
remaining years o his life, lessening the
burden of worrying for his financial support,
and are a form of reward for his loyalty and
service to the employer (Aquino v. NLRC,
G.R. No. 87653 February 11, 1992).
Compulsory retirement age below 60 is
allowed
Art. 287 permits employer and employee to fix
the applicable retirement age at below 60. The
same is legal and enforceable so long as the
parties agree to be governed by such CBA
(Pantranco North Express v. NLRC, G.R. No.
95940, July 24, 1996).
Rule for extension of service of retiree upon
reaching the compulsory retirement age
Upon the compulsory retirement of an
employee or official in the public or private
service, his employment is deemed terminated.
The matter of extension of service of such
employee or official is addressed to the sound
97
discretion of the employer (UST Faculty Union during SY 1981-1982. In 1982, she applied
v. NLRC, G.R. No. 89885, August 6, 1990). anew at f Sta. Catalina which hired her. On
Mar 22, 1997, during the the 51st
AMOUNT Commencement Exercises of Sta. Catalina,
Computation of retirement benefits in the Hilaria was awarded a Plaque of
absence of an applicable agreement or Appreciation for 30 yrs of service and Php
retirement plan 59,038.35 However, amount of Php 12,000
A retiree is entitled to a retirement pay representing the gratuity pay, which was
equivalent to atleast ½ month salary for every given to her, was deducted from her
year of service, a fraction of at least 6 months retirement benefits.
being considered as 1 whole year (R.A. 7641). Should the gratuity pay be deducted from
the retirement benefits?
Composition of ½ month salary of
retirement pay A: Yes. Gratuity pay is separate and distinct
Unless parties provide for broader inclusions, from retirement benefits. It is paid purely out of
retirement pay is comprised of: generosity.
1. 15 days salary based on latest salary rate;
2. Cash equivalent of not more than 5 days of Gratuity pay v. Retirement benefits
service incentive leaves (22.5/year of
service) GRATUITY PAY RETIREMENT
BENEFITS
3. 1/12 of the 13th month pay
It is paid to the are intended to help
4. All other benefits as may be agreed upon by
beneficiary for the the employee enjoy
the employer and employee (Sec. 5.2, Rule past services or the remaining years of
II, Book VI,IRR). favor rendered his life, releasing him
purely out of from the burden of
NOTE: Under Sec. 26 of R.A. 4670, otherwise generosity of the worrying for his
known as “Magna Carta for Public School giver or grantor. It financial support, and
Teachers”, public school teachers having is not intended to are a form of reward
fulfilled the age and service requirements of the pay a worker for for his loyalty to the
applicable retirement laws shall be given one actual services employer (Sta.
range salary raise upon the retirement, which rendered or for Catalina College and
shall be the basis of the computation of the actual Sr. Loreta Oranza, v.
lump sum of the retirement pay and monthly performance. It is a NLRC and Hilaria
money benefit or a Tercera, G.R. No.
benefit thereafter.
bounty given to the 144483, November
worker, the 19, 2003).
Q: In 1955, Hilaria was hired as a grade purpose of which is
school teacher at the Sta. Catalina. In 1970, to reward
she applied for and was granted a 1 year employees who
leave of absence (LOA) without pay due to have rendered
the illness of her mother. After the satisfactory service
expiration in 1971 of her LOA, she had not to the company.
been heard from by the Sta. Catalina. In the
meantime, she was employed as a teacher at
RETIREMENT PAY UNDER RA 7641
the San Pedro Parochial School during SY
VIS-À-VIS RETIREMENT BENEFITD
’80-’81 and at the Liceo de San Pedro,
UNDER SSS AND GSIS LAWS

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 98
 SOCIAL REVISED EMPLOYE The 15-day salary of workers paid by the
SECURITY GOVERN ES results and part-time workers shall be
LAW MENT COMPENS determined from their average daily salary
SERVICE ATION which is that average daily salary for the last 12
INSURAN ACT months reckoned from the date of their
CE ACT retirement, divided by the number of actual
Compulsory Compulsory Compulsory working days in that particular period (Sec. 5.2
upon all for all upon all
and 5.3 of the Rules Implementing the New
employees permanent employers
Retirement Law)
not over 60 employees and their
years of age below 60 employees TAXABILITY
and their years of age not over 60
employer. upon years of age; Non taxability of retirement benefits under
1. Filipi appointmen provided, that R.A. 7641
nos recruited t of an employee
in the permanent who is over Retirement benefits under R.A. 7641 are tax
Philippines status, and 60 years of exempt provided that such benefits provided by
by foreign for all age and the retirement plan may be equal or less than
based elective paying the minimum requirement provided by law.
employers officials for contributions
for the duration to qualify for Requirements for tax exemption under R.A.
employment of their the retirement 7641
abroad may tenure. or life 1. That there be no CBA or other applicable
be covered insurance
employment contract providing for
by the SSS NOTE: Any benefit
retirement benefits for an employee; or
on a
person, administered
voluntary whether by the system 2. Even if there is a CBA or other applicable
basis. elected or shall be employment contract providing for
2. Com appointed, subject to retirement benefits for an employee, that the
pulsory upon in the compulsory same is below the requirements set forth by
all self-
service of coverage. law.
employed an Eris a
persons covered Topic 5: Management Prerogative
earning Php employees
1,800 or
if he Overview
more per
receives Management prerogative is an exception to the
annum. compensati Principle of Co-determination. An owner of a
on for such
business enterprise is given considerable
service.
leeway in managing his business. Our law
(1997 Bar Exam Question)
recognizes certain rights, collectively called
RETIREMENT BENEFITS OF management prerogative as inherent in the
WORKERS PAID BY RESULTS/ management of business enterprises.
RETIREMENT BENEFITS OF PART- Employers are also accorded rights and
TIME WOKERS privileges to assure their self-determination and
independence and reasonable return of capital.
Determination of the amount of retirement
Consequently, employees are unable to
benefits of workers paid by results and part-
negotiate with them on terms and conditions.
time workers

PAMANTASAN NG LUNGSOD NG MAYNILA

LAONGLAAN NOTES 2017 99
 This Court has consistently refused to interfere
with the exercise by management of its
prerogative to regulate the employees’ work
assignments, the working methods and the
place and manner of work. (Peckson v
Robinsons, G.R No. 155098)
General Rule
Management is free to regulate, according to its
own discretion and judgment, all aspects of
employment, including hiring, work
assignments, working methods, time, place and
manner of work, processes to be followed,
supervision of workers, working regulations,
transfer of employees, work supervision, lay
off of workers and discipline, dismissal and
recall of workers. (Unicorn v Basarte, G.R No.
154689)
Limitations
The exercise of management prerogative is
valid provided it is not performed in a
malicious, harsh, oppressive, vindictive or
wanton manner or out of malice or spite.
(GPLEU v GPLAC, G.R. No. 126717).
As long as the company’s exercise of the same
is in good faith to advance its interest and not
for the purpose of defeating or circumventing
the rights of employees under the law or a valid
agreement, such exercise will be upheld.
(J.A.T. General Services v. NLRC, G.R
No.148340)
Management prerogative is subject to
limitations found in the law, a collective
bargaining agreement, or in general principles
of fair play and justice. (Norkis Trading v
NLRC, G.R No. 168159)
A. DISCIPLINE
Nature of prerogative to discipline
Management is free to regulate, according to its
own discretion and judgment, all aspects of
employment, including xxx, lay off of workers
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
and discipline, dismissal and recall of workers.
(Unicorn v Basarte, G.R No. 154689)
Disciplinary action against an erring employee
is a management prerogative which, generally,
is not subject to judicial interference. However,
this policy can be justified only if the
disciplinary action is dictated by legitimate
business reasons and is not oppressive, as in
this case. (Areno v Skycable, G.R No. 180302)
Limitations
An employers power to discipline his
employees must not be exercised in an arbitrary
manner as to erode the constitutional guarantee
of security of tenure. (Procter and Gamble, G.R
No. 139847)
Truly, while the employer has the inherent right
to discipline, including that of dismissing its
employees, this prerogative is subject to the
regulation by the State in the exercise of its
police power. (Manila Trading v Zulueta, G.R
No. L-47653)
In this regard, it is a hornbook doctrine
that infractions committed by an employee
should merit only the corresponding penalty
demanded by the circumstance. The penalty
must be commensurate with the act, conduct
or omission imputed to the employee and must
be imposed in connection with the disciplinary
authority of the employer. (CREA v LNRC
G.R No. 102993)
B. TRANSFER OF EMPLOYEES
Nature of the power to transfer
The doctrine is well-settled that it is the
employer’s prerogative, based on its
assessment and perception of its employees’
qualifications, aptitudes and competence, to
move them around in the various areas of its
business operations in order to ascertain where
they will function with maximum benefit to the
company. (Tinio v C.A, G.R No. 171764)
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An employee’s right to security of tenure does
not give him a vested right to his position as
would deprive the company of its prerogative
to change his assignment or transfer him where
he will be most useful. (P-JACC v NLRC, G.R
83239)
An employee has no valid reason to disobey the
order of transfer given by management,
especially if he has tacitly given his consent
thereto when he acceded to the companys
policy of hiring sales staff who are willing to be
assigned anywhere in the Philippines which is
demanded by the employer’s business. (Abbot
Laboratories v NLRC, G.R 76959)
Transfer vis-a-vis Promotion/Demotion
A transfer is a movement from one position to
another which is of equivalent rank, level or
salary, without break in service. Promotion, on
the other hand, is the advancement from one
position to another with an increase in duties
and responsibilities as authorized by law, and
usually accompanied by an increase in salary.
Conversely, demotion involves a situation
where an employee is relegated to a
subordinate or less important position
constituting a reduction to a lower grade or
rank, with a corresponding decrease in duties
and responsibilities, and usually accompanied
by a decrease in salary. (Tinio v C.A, G.R No.
171764)
Mere title or position held by an employee in a
company does not determine whether a transfer
constitutes a demotion. Rather, it is the totality
of the following circumstances, to wit:
economic significance of the work, the duties
and responsibilities conferred, as well as the
same rank and salary of the employee, among
others, that establishes whether a transfer is a
demotion. (Tinio v C.A, G.R No. 171764)
Limitation on the power to transfer
But, like other rights, there are limits
thereto. The managerial prerogative to transfer
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personnel must be exercised without grave
abuse of discretion, bearing in mind the basic
elements of justice and fair play. Having the
right should not be confused with the manner
in which the right is exercised. Thus, it cannot
be used as a subterfuge by the employer to rid
himself of an undesirable worker. The
employer must be able to show that the transfer
is not unreasonable, inconvenient, or
prejudicial to the employee; nor does it involve
a demotion in rank or a diminution of his
salaries, privileges, and other benefits. (Tinio v
C.A , G.R No. 171764)
Transfer as constructive dismissal
Constructive dismissal is the employee’s
quitting because continued employment is
rendered impossible, unreasonable or unlikely;
as an offer involving a demotion in rank and
diminution of pay. Likewise, constructive
dismissal exists when an act of clear
discrimination, insensibility or disdain by an
employer has become so unbearable to the
employee leaving him with no option but to
forego his continued employment. (Blue Dairy
v NLRC, G.R No. 129843)
Constructive dismissal is when three conditions
concur:
1. when the transfer
is unreasonable, inconvenient or prejudicia
l to the employee;
2. when the transfer involves a demotion in
rank or diminution of salaries, benefits and
other privileges;
3. and when the employer performs a clear act
of discrimination, insensibility, or disdain
towards the employee, which forecloses any
choice by the latter except to forego his
continued employment. (Tinio v C.A, G.R
No. 171764)
The burden of proof in constructive dismissal
cases is on the employer to establish that the
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 transfer of an employee is for valid and
legitimate grounds, i.e., that the transfer is not
unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in
rank or a diminution of salaries, privileges and
other benefits. (Tinio v C.A, G.R No. 171764)
C. PRODUCTIVITY STANDARDS (PS)
Nature
An employer is entitled to impose productivity
standards for its workers, and in fact, non-
compliance may be visited with a penalty even
more severe than demotion. This management
prerogative of requiring standards may be
availed of so long as they are exercised in good
faith for the advancement of the employer's
interest. (Leonardo v NLRC, G.R No. 125303)
Failure to meet PS as just cause
An employee’s failure to meet sales or work
quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross
neglect of duty that is a just cause for dismissal
under Article 282 of the Code.
Limitation
However, in order for the quota imposed to be
considered a valid productivity standard and
thereby validate a dismissal, managements
prerogative of fixing the quota must be
exercised in good faith for the advancement of
its interest.
PS as just cause to terminate Probationary EE
Section 6 of the Implementing Rules of Book
VI, Rule VIII-A of the Code specifically
requires the employer to inform the
probationary employee of such reasonable
standards at the time of his engagement, not
at any time later; else, the latter shall be
considered a regular employee.
D. BONUS
Bonus defined
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A bonus is an amount granted and paid to an
employee for his industry and loyalty which
contributed to the success of the employer’s
business and made possible the realization of
profits. It is an act of generosity granted by an
enlightened employer to spur the employee to
greater efforts for the success of the business
and realization of bigger profits.
Bonus generally not demandable
The granting of a bonus is a management
prerogative, something given in addition to
what is ordinarily received by or strictly due the
recipient. Thus, a bonus is not a demandable
and enforceable obligation, except when it is
made part of the wage, salary or compensation
of the employee. (BPI v NLRC, G.R No.
10701)
Bonus as vested right
Whether or not a bonus forms part of wages
depends upon the circumstances and conditions
for its payment. If it is additional compensation
which the employer promised and agreed to
give without any conditions imposed for its
payment, such as success of business or greater
production or output, then it is part of the wage.
But if it is paid only if profits are realized or if
a certain level of productivity is achieved, it
cannot be considered part of the wage. Where
it is not payable to all but only to some
employees and only when their labor becomes
more efficient or more productive, it is only an
inducement for efficiency, a prize therefore, not
a part of the wage. (Metro Transit v NLRC, G.R
No. 121574)
Generally, a bonus is not a demandable and
enforceable obligation. For a bonus to be
enforceable, it must have been promised by the
employer and expressly agreed upon by the
parties. Given that the bonus in this case is
integrated in the CBA, the same partakes the
nature of a demandable obligation. Verily, by
virtue of its incorporation in the CBA, the
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Christmas bonus due to respondent Association
has become more than just an act of generosity
on the part of the petitioner but a contractual
obligation it has undertaken. (Lepanto v LCEA,
G. R No. 180886)
The act of granting the same has become an
established company practice such that it has
virtually become part of the employee’s salary
or wage. A bonus may be granted on equitable
consideration when the giving of such bonus
has been the company’s long and regular
practice. (Eastern Telecom v ETEU, G.R No.
185665)
What constitutes company practice?
To be considered a regular practice, however,
the giving of the bonus should have been done
over a long period of time, and must be shown
to have been consistent and deliberate. The test
or rationale of this rule on long practice
requires an indubitable showing that the
employer agreed to continue giving the benefits
knowing fully well that said employees are not
covered by the law requiring payment thereof.
(PHILACOR v CA, G.R No. 149434)
Bonus cannot squeeze blood from stone
However, an employer cannot be forced to
distribute bonuses which it can no longer afford
to pay. To hold otherwise would be to penalize
the employer for his past generosity. (BPI v
NLRC, G.R No. 100701)
E. CHANGE IN WORKING HOURS
Management retains the prerogative, whenever
exigencies of the service so require, to change
the working hours of its employees. (Sime
Darby v NLRC, G.R No. 119205)
However, the exercise of management
prerogative is not absolute. By its very nature,
encompassing as it could be, management
prerogative must be exercised in good faith and
with due regard to the rights of labor verily,
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with the principles of fair play at heart and
justice in mind. While we concede that
management would best know its operational
needs, the exercise of management prerogative
cannot be utilized as an implement to
circumvent our laws and oppress employees.
(PAL v Pascua, G.R No. 143258)
Reduction of work hours
Financial losses must be shown before a
company can validly opt to reduce the work
hours of its employees. (Linton v Carpio et.al,
G.R No. 163147)
Work hours in Unfair Labor Practices
Granting lunch breaks to certain employees
while depriving the other employees of such
breaks. This Court affirmed in that case the
NLRCs finding that such act of management
was discriminatory and constituted unfair labor
practice. (Sime Darby v NLRC, G.R No.
119205)
As shown by the records, the change effected
by management with regard to working time is
made to apply to all factory employees engaged
in the same line of work whether or not they are
members of private respondent union. Hence, it
cannot be said that the new scheme adopted by
management prejudices the right of private
respondent to self-organization. (Sime Darby
vs NLRC, G.R No. 119205)
F. MARRIAGE BETWEEN EMPLOYEES
OF COMPETITOR – EMPLOYER
Rationale for prohibition
As held in a Georgia, U.S.A case, it is a
legitimate business practice to guard business
confidentiality and protect a competitive
position by even-handedly disqualifying from
jobs male and female applicants or employees
who are married to a competitor.
Constitutionality
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 The challenged company policy does not
violate the equal protection clause of the
Constitution as petitioners erroneously suggest.
It is a settled principle that the commands of the
equal protection clause are addressed only to
the state or those acting under color of its
authority. Corollary, it has been held in a long
array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against
merely private conduct, however,
discriminatory or wrongful. The only
exception occurs when the state. (Tecson v
Glaxo, G.R No. 149434)
Not an attack against marriage
The policy being questioned is not a policy
against marriage. An employee of the company
remains free to marry anyone of his or her
choosing. The policy is not aimed at restricting
a personal prerogative that belongs only to the
individual. However, an employee’s personal
decision does not detract the employer from
exercising management prerogatives to ensure
maximum profit and business success. (Tecson
v Glaxo, G.R No. 149434)
G. POST-EMPLOYMENT BAN
Ban is generally againts public policy
There are two principal grounds on which the
doctrine is founded that a contract in restraint
of trade is void as against public policy. One is,
the injury to the public by being deprived of the
restricted party’s industry; and the other is, the
injury to the party himself by being precluded
from pursuing his occupation, and thus being
prevented from supporting himself and his
family. (Ferrazzini v Gsell)
Public welfare is first considered, and if it be
not involved, and the restraint upon one party
is not greater than protection to the other party
requires, the contract may be sustained. The
question is, whether, under the particular
circumstances of the case and the nature of the
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particular contract involved in it, the contract
is, or is not, unreasonable. (Gibbs v Baltimore)
Contra
But it is just as important to protect the
enjoyment of an establishment in trade or
profession, which its employer has built up by
his own honest application to every day duty
and the faithful performance of the tasks which
every day imposes upon the ordinary
man. What one creates by his own labor is
his. Public policy does not intend that another
than the producer shall reap the fruits of labor;
rather, it gives to him who labors the right by
every legitimate means to protect the fruits of
his labor and secure the enjoyment of them to
himself. Freedom to contract must not be
unreasonably abridged. Neither must the right
to protect by reasonable restrictions that which
a man by industry, skill and good judgment has
built up, be denied. (Rivera v Solidbank, G.R
No. 163269)
Reasonable ban
The restraint may not be unduly harsh or
oppressive in curtailing the employees
legitimate efforts to earn a livelihood and must
be reasonable in light of sound public policy.
Courts should carefully scrutinize all contracts
limiting a man’s natural right to follow any
trade or profession anywhere he pleases and in
any lawful manner. (Rivera v Solidbank, G.R
No. 163269)
Whether a covenant prohibiting competitive
employment will be upheld as valid and
enforceable in court will depend on the
reasonableness of such covenant – if it is not
unreasonable or oppressive, or an undue or
unreasonable restraint of trade.
The court must have before it evidence relating
to the legitimate interests of the employer
which might be protected in terms of time,
space and the types of activity proscribed.
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In determining whether the contract is
reasonable or not, the trial court should
consider the following factors: (a) whether the
covenant protects a legitimate business interest
of the employer; (b) whether the covenant
creates an undue burden on the employee; (c)
whether the covenant is injurious to the public
welfare; (d) whether the time and territorial
limitations contained in the covenant are
reasonable; and (e) whether the restraint is
reasonable from the standpoint of public
policy. (Weber v Tillman)
Topic 6: Social Welfare Legislation
SOCIAL WELFARE LEGISLATION – PD
626
Social Legislation
It consists of statutes, regulations and
jurisprudence that afford protection to labor,
especially to working women and minors, and
is in full accord with the constitutional
provisions on the promotion of social justice to
insure the well-being and economic security of
all the people.
A. SOCIAL SECURITY SYSTEM LAW
(R.A. 8282)
Policy objective in the enactment of the Social
Security Law
To establish, develop, promote and perfect a
sound and viable tax-exempt social security
service suitable to the needs of the people
throughout the Philippines, which shall
promote social justice and provide meaningful
protection to members and their beneficiaries
against the hazards of disability, sickness,
maternity, old age, death, and other
contingencies resulting in loss of income or
financial burden (Sec. 2, R.A. 8282).
NOTE: The enactment of SSS law is a
legitimate exercise of the police power. It
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affords protection to labor and is in full accord
with the constitutional mandate on the
promotion of social justice [Roman Catholic
Archbishop of Manila vs. SSS, G.R. No.
15045, (1961)].
Definitions
1. Employer - Any person, natural or juridical,
domestic or foreign, who carries into the
Philippines any trade, business, industry,
undertaking or activity of any kind and uses the
services of another person who is under his
orders as regards the employment, except the
Government and any of its political
subdivisions, branches or instrumentalities,
including corporations owned or controlled by
the Government: Provided, That a self-
employed person shall be both employee and
employer at the same time. (Sec 8[c], R.A.
8282)
2. Employee - Any person who performs
services for an employer in which either or both
mental and physical efforts are used and who
receives compensation for such services, where
there is an employer-employee relationship:
Provided, that a self-employed person shall be
both employee and employer at the same time.
(Sec. 8[d], R.A. 8282)
NOTE: under Sec 8 of said law, employees of
bona fide independent contractors shall not be
deemed employees of the employer engaging
the services of said contractors.
3. Employment – GR: Any service performed
by an employee for his employer.
Exceptions:
1. Employment purely casual and not for
the purpose of occupation or business
of the employer;
2. Service performed on or in connection
with an alien vessel by an employee if
he is employed when such vessel is
outside the Philippines;
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 3. Service performed in the employ of the
Phil. Government or instrumentality or
agency thereof;
4. Service performed in the employ of a
foreign government or international
organization, or their wholly-owned
instrumentality:
5. Such other services performed by
temporary and other employees which
may be excluded by regulation of the
SSC. Employees of bona fide
independent contractors shall not be
deemed employees of the employer
engaging the services of said
contractors. (Sec. 8[j], R.A. 8282)
4. Contingency - The retirement, death,
disability, injury or sickness and maternity of
the member.
5. Monthly pension
1. The monthly pension shall be the
highest of the following amounts:
a. The sum of the following:
i. Php 300.00; plus
ii. 20% of the average monthly
salary credit; plus
iii. 2% of the average monthly
salary credit for each credited
year of service in excess of 10
years; or
b. 40% of the average monthly salary
credit; or
c. Php 1,000.00, provided that the
Monthly Pension shall in no case be
paid for an aggregate amount of
less than sixty (60) months (Sec. 12
[a], R.A. 8282)
2. Minimum Pension
a. Php 1,200.00 - members with at
least 10 credited years of service
b. Php 2, 400.00 for those with 20
credited years of service. (Sec. [b],
R.A. 8282)
6. Compensation - All actual remuneration for
employment, including the mandated cost of
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living allowance, as well as the cash value of
any remuneration paid in any medium other
than cash except that part of the remuneration
received during the month in excess of the
maximum salary.
7. Average monthly credit - An average
monthly credit is the result obtained by:
a. Dividing the sum of the last 60 monthly
salary credits immediately preceding
the semester of contingency by 60; or
b. Dividing the sum of all the monthly
salary credits paid prior to the semester
of contingency by the number of
monthly contributions paid in the same
period, whichever is greater.
Provided, that the injury or sickness which
caused the disability shall be deemed as the
permanent disability for the purpose of
computing the average monthly salary credit.
8. Average daily salary credit - An average
salary credit is the result obtained by dividing
the sum of the 6 highest monthly salary credits
in the 12-month period immediately preceding
the semester of contingency by 180.
SSS premiums are not taxes
The funds contributed to the System belong to
the members who will receive benefits, as a
matter of right, whenever the hazards provided
by the law occur [CMS Estate, Inc., vs. SSS,
G.R. No. 26298, (1984)].
Benefits received under SSS law are not part
of the estate of a member
Benefits receivable under the SSS Law are in
the nature of a special privilege or an
arrangement secured by the law pursuant to the
policy of the State to provide social security to
the workingman. The benefits are specifically
declared not transferable and exempt from tax,
legal processes and liens [SSS vs. Davac, et. al.,
G.R. No.21642, (1966)].
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9. Remittance to SSS and prescriptive period
of right to institute action under the Social
Security Law in Sec. 22(b)
The contributions payable under this Act in
cases where an employer refuses or neglects to
pay the same shall be collected by the SSS in
the same manner as taxes are made collectible
under the National Internal Revenue Code, as
amended. Failure or refusal of the employer to
pay or remit the contributions herein prescribed
shall not prejudice the right of the covered
employee to the benefits of the coverage.
The right to institute the necessary action
against an employer may be commenced within
twenty (20) years from the time the
delinquency is known or the assessment is
made by the SSS, or from the time the benefit
accrues, as the case may be.
10. Beneficiaries
A. Primary Beneficiaries
1. The dependent spouse until he or
she remarries;
2. The dependent legitimate,
legitimated or legally adopted, and
illegitimate children who are not
yet 21 years of age.
The dependent illegitimate children shall be
entitled to 50% of the share of the legitimate,
legitimated or legally adopted children.
However, in the absence of the dependent
legitimate, legitimated children of the member,
his/her dependent illegitimate children shall be
entitled to 100% of the benefits
B. Secondary Beneficiaries
1. The dependent parents, in the
absence of the primary
beneficiaries.
2. Any other person designated by the
member as his/her secondary
beneficiary, in the absence of all
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the foregoing primary beneficiaries
and dependent parents.
11. Dependents of a member who is
retired/disabled/deceased are entitled to the
dependent’s pension
The legitimate, legitimated, or legally adopted
and illegitimate children, conceived on or
before the date of retirement of a retiree will
each receive dependents’ pension equivalent to
10 percent of the member’s monthly pension or
P250, whichever is higher.
Only five (5) minor children, beginning from
the youngest, are entitled to the dependents
pension. No substitution is allowed.
If there are more than five (5) dependents, the
legitimate, legitimated, or legally adopted
children shall be preferred.
Dependents’ entitlement to benefit stops
when the child:
1. reaches 21 years old;
2. gets married;
3. get employed; or
4. dies.
The dependents’ pension is granted for life for
children over 21 years of age, provided they are
incapacitated and incapable of self-support due
to physical or mental defect which is congenital
or acquired during minority.
Compulsory Coverage of Employers –
premised on the existence of employer-
employee relationship, the essential elements
of which are: (1) selection and engagement of
the employee; (2) payment of wages; (3) the
power of dismissal; and (4) the power of
control with regard to the means and methods
by which the work is to be accomplished, with
the power of control being the most
determinative factor.
a. An employer or any person who uses
the services of another person in
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 business, trade, industry or any
undertaking.
b. A social, civic, professional, charitable
and other non-profit organizations
which hire the services of employees
are considered “employers.”
c. A foreign government, international
organization or its wholly-owned
instrumentality such as an embassy in
the Philippines, may enter into an
administrative agreement with the SSS
for the coverage of its Filipino
employees.
Compulsorily Coverage of Employees
a. A private employee, whether
permanent, temporary or provisional,
who is not over 60 years old.
b. A domestic worker or kasambahay who
has rendered at least one (1) month of
service (RA No 10361, Sec 30). With
monthly income not less than one
thousand pesos (RA No 8282, Sec 9)
c. A Filipino seafarer upon the signing of
the standard contract of employment
between the seafarer and the manning
agency which, together with the foreign
ship owner, act as employers.
d. An employee of a foreign government,
international organization or their
wholly-owned instrumentality based in
the Philippines, which entered into an
administrative agreement with the SSS
for the coverage of its Filipino workers
except those already covered by their
respective civil service retirement
systems.
e. The parent, spouse or child below 21
years old of the owner of a single
proprietorship business.
Compulsory Coverage of Self-Employed
Persons
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A self-employed person, regardless of trade,
business or occupation, with an income of at
least P1,000 a month and not over 60 years old,
should register with the SSS. Included, but not
limited to, are the following self-employed
persons:
a. Self-employed professionals;
b. Business partners, single proprietors
and board directors;
c. Actors, actresses, directors,
scriptwriters and news reporters who
are not under an employer-employee
relationship;
d. Professional athletes, coaches, trainers
and jockeys;
e. Farmers and fisherfolks (RA No 8282,
Sec 9-A); and
f. Workers in the informal sector such as
cigarette vendors, watch-your-car
boys, hospitality girls, among others.
Unless otherwise specified, all provisions of
the law, R.A. No. 8282, applicable to covered
employees shall also be applicable to the
covered self-employed persons.
A self-employed person shall be both employee
and employer at the same time.
Voluntary Coverage
1. Separated Members - A member who is
separated from employment or ceased
to be self-employed/OFW/non-
working spouse and would like to
continue contributing.
2. Overseas Filipino Workers (OFWs) - A
Filipino recruited in the Philippines by
a foreign-based employer for
employment abroad or one who
legitimately entered a foreign country
(i.e., tourist, student) and is eventually
employed.
3. Non-working spouses of SSS members
- A person legally married to a
currently employed and actively paying
SSS member who devotes full time in
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 the management of household and
family affairs may be covered on a
voluntary basis, provided there is the
approval of the working spouse. The
person should never have been a
member of the SSS. The contributions
will be based on 50 percent (50%) of
the working spouse’s last posted
monthly salary credit but in no case
shall it be lower than P1,000.
4. Self-employed, who realizes no income
for a certain month
Effective Date of Coverage
For compulsory coverage:
1. For employer - Compulsory coverage
of the employer shall take effect on the
first day of his operation or on the first
day he hires employee/s. The employer
is given only 30 days from the date of
employment of employee to report the
person for coverage to the SSS.
2. For employee - Compulsory coverage
of the employee shall take effect on the
first day of his employment.
3. For self-employed - The compulsory
coverage of the self-employed person
shall take effect upon his registration
with the SSS or upon payment of the
first valid contribution, in case of initial
coverage.
For voluntary coverage:
1. For an OFW – upon first payment of
contribution, in case of initial coverage.
2. For a non-working spouse – upon first
payment of contribution.
3. For a separated member – on the month
he/she resumed payment of
contribution.
Effect of separation of an employee from his
employment under compulsory coverage
1. His employer’s contribution on his
account and his obligation to pay
contribution arising from that
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employment shall cease at the end of
the month of separation;
2. Said employee shall be credited with all
the contributions paid on his behalf and
entitled to benefits according to the
provisions of the SSS Law.
3. The employee may, however, continue
to pay the total contributions to
maintain his right to full benefit (Sec.
11, R.A. 8282).
NOTE: The above provision recognizes the
“once a member, always a member” rule.
Effect of the interruption of business or
professional income
If the self-employed member realizes no
income in any given month:
1. He shall not be required to pay
contributions for that month.
2. He may, however, be allowed to
continue paying contributions under
the same rules and regulations
applicable to a separated employee
member:
3. Provided, that no retroactive payment
of contributions shall be allowed other
than as prescribed under Sec. 22-A
(Sec. 11-A, R.A. 8282).
Determination of the contributions of the
self-employed
The contribution shall be determined in
accordance with Sec. 18 of the SSS Law,
provided that:
1. The monthly earnings declared as the
time of registration shall be considered
as his monthly compensation and he
shall pay for both employer and
employee contributions
2. The monthly earnings declared at the
time of registration shall remain the
basis of his monthly salary credit,
unless another declaration of his
monthly earnings was made, the latter
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 becomes the new basis of his monthly
salary credits. [Sec. 19-A, R.A. No.
8282]
Reportorial requirements of the employer
and self-employed
1. Employer - Report immediately to SSS
the names, ages, civil status,
occupations, salaries and dependents of
all his covered employees
2. Self-employed - Report to SSS within
30 days from the first day of his
operation, his name, age, civil status,
occupation, average monthly net
income and his dependents
Excluded Employers - Government and any
of its political subdivisions, branches or
instrumentalities, including corporations
owned or controlled by the Government with
original charters.
Excluded Employees - Workers whose
employment or service falls under any of the
following circumstances are not covered:
1. Employment purely casual and not for
the purpose of occupation or business
of the employer;
2. Service performed on or in connection
with an alien vessel by an employee if
he is employed when such vessel is
outside the Philippines;
3. Service performed in the employ of the
Philippine Government or
instrumentality or agency thereof;
4. Service performed in the employ of a
foreign government or international
organization, or their wholly-owned
instrumentality: Provided, however,
That this exemption notwithstanding,
any foreign government, international
organization or their wholly-owned
instrumentality employing workers in
the Philippines or employing Filipinos
outside of the Philippines, may enter
into an agreement with the Philippine
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
Government for the inclusion of such
employees in the SSS except those
already covered by their respective
civil service retirement systems:
Provided, further, That the terms of
such agreement shall conform with the
provisions of R.A. No. 8282 on
coverage and amount of payment of
contributions and benefits: Provided,
finally, That the provisions of this Act
shall be supplementary to any such
agreement; and
5. Such other services performed by
temporary and other employees which
may be excluded by regulation of the
Social Security Commission.
Employees of bona-fide independent
contractors shall not be deemed
employees of the employer engaging
the service of said contractors.
Classification of SSS Benefits
1. Social security benefits:
a. Sickness
b. Maternity
c. Retirement
d. Disability
e. Death and funeral.
2. Employees’ compensation benefits.
SICKNESS BENEFITS
It is a daily cash allowance paid for the number
of days a member is unable to work due to
sickness or injury.
Requisite for the enjoyment of sickness
benefits of an SSS member:
1. He is unable to work due to sickness or
injury and confined either in a hospital
or at home for at least four (4) days;
2. He has paid at least three months of
contributions within the 12-month
period immediately before the semester
of sickness has been paid;
110
 3. When all the company sick leaves with
pay for the current year has been used
up; and
4. The employer has been notified, or, if a
separated, voluntary or self-employed
member, the SSS directly within 5
calendar days after the start of his
confinement.
NOTE: The requirement of notification is not
necessary when:
1. Confinement is in a hospital; or
2. The employee became sick or was
injured while working or within the
premises of the employer.
The amount of a member’s sickness benefit per
day is equivalent to ninety (90) percent of the
member’s average daily salary credit.
Days a member can avail of the sickness
benefit
A member can ban be granted sickness benefit
for a maximum of 120 days in one calendar
year, however any unused portion of the
allowable 120 days of sickness benefit cannot
be carried forward and added to the total
number of allowed compensable days for the
following year.
The sickness benefit shall not be paid for more
than 240 days on account of the same illness. If
the same sickness or injury still persists after
240 days, his claim will be considered a
disability claim.
Payment of sickness benefit to employed
member
The payment of the daily sickness allowance is
advanced by the employer every regular
payday. The SSS will then reimburse the
employer of the amount legally advanced upon
receipt of satisfactory proof of such payment
and legality thereof.
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
The SSS will reimburse the employer only for
confinements within the one (1) year period
immediately preceding and the date the claim
for benefit or reimbursement is received by the
SSS, except for confinements in hospital.
Payment of sickness benefit to unemployed,
self-employed or voluntary member
The sickness benefit will be paid directly by the
SSS to the unemployed, self-employed or
voluntary members
Prescribed period for filing for a member
who is confined in:
a) hospital – the claim for benefit must be
filed within one (1) year from the last
day of confinement
b) home – the claim for reimbursement by
the employer must be filed within one
(1) year from the start of illness.
Instances when the employer or the
unemployed member is not entitled to
reimbursement
1. Where the employer failed to notify the
SSS of the confinement;
2. In the case of the unemployed; where
he failed to send the notice directly to
the SSS except when the confinement
is in a hospital; and
3. Where the claim for reimbursement is
made after 1 year from the date of
confinement.
MATERNITY BENEFIT
The maternity benefit is a daily cash allowance
granted to a female member who was unable to
work due to childbirth or miscarriage.
Qualifications for entitlement to maternity
benefit
1. She has paid at least three monthly
contributions within the 12-month
period immediately preceding the
semester of her childbirth or
miscarriage.
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 2. She has given the required notification
of her pregnancy through her employer
if employed, or to the SSS if separated,
voluntary or self-employed member.
Pregnant women, whether married or
unmarried, and voluntary or self-employed
members are entitled to maternity leave
benefits
th
Maternity benefits are not part of the 13
month pay computation – because maternity
benefits are granted to employees in lieu of
wages
The maternity benefit is equivalent to one
hundred (100) percent of the member’s average
daily salary credit multiplied by sixty (60) days
for normal delivery or miscarriage, seventy-
eight (78) days for caesarian section delivery.
The maternity benefit shall be paid only for the
first four (4) deliveries or miscarriages.
No member can be entitled to two benefits
for the same period.
A female member cannot claim for sickness
benefit for a period of sixty (60) days for
normal delivery or miscarriage, seventy-eight
(78) days for caesarian section delivery within
which she has been paid the maternity benefit.
Notification of employer and SSS
As soon as a member becomes pregnant, she
must immediately notify her employer (if
employed) or the SSS (if separated/self-
employed/voluntary) of such pregnancy and
the probable date of her childbirth at least sixty
(60) says from the date of conception by
accomplishing Maternity Notification form
(SSS FORM MAT-1) and by submitting proof
of pregnancy.
The employer must, in turn, notify the SSS
through the submission of the Maternity
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LAONGLAAN NOTES 2017
Notification Form and proof of pregnancy
immediately after the receipt of the notification
from the employee member. Failure to observe
the rule on notification may result to the denial
of the maternity claim.
The maternity benefits will be paid to the
claimant for:
1. Employed members – the benefit is
advanced by the employer to the
qualified employee, in full, within
thirty (30) days from the date of filing
of the maternity leave application. The
SSS, in turn, shall immediately
reimburse the employer one hundred
(100) percent of the amount of the
maternity benefit advanced to the
female employee upon receipt of
satisfactory proof of such payment and
legality thereof.
If the employee member gives birth or suffers
miscarriage without the required contributions
having been remitted by the employer, or the
employer fails to notify the SSS, the employer
will be required to pay to the SSS damages
equivalent to the benefits the employee would
otherwise have been entitled to.
2. Separated/self-employed/voluntary
members – the amount of benefit is
paid directly to them by the SSS.
RETIREMENT BENEFIT
It is a cash benefit either in monthly pension or
lump sum paid to a member who can no longer
work due to old age.
Types of retirement benefit
1. Monthly Pension - Lifetime cash
benefit paid to a retiree who has paid at
least 120 monthly contributions to the
SSS prior to the semester of retirement.
2. Lump Sum Amount - Granted to a
retiree who has not paid the required
120 monthly contributions. It is equal
112
 to the total contributions paid by the
member and by the employer including
interest.
Members who qualify for a retirement
benefit
1. Members must have paid at least 120
monthly contributions prior to the
semester of retirement and is any of the
following, whichever is applicable:
a. at least 60 years old and
separated from employment or
has ceased to be a self-
employed/OFW/Household
Helper (optional retirement);
b. at least 65 years old whether
still employed/self-employed,
working as OFW/Household
Helper or not (technical
retirement);
c. at least 55 years old and
separated from employment or
has ceased to be a self-
employed, if an “underground
mineworker” (optional
retirement); Provided that
member has been an
underground mineworker at
least 5 years (either continuous
or accumulated) prior to the
semester of retirement but
whose actual date of retirement
is not earlier than March 13,
1998;
d. at least 60 years old whether
still employed/self-employed
or not, if an “underground
mineworker” (technical
retirement); or
e. a total disability pensioner who
has recovered from disability
and is at least 60 years old (or
at least 55 years old, if an
underground mineworker).
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
2. A former retiree-pensioner whose
monthly pension was suspended due to
reemployment/self-employment and is
now separated from employment or has
ceased to be an self-employed.
3. A member who is 60 years old and
above, but not yet 65, with 120
contributions or more may continue
paying as VM up to 65 years old to
avail of the higher amount of benefit.
NOTE: Monthly pension dependents’ pension
shall be suspended:
1. Upon the reemployment or resumption
of self-employment;
2. Recovery of the disabled member from
his permanent total disability
3. Failure to present himself for
examination at least once a year upon
notice by the SSS. [Sec. 13-A (b), RA
8282]
In case of death of a retiree pensioner
Upon the death of the retiree pensioner, the
primary beneficiaries as of the date of the
retirement shall be entitled to one hundred
(100) percent of the monthly pension and the
dependents to the dependents’ pension
If the retiree pensioner dies within sixty (60)
months from the start of the monthly pension
and has no primary beneficiaries, the secondary
beneficiaries shall be entitled to a lump sum
benefit equivalent to the total monthly pensions
corresponding to the five-year guaranteed
period excluding the dependents’ pension.
The retiree is entitled to a 13th month pension
payable every December.
DISABILITY BENEFIT
It is a cash benefit paid to a member who
becomes permanently disabled, either partial or
total with at least one (1) monthly contribution
paid to the SSS prior to the semester of
contingency.
113
The New Disability Program individual to perform activities of daily living
(ADL) is tested using the Functional
The new program is a re-designed disability
Independence Measure (FIM).
program that implements the revised manual of
disability assessment. The new program adopts Member should have twenty (20) percent
the World Health Organization’s (WHO) medical impairment to qualify for functional
definition of disability that states as any assessment.
“restriction or lack (resulting from impairment)
Permanent partial disability
of ability to perform an activity in the manner
or within the range considered normal for a A complete and permanent loss or use of any of
human being. the following body parts and does not totally
prevent a member from engaging in any
The re-designed disability program aims to
engaging occupation.
ensure that the appropriate disability is paid to
deserving members.
One thumb One big toe
Salient Features of the New Disability One index finger One hand
Program One middle finger One arm
One ring finger One foot
1. New Manual of Disability Assessment
One little finger One leg
is any restriction or lack (resulting from
Hearing of one ear One ear
impairment) of ability to perform an
Hearing of both ears Both ears
activity in the manner or within the
Sight of one eye
range considered normal for a human
being.
Permanent total disability
2. Impairment is defined as any loss or
abnormality of psychological, Under Sec. 13-A (d) of the SSS Law, the
physiological, or anatomical structure following disabilities are deemed permanent
or function. total:
1. Complete loss of sight of both eyes;
3. Annual Assessment of all disability
2. Loss of two limbs at or above the ankle
pensioners except permanent partial
or wrists;
disabilities stated under Section 13A
3. Permanent complete paralysis of two
paragraph (f) of the SS Law.
limbs;
4. Prescriptive period of ten (10) years in 4. Brain injury resulting to incurable
filing disability claim application from imbecility or insanity; and
the date of occurrence of disability. 5. Such cases as determined and approved
by the SSS.
The Medical and Functional Assessment
under the New Disability Program Types of disability benefit
1. Monthly Pension - cash benefit paid to
Under the medical assessment, nature and a disabled member who has paid at
degree of impairment of affected body least 36 monthly contributions to the
part/system is determined through physical SSS prior to the semester of disability.
examination and interview supported by The amount will be based on the
appropriate diagnostic tests; while, under member’s number of paid contributions
functional assessment, the capacity of the and the years of membership.

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LAONGLAAN NOTES 2017 114
NOTE: Only totally and permanently disabled
members will receive a lifetime monthly
pension.
The monthly pension of a partially disabled
member is paid up to a certain number of
months only according to the degree of
disability. If with deteriorating and related
permanent granted claim shall be deducted
from the percentage degree of disability of the
current claim.
The monthly pension is also given in a lump
sum if duration of pension is payable for less
than 12 months.
In addition to the monthly pension, a
supplemental allowance of P500.00 is paid to
the total or partial disability pensioner.
2. Lump Sum Amount - Granted to a
disabled member who has not paid the
required 36 monthly contributions.
a. For permanent total disability, the
lump sum benefit is equivalent to
the monthly pension times the
number of monthly contributions
paid to the SSS or twelve (12) times
the monthly pension, whichever is
higher.
b. For permanent partial disability,
the lump sum benefit is equivalent
to the monthly pension times the
number of monthly contributions
times the percentage of disability in
relation to the whole body or the
monthly pension times twelve (12)
times the percentage of disability,
whichever is higher.
Suspension of the monthly pension of the
member and the dependent’s pension will
occur upon:
a. Reemployment;
b. Resumption of self-employment;
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LAONGLAAN NOTES 2017
c. Recovery of the disabled member from
permanent total disability; or
d. Failure to present himself for
examination at least once a year upon
notice by SSS (member may request for
a domiciliary or a home visit if the
disability inhibits the member from
reporting for re-examination by the
SSS physician at any of the SSS branch
offices).
Effect of the death of a pensioner with
permanent total disability
1. Primary beneficiaries are entitled to
receive monthly pension as of the date
of disability.
2. If there are no primary beneficiaries
and the pensioner dies within 60
months from the start of his monthly
pension - Secondary beneficiaries shall
be entitled to a lump sum benefit
equivalent to the total monthly
pensions corresponding to the balance
of the 5-year guaranteed period
excluding the dependents’ pension
(Sec. 13-A [c], R.A. 8282).
Effect of retirement or death of a pensioner
with a partial disability
If the pensioner with partial disability retires or
dies, the disability pension shall cease upon his
retirement or death (Sec 13-A [j], R.A. 8282).
DEATH AND FUNERAL BENEFITS
The death benefit is a cash benefit either in
monthly pension or lump sum paid to the
beneficiaries of a deceased member.
The funeral benefit is a variable amount
ranging from a minimum of P20,000. 00 to a
maximum of P40,000. 00, depending on the
member’s paid contributions and CYS.
Entitlement to Death Benefits
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 1. Upon death of a member, if he has paid
at least thirty-six (36) monthly
contributions prior to the semester of
death:
a. primary beneficiaries shall be
entitled to the monthly pension; or
b. If there are no primary
beneficiaries, secondary
beneficiaries shall be entitled to a
lump sum benefit equivalent to 36
times the monthly pension.
2. Upon death of a member If he has not
paid the required thirty-six (36)
monthly contributions prior to the
semester of death:
a. Primary or secondary beneficiaries
shall be entitled to a lump sum
benefit equivalent to the monthly
pension multiplied by the number
of monthly contributions paid to
the SSS: or
b. 12 times the monthly pension,
whichever is higher (Sec. 13, R.A.
8282).
NOTE: the primary or secondary beneficiaries
of a deceased employee-member, who had no
contribution at all and who was reported for
coverage shall be entitled to funeral benefit
only.
The deceased member’s beneficiaries are
entitled to a 13th month pension payable every
December and the funeral benefit, which is paid
to whoever, shouldered the funeral expenses of
the deceased member.
B. GSIS LAW [R.A. No. 8291]
The Government Service Insurance System
Act of 1997
Purpose for the enactment of the GSIS law
To provide and administer the following social
security benefits for government Ees:
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LAONGLAAN NOTES 2017
1. Compulsory life insurance;
2. Optional life insurance;
3. Retirement benefit;
4. Disability benefits to work-related
contingencies; and
5. Death benefits
Definitions
1. Employer
a. National Government
b. Its political subdivisions, branches,
agencies,
c. instrumentalities
d. GOCCs, and financial institutions with
original
e. charters
f. Constitutional Commissions and the
Judiciary
g. (Sec. 2[c], R.A. 8291)
2. Employee or member - Any person,
receiving compensation while in the service of
an Er, whether by election or appointment,
irrespective of status of appointment, including
barangay and sanggunian officials (Sec. 2[d],
R.A. 8291).
3. Compensation - The basic pay or salary
received by an Ee, pursuant to his or her
election or appointment, excluding per diems,
bonuses, OT pay, honoraria, allowances and
any other emoluments received in addition to
the basic pay which are not integrated into the
basic pay under existing laws (Sec. 2[i], R.A.
8291).
Reportorial requirements of the Er
Er must report to GSIS the names, employment
status, positions, salaries of the employee and
such other matter as determined by the GSIS.
Penalty in case of delayed remittance or non-
remittance of contributions
The unremitted contributions shall be charged
interests as prescribed by the GSIS Board of
116
Trustees but shall not be less than 2% simple
interest per month from due date to the date of
payment by the employers concerned (Sec. 7,
R.A. 8291).
COVERAGE
Who are compulsorily required to become
members of the GSIS?
1. All government personnel, whether
elective or appointive, irrespective of status
of appointment, provided they are
receiving fixed monthly compensation and
have not reached the mandatory retirement
age of 65 years, are compulsorily covered
as members of the GSIS and shall be
required to pay contributions.
2. However, employees who have reached the
retirement age of 65 or more shall also be
covered, subject to the following rules:
An employee who is already beyond the
mandatory retirement age of 65 shall be
compulsorily covered and be required to pay
both the life and retirement premiums under the
following situations:
a) An elective official who at the time of
election to public office is below 65
years of age and will be 65 years or
more at the end of his term of office,
including the period/s of his re-election
to public office thereafter without
interruption.
b) Appointive officials who, before
reaching the mandatory age of 65, are
appointed to government position by
the President of the Republic of the
Philippines and shall remain in
government service at age beyond 65.
c) Contractual employees including
casuals and other employees with an
employee-government agency
relationship are also compulsorily
covered, provided they are receiving
fixed monthly compensation and
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
rendering the required number of
working hours for the month.
What are the classes of membership in the
GSIS?
Membership in the GSIS is classified either by
type or status of membership.
 As to type of members, there are regular
and special members:
a) Regular Members – are those
employed by the government of the
Republic of the Philippines, national or
local, legislative bodies, government-
owned and controlled corporations
(GOCC) with original charters,
government financial institutions
(GFIs), except uniformed personnel of
the Armed Forces of the Philippines,
the Philippine National Police, Bureau
of Jail Management and Penology
(BJMP) and Bureau of Fire Protection
(BFP), who are required by law to remit
regular monthly contributions to the
GSIS.
b) Special Members – are constitutional
commissioners, members of the
judiciary, including those with
equivalent ranks, who are required by
law to remit regular monthly
contributions for life insurance policies
to the GSIS in order to answer for their
life insurance benefits defined under
RA 8291.
 As to status of membership, there are
active and inactive members.
a) Active member – refers to a member
of the GSIS, whether regular or special,
who is still in the government service
and together with the government
agency to which he belongs, is required
to pay the monthly contribution.
117
 b) Inactive member – a member who is
separated from the service either by
resignation, retirement, disability,
dismissal from the service,
retrenchment or, who is deemed retired
from the service under this Act.
When does membership become effective?
The effective date of membership shall be the
date of the member’s assumption to duty on his
original appointment or election to public
office.
What is the effect of separation from the
service?
A member separated from the service shall
continue to be a member, and shall be entitled
to whatever benefits he has qualified to in the
event of any contingency compensable under
the GSIS Law.
EXCLUSIONS FROM COVERAGE
Who are excluded from the compulsory
coverage of the GSIS Law?
The following employees are excluded from
compulsory coverage:
a) Uniformed personnel of the Armed
Forces of the Philippines (AFP),
Philippine National Police (PNP),
Bureau of Fire Protection (BFP) and
Bureau of Jail Management and
Penology (BJMP);
b) Barangay and Sanggunian Officials
who are not receiving fixed monthly
compensation;
c) b who are not receiving fixed monthly
compensation; and
d) Employees who do not have monthly
regular hours of work and are not
receiving fixed monthly compensation.
DEPENDENTS, BENEFCIARIES
Who are beneficiaries under the GSIS Law?
There are two (2) kinds of beneficiaries under
the GSIS Law as follows:
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LAONGLAAN NOTES 2017
1. Primary beneficiaries — The legal
dependent spouse until he/she remarries
and the dependent children.
2. Secondary beneficiaries — The dependent
parents and, subject to the restrictions on
dependent children, the legitimate
descendants.
Who are dependents under the GSIS Law?
Dependents shall be the following:
a) the legitimate spouse dependent for
support upon the member or pensioner;
b) the legitimate, legitimated, legally adopted
child, including the illegitimate child, who
is unmarried, not gainfully employed, not
over the age of majority, or is over the age
of majority but incapacitated and
incapable of self- support due to a mental
or physical defect acquired prior to age of
majority; and
c) the parents dependent upon the member
for support.
Gainful Occupation — Any productive activity
that provided the member with income at least
equal to the minimum compensation of
government employees.
BENEFITS
What are the kinds of benefits under the
GSIS Law?
The following are the benefits under the GSIS
Law:
1. Compulsory Life Insurance Benefits
under the Life Endowment Policy
(LEP)
2. Compulsory Life Insurance Benefits
under the Enhanced Life Policy (ELP)
3. Retirement Benefits
4. Separation Benefit
5. Unemployment Benefit
6. Disability Benefits
7. Survivorship Benefits
8. Funeral Benefits
118
1. Compulsory Life Insurance Benefits
Under the Life Endowment Policy (LEP)
A member under this policy may be entitled to
any of the following benefits, depending on the
circumstances:
a) Maturity benefits – the face amount
value payable to any member upon
maturity of the policy
b) Cash Surrender Value – earned values
during the term of the insurance
payable to the member when he is
separated from the service before
maturity date of the policy or when he
is considered as a case of PTD.
c) Death Benefit - the face value of tbe
policy payable to designated
beneficiary/ies or legal heirs, in the
absence of the former, upon death of a
member
d) Accidental Death Benefit (ADB) -
additional benefit equivalent to the
amount of Death Benefit when the
member dies by accident. In this
connection, proof must be presented to
sufficiently establish that the cause of
the member’s death is accidental.
e) The right to present sufficient proof to
show that death was accidental shall
prescribe if the claim for ADB is files 4
years after the death of the member.
f) Cash Dividend – a policy holder is
entitled to dividends subject to the
guidelines as approved by the GSIS
Board
- NOT a guaranteed benefit
2. Compulsory Life Insurance Benefits
Under the Enhanced Life Policy (ELP)
A member under this policy may be entitled to
any of the following benefits, depending on the
circumstances:
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
a) Death Benefit – equivalent to the LATEST
annual salary multiplied by amount of
insurance (AOI) factor which is:
1.5 or 1.8
x current monthly salary by the GSIS, payable
to the legal heirs
- all outstanding obligations of the member in
accordance with the Claims and Loans
Interdependency Policy (CLIP).
b) Termination – the policy earns a
Termination Value during the life of the
policy computed from the percentage of
life insurance premiums actually remitted
and paid to GSIS.
- termination value is equivalent to a
percentage of monthly life insurance premiums
as determined by the GSIS due and paid in full,
either by direct remittance or through an APL
facility
- the accumulated termination value will grow
at such rate as determined by the Actuary
- the termination value shall be paid to the
member upon his separation from the
government services less all indebtedness of
the member with the GSIS in accordance with
the CLIP
c) Cash Dividend - a policy holder is entitled
to dividends subject to the guidelines as
approved by the GSIS Board
- NOT a guaranteed benefit
4. Retirement Benefit – consists of a monthly
pension
- computed based on years of service and
Average Monthly Compensation (AMC) for
the last 3 years
Eligibility:
The member:
(1) has rendered at least 15 years of service
(2) is at least 60 years of age
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(3) is not receiving a monthly pension benefit
from permanent of total disability
Retirement Benefit Options
A retiring member has the following options:
1) Lump sum equivalent to 6 months of the
basic monthly pension (BMP) payable at the
time of retirement and an old-age pension
benefit equal to BMP payable for life,
starting upon the expiration of the 5 years
covered by the lump sum; or
2) Cash payment equivalent to 18 times his
BMP and monthly pension for life payable
immediately (Sec. 13[a], R.A. 8291).
GR: Conversion in the mode of retirement
from RA 8291 to any other retirement laws and
vice versa administered by the GSIS shall NOT
be allowed.
XPN: those who became a member GSIS
members prior to the implementation of RA
8291, shall have the OPTION to retire under
PD 1146, RA 660, or RA 1616 subject to
eligibility
Change of Retirement Benefit Option Under
RA 8291
Change of retirement benefit option from
eighteen (18) months cash payment plus
immediate pension to five (5) year lump sum,
or vice versa, shall not be allowed. The GSIS
shall process the claim for retirement benefits
based on the member’s record in the GSIS
database.
Processing of retirement benefits of
members who died while their claims are
being processed.
For those qualified for retirement benefits:
1.) If the deceased member opted for five year
lump sum benefit as indicated in his/her claim
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
for retirement application, his legal heirs shall
be entitled to five-year lump sum benefit
equivalent to sixty (60) months basic monthly
pension (BMP). However, the survivorship
pension to qualified primary beneficiaries, if
any shall be granted after the end of the 5-year
guaranteed period, but filing of claim for
survivorship benefit should be done before the
end of the 4-year prescription period.
2.) If the deceased member opted for immediate
pension as indicated in his/her claim for
retirement benefit his legal heirs shall be
entitled to retirement benefits equivalent to
eighteen (18) months of BMP, plus accrued
pension, if any, up to the date of death of the
retiree. The corresponding survivorship
pension shall be paid to the qualified primary
beneficiaries, if any, and shall be computed
from the date of the death of the retiree, subject
to filing the claim.
3.) In case the deceased member failed to
indicate in his/her retirement option, it shall be
computed as if he/she opted for immediate
pension.
4.) The proceeds of retirement benefits shall be
paid and distributed to the legal heirs in
accordance with the law on succession under
the Civil Code of the Philippines.
For those not qualified for retirement benefits,
the GSIS shall determine if he/she is qualified
to other applicable benefits under R.A. 8291 or
such other laws administered by the GSIS.
Effects of re-employment
When a retired/separated member is re-
employed or reinstated in the service, his/her
previous services credited at the time of his/her
retirement/separation for which a
corresponding benefit had been awarded, shall
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be excluded in the computation of service. In
effect, he/she shall be considered a new entrant.
However, for those who retired prior to the
enactment of R.A. 8291, the previous services
of a retired/separated member may be added in
the computation of his creditable services
(subject to premium-based policy) upon
subsequent retirement under R.A. 8291 only
when both conditions are met: (a) the three
retirement re-entered government service
before June 24, 1997; and (b) the total amount
of benefit previously received, if any, including
the prescribed interest was refunded to GSIS on
or before March 2, 2006.
Basis of computation of total service
Total Length of Service (TLS) is the number of
years in government service regardless of
status of employment, with or without premium
contributions.
For purposes of computing the total length of
service under part-time status of employment,
services shall be converted to their full-time
equivalent using forty-hour week and fifty two-
week a year as basis.
Computation of creditable service.
The computation of creditable service for the
purpose of determining the amount of benefits
payable shall include the period or periods of
service with the required premium
contributions.
Computation of Average Monthly
Compensation (AMC).
The AMC shall be computed on the basis of the
average salary of the member for the last 36
months of creditable service immediately
preceding his retirement or separation.
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The basis for computing the AMC of a
separated or retired member requesting for
computation of benefits shall be the prevailing
policy on AMC at the time the claim is being
processed.
Computation of Revalued Monthly
Compensation
AMC plus Seven Hundred Pesos (P 700.00)
Computation of Basic Monthly Pension.
The formula for computing the BMP may be
adjusted subject to the approval of the Board
upon the recommendation by the President and
General Manager.
As a general rule, the BMP shall only be
computed for those members or
dependents/heirs of members who are eligible
to receive benefits under this law. It shall be
computed on the basis of a percentage of the
RAMC at the rate of 2.5% for every year of
creditable service, but in no case shall it exceed
90% of the AMC of the member. The formula
for computing BMP shall be: BMP = RAMC x
(2.5% x RCS).
Adjustment/Increase in pension.
Periodic adjustments of the monthly pension of
all existing pensioners shall be done on the
basis of what is sustainable and prudent for the
GSIS as recommended by its Actuary and
approved by the Board.
Policies affecting pension administration.
1.) Regardless of the date of retirement, the
monthly pension shall commence on the 1st day
of the month following the month of retirement.
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2.) Annual renewal of active status (ARAS) of
Old Age and survivorship pensioners is
required on their birth month every year.
3.) Effects of non-renewal of active status as
pensioner:
A.) Suspension of payment of monthly pension
B.) Non-entitlement to cash gift if status is
suspended at the time of declaration;
C.) Non-entitlement to pension increases if
status is suspended at the time of declaration.
3. Retirement Benefits
Reason for compulsory retirement
The compulsory retirement of government
officials and Ees upon reaching the age of 65
years is founded on public policy which aims
by it to maintain efficiency in the government
service and at the same time give the retiring
public servants the opportunity to enjoy during
the remainder of their lives the recompense, for
their long service and devotion to the
government, in the form of a comparatively
easier life, freed from the rigors of civil service
discipline and the exacting demands that the
nature of their work and their relations with
their superiors as well as the public would
impose upon them [Beronilla vs. GSIS, G.R.
No. 21723, (1970)].
Conditions in order to be entitled to
retirement benefits
1. A member has rendered at least 15 years of
service;
2. He is at least 60 years of age at the time of
retirement; and
3. He is not receiving a monthly pension
benefit from permanent total disability (Sec.
13-A, R.A. 8291).
Options of the retiree with regard to his or
her retirement benefits
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The retiree may get either of the following:
1. Lump sum equivalent to 6 months of the
basic monthly pension (BMP) payable at the
time of retirement and an old-age pension
benefit equal to BMP payable for life,
starting upon the expiration of the 5 years
covered by the lump sum; or
2. Cash payment equivalent to 18 times his
BMP and monthly pension for life payable
immediately (Sec. 13[a], R.A. 8291).
Rule in case of extension of service in order
to be entitled for retirement benefits
In Rabor v. CSC (G.R. No. 111812, May 1995),
the Supreme Court held that the head of the
government agency concerned is vested with
discretionary authority to allow or disallow
extension of the service of an official or Ee who
has reached 65 years old without completing
the 15 years of government service. However,
this discretion is to be exercise conformably
with the provisions of Civil Service
Memorandum Circular No. 27, series of 1990
which provides that the extension shall not
exceed 1 year.
6. Disability Benefits
Disability
Any loss or impairment of the normal functions
of the physical and/or mental faculty of a
member, which reduces or eliminates his/her
capacity to continue with his/her current
gainful occupation or engage in any other
gainful occupation.
Total disability
Complete incapacity to continue with present
employment or engage in any gainful
occupation due to the loss or impairment of the
normal functions of the physical and/or mental
faculties of the member.
Types of permanent disability
1. Permanent Total Disability (PTD) - Accrues
or arises when recovery from any loss or
impairment of the normal functions of the
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physical and/or mental faculty of a member
which reduces or eliminates his capacity to
continue with his current gainful occupation or
engage in any other gainful occupation is
medically remote [Section 2 (q) and (s) R.A.
8291].
2. Permanent Partial Disability (PPD) -
Accrues or arises upon the irrevocable loss or
impairment of certain portion/s of the physical
faculties, despite which the member is able to
pursue a gainful occupation (Sec. 2[u], R.A.
8291).
Benefits for permanent total disability
1. A member is entitled to the monthly income
benefit for life equivalent to the BMP when:
a. He is in the service at the time of the
disability or
b. If separated from service
c. He has paid at least 36 monthly
contributions within 5 years immediately
preceding his disability
d. He has paid a total of at least 180
monthly contribution prior his disability
e. He is not receiving old-age retirement
pension benefits
2. If the member does not satisfy the conditions
above but has rendered at least 3- years-service,
he shall be advanced the cash payment
equivalent to 100% of his average monthly
compensation for each year of service he has
pad contributions but not less than Php
12,000.00 which should have been his
separation benefit (he shall no longer receive
separation benefits).
Benefits for permanent partial disability
A member is entitled to cash payment in
accordance with the schedule of disabilities to
be prescribed by GSIS, if he satisfies the given
conditions of either (1) or (2) of Sec. 16(a).
Suspension of payment of benefits
1. In case a member is re-employed; or
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2. Member recovers from disability as
determined by the GSIS; or
3. Fails to present himself for medical
examination when required by the
GSIS (Sec. 16 [c], R.A. 8291).
Instances when recovery is precluded
If the permanent disability was due to the
following acts of the subject Ee, recovery from
the GSIS is precluded:
1. Grave misconduct
2. Notorious negligence
3. Habitual intoxication
4. Willful intention to kill himself or
another
TEMPORARY DISABILITY
Temporary total disability
It accrues or arises when the impaired physical
and/or mental faculties can be rehabilitated
and/or restored to their normal functions (Sec
2[t], R.A. 8291).
NOTE: A member cannot enjoy the temporary
total disability benefit and sick leave pay
simultaneously.
Benefits for temporary disability
1. Member is entitled to 75% of his current
daily compensation for each day or fraction
thereof of total disability benefit, to start at the
4th day but not exceeding 120 days in one
calendar year when:
a. He has exhausted all sick leaves
b. CBA sick leave benefits
Provided, that:
i. He was in the service at time of disability; or
ii. If separated, he has rendered at least 3 years
of service and has paid at least 6 monthly
contributions in the year preceding his
disability
2. The temporary total disability benefits shall
in no case be less than P70 a day.
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NOTE: An application for disability must be
filed with the GSIS within 4 years from the date
of the occurrence of the contingency.
5. Separation Benefits
Entitlement of a member to separation
benefits
A member who has rendered a minimum of 3
years creditable service shall be entitled to
separation benefit upon resignation or
separation under the following terms:
1. A member with at least 3 years but less than
15 years - Cash payment equivalent to 100% of
the AMC for every year of service the member
has paid contributions:
a. Not less than Php 12,000.00
b. Payable upon reaching 60 years of age
or upon separation, whichever comes
later.
2. A member with less than 15 years of service
and less than 60 years of age at the time of
resignation or
separation:
a. Cash payment equivalent to 18 times
the basic monthly pension (BMP),
payable at the time of resignation or
separation
b. An old-age pension benefit equal to the
basic monthly pension, payable
monthly for life upon reaching the age
of 60.
Effects of separation from service with
regard to membership
A member separated from the service shall
continue to be a member and shall be entitled
to whatever benefits he has qualified to.
Note: A member separated for a valid cause
shall automatically forfeit his benefits, unless
the terms of resignation or separation provide
otherwise. In the case of forfeiture, the
separated employee shall be entitled to receive
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LAONGLAAN NOTES 2017
only 1⁄2 of the cash surrender value of his
insurance.
6. Unemployment benefits
It will consists of cash payment equivalent to
50% of the average monthly compensation.
NOTE: A member who has rendered at least
15 years of service will be entitled to separation
benefits instead of unemployment benefits.
Conditions for entitlement to unemployment
benefits
1. The recipient must be a permanent Ee
at the time of separation;
2. His separation was involuntary due to
the abolition of his office or position
resulting from reorganization; and
3. He has been paying the contribution for
at least 1 year prior to separation.
7. Survivorship Benefits
Persons entitled to survivorship benefits
Upon the death of a member or pensioner, his
beneficiaries shall be entitled to survivorship
benefits. Such benefit shall consist of:
1. The basic survivorship pension which is
50% of the basic monthly pension; and
2. The dependent children’s pension not
exceeding 50% of the basic monthly
pension
Note: The dependent children shall be entitled
to the survivorship pension as long as there are
dependent children and, thereafter, the
surviving spouse shall receive the basic
survivorship pension for life or until he or she
remarries.
Conditions for the entitlement of the
primary beneficiaries to basic monthly
pension
Upon the death of a member, the primary
beneficiaries shall be entitled to:
1. Survivorship pension - Provided, that the
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deceased:
a. Was in the service at the time of his
death; or
b. If separated from the service, has
rendered at least 3 years of service at
the time of his death and has paid 36
monthly contributions within the five-
year period immediately preceding his
death; or has paid a total of at least 180
monthly contributions prior to his
death; or
2. The survivorship pension plus a cash
payment equivalent to 100% of his average
monthly compensation for every year of
service - Provided, that the deceased was in the
service at the time of his death with at least 3
years of service; or
3. A cash payment equivalent to 100% of his
average monthly compensation for each year of
service he paid contributions, but not less than
Php 12,000.00 - Provided, that the deceased has
rendered at least 3 years of service prior to his
death but does not qualify for the benefits under
item (1) or (2) of this paragraph [Sec. 21 (a),
R.A. 8291].
Secondary beneficiaries
In the absence of primary beneficiaries, the
secondary beneficiaries shall be entitled to:
1. The cash payment equivalent to 100%
of his average monthly compensation
for each year of service he paid
contributions, but not less than Php
12,000.00 - Provided, That the member
is in the service at the time of his death
and has at least 3 years of service; or
2. In the absence of secondary
beneficiaries, the benefits under this
paragraph shall be paid to his legal
heirs (Sec. 21[c], R.A. 8291).
Payment of survivorship pension
After the end of the guaranteed 30 months, the
beneficiaries are still entitled to survivorship
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benefits. The survivorship pension shall be paid
as follows:
1. When the dependent spouse is the only
survivor, he/she shall receive the basic
survivorship pension for life or until he
or she remarries;
2. When only dependent children are the
survivors, they shall be entitled to the
basic survivorship pension for as long
as they are qualified, plus the
dependent children’s pension
equivalent to 10% of the basic monthly
pension for every dependent child not
exceeding 5, counted from the
youngest and without substitution;
3. When the survivors are the dependent
spouse and the dependent children, the
dependent spouse shall receive the
basic survivorship pension for life or
until he/she remarries, and the
dependent children shall receive the
dependent children’s pension (Sec.
21[b], R.A. 8291).
Benefits that the beneficiaries are entitled to
upon the death of the pensioner
1. Upon the death of an old-age pensioner or a
member receiving the monthly income
benefit for permanent disability, the
qualified beneficiaries shall be entitled to
the survivorship pension.
2. When the pensioner dies within the period
covered by the lump sum, the survivorship
pension shall be paid only after the
expiration of such period.
9. Funeral Benefits
a. Nature of benefit
- intended to help defray the express incident to
the burial and funeral of the deceased member,
pensioner or retiree under RA 660, RA 1616,
PD 1146, and RA 8291
b. To whom payable
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- payable to ANY qualified individual, in
accordance with the following order of priority:
1) Legitimate spouse
2) Legitimate child who spent for the
funeral services
3) Any other person who can show
incontrovertible proof that he
shouldered the funeral expenses of the
deceased
c. Amount of funeral benefit
The amount of funeral benefit are as follows:
1) The prevailing amount approved by the
Board of Trustees at the time of death
of the member or prisoner.
2) For uniformed members of the PNP,
BJMP, and BFP, the amount of funeral
benefit is fixed at P10, 000.00
d. Conditions for entitlement
Funeral benefit shall be paid upon death of:
(1) An active member
(2) A member who has been separated
from the service with more than 15
years of credible service, but entitled to
future separation or retirement benefits
(3) Old age or disability pensioner
(4) A retiree who at the time of his
retirement is at least 60 years of age and
with at least 20 years but who opts to
retire under RA 1616 on or after June
24, 1997
(5) A member who retired under RA 1616
prior to June 24, 1997 with at least 20
years of service, regardless of age
C. Limited Portability law (RA 7699)
Sec. 3. Provisions of any general or special law
or rules and regulations to the contrary
notwithstanding, a covered worker who
transfers employment from one sector to
another or is employed in both sectors shall
have his credible services or contributions in
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
both Systems credited to his service or
contribution record in each of the Systems and
shall be totalized for purposes of old-age,
disability, survivorship and other benefits in
case the covered member does not qualify for
such benefits in either or both Systems without
totalization: Provided, however, that
overlapping periods of membership shall be
credited only once for purposes of totalization.
Sec. 4. All contributions paid by such member
personally, and those that were paid by his
employers to both Systems shall be considered
in the processing of benefits which he can claim
from either or both Systems: Provided,
however, That the amount of benefits to be paid
by one System shall be in proportion to the
number of contributions actually remitted to
that System.
Advantage
This is advantageous to the SSS and GSIS
members for purposes of death, disability or
retirement benefits. In the event the Ees transfer
from the private sector to the public sector, or
vice-versa, their creditable employment
services and contributions are carried over and
transferred as well.
Sec. 5. Nothing in this Act shall be construed to
diminish or reduce the benefits being enjoyed
by a covered worker arising from existing laws,
issuances, and company policies or practices or
agreements between the employer and the
employees.
Sec. 6. The Department of Labor and
Employment for the private sector and the Civil
Service Commission for the government
sector, together with the SSS and the GSIS
shall, within ninety (90) days from the
effectivity of this Act, promulgate the rules and
regulations necessary to implement the
provisions hereof: Provided, that any conflict
in the interpretation of the law and the
implementing rules and regulations shall be
resolved in favor of the workers.
126

General Rule:
A covered worker who transfers employment
from one sector (i.e. private to public, or vice
versa) to another or is employed in both sectors
shall have his credible services or contributions
in both SSS and GSIS credited to his service or
contribution record in each of the Systems and
shall be totalized
Exception:
Provisions of any general or special law or rules
and regulations
Purposes:
1. Old-age
2. Disability,
3. Survivorship
4. other benefits
in case the covered member does not qualify for
such benefits in either or both Systems without
totalization. (Sec. 3)
Applicability:
 Overlapping periods of membership shall
be credited only once for purposes of
totalization. (Sec. 3)
 All contributions paid by such member
personally, and those that were paid by his
employers to both Systems shall be
considered in the processing of benefits
which he can claim from either or both
Systems. (Sec. 4)
 the amount of benefits to be paid by one
System shall be in proportion to the
number of contributions actually remitted
to that System. (Sec. 4)
Totalization of service credits is only resorted
to when the retiree does not qualify for benefits
in either or both of the Systems. Here,
petitioner is qualified to receive benefits
granted by the Government Security Insurance
System (GSIS), if such right has not yet been
exercised … petitioner’s fourteen years of
PAMANTASAN NG LUNGSOD NG MAYNILA
LAONGLAAN NOTES 2017
service with the DOH…. may be recognized by
the GSIS…Since petitioner may be entitled to
some benefits from the GSIS, he cannot avail
of the benefits under R.A. No. 7699.
Gamogamo vs PNOC Shipping & Transport
Corp G.R No. 141707 May 7, 2002
D. Employees Compensation
Employees’ compensation program
It is the program provided for in Arts. 166 to
208 of the LC whereby a fund known as the
State Insurance Fund is established through
premium payments exacted from Ers and from
which the Ees and their dependents in the event
of work-connected disability or death, may
promptly secure adequate income benefit, and
medical or related benefits.
NOTE: The claimant under the Employee’s
Compensation Program is required to present
proof of casual relation or aggravation, if the
cause or origin of the disease is still
unknown. Compassion for the victims of
diseases not covered by law ignores the need to
show a greater concern for the trust fund to
which the tens of millions of workers and their
families look for compensation whenever
accidents, disease, and deaths occur. The law,
however, does not require a direct casual
relation. It is enough that the hypothesis on
which the workman’s claim is based is
PROBABLE.
COVERAGE
Coverage a. Every Employer
b. Every employee not
over 60 years old
c. Any employee over 60
years of age if he had
paying contributions
prior to age 60 and has
not been compulsorily
retired.
127
 d. An employee who is 2. Private sector covered by the SSS,
coverable by GSIS and comprising all Ers other than those defined
SSS shall be in the immediately preceding paragraph.
compulsorily covered
by both systems The Ee may belong to either the:
Grounds for A. For the injury and the 1. Public sector comprising the employed
Compensability resulting disability or workers who are covered by the GSIS,
death to be including the members of the AFP, elective
compensable, the officials who are receiving regular salary
injury must be the and any person employed as casual
result of accident emergency, temporary, substitute or
arising out of and in the contractual;
course of the 2. Private sector comprising the employed
employment workers who are covered by the SSS.
B. For the sickness and the
resulting disability or Effectivity of the compulsory coverage
death to be 1. Employer – On the first day of operation
compensable, the 2. Employee – On the day of his employment
sickness must be the
result of an Theory of increased risk
occupational disease The term “sickness” as defined in Art. 167(l) of
listed under the annex the LC is recognition of the theory of increased
of the IR dealing with risk. To establish compensability under the
the occupational same, the claimant must show substantial proof
diseases with the of work-connection, but what is required is
conditions set therein merely a reasonable work-connection and not a
satisfied. Otherwise, direct causal relation. Proof of actual cause of
proof must be shown the ailment is not necessary. The test of
that the risk of evidence of relation of the disease with the
contracting the disease employment is probability and not certainty
is increased by the [Jimenez v. Employees’ Compensation
working conditions. Commission, G.R. No. L-58176, (1984);
Panotes vs. ECC, G.R. No. L-64802, (1984)].

Coverage NOTE: An illness not listed by the Employees’

Ers and their Ees not over 60 years of age are
subject to compulsory coverage under this
program.
The Er may belong to either the:
1. Public sector covered by the GSIS,
comprising the National Government,
including GOCCs, Philippine Tuberculosis
Society, the Philippine National Red Cross,
and the Philippine Veterans Bank; and
Compensation Commission as an occupational
disease is compensable provided that it is
established that the risk of contracting the same
is increased by working conditions.
Going and coming rule
GR: In the absence of special circumstances,
an Ee injured while going to or coming from

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his place of work is excluded from the benefits
of Workmen’s Compensation Act.
XPNs:
1. Where the Ee is proceeding to or from his
work on the premises of the Er;
2. Proximity Rule—where the Ee is about to
enter or about to leave the premises of his Er
by way of exclusive or customary means of
ingress and egress;
3. Ee is charged, while on his way to or from
his place of employment or at his home, or
during this employment with some duty or
special errand connected with his
employment; and
4. Where the Er as an incident of the
employment provides the means of
transportation to and from the place of
employment.
Personal comfort doctrine
Acts performed by an Ee within the time and
space limits of his employment, to minister
personal comfort, such as satisfaction of his
thirst, hunger, or other physical demands, or to
protect him from excessive cold, shall be
deemed incidental to his employment and
injuries suffered in the performance of such act
shall be considered compensable and arising
out of and in the course of employment.
Defenses that may be interposed by the state
insurance fund against a claim for
compensation made by a covered Ee or his
dependents
The following defenses may be set up:
1. Injury is not work-connected or the sickness
is not occupational
2. Disability or death was occasioned by the
Ee’s intoxication, willful intention to injure
or kill himself or another, or his notorious
negligence (Art. 172, LC)
3. No notice of sickness, injury or death was
given to the Er (Art. 206, LC)
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LAONGLAAN NOTES 2017
4. Claim was filed beyond 3 years from the time
the cause of action accrued (Art. 201, LC, as
amended by P.D. 1921)
Note: Notorious negligence is equivalent to
gross negligence; it is something more than
mere carelessness or lack of foresight.
Q: Abraham Dino works as a delivery man in a
construction supply establishment owned by
Abraham Julius. One day, while Dino was
making reports on his delivery, he had an
altercation with Julius; irked by the
disrespectful attitude of Dino, Julius pulled out
his gun and shot Dino, hitting him in the spinal
column and paralyzing him completely. Julius
was prosecuted for the act.
1. Is the disability suffered by Abraham Dino
compensable?
2. If Abraham Dino recovers compensation
from the SIF, can he still recover from
Abraham Julius damages in the criminal case?
Why?
A:
1. Yes. The injury was sustained by Abraham
Dino in his place of work and while in the
performance of his official functions.
2. No. Under Art. 173 of the LC, as amended
by P.D. 1921, the liability of the State
Insurance Fund under the Employees’
Compensation Program shall be exclusive and
in place of all other liabilities of the Er to the
Ee or his dependents or anyone otherwise
entitled to recover damages on behalf of the Ee
or his dependents.
Q: Wilfredo, a truck driver employed by a
local construction company, was injured in
an accident while on assignment in one of his
employer’s project in Iraq. Considering that
his injury was sustained in a foreign
country, is Wilfredo entitled to benefits
129
under the Employees’ Compensation
Program?
A: Yes. Filipinos working abroad in the service
of an Er, domestic or foreign, who carries on in
the Philippines any trade, business, industry,
undertaking or activity of any kind, are covered
by the ECP (Rule 1, Section 5, ECC Rules;
Art.169, LC).
Contributions to the State Insurance Fund
Contributions under this Title shall be paid in
their entirety by the Er and any contract or
device for the deduction of any portion thereof
from the wages or salaries of the Ees shall be
null and void (Art.183(c), LC).
Definitions
1. Injury - Any harmful change in the human
organism from any accident arising out of and
in the course of employment.
2. Sickness - Any illness definitely accepted as
an occupational disease.
3. Occupational Disease - One which results
from the nature of the employment, and by
nature is meant conditions which all Ees of a
class are subject and which produce the disease
as a natural incident of a particular occupation,
and attach to that occupation a hazard which
distinguishes it from the usual run of
occupations and is in excess of the hazard
attending the employment in general.
To be occupational, the disease must be one
wholly due to causes and conditions which are
normal and constantly present and
characteristic of the particular occupation.
NOTE: Although the cause of cancer is not yet
known, it has already been included as a
qualified occupational disease in certain cases.
4.Compensable Sickness - It means any illness
definitely accepted as an occupational disease
listed by the Commission or any illness caused
by employment, subject to proof that the risk of
PAMANTASAN NG LUNGSOD NG MAYNILA
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contracting the same is increased by working
conditions (Art. 167(l), LC).
Kinds of Disability
There are three (3) types of loss of income
benefits:
Temporary Total Disability (TTD) benefit
which is given to an employee who is unable to
work for a continuous period not exceeding 120
days
.
Permanent Partial Disability (PPD) benefit
which is given to a worker who loses a body
part and consequently the loss of the use of that
body part.
Permanent Total Disability (PTD) benefits
which is given if the employee’s inability to
work lasts for more than 240 days. PTD benefit
can be claimed in the following cases:
1. Complete loss of sight of both eyes;
2. Loss of two limbs at or above the ankles or
wrists;
3. Permanent and complete paralysis of two
limbs;
4. Brain injury resulting in incurable imbecility
or insanity; and
5. Such cases as determined by the SSS and
approved by the Commission.
Permanent and total disability means
“disablement of an employee to earn wages in
the same kind of work or work of a similar
nature that he was trained for or accustomed to
perform, or any kind of work which a person of
his mentality and attainment can do”. In labor
laws disability need to render the seafarer
absolutely helpless or feebie to compensable: it
is enough that it incapacitates one perform his
customary work (Esguerra v. United PHL
Lines. Inc. G.R No.199932 July 3, 2013)
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Accrual of the right to compensation or
benefit under the Employee’s Compensation
Program
The right to compensation or benefit for loss or
impairment of an employee’s earning capacity
due to work-related illness or injury arises or
accrues upon, and not before, the happening of
the contingency. Hence, an Ee acquires no
vested right to a program of compensation
benefits simply because it was operative at the
time he became employed [San Miguel
Corporation vs. NLRC, G.R. No. 57473,
(1988)].
Benefits under the State Insurance Fund
1. Medical Benefits
2. Disability Benefits
3. Death Benefits
4. Funeral Benefits
MEDICAL BENEFIT (MEDICAL
SERVICES)
For an Ee to be entitled to medical services, the
following conditions must be satisfied:
1. He has been duly reported to the System
(SSS or GSIS);
2. He sustains a permanent disability as a result
of an injury or sickness; and
3. The System has been notified of the injury or
sickness which caused his disability.
DISABILITY BENEFITS
They are income benefits in case of temporary
total disability, permanent total disability and
permanent partial disability
Permanent and total disabilities
The following disabilities shall be deemed
permanent and total:
1. Temporary total disability lasting
continuously for more than one hundred
twenty days, except as otherwise provided
for in the Rules;
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2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankle or
wrist;
4. Permanent complete paralysis of two limbs;
5. Brain injury resulting in incurable imbecility
or insanity; and
6. Such cases as determined by the Medical
Director of the System and approved by the
Commission (Art.192(c), LC).
NOTE: Permanent total disability may arise
although the employees does not lose the use of
any part of his body. Where the Ee is unable,
by reason of the injury or sickness, to perform
his customary job for more than 120 days,
permanent total disability arises [Ijares vs. CA,
G.R. No. 105854, (1999)].
Conversion of a permanent partial disability
to permanent total disability
A permanent partial disability converted to
permanent total disability after the employee’s
retirement. This is in line with the social justice
provision in the Constitution. A person’s
disability may not manifest itself fully at one
precise moment in time but rather over a period
of time. Disability should not be understood
more on its medical significance but on the loss
of earning capacity.
DEATH BENEFITS
The beneficiaries of a deceased Ee shall be
entitled to an income benefit if all of the
following conditions are satisfied:
1. The Ee has been duly reported to the System;
NOTE: If an employee suffers disability or
dies before he is duly reported for coverage to
the System (SSS or GSIS), the Er shall be liable
for the benefits (Sec.1, Rule X; Sec.1, Rule XI;
Sec. 1, Rule XII; Sec. 1, Rule XIII; ECC Rules).
2. He died as a result of an injury or sickness;
and
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3. The System has been duly notified of his
death, as well as the injury or sickness which
caused his death.
Length of time the primary beneficiaries are
entitled to death benefits
1.Dependent Spouse—until he or she remarries.
2. Dependent Children—until they get married,
or find gainful employment, or reach 21
years of age.
3. Dependent Child suffering from physical or
mental defect—until such defect disappears.
Er’s liability in case of death or injury of the
Ee
1. If the cause of the death or personal injury
arose out of and in the course of
employment, the Er is liable.
2. If the cause was due to the Ee’s own
notorious negligence, or voluntary act or
drunkenness, the Er shall not be liable.
3. If the cause was partly due to the Ee’s lack
of due care, the compensation shall be
inequitably reduced.
4. If the cause was due to the negligence of a
fellow Ee, the Er and the guilty Ee shall be
liable solidarily.
5. If the cause was due to the intentional or
malicious act of fellow Ee, the fellow Ee and
Er are liable unless the Er exercised due
diligence in selecting and supervising his
Ees.
FUNERAL BENEFIT
A funeral benefit of Php 10, 000.00 shall be
paid upon the death of a covered Ee or
permanently totally disabled pensioner.
Persons entitled to benefits under the
Employees’ Compensation Program
The covered Ee, his dependents, and in case of
his death, his beneficiaries.
Dependents of the employee
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1. Legitimate, legitimated, legally adopted or
acknowledged natural child who is
unmarried, not gainfully employed, and not
over 21 years of age or over 21 years of age
provided he is incapacitated and incapable
of self-support due to a physical or mental
defect which is congenital or acquired
during minority;
2. Legitimate spouse living with the Ee;
3. Parents of said Ee wholly dependent upon
him for regular support (Art.167(i), LC, as
amended by P.D. 1921);
Beneficiaries
It includes the dependent spouse until he
remarries and dependent children, who are the
primary beneficiaries. In their absence, the
dependent parents and subject to the
restrictions imposed on dependent children, the
illegitimate children and legitimate
descendants who are the secondary
beneficiaries: Provided, that the dependent
acknowledged natural child shall be considered
as a primary beneficiary when there are no
other dependent children who are qualified and
eligible for monthly income benefit (Art. 167,
LC, as amended by Sec. I, P.D. 1921).
Recovery from the State Insurance Fund
does not bar a claim for benefits under the
SSS Law
As expressly provided for in Art. 173 of the LC,
payment of compensation under the State
Insurance Fund shall not bar the recovery of
benefits under the SSS Law. Benefits under the
State Insurance Fund accrue to the Ees
concerned due to hazards involved and are
made a burden on the employment itself. On
the other hand, social security benefits are paid
to SSS members by reason of their membership
therein for which they contribute their money
to a general fund [Ma-ao Sugar Central Co.,
Inc. vs. CA, G.R. No. 83491, (1990)].
Filing of Claims
132
Employees can claim only for work-connected
sickness, injuries, or death.
Who may file: The claimant or his/her
representative may file an appropriate claim
with the GSIS, in case of public sector
claimant, or with the SSS, in case of private
sector claimant.
When: A claim must be filed within three (3)
years from:
a. In case of sickness – from the time the
employee lost his earning capacity;
b. In case of injury – from the time it was
sustained;
c. In case of death – from the time of death of
the covered member.
How: Fill in the prescribed forms supplied by
the GSIS or SSS and attach the supporting
documents required for every contingency.
Where to File: All EC claims may be filed by
the claimant at his option in the Regional
Office/ Branch of the System ([GSIS- public
sector]; [SSS-private sector]) nearest to the
public place of work or residence.”
Period of Appeal. The claimant shall file with
the GSIS or the SSS, as the case may be, a
notice of appeal within thirty (30) calendar
days from receipt of the decision.
Obligations/Responsibilities of Employers
1. Contribution to the State Insurance Fund
(SIF). – The employer shall contribute in
behalf of his or her employees to the SIF, from
which payments for benefits are drawn.
2. Registration. – Every employer (and every
employee as well) shall be registered with the
GSIS or SSS by accomplishing the prescribed
forms.
3. Safety Devices. – The employer shall
comply with health and safety laws and shall
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LAONGLAAN NOTES 2017
take the necessary precautions for the
prevention of work-related disability or death.
4. Employer ’s Logbook. –
 All employers shall keep a logbook to
record chronologically the sickness, injury
or death of their employees, setting forth
therein their names, dates and places of the
contingency, nature of the contingency
and absences.
 Entries in the logbook shall be made
within five (5) days from notice or
knowledge of the occurrence of the
contingency.
 Within five days after entry in the logbook,
the employer shall report to the System
only those contingencies he deems to be
work-connected. ”
5. Provision for Medical Services. – In
addition to EC benefits, existing medical
services being provided by the employer shall
be maintained and continued to be enjoyed by
their employees.
Powers and duties
 To assess and fix a rate of contribution from
all employers
 To determine the rate of contribution
payable by an employer whose records
show a high frequency of work accidents or
occupational disease due to failure by the
said employer to observe adequate safety
measures
 To approve rules and regulations governing
the processing of claims and the settlement
of disputes arising therefrom as prescribed
by the System
 To initiate policies and programs toward
adequate occupational health and safety and
accident
 To make the necessary actuarial studies and
calculation
133
 To appoint the personnel of its staff, subject
to civil service law and rules
 To adopt annually a budget of expenditures
of the Commission and its staff chargeable
against the State Insurance Fund
 To have the power to administer oath and
affirmation
 To sue and be sued in court
 To acquire property, real or personal, which
may be necessary
 To enter into agreements or contracts for
such services or aid as may be needed for the
proper, efficient and stable administration of
the program
 To perform such other acts as it may deem
appropriate for the attainment of the
purposes of the Commission and proper
enforcement of the provisions of this Title
Art. 177

Q: Jani is a janitor at Pristine Skin Clinic. His

tasks include cleaning the clinic, disposing the
garbage and putting the hospital equipment in
order. After 10 years in service, he acquired the
Hansen’s Disease or leprosy, uremia and
nephitis which eventually led to his death. Is
the death compensable?
Ans: Yes the death is compensable. An illness
may be compensable even if it is not among the
occupational diseases listed provided the
claimant can prove that the nature of work
increased the risk of contracting such disease.
Here, Jani worked in the clinic for 10 years and
was exposed to each and every kind of skin
disease. Thus, the nature of work supports the
increased risk theory which makes the disease
compensable (Clemente vs. GSIS G.R No.
47521 July 31 1987).

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