LABOR CODE OF THE PHILIPPINES
b) To affords protection to workers against injustice
Chapter I GENERAL PROVISIONS
THE CONCEPT OF LABOR.
In its broadest sense, labor includes every possible human
exertion, mental or physical, and even spiritual. In a more
limited sense, it refers to any bodily or intellectual exertion
done wholly or partly for a purpose other than the pleasure
derived from its performance (51 C.J.S. 470-7 1).
Labor Legislation Consists of statutes, regulations, and
jurisprudence governing the relations between capital and
labor by providing for certain employment standards and a
legal framework for negotiating, adjusting and administering
those standards and other incidents of employment.
Labor legislation is broadly classified as labor standards
and relations:
Labor standards minimum requirements by existing laws,
rules and regulations relating to wages, hours of work, cost of
living allowances and other monetary and welfare benefits
including occupational employees and health standards.
- It is that branch of labor law that establishes the minimum
terms and conditions of employment that an employer must
provide to the workers.
Labor relations law defines the status, rights, duties and
the institutional mechanisms that govern the individual and
collective interactions of employers, employees or their
representatives.
Coverage of the law on labor standards:
1) Wages;
2) Working conditions and rest periods: hours of work,
weekly rest periods, holidays, service incentive
th
leaves and service charges, 13 month pay;
3) Working conditions for special groups of
employees: women, minors, househelpers,
homeworkers, apprentice, learners, handicapped
workers;
4) Termination of employment: Substantive due
process and procedural due process.
What is the aim and reason of labor laws?
The aim and reason of labor laws is social justice.
Social justice the promotion of the welfare of all people,
the adoption by the Government of measures cultivated to
insure economic stability of all the component elements of
society through the maintenance of proper economic and
social equilibrium in the interrelations of the community
through the exercise of measures justifiable or through the
exercise of powers underlying the existence of all
governments.
Social legislation laws that provide particular kinds of
protection or benefits to society or segments thereof in
furtherance of social justice.
Purposes:
Labor standards are enacted by the legislature:
a) To alleviate the plight of workers whose wages
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barely meet the spiraling costs of their basic needs.
arising out of employer-employee relationships.
c) To ensure redress for violations of basic employee
rights as well as to impose sanctions upon those
who violate them.
Labor laws are considered written into every contract, and
stipulations in violation thereof are considered null.
Coverage of the law on labor standrds:
1) Wages
2) Working conditions and rest periods:
- hours of work
- weekly rest periods
- holidays, service incentive leaves and service
charges
th
- 13 month pay
3) working conditions for special groups of employees:
women, minors, househelpers, homwworkers,
apprentices, learners, handicapped workers.
4) Termination of employment:
1) Substantive due process
2) Procedural due process.
Labor laws are considered written in every contract, and
stipulations in violation thereof are considered null. (Mariveles
Shipyard Corp. v CA)
Art. II, Sec. 10 of the Constitution: The State shall promote
social justice in all phases of national development.
Labor is regarded as a primary social economic force. The
State thus, must protect the rights of the workers and promote
their welfare.
Difference between labor laws and social legislation:
Labor Laws Social Legislation
Necessarily social legislation. Not all social legislation are
All labor laws are social labor laws. This is much
legislation. broader in concept that labor
laws.
CONSTITUTIONAL RIGHTS AND MANDATES
Basic Rights guaranteed by the Constitution:
These rights guaranteed by the Constitution may be classified
into two, namely: a) individual rights of workers; and b)
collective rights of labor in general.
The individual rights of workers are found in Art. III, Bill of
Rights, which is described as "the charter of individual
liberties." While all persons enjoy these rights, their particular
application to workers carries a certain significance which
requires special consideration.
The collective rights of labor in general are enshrined in the
Protection to Labor clause, Art. XIII, Sec. 3.These two sets of
rights are not identical.
Right to organize themselves: Art. III, Sec. 8: right
of the people in the private and public sector to
form unions, associations or societies.
Engage in peaceful and concerted activities
including the right to strike.
Security of tenure.
Work under humane conditions.
Receive a living wage.
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 Participate in policy and decision making processes
affecting rights and benefits as may be provided by
law.
Shared responsibility: Art. II Sec. 20 the State
recognizes the indispensable role of the private
sector, encourages private enterprise, and provides
incentives to needed investments.
NEW CONSTITUTIONAL POLICIES CONCERNING LABOR.
The Constitution adopts the following new policies regarding
labor:
Art XII, Sec. 18. The state affirms labor as a
primary social economic force. It shall protect the
right of workers and promote their welfare.
This is the first time that a Philippine Constitution gives
explicit recognition to the role of labor in social and economic
development. It also states a policy of protection for the rights
and welfare of notices.
Art. XII, Sec. 12. The State shall promote the
preferential use of Filipino labor domestic materials
and locally produced goods, and adopt measures
that help make them more competitive.
This is a strongly nationalistic policy favoring Filipino labor,
raw materials and finished products which the State seeks to
promote and strengthen.
Art. XIII, Sec. 3."... The State shall promote the
principle of said responsibility between workers and
employers, and the preferential use of voluntary
modes in settling disputes, including conciliation,
and shall enforce their mutual compliance the, with
to foster industrial peace."
For the first time the Constitution expresses a -preference in
the method of resolving industrial disputes. This is through the
use of voluntary modes such as negotiation, collective
bargaining, voluntary arbitration, mediation and conciliation.
The reason is that these modes are less frictional and entail
less social costs to the parties, to government, and to society
as a whole.
Art. XIII, Sec. 14,"The State shall project working
women by providing safe and healthful working
conditions, taking into account their maternal
functions, and provide such facilities and
opportunities that will enhance their welfare and
enable them to realize their full potential in the
service of the nation."
The protection of working women, which the previous
Constitution mentioned only incidentally, is now given a
separate title in view of the important role of women in Filipino
society.
RESTATEMENT OF OTHER CONSTITUTIONAL POLICIES.
The Constitution also restates and rephrases policies
established in the previous Constitution, and readapts them
for further implementation.
These policies are:
"The State shall afford fish protection to labor, local and
overseas, organized and unorganized, and promote full
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employment and equality of employment opportunities for...
"(Art. XIII, Sec.3) This is a more positive and comprehensive
restatement of the Protection to Labor clause. ". . . 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
on investments, and to expansion and growth."
(Art. XIII, Sec3) This policy precludes the State from adopting
a laissez faire policy on labor relations due to the public
interest involved therein, it also provides guidelines by which
the State's regulatory power shall be exercised.
OTHER FEATURES PROTECTING FILIPINO LABOR.
The Constitution also embodies other new provisions
favorable to Filipino labor Specifically, it contains new
nationalistic measures which further augment those currently
in force.
The basic nationalistic policy on labor is articulated as follows:
The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt
measures that help make competitive.: ( Art Xlii, Sec. 12).
Consistent with this declared policy, the Constitution
nationalizes new fields of endeavor. Thus: The practice of all
professions in the Philippines shall be limited to Filipino
citizens, save in cases prescribed by law"(Art. XII, Sec.14).
Educational institutions, other than those established by
religious groups and mission boards, shall be owned solely by
citizens of the Philippines or corporations or associations at
least sixty per centum of the capital of which is owned by
such citizens. The Congress may, however, require increased
Filipino equity participation in all educational institutions.
The control and administration of educational institutions shall
be vested in citizens of the Philippines. (Art. XJV, Sec.4 (2))
The ownership and management of mass media shall be
limited to citizens of the Philippines, or to corporations,
cooperatives or associations wholly-owned and managed by
such citizens. Only Filipino citizens or corporations or
associations at least seventy per centum of the capital of
which is owned by such citizens shall be allowed to engage in
the advertising industry. . ." (Art. XVI, Sec.II [2]).
Civil Code provisions on Labor:
SECTION 2. - Contract of Labor (n)
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.
Art. 1701. Neither capital nor labor shall act oppressively
against the other, or impair the interest or convenience of the
public.
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.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
Art. 1703. No contract which practically amounts to
involuntary servitude, under any guise whatsoever, shall be
valid.
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.
Art. 1705. The laborer's wages shall be paid in legal currency.
Art. 1706. Withholding of the wages, except for a debt due,
shall not be made by the employer.
Art. 1707. The laborer's wages shall be a lien on the goods
manufactured or the work done.
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.
Art. 1709. The employer shall neither seize nor retain any tool
or other articles belonging to the laborer.
Art. 1710. Dismissal of laborers shall be subject to the
supervision of the Government, under special laws.
Art. 1711. Owners of enterprises and other employers are
obliged to pay compensation for the death of or injuries to
their laborers, workmen, mechanics or other employees, even
though the event may have been purely accidental or entirely
due to a fortuitous cause, if the death or personal injury arose
out of and in the course of the employment. The employer is
also liable for compensation if the employee contracts any
illness or disease caused by such employment or as the
result of the nature of the employment. If the mishap was due
to the employee's own notorious negligence, or voluntary act,
or drunkenness, the employer shall not be liable for
compensation. When the employee's lack of due care
contributed to his death or injury, the compensation shall be
equitably reduced.
Art. 1712. If the death or injury is due to the negligence of a
fellow worker, the latter and the employer shall be solidarily
liable for compensation. If a fellow worker's intentional
malicious act is the only cause of the death or injury, the
employer shall not be answerable, unless it should be shown
that the latter did not exercise due diligence in the selection or
supervision of the plaintiff's fellow worker.
Art. 3 Declaration of State policy the state shall afford
protection to labor, promote full employment, ensure
equal work opportunities regardless of sex, race or
creed, and regulate the relations between workers and
employers. The State shall assure the rights of workers
to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work.
The goals of the national economy:
A more equitable distribution of opportunities,
income and wealth.
Sustained increase in the amount of goods and
services.
Expanding productivity.
The Court in Serrano v Gallant, struck down a provision in the
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law which provides that for workers with employment
contracts with a term of one year or more, who are illegally
dismissed, are entitled to salaries for the unexpired portion of
his employment contract or three (3) months salary for every
year of the unexpired term. It creates discrimination on
various levels, those employed for less than one year, those
employed for one year or more, and local workers with fixed
periods of employment. The subject clause classifies OFWs
into two categories. The first category includes OFWs with
fixed-period employment contracts of less than one year; in
case of illegal dismissal, they are entitled to their salaries for
the entire unexpired portion of their contract. The second
category consists of OFWs with fixed-period employment
contracts of one year or more; in case of illegal dismissal,
they are entitled to monetary award equivalent to only 3
months of the unexpired portion of their contracts. The
disparity in the treatment of these two groups cannot be
discounted. The enactment of the subject clause in R.A. No.
8042 introduced a differentiated rule of computation of the
money claims of illegally dismissed OFWs based on their
employment periods, in the process singling out one category
whose contracts have an unexpired portion of one year or
more and subjecting them to the peculiar disadvantage of
having their monetary awards limited to their salaries for 3
months or for the unexpired portion thereof, whichever is less,
but all the while sparing the other category from such
prejudice, simply because the latter's unexpired contracts fall
short of one year. Also, the subject clause creates a sub-layer
of discrimination among OFWs whose contract periods are for
more than one year: those who are illegally dismissed with
less than one year left in their contracts shall be entitled to
their salaries for the entire unexpired portion thereof, while
those who are illegally dismissed with one year or more
remaining in their contracts shall be covered by the subject
clause, and their monetary benefits limited to their salaries for
three months only. It violates OFWs rights to equal
protection, for which, the Court struck it down.
This Article also deals with the interdependence of the
workers and employers one cannot exist without the other.
In Becmen v Cuaresma, the parents of an OFW who allegedly
committed suicide in her dormitory abroad, was allowed by
the Court to recover moral damages, for which the local agent
and the foreign employer were solidarily liable. This was
allowed as the Court held that acts and omissions are against
public policy because they undermine and subvert the interest
and general welfare of our OFWs abroad, who are entitled to
full protection under the law. They set an awful example of
how foreign employers and recruitment agencies should treat
and act with respect to their distressed employees and
workers abroad. Their shabby and callous treatment of the
OFWs case; their uncaring attitude; their unjustified failure
and refusal to assist in the determination of the true
circumstances surrounding her mysterious death, and instead
finding satisfaction in the unreasonable insistence that she
committed suicide just so they can conveniently avoid
pecuniary liability; placing their own corporate interests above
of the welfare of their employees all these are contrary to
morals, good customs and public policy, and constitute taking
advantage of the poor employee and her familys ignorance,
helplessness, indigence and lack of power and resources to
seek the truth and obtain justice for the death of a loved one.
Private employment agencies are held jointly and severally
liable w/ the foreign-based employer for any violation of the
recruitments agreement or contact of employment. The
purpose is to assure the aggrieved worker of immediate and
sufficient payment of what is due to him. It is in keeping with
the policy of state, to protect and alleviate the plight of the
working class. Thus, the Court in Sevillana v IT, held that the
petitioner was illegally dismissed, as the employer failed to
present evidence sufficient to support the conclusion that the
LABORICADIZ 3
employee was dismissed due to the disease. The employee
was actually declared fir for work by the physician, which the
employer failed to rebut.
Art. 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.
This does not mean that every labor dispute will be
automatically decided in favor of labor. Management also has
its own rights, which are entitled to respect and enforcement
in the interest of fairplay.
Employers have management prerogative, a right giving them
freedom to regulate all aspects of employment, including
recall and dismissal of workers. In general, management has
the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company
rules and regulations. In the case, the dismissed employee
was given ample opportunity to present his side and to defend
himself against the charges against him. He had every
opportunity be heard. PAL notified him of the charges &
required him to answer. He participated in the investigation
and appeared w/ his counsel. He was notified of his dismissal.
The fact that he wasnt able to confront the complainant did
not mean that he was deprived of his right to due process.
(PAL v NLRC and Diamante)
An employer enjoys a wide latitude of discretion in the
promulgation of policies, rules and regulations on work-
related activities of its employees. An employee in this case,
incurred several absences without permission. It was said that
he even falsified some documents to make it seem as if he
had permission of the company on several dates. The Court
held there was no evidence regarding the falsification, other
than the bare testimony of the witnesses of the company. But,
still the dismissal of the employee was upheld on the ground
that he did incur the absences without the permission of the
company. Although it was previously lax in implementing its
rules regarding absences, it is not estopped form being firm in
this case. It is axiomatic that appropriate disciplinary sanction
is within the purview of management imposition, thus, in the
implementation of its rules and policies, the employer has the
choice to do so strictly or not, sicne it is inherent in its right to
control and manage its business effectively. Management has
the prerogative to impose sanctions lighter than those
specifically prescribed by its rules, or to condone completely
the violations of its erring employees. Of course, this
prerogative must be exercised free of grave abuse of
discretion, bearing in mind the requirements of justice and fair
play. (San Miguel Corp. v NLRC)
The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied. Except as
limited by special laws, an employer is free to regulate,
according to his own discretion and judgment, all aspects of
employment, including the hiring, work assignments, working
methods, time, place and manner of work, tools to be used,
processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off
or workers and the discipline, dismissal and recall of work.
Every business endeavors to increase its profits. In the
process, it may adopt or devise means designated towards
that goal. Even as the law is solicitous of the welfare of the
employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The
free will of management to conduct its own business affairs to
achieve its purpose cannot be denied. So long as the
companys management prerogatives are exercised in good
faith for the advancement of the employers interest and not
for the purpose if defeating or circumventing the rights of the
employees under special laws or under valid agreements, the
court will uphold them. (San Miguel Brewery Sales Force
Starr Weigand
Union v Ople)
The Court also upheld the right of the employer to
preventively suspend the erring employee pending
investigation of the charges against him, as in the case of
PNB v Velasco, if it was obviously done as a measure of self-
protection. It was necessary to secure the vital records of the
petitioner in the case, which, in view of the position of the
employee as internal auditor, are easily accessible to him. He
also cannot be said to be illegally dismissed, if an
investigation was undertaken, and he was provided with the
opportunity to rebut the charges, and the evidence showed
that he was really guilty of gross misconduct.
This prerogative, however, should not amount to
discrimination. The Court in International School Alliance v
Quisumbing, struck down tits policy on providing higher
wages for foreign hires as opposed to local hires, as it
amounted to discrimination. Discrimination, particularly in
terms of wages, is frowned upon by the Labor Code. Article
135, for example, prohibits and penalizes the payment of
lesser compensation to a female employee as against a male
employee for work of equal value. Article 248 declares it an
unfair labor practice for an employer to discriminate in regard
to wages in order to encourage or discourage membership in
any labor organization. Persons who work with substantially
equal qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries. This rule
applies to the School, its "international character"
notwithstanding. The school contends that petitioner has not
adduced evidence that local-hires perform work equal to that
of foreign hires. This point has no merit. If an employer
accords employees the same position and rank, the
presumption is that these employees perform equal work.
This presumption is borne by logic and human experience. If
the employer pays one employee less than the rest, it is not
for that employee to explain why he receives less or why the
others receive more. The employer has discriminated against
that employee; it is for the employer to explain why the
employee is treated unfairly.
The Secretary of labor is mandated to equally protect and
respect not only the laborers, but also the rights of the
management.
Thus, in Jamer v NLRC, the Court held that the law in
protecting the rights of the employees authorizes neither
oppression nor self-destruction of the employer. The cause of
social justice is not served by upholding the interest of the
petitioner in disregard of the right of the employer. 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. While it is true that
compassion and human consideration should guide the
disposition of cases involving the termination of employment,
it should not be overlooked that the benefits afforded to labor
do not include compelling an employer to retain the services
of an employee who has been shown to be a gross liability to
the employer. The intent is to balance the scale of justice; to
put the two parties of relatively equal positions. There may be
cases where the circumstances warrant favoring labor over
the interests of management, but never should the scale be
so tilted if the result is an injustice to the employer. Justice is
to be denied to no one.
Rights of management:
Right to ROI (Return on investment) employer has a right
to make profits.
Right to prescribe rules employers right to make
reasonable rules and regulations when the employees enter
the service. These rules and regulations become part of the
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
employment contract.
Right to select employees employer has the right under
the law to full freedom in employing any person free to accept
employment from him except as restricted by statute or a
valid contract.
Right to transfer or discharge employees employer has
the right to transfer, reduce or lay off personnel in order to
minimize expenses and to insure the stability of business.
MANAGEMENT PREROGATIVES. By way of
counterbalance to the employees" right to security of tenure
are the rights recognized by law as inherent in the
management of business enterprises. The owner of a
business enterprise is given considerable leeway in managing
his business based on the principle of managerial control of
business flowing from ownership of property aid the rationale
of business enterprise which is maximization of profit. These
rights, collectively called management prerogatives, comprise
the owner's freedom to administer the affairs of his business
enterprise in his quest for profits.
Thus the Supreme Court stated that "except as limited by
special laws, an employer is free to regulate, according to his
own discretion and judgment, all aspects of employment
including hiring, work assignments, working methods, time,
place and manner of work, tools to be used, processes to be
followed, supervision of workers, working regulations, transfer
of employees, lay-off of workers and the discipline, dismissal
and recall of work." (San Miguel Brewery Sales Force Union
vs. Ople) But an employer's prerogative and power to
discipline and terminate employees" services may not be
exercised in an arbitrary or despotic manner as to erode and
render meaningless the Constitutional guarantees of security
of tenure and due process. (Hongkong and Shanghai Banking
Corp. vs. NLRC) In a recent case, the Supreme Court
cautioned that having the right should not be confused with
the manner in which that right is exercised. The employer
must show that a transfer or reassignment of an employee is
not unreasonable, inconvenient or prejudicial to the
employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other benefits.
Should the employer fail to prove these, the employee's
transfer shall be tantamount to constructive dismissal. (Blue
Dairy Corp. et al vs. NLRC et al.).
On the matter of closure or suspension of operations, the
High Court noted that the determination to cease or suspend
operations is a management prerogative that the State
usually does not interfert with, as no business can be required
to continue operating at a loss simply to maintain the workers
in employment. Such an act would be tantamount to a taking
of property with t due proc ss of law, which the employer has
a right to resist. (San Pedro Hospital of Digos, Inc. vs. SOLE)
To be more specific, management prerogatives cover the
following aspects of business:
A. Operation of the business, including
----transfer or relocation of the plant ----introduction of new
machines or processes (even if resulting in lay-offs) ----
transformation of the company (eg. mergers, spin-offs) ----
suspension of operations ----sale or other disposition of the
business ----total closure, if in good faith
B. Personnel actions, such as
----hiring of personnel and imposing reasonable conditions
Starr Weigand
therefore ----determining size of the work force ----transfers or
assignments of employees ----disciplining employees ----
terminating employees for cause
All the above are subject to the condition that the
requirements of law, public policy, morals, good customs and
good faith are complied with.
The rationale for this policy is that an employee's right to
security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogatives.
(Homeowners Savings and Loan Assn. vs. NLRC).
Art. 5 Rules and Regulations the Department of Labor
and other government agencies charged with the
administration and enforcement of this Code or any of its
parts shall promulgate the necessary implementing rules
and regulations. Such rules and regulations shall become
effective 15 days after announcement of their adoption in
newspapers of general circulation.
TO be valid, the rule or regulation must not exceed the scope
or limits of the delegating legislation. Otherwise, it is void.
Art. 6 Applicability All rights and benefits granted to
workers under this Code shall, except as may otherwise
be provided herein, apply alike to all workers, whether
agricultural or non-agricultural.
Do the provisions of the Labor Code apply to employees
in government?
No. They fall under the Civil Service Law, being Civil Service
employees.
Are employees of the GOCCs covered by the provisions
of the Labor Code?
It depends. If the GOCC is one with a special charter (created
under a statute passed by the legislature), then its employees
are not covered by the labor code, and they fall under the civil
service laws. But, if the GOCC is incorporated under the
Corporation Code (i.e. registered with SEC, etc.) then, its
employees fall under the labor code.
N.B. Provisions on emancipation of tenants skipped.
Book I - PRE-EMPLOYMENT
Art. 12 Statement of Objectives it is the primary policy
of the State:
a) To promote and maintain a state to full
employment through improved manpower
training, allocation and utilization.
b) To protect every citizen desiring to work locally
or overseas by securing for him the best
possible terms and conditions or employment.
c) To facilitate a free choice of available
employment by persons seeking work in
conformity with the national interest.
d) To facilitate and regulate the movement of
workers in conformity with the national interest.
e) To regulate the employment of aliens, including
the establishment of a registration and/or work
permit system.
f) To strengthen the network or public
employment offices and rationalize the
LABORICADIZ 5
 participation of the private sector in the
recruitment and placement of workers, locally
and overseas, to serve national development
objectives.
g) To insure careful selection of Filipino workers
for overseas employment in order to protect the
good name of the Philippines abroad.
What is the primary mandate of the DOLE?
The DOLE is the primary policy-making, programming,
coordinating, and administrative entity of the Executive
Branch. The Admin Code mandates the DOLE to Assume
responsibility for:
a) the promotion of gainful employment opportunities
and the optimization of the development and
utilization of the countrys manpower resources.
b) The advancement of the workers welfare by
providing for just and humane working conditions
and terms of employment.
c) The maintenance of industrial peace by promoting
harmonious, equitable and stable employment
relations that assure protection for the rights of the
parties.
Title I RECRUITMENT AND PLACEMENT OF WORKERS
Chapter I GENERAL PROVISIONS
ARTICLE 13. Definitions. (a) Worker means any
member of the labor force, whether employed or
unemployed.
(b) Recruitment and placement refers to any act of
canvassing, enlisting, contracting, transporting, utilizing,
hiring or procuring workers, and includes referrals,
contract services, promising or advertising for
employment, locally or abroad, whether for profit or not:
Provided, That any person or entity which, in any
manner, offers or promises for a fee, employment to two
or more persons shall be deemed engaged in recruitment
and placement.
(c) Private fee-charging employment agency means any
person or entity engaged in recruitment and placement of
workers for a fee which is charged, directly or indirectly,
from the workers or employers or both.
(d) License means a document issued by the
Department of Labor authorizing a person or entity to
operate a private employment agency.
(e) Private recruitment entity means any person or
association engaged in the recruitment and placement of
workers, locally or overseas, without charging, directly or
indirectly, any fee from the workers or employers.
(f) Authority means a document issued by the
Department of Labor authorizing a person or association
to engage in recruitment and placement activities as a
private recruitment entity.
(g) Seaman means any person employed in a vessel
engaged in maritime navigation.
(h) Overseas employment means employment of a
worker outside the Philippines.
(i) Emigrant means 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.
ARTICLE 14. Employment promotion. The Secretary of
Labor shall have the power and authority:
(a) To organize and establish new employment offices in
addition to the existing employment offices under the
Department of Labor as the need arises;
(b) To organize and establish a nationwide job clearance
and information system to inform applicants registering
with a particular employment office of job opportunities
Starr Weigand
in other parts of the country as well as job opportunities
abroad;
(c) To develop and organize a program that will facilitate
occupational, industrial and geographical mobility of
labor and provide assistance in the relocation of workers
from one area to another; and
(d) To require any person, establishment, organization or
institution to submit such employment information as
may be prescribed by the Secretary of Labor.
ARTICLE 15. Bureau of Employment Services. (a) The
Bureau of Employment Services shall be primarily
responsible for developing and monitoring a
comprehensive employment program. It shall have the
power and duty:
1. To formulate and develop plans and programs to
implement the employment promotion objectives of this
Title;
2. To establish and maintain a registration and/or
licensing system to regulate private sector participation
in the recruitment and placement of workers, locally and
overseas, and to secure the best possible terms and
conditions of employment for Filipino contract workers
and compliance therewith under such rules and
regulations as may be issued by the Minister of Labor;
3. To formulate and develop employment programs
designed to benefit disadvantaged groups and
communities;
4. To establish and maintain a registration and/or work
permit system to regulate the employment of aliens;
5. To develop a labor market information system in aid of
proper manpower and development planning;
6. To develop a responsive vocational guidance and
testing system in aid of proper human resources
allocation; and
7. To maintain a central registry of skills, except seamen.
(b) The regional offices of the Ministry of Labor shall
have the original and exclusive jurisdiction over all
matters or cases involving employer-employee relations
including money claims, arising out of or by virtue of any
law or contracts involving Filipino workers for overseas
employment except seamen: Provided, That the Bureau
of Employment Services may, in the case of the National
Capital Region, exercise suchpower, whenever the
Minister of Labor deems it appropriate. The decisions of
the regional offices of the Bureau of Employment
Services, if so authorized by the Minister of Labor as
provided in this Article, shall be appealable to the
National Labor Relations Commission upon the same
grounds provided in Article 223 hereof. The decisions of
the National Labor Relations Commission shall be final
and unappealable. (Superseded by Exec. Order 797, May
1, 1982).
(c) The Minister of Labor shall have the power to impose
and collect fees based on rates recommended by the
Bureau of Employment Services. Such fees shall be
deposited in the National Treasury as a special account
of the General Fund, for the promotion of the objectives
of the Bureau of Employment Services, subject to the
provisions of Section 40 of Presidential Decree No. 1177.
Art. 15 empowers the DOLE to promote employment
opportunities. A significant development to the promotion of
local labor if the passage of RA 8042 which required the
establishment of a public employment services office (PESO)
in capital towns, cities and other strategic places. The PESO
is intended to serve as an employment service and
information center in its area of operation.
ARTICLE 16. Private recruitment. Except as provided in
Chapter II of this Title, no person or entity other than the
public employment offices, shall engage in the
recruitment and placement of workers.
General Rule: No person or entity other than a public
employment office shall engage in the recruitment and
placement of workers.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.

Exception: Private employment sector shall participate in the
recruitment and placement of workers, locally and overseas.
ARTICLE 17. Overseas Employment Development Board.
An Overseas Employment Development Board is
hereby created to undertake, in cooperation with relevant
entities and agencies, a systematic program for overseas
employment of Filipino workers in excess of domestic
needs and to protect their rights to fair and equitable
employment practices. It shall have the power and duty:
1. To promote the overseas employment of Filipino
workers through a comprehensive market promotion and
development program;
2. To secure the best possible terms and conditions of
employment of Filipino contract workers on a
government-to-government basis and to ensure
compliance therewith;
3. To recruit and place workers for overseas employment
on a government-to-government arrangement and in
such other sectors as policy may dictate; and
4. To act as secretariat for the Board of Trustees of the
Welfare and Training Fund for Overseas Workers.
ARTICLE 18. Ban on direct-hiring. No employer may
hire a Filipino worker for overseas employment except
through the Boards and entities authorized by the
Secretary of Labor. Direct-hiring by members of the
diplomatic corps, international organizations and such
other employers as may be allowed by the Secretary of
Labor is exempted from this provision.
General Rule: Direct hiring of Filipino workers by a foreign
employer is not allowed.
Exceptions:
- direct hiring by members of the diplomatic corps,
international organizations and such other
employers as may be allowed by the Secretary of
Labor.
- Direct hirees: individual workers who are able to
secure contracts for overseas employment with
their own efforts and representation without
assistance or participation of an agency. But such
hiring must be processed by the POEA.
ARTICLE 19. Office of Emigrant Affairs. (a) Pursuant to
the national policy to maintain close ties with Filipino
migrant communities and promote their welfare as well
as establish a data bank in aid of national
manpowerpolicy formulation, an Office of Emigrant
Affairs is hereby created in the Department of Labor. The
Office shall be a unit at the Office of the Secretary and
shall initially be manned and operated by such personnel
and through such funding as are available within the
Department and its attached agencies. Thereafter, its
appropriation shall be made part of the regular General
Appropriations Decree.
(b) The office shall, among others, promote the well-
being of emigrants and maintain their close link to the
homeland by:
1) serving as a liaison with migrant communities;
2) provision of welfare and cultural services;
3) promote and facilitate re-integration of migrants into
the national mainstream;
4) promote economic; political and cultural ties with the
communities; and
5) generally to undertake such activities as may be
appropriate to enhance such cooperative links.
BP No. 79: abolished the Office of Emigrant Affairs and its
pertinent functions were transferred to the Commission on
Filipinos Overseas. It provides advice and assistance to the
President and the Congress in the formulation of policies and
measures affecting Filipinos overseas. It is composed of 5
Starr Weigand
members appointed by the President one of whom is the
Minister of Foreign Affairs as ex officio member.
ARTICLE 20. National Seamen Board. (a) A National
Seamen Board is hereby created which shall develop and
maintain a comprehensive program for Filipino seamen
employed overseas. It shall have the power and duty:
1. To provide free placement services for seamen;
2. To regulate and supervise the activities of agents or
representatives of shipping companies in the hiring of
seamen for overseas employment and secure the best
possible terms of employment for contract seamen
workers and secure compliance therewith;
3. To maintain a complete registry of all Filipino seamen.
(b) The Board shall have original and exclusive
jurisdiction over all matters or cases including money
claims, involving employer-employee relations, arising
out of or by virtue of any law or contracts involving
Filipino seamen for overseas employment. The decisions
of the Board shall be appealable to the National Labor
Relations Commission upon the same grounds provided
in Article 223 hereof. The decisions of the National Labor
Relations Commission shall be final and inappealable.
1982: EO 797 was passed, aiming to streamline in the
overseas employment program. The OEDB, NSB and the
overseas employment program of the BES were united in a
single entity the Philippine Overseas Employment
Administration (POEA)
Principal functions of the POEA:
Formulation, implementation and monitoring of the overseas
employment of Filipino workers and the protection of their
rights to fair and equitable practices. It also participates in the
deployment of Filipino workers through government to
government hiring.
Composition of POEA:
Governing board
- Secretary of Labor and Employment, as the
Chairman
- Administrator
- A third member considered as well-versed in the
field of overseas employment and shall be
appointed by the President to serve a term of 2
years/
Office of the Administrator
Offices of such number of Deputy Administrators as
may be necessary
Office of the Director for each of the principal
subdivisions of its internal structure.
Overseas Filipino Worker (OFW) A Filipino worker who is
to be engaged or is engaged in a remunerated activity in a
country of which he is not a legal resident.
Classifications of OFWs accdg. To DOLE:
Land Based - contract workers other than a seaman,
including workers engaged in offshore activities whose
occupation requires that the majority of his working/gainful
hours are spent on land.
Sea based those employed in a vessel engaged in maritime
navigation.
Regulatory and adjudicatory powers of the POEA:
Under RA 8042, NLRC was given jurisdiction
involving employer-employee relations.
POEA retains original and eclusive jurisdiction over:
- All cases which are administrative in character
involving or arising out of violations of rules
and regulations relating to licensing and
registration or recruitment and employment
agencies or entities.
- Disciplinary action cases and other special
cases which are administrative in character
involving employers, principal, contracting
LABORICADIZ 7
 partners and Filipino migrant workers.
the POEA does not have jurisdiction to hear and
decide a claim for enforcement of a foreign
judgment.
ARTICLE 21. Foreign service role and participation. To
provide ample protection to Filipino workers abroad, the
labor attaches, the labor reporting officers duly
designated by the Secretary of Labor and the Philippine
diplomatic or consular officials concerned shall, even
without prior instruction or advice from the home office,
exercise the power and duty:
(a) To provide all Filipino workers within their jurisdiction
assistance on all matters arising out of employment;
(b) To insure that Filipino workers are not exploited or
discriminated against;
(c) To verify and certify as requisite to authentication that
the terms and conditions of employment in contracts
involving Filipino workers are in accordance with the
Labor Code and rules and regulations of the Overseas
Employment Development Board and National Seamen
Board;
(d) To make continuing studies or researches and
recommendations on the various aspects of the
employment market within their jurisdiction;
(e) To gather and analyze information on the employment
situation and its probable trends, and to make such
information available; and
(f) To perform such other duties as may be required of
them from time to time.
ARTICLE 22. Mandatory 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.
EO 857: prescribe the percentages of foreign exchange
remittance ranging from 50% to 80% of the basic salary
depending on the workers kind of job.
ARTICLE. 23. Composition of the Boards. (a) The OEDB
shall be composed of the Secretary of Labor and
Employment as Chairman, the Undersecretary of Labor
as Vice-Chairman, and a representative each of the
Department of Foreign Affairs, the Department of
National Defense, the Central Bank, the Department of
Education, Culture and Sports, the National Manpower
and Youth Council, the Bureau of Employment Services,
a workers organization and an employers organization
and the Executive Director of the OEDB as members.
(b) The National Seamen Board shall be composed of the
Secretary of Labor and Employment as Chairman, the
Undersecretary of Labor as Vice-Chairman, the
Commandant of the Philippine Coast Guard, and a
representative each of the Department of Foreign Affairs,
the Department of Education, Culture and Sports, the
Central Bank, the Maritime Industry Authority, the Bureau
of Employment Services, a national shipping association
and the Executive Director of the NSB as members.
The members of the Boards shall receive allowances to
be determined by the Board which shall not be more than
P2,000.00 per month.
(c) The Boards shall be attached to the Department of
Labor for policy and program coordination. They shall
each be assisted by a Secretariat headed by an Executive
Director who shall be a Filipino citizen with sufficient
experience in manpower administration, including
overseas employment activities. The Executive Director
shall be appointed by the President of the Philippines
upon the recommendation of the Secretary of Labor and
shall receive an annual salary as fixed by law. The
Secretary of Labor shall appoint the other members of
the Secretariat.
(d) The Auditor General shall appoint his representative
to the Boards to audit their respective accounts in
Starr Weigand
accordance with auditing laws and pertinent rules and
regulations.
ARTICLE 24. Boards to issue rules and collect fees. - The
Boards shall issue appropriate rules and regulations to
carry out their functions. They shall have the power to
impose and collect fees from employers concerned,
which shall be deposited in the respective accounts of
said Boards and be used by them exclusively to promote
their objectives.
Chapter II REGULATIONS OF RECRUITMENT AND
PLACEMENT ACTIVITIES
Art. 25 Private sector participation in the recruitment and
placement of workers Pursuant to national
development objective and in order to harness and
maximize the use of private sector resources and
initiative in the development and implementation of a
comprehensive employment program, the private
employment sector shall participate in the recruitment
and placement of workers, locally and overseas, under
such guidelines, rules and regulations as may be issued
by the Secretary of Labor.
Art. 26 Travel agencies prohibited to recruit Travel
agencies and sales agencies of airline companies are
prohibited from engaging in the business of recruitment
and placement of workers for overseas employment
whether for profit or not.
Rule 1, Sec. 2 of the POEA Rules also disqualify persons with
derogatory records such as those convicted of illegal
recruitment or other crimes involving moral turpitude. The
prohibition extends to any official or employee of the DOLE,
POEA, OWWA, DFA and other government agencies directly
involved in the implementation of the RA 8042 or any of their
th
relatives within the 4 civil degree.
ARTICLE 27. Citizenship requirement. Only Filipino
citizens or corporations, partnerships or entities at least
seventy-five percent (75%) of the authorized and voting
capital stock of which is owned and controlled by Filipino
citizens shall be permitted to participate in the
recruitment and placement of workers, locally or
overseas.
ARTICLE 28. Capitalization. All applicants for authority
to hire or renewal of license to recruit are required to
have such substantial capitalization as determined by the
Secretary of Labor.
Requirements for participation in recruitment and
placement of workers:
Private employment agency for local employment:
- Single proprietorship or partnership: minimum
net worth must be PhP 200 k
- Corporations: Minimum paid up capital must
be PhP 500 k.
Private recruitment or manning agency for overseas
employment:
- Single proprietorship or partnership must have
a minimum capitalization of PhP 2 M.
- Corporation must have minimum paid-up
capital of PhP 2 M.
ARTICLE 29. Non-transferability of license or authority.
No license or authority shall be used directly or indirectly
by any person other than the one in whose favor it was
issued or at any place other than that stated in the
license or authority be transferred, conveyed or assigned
to any other person or entity. Any transfer of business
address, appointment or designation of any agent or
representative including the establishment of additional
offices anywhere shall be subject to the prior approval of
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
the Department of Labor.
Licensees/holders of authority may, as a rule, undertake
recruitment and placement activity only at their authorized
official address.
If in Metro Manila, they are allowed to conduct provincial
recruitment upon written authority of the POEA. A copy of
such authority will be presented to the DOLE or regional
director of the place concerned.
ARTICLE 30. Registration fees. The Secretary of Labor
shall promulgate a schedule of fees for the registration of
all applicants for license or authority.
ARTICLE 31. Bonds. All applicants for license or
authority shall post such cash and surety bonds as
determined by the Secretary of Labor to guarantee
compliance with prescribed recruitment procedures,
rules and regulations, and terms and conditions of
employment as may be appropriate.
Amount of Bonds:
Recruitment agency for local employment:
Cash Bond of PhP 25K;
Surety Bond of PhP 100K;
Such bonds are valid ofr 2 years and will answer for
all valid and legal claims arising from the illegal use
of the license/authority.
Recruitment or manning agency for overseas
employment:
Submit an Escrow Agreement in the amount of PhP
1M with a confirmation of escrow deposit with an
accredited bank
Surety bond of PHP 100K from a bonding company
acceptable to the POEA and accredited with the
Insurance Commission.
POEA has the power to enforce liability under the bonds. And
the bonds referred to here cannot be garnished to satisfy a
claim against a recruitment agency, as it is only intended to
answer for employment related claims and for violations of
labor laws.
ARTICLE 32. Fees to be paid by workers. Any person
applying with a private fee-charging employment agency
for employment assistance shall not be charged any fee
until he has obtained employment through its efforts or
has actually commenced employment. Such fee shall be
always covered with the appropriate receipt clearly
showing the amount paid. The Secretary of Labor shall
promulgate a schedule of allowable fees.
Chargeable fees:
Placement fee for local employment: cannot exceed 20%
of the workers first monthly basic salary. The placement fee
cannot be charged prior to the actual commencement of
employment.
Placement and Documentation fees for overseas
employment:
The PRINCIPAL shall be responsible for: the VISA
fee, Airfare, POEA processing fee, and OWWA
membership fee.
Documentation costs: Passport, NBI/Police
Clearance/baranggay clearance, authentication,
birth certificate, medicare, trade test (if necessary),
inoculation when required by the host country, and
medical examination fee.
Service fees:
Local Employment: Agency may charge the
employer a service fee which shall not exceed 20%
of the annual salary of the worker. The fee cannot
be deducted from the salary of the worker.
Overseas Agency: Agency may charge its
Starr Weigand
principals a service or manning fee to cover
services rendered in the recruitment and
documentation and placement of workers.
The POEA may require the refund of illegally collected fees.
Such relief includes the refund/reimbursement of such fees as
may have been fraudulently or illegally collected, or such
money, goods or services imposed and accepted in excess of
what is licitly prescribed.
ARTICLE 33. Reports on employment status. Whenever
the public interest requires, the Secretary of Labor may
direct all persons or entities within the coverage of this
Title to submit a report on the status of employment,
including job vacancies, details of job requisitions,
separation from jobs, wages, other terms and conditions
and other employment data.
ARTICLE 34. Prohibited practices. It shall be unlawful
for any individual, entity, licensee, or holder of authority:
(a) To charge or accept, directly or indirectly, any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor, or to make a
worker pay any amount greater than that actually
received by him as a loan or advance;
(b) To furnish or publish any false notice or information
or document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under this
Code.
(d) To induce or attempt to induce a worker already
employed to quit his employment in order to offer him to
another unless the transfer is designed to liberate the
worker from oppressive terms and conditions of
employment;
(e) To influence or to attempt to influence any person or
entity not to employ any worker who has not applied for
employment through his agency;
(f) To engage in the recruitment or placement of workers
in jobs harmful to public health or morality or to the
dignity of the Republic of the Philippines;
(g) To obstruct or attempt to obstruct inspection by the
Secretary of Labor or by his duly authorized
representatives;
(h) To fail to file reports on the status of employment,
placement vacancies, remittance of foreign exchange
earnings, separation from jobs, departures and such
other matters or information as may be required by the
Secretary of Labor.
(i) To substitute or alter employment contracts approved
and verified by the Department of Labor from the time of
actual signing thereof by the parties up to and including
the periods of expiration of the same without the
approval of the Secretary of Labor;
(j) To become an officer or member of the Board of any
corporation engaged in travel agency or to be engaged
directly or indirectly in the management of a travel
agency; and
(k) To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations other than those authorized under this
Code and its implementing rules and regulations.
ARTICLE 35. Suspension and/or cancellation of license
or authority. - The Minister of Labor shall have the power
to suspend or cancel any license or authority to recruit
employees for overseas employment for violation of rules
and regulations issued by the Ministry of Labor, the
Overseas Employment Development Board, or for
violation of the provisions of this and other applicable
laws, General Orders and Letters of Instructions.
Suspension and cancellation of license is an
administrative sanction for recruitment violations.
LABORICADIZ 9
Grounds for such suspension:
Engaging in acts of misrepresentation for the
purpose of securing a license or renewal thereof
(i.e. giving false testimonies or falsified documents.)
Engaging in the recruitment or placement of
workers in jobs harmful to public health or morality
or the dignity of the Republic of the Philippines.
Charging any fee before employment is obtained
for an applicant worker.
Charging any fee in an amount exceeding the
allowable rate.
Obstructing inspection of the DOLE.
The DOLE SECRETARY and the POEA ADMINSITRATOR
have the concurrent jurisdiction to suspend or cancel a
license or authority. The Secretary of DOLE has the power to
apply these sanctions, however, due to his rule-making
power, he authorized the POEA to conduct the necessary
proceedings regarding the exercise of such power.
Chapter III MISCELLANEOUS PROVISIONS
ARTICLE 36. Regulatory power. - The Secretary of Labor
shall have the power to restrict and regulate the
recruitment and placement activities of all agencies
within the coverage of this Title and is hereby authorized
to issue orders and promulgate rules and regulations to
carry out the objectives and implement the provisions of
this Title.
ARTICLE 37. Visitorial Power. - The Secretary of Labor or
his duly authorized representatives may, at any time,
inspect the premises, books of accounts and records of
any person or entity covered by this Title, require it to
submit reportsregularly on prescribed forms, and act on
violation of any provisions of this Title.
ARTICLE 38. Illegal recruitment. (a) Any recruitment
activities, including the prohibited practices enumerated
under Article 34 of this Code, to be undertaken by non-
licensees or non-holders of authority, shall be deemed
illegal and punishable under Article 39 of this Code. The
Department of Labor and Employment or any law
enforcement officer may initiate complaints under this
Article.
(b) Illegal recruitment when committed by a syndicate or
in large scale shall be considered an offense involving
economic sabotage and shall be penalized in accordance
with Article 39 hereof.
Illegal recruitment is deemed committed by a syndicate if
carried out by a group of three (3) or more persons
conspiring and/or confederating with one another in
carrying out any unlawful or illegal transaction,
enterprise or scheme defined under the first paragraph
hereof. Illegal recruitment is deemed committed in large
scale if committed against three (3) or more persons
individually or as a group.
(c) The Secretary of Labor and Employment or his duly
authorized representatives shall have the power to cause
the arrest and detention of such non-licensee or non-
holder of authority if after investigation it is determined
that his activities constitute a danger to national security
and public order or will lead to further exploitation of job-
seekers. The Secretary shall order the search of the
office or premises and seizure of documents,
paraphernalia, properties and other implements used in
illegal recruitment activities and the closure of
companies, establishments and entities found to be
engaged in the recruitment of workers for overseas
employment, without having been licensed or authorized
to do so.
See RA 10022. The definition of illegal recruitment now
includes a licensee or holder of authority.
The persons criminally liable for illegal recruitment are the
principals, accomplices and accessories. In case of juridical
Starr Weigand
persons, the officers having control, management or direction
of the business shall be liable.
The Court held in People v Valenciano, that an employee of a
company engaged in illegal recruitment may be haled liable
as principal if it is shown that the employee actively and
consciously participated in the illegal recruitment. Good faith
cannot be a shield to liability, on the ground that the employee
is only following the dictates of her employer, as illegal
recruitment (in large scale) is malum prohibitum, and not
malum inse, and thus, it is immaterial is the accused has
intent to commit the crime.
(People v Navarra) Illegal recruitment has 2 essential
elements:
1) The offender has no valid license or authority
required by law to enable him to lawfully engage in
the recruitment and placement of workers;
2) The offender undertakes any activity within the
meaning of recruitment and placement defined
under Art. 13 or any prohibited practice under Art.
34.
A non-licensee or holder of authority means any person,
corporation or entity without a valid license or authority to
engage in recruitment or placement from the Secretary of
labor or whose license or authority has been suspended,
revoked or cancelled. (Ibid.)
(Under the Labor Code) Illegal recruitment is committed when
a person who is not authorized by the government, gives the
impression that he or she has the power to send workers
abroad. (People v Alvarez)
Illegal recruitment is considered an offense involving
economic sabotage if any of the following qualifying
circumstances exist:
1) the illegal recruitment is committed by a syndicate,
whereby 3/more persons conspire with one another
in carrying out unlawful/illegal transactions;
2) the illegal recruitment is committed in large scale,
as when it is committed against 3 or more persons
individually or as a group. Conspiracy need not be
proved. (People v Valenciano)
ARTICLE 39. Penalties. (a) The penalty of life
imprisonment and a fine of One Hundred Thousand
Pesos (P100,000.00) shall be imposed if illegal
recruitment constitutes economic sabotage as defined
herein;
(b) Any licensee or holder of authority found violating or
causing another to violate any provision of this Title or
its implementing rules and regulations shall, upon
conviction thereof, suffer the penalty of imprisonment of
not less than two years nor more than five years or a fine
of not less than P10,000 nor more than P50,000, or both
such imprisonment and fine, at the discretion of the
court;
(c) Any person who is neither a licensee nor a holder of
authority under this Title found violating any provision
thereof or its implementing rules and regulations shall,
upon conviction thereof, suffer the penalty of
imprisonment of not less than four years nor more than
eight years or a fine of not less than P20,000 nor more
than P100,000 or both such imprisonment and fine, at the
discretion of the court;
(d) If the offender is a corporation, partnership,
association or entity, the penalty shall be imposed upon
the officer or officers of the corporation, partnership,
association or entity responsible for violation; and if
such officer is an alien, he shall, in addition to the
penalties herein prescribed, be deported without further
proceedings;
(e) In every case, conviction shall cause and carry the
automatic revocation of the license or authority and all
the permits and privileges granted to such person or
entity under this Title, and the forfeiture of the cash and
surety bonds in favor of the Overseas Employment
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
Development Board or the National Seamen Board, as the
case may be, both of which are authorized to use the
same exclusively to promote their objectives.
Venue: RTC of the province or city where the offense was
committed of where the offended party actually resides at the
time of the commission of the offense.
In CF Sharp v Espanol, the Court held the petitioner liable for
illegal recruitment for interviewing possible workers prior to
the issuance of the license to recruit from the POEA. The fact
that petitioner did not receive any fee or remuneration for the
interviews did not negate the fact that it engaged in illegal
recruitment.
ILLEGAL RECRUITMENT UNDER RA 10022
Section 5. Section 6 of Republic Act No. 8042, as
amended, is hereby amended to read as follows:
SEC. 6. Definition. For purposes of this Act, illegal
recruitment shall mean any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring, or procuring
workers and includes referring, contract services,
promising or advertising for employment abroad,
whether for profit or not, when undertaken by non-
licensee or non-holder of authority contemplated under
Article 13(f) of Presidential Decree No. 442, as amended,
otherwise known as the Labor Code of the Philippines:
Provided, That any such non-licensee or non-holder who,
in any manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed so
engaged. It shall likewise include the following acts,
whether committed by any person, whether a non-
licensee, non-holder, licensee or holder of authority:
(a) To charge or accept directly or indirectly any amount
greater than that specified in the schedule of allowable
fees prescribed by the Secretary of Labor and
Employment, or to make a worker pay or acknowledge
any amount greater than that actually received by him as
a loan or advance;
(b) To furnish or publish any false notice or information
or document in relation to recruitment or employment;
(c) To give any false notice, testimony, information or
document or commit any act of misrepresentation for the
purpose of securing a license or authority under the
Labor Code, or for the purpose of documenting hired
workers with the POEA, which include the act of
reprocessing workers through a job order that pertains to
nonexistent work, work different from the actual overseas
work, or work with a different employer whether
registered or not with the POEA;
(d) To include or attempt to induce a worker already
employed to quit his employment in order to offer him
another unless the transfer is designed to liberate a
worker from oppressive terms and conditions of
employment;
(e) To influence or attempt to influence any person or
entity not to employ any worker who has not applied for
employment through his agency or who has formed,
joined or supported, or has contacted or is supported by
Starr Weigand
any union or workers organization;
(f) To engage in the recruitment or placement of workers
in jobs harmful to public health or morality or to the
dignity of the Republic of the Philippines;
(h) To fail to submit reports on the status of
employment, placement vacancies, remittance of foreign
exchange earnings, separation from jobs, departures and
such other matters or information as may be required by
the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker,
employment contracts approved and verified by the
Department of Labor and Employment from the time of
actual signing thereof by the parties up to and including
the period of the expiration of the same without the
approval of the Department of Labor and Employment;
(j) For an officer or agent of a recruitment or placement
agency to become an officer or member of the Board of
any corporation engaged in travel agency or to be
engaged directly or indirectly in the management of
travel agency;
(k) To withhold or deny travel documents from applicant
workers before departure for monetary or financial
considerations, or for any other reasons, other than
those authorized under the Labor Code and its
implementing rules and regulations;
(l) Failure to actually deploy a contracted worker without
valid reason as determined by the Department of Labor
and Employment;
(m) Failure to reimburse expenses incurred by the
worker in connection with his documentation and
processing for purposes of deployment, in cases where
the deployment does not actually take place without the
workers fault. Illegal recruitment when committed by a
syndicate or in large scale shall be considered an offense
involving economic sabotage; and
(n) To allow a non-Filipino citizen to head or manage a
licensed recruitment/manning agency.
Illegal recruitment is deemed committed by a syndicate
if carried out by a group of three (3) or more persons
conspiring or confederating with one another. It is
deemed committed in large scale if committed against
three (3) or more persons individually or as a group.
In addition to the acts enumerated above, it shall also be
unlawful for any person or entity to commit the following
prohibited acts:
(1) Grant 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
LABORICADIZ 11
accommodation party, postdated checks in relation to the
said loan;
(2) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to avail
of a loan only from specifically designated institutions,
entities or persons;
(3) Refuse to condone or renegotiate a loan incurred by
an overseas Filipino worker after the latters employment
contract has been prematurely terminated through no
fault of his or her own;
(4) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to
undergo health examinations only from specifically
designated medical clinics, institutions, entities or
persons, except in the case of a seafarer whose medical
examination cost is shouldered by the
principal/shipowner;
(5) Impose a compulsory and exclusive arrangement
whereby an overseas Filipino worker is required to
undergo training, seminar, instruction or schooling of
any kind only from specifically designated institutions,
entities or persons, except for recommendatory trainings
mandated by principals/shipowners where the latter
shoulder the cost of such trainings;
(6) For a suspended recruitment/manning agency to
engage in any kind of recruitment activity including the
processing of pending workers applications; and
(7) For a recruitment/manning agency or a foreign
principal/employer to pass on the overseas Filipino
worker or deduct from his or her salary the payment of
the cost of insurance fees, premium or other insurance
related charges, as provided under the compulsory
workers insurance coverage.
The persons criminally liable for the above offenses are
the principals, accomplices and accessories. In case of
juridical persons, the officers having ownership, control,
management or direction of their business who are
responsible for the commission of the offense and the
responsible employees/agents thereof shall be liable.
In the filing of cases for illegal recruitment or any of the
prohibited acts under this section, the Secretary of Labor
and Employment, the POEA Administrator or their duly
authorized representatives, or any aggrieved person may
initiate the corresponding criminal action with the
appropriate office. For this purpose, the affidavits and
testimonies of operatives or personnel from the
Department of Labor and Employment, POEA and other
law enforcement agencies who witnessed the acts
constituting the offense shall be sufficient to prosecute
the accused.
In the prosecution of offenses punishable under this
section, the public prosecutors of the Department of
Justice shall collaborate with the anti-illegal recruitment
branch of the POEA and, in certain cases, allow the
POEA lawyers to take the lead in the prosecution. The
POEA lawyers who act as prosecutors in such cases
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shall be entitled to receive additional allowances as may
be determined by the POEA Administrator.
The filing of an offense punishable under this Act shall
be without prejudice to the filing of cases punishable
under other existing laws, rules or regulations.
Section 6. Section 7 of Republic Act No. 8042, as
amended, is hereby amended to read as follows:
SEC. 7. Penalties. -
(a) Any person found guilty of illegal recruitment shall
suffer the penalty of imprisonment of not less than twelve
(12) years and one (1) day but not more than twenty (20)
years and a fine of not less than One million pesos
(P1,000,000.00) nor more than Two million pesos
(P2,000,000.00).
(b) The penalty of life imprisonment and a fine of not
less than Two million pesos (P2,000,000.00) nor more
than Five million pesos (P5,000,000.00) shall be imposed
if illegal recruitment constitutes economic sabotage as
defined therein.
Provided, however, That the maximum penalty shall be
imposed if the person illegally recruited is less than
eighteen (18) years of age or committed by a non-
licensee or non-holder of authority.
(c) Any person found guilty of any of the prohibited acts
shall suffer the penalty of imprisonment of not less than
six (6) years and one (1) day but not more than twelve
(12) years and a fine of not less than Five hundred
thousand pesos (P500,000.00) nor more than One million
pesos (P1,000,000.00).
If the offender is an alien, he or she shall, in addition to
the penalties herein prescribed, be deported without
further proceedings.
In every case, conviction shall cause and carry the
automatic revocation of the license or registration of the
recruitment/manning agency, lending institutions,
training school or medical clinic.
Section 7. Section 10 of Republic Act No. 8042, as
amended, is hereby amended to read as follows:
SEC. 10. Money Claims. Notwithstanding any
provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have
the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the
complaint, the claims arising out of an employer-
employee relationship or by virtue of any law or contract
involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other
forms of damage. Consistent with this mandate, the
NLRC shall endeavor to update and keep abreast with the
developments in the global services industry.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
The liability of the principal/employer and the
recruitment/placement agency for any and all claims
under this section shall be joint and several. This
provision shall be incorporated in the contract for
overseas employment and shall be a condition precedent
for its approval. The performance bond to de filed by the
recruitment/placement agency, as provided by law, shall
be answerable for all money claims or damages that may
be awarded to the workers. If the recruitment/placement
agency is a juridical being, the corporate officers and
directors and partners as the case may be, shall
themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and
damages.
Such liabilities shall continue during the entire period or
duration of the employment contract and shall not be
affected by any substitution, amendment or modification
made locally or in a foreign country of the said contract.
Any compromise/amicable settlement or voluntary
agreement on money claims inclusive of damages under
this section shall be paid within thirty (30) days from
approval of the settlement by the appropriate authority.
In case of termination of overseas employment without
just, valid or authorized cause as defined by law or
contract, or any unauthorized deductions from the
migrant workers salary, the worker shall be entitled to
the full reimbursement if his placement fee and the
deductions made with interest at twelve percent (12%)
per annum, plus his salaries for the unexpired portion of
his employment contract or for three (3) months for every
year of the unexpired term, whichever is less.
In case of a final and executory judgement against a
foreign employer/principal, it shall be automatically
disqualified, without further proceedings, from
participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers
until and unless it fully satisfies the judgement award.
Noncompliance with the mandatory periods for
resolutions of case provided under this section shall
subject the responsible officials to any or all of the
following penalties:
(a) The salary of any such official who fails to render his
decision or resolution within the prescribed period shall
be, or caused to be, withheld until the said official
complies therewith;
(b) Suspension for not more than ninety (90) days; or
(c) Dismissal from the service with disqualification to
hold any appointive public office for five (5) years.
Provided, however, That the penalties herein provided
shall be without prejudice to any liability which any such
official may have incured under other existing laws or
rules and regulations as a consequence of violating the
provisions of this paragraph.
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Section 8. The first paragraph of Section 13 of Republic
Act No. 8042, as amended is hereby amended to read as
follows:
SEC. 13. Free Legal Assistance; Preferential Entitlement
Under the Witness Protection Program. A mechanism
for free legal assistance for victims of illegal recruitment
shall be established in the anti-illegal recruitment branch
of the POEA including its regional offices. Such
mechanism shall include coordination and cooperation
with the Department of Justice, the Integrated Bar of the
Philippines, and other non-governmental organizations
and volunteer groups.
Section 9. Section 16 of Republic Act No. 8042, as
amended, is hereby amended to read as follows:
SEC. 16. Mandatory Repatriation of Underage Migrant
Workers. Upon discovery or being informed of the
presence of migrant workers whose ages fall below the
minimum age requirement for overseas deployment, the
responsible officers in the foreign service shall without
delay repatriate said workers and advise the Department
of Foreign Affairs through the fastest means of
communication available of such discovery and other
relevant information. The license of a
recruitment/manning agency which recruited or deployed
an underage migrant worker shall be automatically
revoked and shall be imposed a fine of not less than Five
hundred thousand pesos (Php 500,000.00) but not more
than One million pesos (Php 1,000,000.00). All fees
pertinent to the processing of papers or documents in
the recruitment or deployment shall be refunded in full by
the responsible recruitment/manning agency, without
need of notice, to the underage migrant worker or to his
parents or guardian. The refund shall be independent of
and in addition to the indemnification for the damages
sustained by the underage migrant worker. The refund
shall be paid within thirty (30) days from the date of the
mandatory repatriation as provided for in this Act.
Section 23. A new Section 37-A. of Replublic Act No.
8042, as amended, is hereby added to read as follows:
SEC. 37-A. Compulsory Insurance Coverage for Agency-
Hired Workers. In addition to the performance bond to
be filed by the recruitment/manning agency under
Section 10, each migrant worker deployed by a
recruitment/manning agency shall be covered by a
compulsory insurance policy which shall be secured at
no cost to the said worker. Such insurance policy shall
be effective for the duration of the migrant workers
employment and shall cover, at the minimum:
(a) Accidental death, with at least Fifteen thousand
United States dollars (US$10,000.00) survivors benefit
payable to the migrant workers beneficiaries;
(c) Permanent total disablement, with at least Seven
thousand five hundred United States dollars
(US$7,500.00) disability benefit payable to the migrant
worker. The following disabilities shall be deemed
permanent: total, complete loss of sight of both eyes;
loss of two(2) limbs at or above the ankles or wrists;
permanent complete paralysis of two (2) limbs; brain
injury resulting to incurable imbecility or insanity;
LABORICADIZ 13
(d) Repatriation cost of the worker when his/her
employment is terminated without any valid cause,
including the transport of his or her personal belongings.
In case of death, the insurance provider shall arrange and
pay for the repatriation or return of the workers remains.
The insurance provider shall also render any assistance
necessary in the transport including, but not limited to,
locating a local licensed funeral home, mortuary or direct
disposition facility to prepare the body for transport,
completing all documentation, obtaining legal
clearances, procuring consular services, providing
necessary casket or air transport container, as well as
transporting the remains including retrieval from site of
death and delivery to the receiving funeral home;
(e) Subsistence allowance benefit, with at least One
hundred United States dollars (US$100.00) Per month for
a maximum of six (6) months for a migrant worker who is
involved in a case or litigation for the protection of
his/her rights in the receiving country;
(f) Money claims arising from employers liability which
may be awarded or given to the worker in a judgment or
settlement of his or her case in the NLRC. The insurance
coverage for money claims shall be equivalent to at least
three (3) months for every year of the migrant workers
employment contract;
In addition to the above coverage, the insurance policy
shall also include:
(g) Compassionate visit. When a migrant worker is
hospitalized and has been confined for at least seven (7)
consecutive days, he shall be entitled to a
compassionate visit by one (1) family member or a
requested individual. The insurance company shall pay
for the transportation cost of the family member or
requested individual to the major airport closest to the
place of hospitalization of the worker. It is, however, the
responsibility of the family member or requested
individual to meet all visa and travel document
requirements;
(h) Medical evacuation. When an adequate medical
facility is not available proximate to the migrant worker,
as determined by the insurance companys physician
and/or a consulting physician, evacuation under
appropriate medical supervision by the mode of transport
necessary shall be undertaken by the insurance provider;
and
(i) Medical repatriation. When medically necessary as
determined by the attending physician, repatriation under
medical supervision to the migrant workers residence
shall be undertaken by the insurance provider at such
time that the migrant worker is medically cleared for
travel by commercial carrier. If the period to receive
medical clearance to travel exceeds fourteen (14) days
from the date of discharge from the hospital, an
alternative appropriate mode of transportation, such as
air ambulance, may be arranged. Medical and non-
medical escorts may be provided when necessary.
Only reputable private insurance companies duly
registered with the Insurance Commission (IC) , which
are in existence and operational for at least Five hundred
million pesos (P500,000,000.00) to be determined by the
IC, and with a current year certificate of authority shall be
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qualified to provide for the workers insurance coverage.
Insurance companies who have directors, partners,
officers, employees or agents with relatives, within the
fourth civil degree of consanguinity or affinity, who work
or have interest in any of the licensed
recruitment/manning agencies or in any of the
government agencies involved in the overseas
employment program shall be disqualified from providing
this workers insurance coverage.
The recruitment/manning agency shall have the right to
choose from any of the qualified insurance providers the
company that will insure the migrant worker it will
deploy. After procuring such insurance policy, the
recruitment/manning agency shall provide an
authenticated copy thereof to the migrant worker. It shall
then submit the certificate of insurance coverage of the
migrant worker to POEA as a requirement for the
issuance of an Overseas Employment Certificate (OEC)
to the migrant worker. In the case of seafarers who are
insured under policies issued by foreign insurance
companies, the POEA shall accept certificates or other
proofs of cover from recruitment/manning agencies:
Provided, That the minimum coverage under sub-
paragraphs (a) to (i) are included therein.
Any person having a claim upon the policy issued
pursuant to subparagraphs (a), (b), (c), (d) and (e) of this
section shall present to the insurance company
concerned a written notice of claim together with
pertinent supporting documents. The insurance company
shall forthwith ascertain the truth and extent of the claim
and make payment within ten (10) days from the filing of
the notice of claim.
Any claim arising from accidental death, natural death
or disablement under this section shall be paid by the
insurance company without any contest and without the
necessity of providing fault or negligence of any kind on
the part of the insured migrant worker: Provided, That the
following documents, duly authenticated by the
Philippine foreign posts, shall be sufficient evidence to
substantiate the claim:
(1) Death Certificate In case of natural or accidental
death;
(2) Police or Accident Report In case of accidental
death; and
(3) Medical Certificate In case of permanent
disablement;
For repatriation under subparagraph (d) hereof, a
certification which states the reason/s for the termination
of the migrant workers employment and the need for his
or her repatriation shall be issued by the Philippine
foreign post or the Philippine Overseas Labor Office
(POLO) located in the receiving country.
For subsistence allowance benefit under subparagraph
(e), the concerned labor attach or, in his absence, the
embassy or consular official shall issue a certification
which states the name of the case, the names of the
parties and the nature of the cause of action of the
migrant worker.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
For the payment of money claims under subparagraph
(f), the following rules shall govern:
(1) After a decision has become final and executor or a
settlement/compromise agreement has been reached
between the parties at the NLRC, an order shall be
released mandating the respondent recruitment/manning
agency to pay the amount adjudged or agreed upon
within thirty (30) days;
(2) The recruitment/manning agency shall then
immediately file a notice of claim with its insurance
provider for the amount of liability insured, attaching
therewith a copy of the decision or compromise
agreement;
(3) Within ten (10) days from the filing of notice of claim,
the insurance company shall make payment to the
recruitment/manning agency the amount adjudged or
agreed upon, or the amount of liability insured,
whichever is lower. After receiving the insurance
payment, the recruitment/manning agency shall
immediately pay the migrant workers claim in full, taking
into account that in case the amount of insurance
coverage is insufficient to satisfy the amount adjudged or
agreed upon, it is liable to pay the balance thereof;
(4) In case the insurance company fails to make
payment within ten (10) days from the filing of the claim,
the recruitment/ manning agency shall pay the amount
adjudged or agreed upon within the remaining days of
the thirty (30)-day period, as provided in the first
subparagraph hereof;
(5) If the workers claim was not settled within the
aforesaid thirty (30)-day period, the recruitment/manning
agencys performance bond or escrow deposit shall be
forthwith garnished to satisfy the migrant workers claim;
(6) The provision of compulsory workers insurance
under this section shall not affect the joint and solidary
liability of the foreign employer and the
recruitment/manning agency under Section 10;
(7) Lawyers for the insurance companies, unless the
latter is impleaded, shall be prohibited to appear before
the NLRC in money claims cases under this section.
Any question or dispute in the enforcement of any
insurance policy issued under this section shall be
brought before the IC for mediation or adjudication.
In case it is shown by substantial evidence before the
POEA that the migrant worker who was deployed by a
licensed recruitment/manning agency has paid for the
premium or the cost of the insurance coverage or that the
said insurance coverage was used as basis by the
recruitment/manning agency to claim any additional fee
from the migrant worker, the said licensed
recruitment/manning agency shall lose its license and all
its directors, partners, proprietors, officers and
employees shall be perpetually disqualified from
engaging in the business of recruitment of overseas
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workers. Such penalty is without prejudice to any other
liability which such persons may have incurred under
existing laws, rules or regulations.
For migrant workers recruited by the POEA on a
government-to-government arrangement, the POEA shall
establish a foreign employers guarantee fund which shall
be answerable to the workers monetary claims arising
from breach of contractual obligations. For migrant
workers classified as rehires, name hires or direct hires,
they may opt to be covered by this insurance coverage
by requesting their foreign employers to pay for the cost
of the insurance coverage or they may pay for the
premium themselves. To protect the rights of these
workers, the POEA shall provide them adequate legal
assistance, including conciliation and mediation
services, whether at home or abroad.
At the end of every year, the Department of Labor and
Employment and the IC shall jointly make an assessment
of the performance of all insurance providers, based
upon the report of the NLRC and the POEA on their
respective interactions and experiences with the
insurance companies, and they shall have the authority
to ban or blacklist such insurance companies which are
known to be evasive or not responsive to the legitimate
claims of migrant workers. The Department of Labor and
Employment shall include such assessment in its year-
end report to Congress.
For purposes of this section, the Department of Labor
and Employment, IC, NLRC and the POEA, in
consultation with the recruitment/manning agencies and
legitimate non-government organizations advocating the
rights and welfare of overseas Filipino workers, shall
formulate the necessary implementing rules and
regulations.
The foregoing provisions on compulsory insurance
coverage shall be subject to automatic review through
the Congressional Oversight Committee immediately
after three (3) years from the effectivity of this Act in
order to determine its efficacy in favor of the covered
overseas Filipino workers and the compliance by
recruitment/manning agencies and insurance companies,
without prejudice to an earlier review if necessary and
warranted for the purpose of modifying, amending and/or
repealing these subject provisions.
Title II EMPLOYMENT OF ALIENS
ARTICLE 40. Employment permit of non-resident aliens.
Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign
employer who desires to engage an alien for employment
in the Philippines shall obtain an employment permit
from the Department of Labor.
The employment permit may be issued to a non-resident
alien or to the applicant employer after a determination of
the non-availability of a person in the Philippines who is
competent, able and willing at the time of application to
perform the services for which the alien is desired.
For an enterprise registered in preferred areas of
investments, said employment permit may be issued
upon recommendation of the government agency
charged with the supervision of said registered
enterprise.
LABORICADIZ 15
ARTICLE 41. Prohibition against transfer of employment.
(a) After the issuance of an employment permit, the
alien shall not transfer toanother job or change his
employer without prior approval of the Secretary of
Labor.
(b) An non-resident alien who shall take up employment
in violation of the provision of this Title and its
implementing rules and regulations shall be punished in
accordance with the provisions of Articles 289 and 290 of
the Labor Code. In addition, the alien worker shall be
subject to deportation after service of his sentence.
ARTICLE 42. Submission of list. - Any employer
employing non-resident foreign nationals on the effective
date of this Code shall submit a list of such nationals to
the Secretary of Labor within thirty (30) days after such
date indicating their names, citizenship, foreign and local
addresses, nature of employment and status of stay in
the country. The Secretary of Labor shall then determine
if they are entitled to an employment permit.
Only non-resident aliens are required to obtain employment
permits. Immigrants and resident aliens are required only to
secure an Alien Employment Registration Certificate.
Foreigners may not be employed in certain nationalized
businesses:
Entities that own or control a right, franchise,
privilege, property or business whose exercise or
enjoyment is reserved by law only to Filipinos or to
corporations, 60% of the capital stock of which is
required to be Filipino-owned. (Anti-dummy law)
Exception: the Secretary of Justice, in Opinion No.
143, 1976, opined that aliens may be employed in
entities engaged in nationalized activities, if the
personnel or alien is elected as member of the
board of directors or governing bodies of
corporations or associations in proportion to their
allowable participation in the capital of such entities.
N.B. Book II, Title I skipped.
Title II TRAINING AND EMPLOYMENT OF SPECIAL
WORKERS
Chapter I Apprentices
ARTICLE 57. Statement of objectives. - This Title aims:
(1) To help meet the demand of the economy for trained
manpower;
(2) To establish a national apprenticeship program
through the participation of employers, workers and
government and non-government agencies; and
(3) To establish apprenticeship standards for the
protection of apprentices.
ARTICLE 58. Definition of Terms. As used in this Title:
(a) Apprenticeship means practical training on the job
supplemented by related theoretical instruction.
(b) An apprentice is a worker who is covered by a
written apprenticeship agreement with an individual
employer or any of the entities recognized under this
Chapter.
(c) An apprenticeable occupation means any trade,
form of employment or occupation which requires more
than three (3) months of practical training on the job
supplemented by related theoretical instruction.
(d) Apprenticeship agreement is an employment
contract wherein the employer binds himself to train the
apprentice and the apprentice in turn accepts the terms
of training.
ARTICLE 59. Qualifications of apprentice. To qualify as
an apprentice, a person shall:
(a) Be at least fourteen (14) years of age;
(b) Possess vocational aptitude and capacity for
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appropriate tests; and
(c) Possess the ability to comprehend and follow oral and
written instructions.
Trade and industry associations may recommend to the
Secretary of Labor appropriate educational requirements
for different occupations.
ARTICLE 60. Employment of apprentices. - Only
employers in the highly technical industries may employ
apprentices and only in apprenticeable occupations
approved by the Secretary of Labor and Employment. (As
amended by Section 1, Executive Order No. 111,
December 24, 1986).
ARTICLE 61. Contents of apprenticeship agreements.
Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the
Secretary of Labor and Employment. The period of
apprenticeship shall not exceed six months.
Apprenticeship agreements providing for wage rates
below the legal minimum wage, which in no case shall
start below 75 percent of the applicable minimum wage,
may be entered into only in accordance with
apprenticeship programs duly approved by the Secretary
of Labor and Employment. The Department shall develop
standard model programs of apprenticeship. (As
amended by Section 1, Executive Order No. 111,
December 24, 1986).
ARTICLE 62. Signing of apprenticeship agreement. -
Every apprenticeship agreement shall be signed by the
employer or his agent, or by an authorized representative
of any of the recognized organizations, associations or
groups and by the apprentice.
An apprenticeship agreement with a minor shall be
signed in his behalf by his parent or guardian, if the latter
is not available, by an authorized representative of the
Department of Labor, and the same shall be binding
during its lifetime.
Every apprenticeship agreement entered into under this
Title shall be ratified by the appropriate apprenticeship
committees, if any, and a copy thereof shall be furnished
both the employer and the apprentice.
ARTICLE 63. Venue of apprenticeship programs. Any
firm, employer, group or association, industry
organization or civic group wishing to organize an
apprenticeship program may choose from any of the
following apprenticeship schemes as the training venue
for apprentice:
(a) Apprenticeship conducted entirely by and within the
sponsoring firm, establishment or entity;
(b) Apprenticeship entirely within a Department of Labor
and Employment training center or other public training
institution; or
(c) Initial training in trade fundamentals in a training
center or other institution with subsequent actual work
participation within the sponsoring firm or entity during
the final stage of training.
ARTICLE 64. Sponsoring of apprenticeship program.
Any of the apprenticeship schemes recognized herein
may be undertaken or sponsored by a single employer or
firm or by a group or association thereof or by a civic
organization. Actual training of apprentices may be
undertaken:
(a) In the premises of the sponsoring employer in the
case of individual apprenticeship programs;
(b) In the premises of one or several designated firms in
the case of programs sponsored by a group or
association of employers or by a civic organization; or
(c) In a Department of Labor and Employment training
center or other public training institution.
ARTICLE 65. Investigation of violation of apprenticeship
agreement. Upon complaint of any interested person or
upon its own initiative, the appropriate agency of the
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
Department of Labor and Employment or its authorized
representative shall investigate any violation of an
apprenticeship agreement pursuant to such rules and
regulations as may be prescribed by the Secretary of
Labor and Employment.
ARTICLE 66. Appeal to the Secretary of Labor and
Employment. - The decision of the authorized agency of
the Department of Labor and Employment may be
appealed by any aggrieved person to the Secretary of
Labor and Employment within five (5) days from receipt
of the decision. The decision of the Secretary of Labor
and Employment shall be final and executory.
ARTICLE 67. Exhaustion of administrative remedies. No
person shall institute any action for the enforcementof
any apprenticeship agreement or damages for breach of
any such agreement, unless he has exhausted all
available administrative remedies.
ARTICLE 68. Aptitude testing of applicants. Consonant
with the minimum qualifications of apprentice-applicants
required under this Chapter, employers or entities with
duly recognized apprenticeship programs shall have
primary responsibility for providing appropriate aptitude
tests in the selection of apprentices. If they do not have
adequate facilities for the purpose, the Department of
Labor and Employment shall perform the service free of
charge.
ARTICLE 69. Responsibility for theoretical instruction.
Supplementary theoretical instruction to apprentices in
cases where the program is undertaken in the plant may
be done by the employer. If the latter is not prepared to
assume the responsibility, the same may be delegated to
an appropriate government agency.
ARTICLE 70. Voluntary organization of apprenticeship
programs; exemptions. (a) The organization of
apprenticeship program shall be primarily a voluntary
undertaking by employers;
(b) When national security or particular requirements of
economic development so demand, the President of the
Philippines may require compulsory training of
apprentices in certain trades, occupations, jobs or
employment levels where shortage of trained manpower
is deemed critical as determined by the Secretary of
Labor and Employment. Appropriate rules in this
connection shall be promulgated by the Secretary of
Labor and Employment as the need arises; and
(c) Where services of foreign technicians are utilized by
private companies in apprenticeable trades, said
companies are required to set up appropriate
apprenticeship programs.
ARTICLE 71. Deductibility of training costs. An
additional deduction from taxable income of one-half
(1/2) of the value of labor training expenses incurred for
developing the productivity and efficiency of apprentices
shall be granted to the person or enterprise organizing an
apprenticeship program: Provided, That such program is
duly recognized by the Department of Labor and
Employment: Provided, further, That such deduction
shall not exceed ten (10%) percent of direct labor wage:
and Provided, finally, That the person or enterprise who
wishes to avail himself or itself of this incentive should
pay his apprentices the minimum wage.
ARTICLE 72. Apprentices without compensation. The
Secretary of Labor and Employment may authorize the
hiring of apprentices without compensation whose
training on the job is required by the school or training
program curriculum or as requisite for graduation or
board examination.
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It is mandated that apprenticeship agreements entered into by
the employer and apprentice shall be entered only in
accordance with the apprenticeship program duly approved
by the Minister of Labor and Employment. Prior approval by
the DOLE of the proposed apprenticeship program is,
therefore, a condition sine qua non before an agreement
can be validly entered into.
Thus, in the absence of a valid apprenticeship program duly
approved by the DOLE, the apprenticeship agreement
between the employer and the apprentice has no force and
effect. Consequently, the worker was hired as an apprentice,
but as a regular employee, defined by Art. 280 of the Labor
Code.
Chapter II LEARNERS
ARTICLE 73. Learners defined. Learners are persons
hired as trainees in semi-skilled and other industrial
occupations which are non-apprenticeable and which
may be learned through practical training on the job in a
relatively short period of time which shall not exceed
three (3) months.
ARTICLE 74. When learners may be hired. Learners
may be employed when no experienced workers are
available, the employment of learners is necessary to
prevent curtailment of employment opportunities, and the
employment does not create unfair competition in terms
of labor costs or impair or lower working standards.
ARTICLE 75. Learnership agreement. Any employer
desiring to employ learners shall enter into a learnership
agreement with them, which agreement shall include:
(a) The names and addresses of the learners;
(b) The duration of the learnership period, which shall not
exceed three (3) months;
(c) The wages or salary rates of the learners which shall
begin at not less than seventy-five percent (75%) of the
applicable minimum wage; and
(d) A commitment to employ the learners if they so
desire, as regular employees upon completion of the
learnership. All learners who have been allowed or
suffered to work during the first two (2) months shall be
deemed regular employees if training is terminated by the
employer before the end of the stipulated period through
no fault of the learners.
The learnership agreement shall be subject to inspection
by the Secretary of Labor and Employment or his duly
authorized representative.
ARTICLE 76. Learners in piecework. Learners employed
in piece or incentive-rate jobs during the training period
shall be paid in full for the work done.
ARTICLE 77. Penalty clause. Any violation of this
Chapter or its implementing rules and regulations shall
be subject to the general penalty clause provided for in
this Code.
Distinctions between learnership and apprenticeship:
Learnership Apprenticeship
Nature Semi-skilled Highly technical
Period 3 months Not less than 3
months but but not
more than 6
months
Commitment to At the option of At the option of
employment the Learner the employer
Necessity of Not necessary. Prior approval by
DOLE approval On the DOLE DOLE is
of program inspection necessary
required.
Deductibility of No provision for Expenses of
expenses deductibility. training deductible
LABORICADIZ 17
 from income tax.
Chapter III HANDICAPPED WORKERS
(RA 7277 on Handicapped workers attached as Annex A)
ARTICLE 78. Definition. Handicapped workers are those
whose earning capacity is impaired by age or physical or
mental deficiency or injury.
ARTICLE 79. When employable. Handicapped workers
may be employed when their employment is necessary to
prevent curtailment of employment opportunities and
when it does not create unfair competition in labor costs
or impair or lower working standards.
ARTICLE 80. Employment agreement. Any employer
who employs handicapped workers shall enter into an
employment agreement with them, which agreement shall
include:
a. The names and addresses of the handicapped workers
to be employed;
b. The rate to be paid the handicapped workers which
shall not be less than seventy five (75%) percent of the
applicable legal minimum wage;
c. The duration of employment period; and
d. The work to be performed by handicapped workers.
The employment agreement shall be subject to
inspection by the Secretary of Labor or his duly
authorized representative.
ARTICLE 81. Eligibility for apprenticeship. Subject to
the appropriate provisions of this Code, handicapped
workers may be hired as apprentices or learners if their
handicap is not such as to effectively impede the
performance of job operations in the particular
occupations for which they are hired.
RA 7277: Magna Carta for Disabled Persons
This law mandated that qualified disabled persons be granted
the same terms and conditions of employment as qualified
able-bodied employees. Once they have attained the status of
regular workers, they should be accorded all the benefits
granted by law. Notwithstanding written or verbal contracts to
the contrary. This treatment is rooted not merely on charity or
accommodation, but on justice for all.
The Magna Carta for Disabled Persons mandates a qualified
disabled employee should be given the same terms and
conditions of employment as a qualified able-bodied person.
Since this is the case, if the workers have been engaged to
perform activities which are usually necessary or desirable in
the usual business or trade of the employer, and they have
rendered at least one year of service, are deemed regular
employees.
LABOR STANDARDS Branch of labor law that establishes
the minimum terms and conditions of employment that an
employer must provide the workers.
Existence of Employer-employee relation: condition sine
qua non
The law on labor standards is predicated upon the existence
of an employer-employee relationship. Absent such, the law
on labor standards will not apply.
To determine the existence of such a relationship: The
four-fold test is to be applied
In determining whether a given set of circumstances
constitute or exhibit an employer-employee relationship, the
accepted rule is that the elements or circumstances relating to
the following matters shall be examined and considered:
1) The selection and engagement of the employees;
2) The payment of wages;
3) The power of dismissal; and
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4) The power to control the employees conduct.
Of the above, the control of the employees conduct is
commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer-
employee relationship.
Not every form of control will have the effect of
establishing an employer-employee relationship. A line
should be drawn between:
1) Rules that merely serve as guidelines, which only
promote the result. In such a case, no employer-
employee relationship exists.
2) Rules that fix the methodology and bind or restrict
the party hired to the use of such means of
methods/ these address both the result and the
means employed to achieve it and hence, an
employer-employee relationship exists.
In Francisco v NLRC, the Court held that an employer-
employee relationship existed between the petitioner and the
respondent company. It used the control test to determine
such existence, which was said to be used where the person
for whom the services are performed reserves a right to
control not only the end to be achieved, but also the means to
be used in reaching such an end. In addition to the standard
of right-of-control, the existing economic conditions prevailing
between the parties, like the inclusion of the employee in the
payrolls, can help in determining the existence of an
employer-employee relationship. Aside from the power to
control the employee with respect to the means and methods
by which the work is to be accomplished, economic realities
of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as
an employee, independent contractor, corporate officer or
come other capacity. The Court here used a 2-tiered test: 1)
the putative employers power to control the employee 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 the relationship. By applying the control test,
petitioner is an employee of the respondent, as she was
under the direct control and supervision of the latter, reported
for work regularly, and served in various capacities. And
under the economic realities test, it is clear that the petitioner
was dependent on the corporation because she served the
same for 6 years prior to her dismissal, receiving her salary
checks therefrom and other benefits granted to her. In her
SSS card, the corporate president signed the same, and the
online inquiry of the SSS included her name as an employee
of the corporation. She was also issued an ID as well. Thus,
there being an employer-employee relationship, the petitioner
was entitled to the benefits granted to her upon her dismissal
from the corporation.
In the case of Coca-Cola Bottlers v Climaco, the Court used
the 4-fold test to determine the existence of an employer-
employee relationship between the company physician and
the petitioner corporation. The Court held that there was no
employer-employee relationship present, and thus there is no
illegal dismissal which entitled the physician to benefits
granted under the law. First, the corporation had no power of
control over the performance by the physician of his
objectives, duties and obligations. Their agreement did not
state how he is to conduct his physical examinations, to
immunize, or how to diagnose or treat his patients. He was
merely provided guidelines to ensure that the end result was
achieved, but did not control the means and methods by
which he performed his assigned task. That he was on call,
as provided in the agreement, did not make him a regular
employee. Such a schedule does not amount to control, but is
just a necessary consequence of the agreement. what really
happened was just a termination of the agreement, and not
illegal dismissal, as the parties were not bound as employer-
employee, but merely as contracting parties under the
agreement.
When is control absent? Where a person who works for
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
another does so more or less at his own pleasure and is not
subject to definite hours or conditions of work, and is
compensated according to the result of his efforts and not the
amount thereof, the element of control is absent. (Ibid.)
In Republic v Asiapro Cooperative, the Court held there is
an employer-employee relationship between the respondent
cooperative and its owner-members, and are thus entitled to
enjoy the benefits of the SSS. The Court again used the 4-
fold tests to determine the existence of such relationship. It
held that the power of control, the most important element in
the relationship, refers to the existence of such power, and
not to the actual exercise thereof. It is not essential that the
employer actually supervises the performance of the duties of
the employee, but it is enough that the employer has the right
o wield that power. All the elements were present in the case.
First, the contracts between the cooperative and the owner-
members provided that the cooperative has the exclusive
discretion in the selection and engagement of the owner-
members as well as its team leaders. Second, wages were
given, and whatever their designation may be, by weekly
stipends denominated as shares in the service surplus.
They were really wages, which were always given in amount
not lower than the prescribed by the existing labor laws. Third,
the cooperative had the power to investigate, discipline and
remove the owner-members and its team leaders. Fourth, the
cooperative had the sole control over the manner and means
of performing the services under the service contracts as well
as the means and methods of work. The existence of an
employer-employee relationship cannot be negated by
expressly repudiating it in a contract, when the terms and
surrounding circumstances show otherwise. The employment
status of a person is defined and prescribed by la and not by
what the parties say it should be. Provisions declaring the
same should be struck down as being against law and public
policy, as it is only being used to circumvent compulsory
coverage of its employees by the Social Security Law.
Employee Independent Contractor
Subject to the employers An independent contractor is
power to control the means one who carries on a distinct
and methods by which the and independent business
employees work is to be and undertakes to perform
performed and the job, work or service on its
accomplished. own account and for its own
responsibility according to its
own manner and method,
free from the control of the
principal in all matters
connected with the
performance of the work,
except as to the results
thereof.
In Sonza v ABS-CBN, the Court held that the contract
between Sonza and ABS-CBN did not create an employer-
employee relationship between them. The contract was
unilaterally rescinded by Sonza, by writing to the president of
ABS-CBN. He was not entitled to the benefits granted to the
regular employees of the said TV station, as he was not an
employee thereof, but an independent contractor. The Court
said that the elements for an employer-employee relationship
was not present: first, the specific selection and hiring of
Sonza, because of his unique skills, talents and celebrity
status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive of an independent
contractual relationship, as independent contractors really do
present themselves as having unique skills and talents. In any
case, the method of selecting and engaging Sonza does not
conclusively determine his status. Second, all the talent fees
and benefits paid to Sonza were the result of the negotiations
between the parties which led to the agreement between
them. The parties expressly agreed that the fees would be
paid directly to Sonza, and does not negate his status as
being an independent contractor. Third, wither party may
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terminate the agreement or contract, and ABS-CBN could not
terminate Sonzas services for causes other than breach of
contract. And as compliance with its undertaking in the
agreement, ABS-CBN still paid Sonza even if he stopped
hosting on their channel. The manner by which Sonza
terminated his agreement with ABS-CBN is immaterial. Lastly,
ABS-CBN had no power of control in the methods and
manner used by Sonza in performing his services. The less
control the hirer exercises, the more likely the worker is
considered an independent contractor. He was made to follow
mere guidelines which only aim to achieve a specific goal,
and not in the manner of the work to be done to achieve such
a goal. And, being an exclusive talent does not by itself mean
that he is an employee. Even an independent contractor can
validly provide his services exclusively to the hiring party.
Exclusivity is not necessarily the same as control.
In Dumpit-Murillo v CA, the Court held that newscaster-
petitioner was an employee of ABC-5. This was so because,
her duties, as provided in her contracts with ABC-5 indicate
that ABC-5 had control over her work. It also indicated her
work assignments and the payment of her wages. The said
channel also had the power to dismiss her. Clearly, there
existed an employment relationship between the parties.
Petitioner was held to be a regular employee, entitled to
security of tenure and can be dismissed only for just cause
and after due compliance with procedural due process. Since
such due process was not observed, there was illegal
dismissal.
In Lopez v Bodega City, the lady keeper of the respondent
was held by the Court as a mere concessionaire and not an
employee of the respondent. The Court said that in an illegal
dismissal case, the burden of proof lies with the employer to
prove that the dismissal was for valid cause. But, before such
a case can be decided, an employer-employee relationship
must first be established. And it is incumbent upon petitioner
to prove the relationship by substantial evidence. In using the
four-fold test to determine the Court found that there is no
employment relationship. As to the element of payment of
wages, petitioner presented a cash voucher given to her by
the respondent, but such does not prove that she received
salary from respondents, or that she had been the latters
employee for 10 years. If she really was an employee, she
could have presented more evidence, such as payslips, or
SSS or medicare forms, and the like. But none was
presented. As to the element of control, petitioner failed to cite
any instance wherein she was subjected to the control of the
respondent. It is true that she was made to follow rules and
regulations prescribing appropriate conduct, while within the
premises of Bodega City, but there rules were imposed only
as part of the terms and conditions of the concessionaire
agreement. She could perform her duties in any which way
she wanted, and the only thing controlled by the respondent
was the results they wanted to achieve: i.e. cleanliness of the
ladies room and courtesy to the customers. The requirement
that she had to render her services while the respondent was
open for business was dictated simply by the nature of her
undertaking, which was to give assistance to the users of the
ladies comfort room. The elements of selections and
engagement as well as the power of dismissal are also not
present in the instant case. Thus, petitioner was not illegally
dismissed, and the contract was merely terminated, due to
her violation of the terms and conditions thereof.
In Insular Bank of Asia and America Employees Union v
Inciong, the petitioners were not paid their wages on
unworked regular holidays as mandated by the law, for which
they filed an action. They obtained favorable judgment, and
they were paid their holiday pay. However, after the passage
of PD 857, the Labor Secretary issued Policy Instruction No.
9, which interpreted the the said PD, and excluded from the
benefits of the holiday pay, employees who were paid
monthly. Thus, the employer-bank of petitioners stopped
paying them their holiday pay. The Court held that the
LABORICADIZ 19
issuance of the Secretary f Labor, by going beyond the scope
of the law, constituted as deprivation of property without due
process of law, and amounted to grave abuse of discretion.
The issuance was made out in blatant disregard of Art, 4 of
the Labor Code, which states that 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. The Secretary exceeded his
authority granted him in the Labor Code, authorizing him to
promulgate the necessary implementing rules and
regulations. The Court held that although holiday pay is
primarily intended to benefit the daily paid workers whose
employment and income are circumscribed by the principle of
no work, no pay. This argument may sound meritorious; but
until the provisions of the Labor Code on holiday pay is
amended, monthly paid employees are definitely included in
the benefits of regular holiday pay. The presumption is always
in favor of law, and negatively put, the Labor Code is always
strictly construed against mismanagement. It is also patently
unjust to deprive the petitioner of their vested right acquired
by virtue of a final judgment on the basis of a labor statute
promulgated following the acquisition of such right. A law or
statue cannot annul or modify a judicial order issued prior to
its promulgation.
BOOK III CONDITIONS OF EMPLOYMENT
Title I WORKING CONDITIONS AND REST PERIODS
Chapter I HOURS OF WORK
ARTICLE 82. Coverage. The provisions of this Title
shall apply to employees in all establishments and
undertakings whether for profit or not, but not to
government employees, managerial employees, field
personnel, members of the family of the employer who
are dependent on him for support, domestic helpers,
persons in the personal service of another, and workers
who are paid by results as determined by the Secretary of
Labor in appropriate regulations.
As used herein, managerial employees refer to those
whose primary duty consists of the management of the
establishment in which they are employed or of a
department or subdivision thereof, and to other officers
or members of the managerial staff.
Field personnel shall refer to non-agricultural
employees who regularly perform their duties away from
the principal place of business or branch office of the
employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.
The provisions of this title apply to all employees in all
establishments and undertakings, whether operating for profit
or not.
Exclusions:
1) Governement employees, including employees
of GOCCs with original charters. Employees of
GOCCs organized under the Corporation Code are
covered by the provisions of the Labor Code.
2) Managerial employees
- A managerial employee is one who can lay
down management policies, or who can hire,
fire, demote, or promote, or who can
effectively recommend the foregoing courses
of action.
- The philosophy behind the exemption of
managerial employees from the Labor Code is
that such employees are not usually employed
for every hour of work but their compensation
is determined considering their special
training, experience, or knowledge which
requires the exercise of discretion and
independent judgment, or perform work
related to management policies or general
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business operations along specialized or
technical lines. For those employees, it is not
feasible to provide a fixed monthly rate of pay
or maximum hours of labor.
3) Managerial staff
- their primary duties consists of the
performance of their work directly related to
management policies of their employer
- they customarily and regularly exercise
discretion and independent judgment
- they regularly and directly assist the
managerial employee whose primary duty
consists of the management of a department
of the establishment in which they are
employed
- they execute, under general supervision, work
along specialized or technical lines requiring
special training, experience or knowledge
- they execute, under general supervision,
special assignments and tasks
- they do not devote more than 20% of their
hours worked in a work-week to activities
which are not directly and clearly related to the
performance of their work hereinbefore
described.
- A supervisor is deemed a member of the
managerial staff, as they oversee the
operation of the business of the company and
the performance of the workers. This will
necessarily require the use of discretion and
independent judgment to ensure the proper
management of the establishment. A foreman
is a supervisor, as he is the representative of
management over the workers and the
operation of the department.
4) Field personnel: These workers work away from
the employers place of business, not subject to the
personal supervision of the employer, and the
employee has not way of knowing the number of
hours worked per day.
5) Family members: Members of the family of the
employer who are dependent upon the latter for
support are excluded from the coverage.
6) Domestic helpers and persons in the personal
service of another: Those contemplated are those
who are employed in the employers home to
minister to the personal comfort and enjoyment of
the employers family. It covers family drivers,
domestic servants, laundry women, yayas,
gardeners, houseboys and other similar
househelps.
7) Workers paid by results: they are paid a fixed
amount for work done, regardless of the time spent
in accomplishing such work.
In the case of Duterte v Kingswood Trading, the Court held
that a truck driver, required to be at specific places at specific
times, are not field personnel despite the fact that they are
performing work away form the principal office of the
employer. To determine whether an employee is a field
employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable certainty
by the employer. In so doing, an inquiry must be made as to
whether or not the employees time and performance are
constantly supervised by the employer. It was necessary to
determine in this case if the dismissed employee was a field
employee, so as to be able to determine is he is entitled to
benefits under Art. 94 and 95 of the Labor Code. He was he
was told to look for another job when he tried to report back
for work, after he was confined in a hospital due to a heart
attack. He was said to not be a field employee, but a regular
one, as he was based at the principal office of the company,
and worked within an ascertainable time, which can be
determined with reasonable certainty. And his time and
performance were constantly supervised by the employer, as
when he was not driving, he was given cleaning and
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
maintenance jobs of the companys machines.
In Mcleod v NLRC, the Court held that, as VP, Mcleod was a
managerial employee who is excluded from the coverage of
Title I, Book III of the Labor Code. He is entitled only to the
payment of leave and sick leave if he and PMI, the employer,
agreed on it. The payment of vacation and sick leave
depends on the policy of the employer or the agreement
between the employer and the employee. But here, there is
no showing that the parties had an agreement concerning the
payment of these benefits. The company also did not
th
underpay his 13 month pay, as the underpayment he
claimed is for the time that there was no longer any employer-
employee relationship between him and the company. As to
his claim for unpaid monetary equivalent of unused plane
tickets, there is no evidence as to a company policy granting
the same to its officers and employees. The company may
have granted the same to him at some other time, but it is not
an established practice. For a bonus to be enforceable, the
employer must have promised it, and the parties expressly
agreed upon it, or it must have had a fixed amount and had
been a long and regular practice on the part of the employer.
But, there is no evidence of such in this case. He also cannot
claim that his salary was reduced without his consent, as he
was informed of the same, and he should have objected
thereto at the time. But he is entitled to retirement pay.
ARTICLE 83. Normal hours of work. The normal hours
of work of any employee shall not exceed eight (8) hours
a day.
Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in
hospitals and clinics with a bed capacity of at least one
hundred (100) shall hold regular office hours for eight (8)
hours a day, for five (5) days a week, exclusive of time for
meals, except where the exigencies of the service require
that such personnel work for six (6) days or forty-eight
(48) hours, in which case, they shall be entitled to an
additional compensation of at least thirty percent (30%)
of their regular wage for work on the sixth day. For
purposes of this Article, health personnel shall include
resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.
GR - Normal Hours of Work: Not to exceed 8 hours a day,
for a six day week (48 hours per week).
Exceptions: Health personnel who hold regular office hours
for 8 hours a day, for 5 days a week (40 hour week). In the
event the health personnel is required by the exigencies of
the service to work for 6 days, they shall be entitled to OT pay
at the rate of 30% of the regular wage for work done on the
th
6 day.
The cardinal rule on hours of work is: The nominal hours of
work of any employee shall not exceed eight hours a day (Art.
83, LC).
This does not mean that no employee may work more than
eight hours a day, but if work is performed beyond eight cores
in a day, the worker should be paid for the overtime work an
additional compensation equivalent to his regular wage plus
at least 25 percent thereof. If the overtime work is performed
on a holiday or rest day, the additional compensation shall be
at least 30 per cent of the regular rate of the first eight hours
of such holiday or rest day (Art. 87, LC). This additional
compensation is called overtime pay.
Health personnel in cities and municipalities with a population
of at least one million or in hospitals and clinics with a bed
capacity of at least 100 shall hold regular omce hours for
eight hours" a day for five days a week, or a total of 40 hours
a week, exclusive of time for meals, except where the
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exigencies of the service require that such personnel work for
six days or 48 hours, in which case they shall be entitled to an
additional compensation of at least 30 per cent of their regular
wage for work on the sixth day. The term health personnel"
includes resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants
and all other hospital or clinic personnel (Art 83 LC).
ARTICLE 84. Hours worked. Hours worked shall include
(a) all time during which an employee is required to be on
duty or to be at a prescribed workplace; and (b) all time
during which an employee is suffered or permitted to
work.
Rest periods of short duration during working hours shall
be counted as hours worked.
Hours worked: Includes:
1) all time during which an employee is required to be
on duty or to be at the prescribed workplace, and
2) all time during which an employee is suffered or
permitted to work.
ARTICLE 85. Meal periods. Subject to such regulations
as the Secretary of Labor may prescribe, it shall be the
duty of every employer to give his employees not less
than sixty (60) minutes time-off for their regular meals.
Meal Break: The 8-hour work period does not include the
one-hour meal break, W/N the employees take their meals
within the company premises.
Exception: (when meal break is part of the hours worked)
Where during the so-called meal period, the laborers are
required to stand by for emergency work, or where the meal
hour s not one complete rest, such period is considered
overtime.
The time for working can only be segregated or deducted
from working time, if the work is not continuous and the
employee can leave his working place and rest completely.
Hence, if the work is continuous, the mealtime breaks should
be counted as working time for purposes of computing
overtime compensations (National Development Co. v CIR)
Meal Break of less than 1 hour is part of hours worked.
When idle time is not considered as working time:
The idle time that an employee may spend for resting and
during which he may leave the spot or place of work though
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)
A laborer need not leave the premises of the factory shop or
boat in order that his period of rest shall not be counted, it
being enough that he cease work, may rest completely and
leave or may levae at his will the spot where he actually stays
while working, to go somewhere else, whether within or
outside the premises of said factory, shop or boat. If these
requisites are complied with, the period of such rest shall not
be counted. (Luzon Stevedoring Co. v Luzon Marine Dept.
Union)
The period of time that the employee had nothing to do while
waiting for customers is not counted as compensable time.
(Isaac Peral Bowling Alley v United Employees Welfare
Assoc.)
When waiting time is compensable: Waiting time is
compensable if during the the period the employee is subject
to the absolute control of the employer such that the
employee is effectively deprived of the time to attend to other
personal pursuits. (Arica v NLRC)
LABORICADIZ 21
Work interruption due to brownout (Policy Instruction No.
36 of the DOLE)
Brownouts of short duration but not exceeding 20 minutes
shall be treated as worked or compensable hours, whether
used productively or not.
Brownouts for more than 20 minutes may not be treated as
hours worked provided any of the following conditions are
present:
a) the employees can leave their workplace or go
somewhere within or without the work premises; or
b) the employees can use the time effectively for their
own interests.
In each case, the employer may extend the working hours of
the employees outside the regular hours to compensate for
the loss of productive man-hours without being liable for OT
pay.
Industrial enterprises with 1 or 2 workshifts may adopt any of
the workshifts prescribed for enterprises with 3 workshifts to
prevent serious loss or damage to materials, machineries or
equipment that may result in case of power interruptions.
Working time aboard a vessel: Seamen are required to stay
on board by the nature of their duties, and are thus given, in
addition to their regular compensation, free living quarters and
subsistence allowances when required to be on board. The
correct criterion on W/N sailors are to be given OT pay is
whether they actually rendered service in excess of the 8
hours provided by law. (National Shipyards v CIR)
Normal commuting time from home to work and from work
to home is not hours of work. But, it may be such to the extent
the employee is required to perform substantial work under
the control and supervision of the employer.
Travel Time: Official travel away from the workplace is hours
of work if the travel is:
a) within the days and hours of the employees
regularly scheduled administrative workweek,
including regularly scheduled OT hours; or
b) outside the hours of the employees regularly
scheduled administrative workweek, is ordered or
approved, and meets one of the ff conditions:
- involves the performance or work while
traveling;
- incident to travel that involves the performance
of work while traveling;
- carried out under arduous and unusual
conditions; or
- results form an event that could not be
scheduled or controlled administratively by
any individual.
ARTICLE 86. Night shift differential. Every employee
shall be paid a night shift differential of not less than ten
percent (10%) of his regular wage for each hour of work
performed between ten oclock in the evening and six
oclock in the morning.
Night work:
Work done at night should be paid more than work done at
daytime; and that if that work is done beyond the workers
regular hours of duty, he should also be paid additional
compensation for overtime work.
Additional compensation for nighttime work is founded on
public policy, hence the same cannot be waived.
ARTICLE 87. Overtime work. Work may be performed
beyond eight (8) hours a day provided that the employee
is paid for the overtime work, an additional compensation
equivalent to his regular wage plus at least twenty-five
percent (25%) thereof. Work performed beyond eight
hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight
hours on a holiday or rest day plus at least thirty percent
Starr Weigand
(30%) thereof.
Overtime Work: Consists of hours worked on a given day in
excess of the applicable work period, which is 8 hours. In
order that work may be considered as OT, the hours worked
must be in excess of and in addition to the 8 hours worked
during the prescribed daily work period. (Caltex Regular
Employees v Caltex Phils.)
Computation of overtime pay shall be based only on the
regular basic pay, exclusive of fringe benefits:
General Rule on waiver of overtime pay: Overtime
compensation cannot be waived, whether expressly or
impliedly, and stipulations to the contrary is against the law.
Any quitclaim whereby the workers agree to forego payment
of OT pay is null and void ab initio. (Mercury Drug v Dayao)
Exemptions: Built-in overtime pay
1) Non-payment of OT pay to an employee in excess
of the regular hours worked is valid as the OT pay
was already provided in the written contract with a
built-in overtime pay and signed by the Director of
the BES and enforced by the employer.
(Engineering Equipment v Minister of Labor)
2) Adoption of a compressed work week on voluntary
basis, subject to the following guidelines (Dept.
Order No. 02, Series of 2004):
- The CWW scheme is undertaken as a result of
an express and voluntary agreement of
majority of the covered employees or their
duly authorized representative, which may be
in the CBA or other legitimate workplace
mechanism of participation.
- In firms using substances, chemicals and
processes or operating under conditions which
may pose as hazards to the health and safety
of the employees, there must be a certification
from an accredited health and safety
organization or practitioner or firms safety
committee that work beyond the 8 hours is
within the threshold limits or tolerable levels of
exposure.
- The employer shall notify the DOLE, through
the Regional Office having jurisdiction over the
workplace, of the adoption of the CWW
scheme. Such notice shall be in DOLE CWW
Report form.
The CWW scheme which complies with the foregoing
conditions, would mean tat work beyond 8 hours will not be
compensable by overtime pay. And those, employees under
such schemes are entitled to meal periods of not less than 60
mins. And adoption of the scheme shall not result in the
diminution of existing benefits. Reversion to normal 8-hour
workdays shall not constitute to diminution of benefits.
Claim for overtime pay is not justified in the absence of a
written authority to render overtime after office hours during
Sundays and holidays.
CBA provisions may oblige the workers to work beyond 8
hours, if such is necessary for the operations of the employer,
and the workers voluntarily assented to the arrangement.
Proof of OT claim: Normally, the presentation of payrolls,
daily time records and similar documents are required before
allowing claims for OT pay.
For OFWs It is sufficient that they allege claims for OT with
particularity. The claim against foreign employers should not
be subjected to the same rules of evidence and procedure
easily obtained by employees locally employed. The local
recruitment agency who deployed the OFWs to the foreign
principal could obtain the records from the principal to refute
the claim for OT. If the local agency fails to do so, it waives
their defense on the matter, and admits the claim of the
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
worker. The local recruitment agency is solidarily liable with
the foreign principal for the OT pay claims of the workers.
ARTICLE 88. Undertime not offset by overtime.
Undertime work on any particular day shall not be offset
by overtime work on any other day. Permission given to
the employee to go on leave on some other day of the
week shall not exempt the employer from paying the
additional compensation required in this Chapter.
A worker is entitled to overtime pay only for work in actual
service beyond 8 hours. But, the worker is not entitled to
deduct form his overtime pay the undertime incurred. The
proper method should be to deduct the undertime from the
accrued leave, but pay the worker the overtime to which he is
entitled. This obviates the irregular schedule that would result
if the overtime should be set off against the undertime for that
would place the schedule for working hours dependent on the
employee. (National Waterworks and Sewerage Authority v
NWSA Unions)
ARTICLE 89. Emergency overtime work. Any employee
may be required by the employer to perform overtime
work in any of the following cases:
(a) 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;
(b) 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;
(c) When there is urgent work to be performed on
machines, installations, or equipment, in order to avoid
serious loss or damage to the employer or some other
cause of similar nature;
(d) When the work is necessary to prevent loss or
damage to perishable goods; and
(e) 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.
Any employee required to render overtime work under
this Article shall be paid the additional compensation
required in this Chapter.
ARTICLE 90. Computation of additional compensation.
For purposes of computing overtime and other additional
remuneration as required by this Chapter, the regular
wage of an employee shall include the cash wage only,
without deduction on account of facilities provided by the
employer.
Chapter II WEEKLY REST PERIODS
ARTICLE 91. Right to weekly rest day. (a) It shall be the
duty of every employer, whether operating for profit or
not, to provide each of his employees a rest period of not
less than twenty-four (24) consecutive hours after every
six (6) consecutive normal work days.
(b) The employer shall determine and schedule the
weekly rest day of his employees subject to collective
bargaining agreement and to such rules and regulations
as the Secretary of Labor and Employment may provide.
However, the employer shall respect the preference of
employees as to their weekly rest day when such
preference is based on religious grounds.
It is the duty of the employer, whether operating for profit or
not, to provide for each of his employees a rest period of not
less than 24 hours after 6 consecutive normal work days.
(Remerco Garments v Minister of Labor and Employment)
Purpose of Rest Day: to afford a chance to get much
needed rest to replenish his worn-out energize and to acquire
Starr Weigand
a new vitality to enable him to effectively perform his duties,
not merely to give him additional salary or bounty. It is to
enable the employee to have some rest and to re-invigorate
himself so that he would be more efficient and productive in
his work.
ARTICLE 92. When employer may require work on a rest
day. The employer may require his employees to work
on any day:
(a) In case of actual or impending emergencies caused by
serious accident, fire, flood, typhoon, earthquake,
epidemic or other disaster or calamity to prevent loss of
life and property, or imminent danger to public safety;
(b) In cases of urgent work to be performed on the
machinery, equipment, or installation, to avoid serious
loss which the employer would otherwise suffer;
(c) In the event of abnormal pressure of work due to
special circumstances, where the employer cannot
ordinarily be expected to resort to other measures;
(d) To prevent loss or damage to perishable goods;
(e) Where the nature of the work requires continuous
operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
(f) Under other circumstances analogous or similar to the
foregoing as determined by the Secretary of Labor and
Employment.
Other than those enumerated in the Law on Emergency
Overtime Work, no employee may be compelled by any
employer to work against his will for more than 8 hours a day.
But, in instances where there really existed an urgency to
require work on a rest day, the disciplinary sanction of outright
dismissal from employment is so severe a consequence,
more so when justifiable grounds exist for failure to report for
work. (Remerco Garments v Minister of Labor)
As a rule, the employer has the right to determine the rest day
of an employee as a managerial prerogative . the employer
may either adopt a general rest day for all employees, or
designate different days as rest days for the employees.
However, the employee may effectively object to a rest day
given to him on religious grounds provided:
1) he makes known his preference 7 days before its
effectivity; and
2) the employer is unable to adopt remedial measures
without serious disruption of business operations, in
which case, the employer may schedule the rest
day preference of the employee for at least 2 days
in a month.
ARTICLE 93. Compensation for rest day, Sunday or
holiday work. - (a) Where an employee is made or
permitted to work on his scheduled rest day, he shall be
paid an additional compensation of at least thirty percent
(30%) of his regular wage. An employee shall be entitled
to such additional compensation for work performed on
Sunday only when it is his established rest day.
(b) When the nature of the work of the employee is such
that he has no regular workdays and no regular rest days
can be scheduled, he shall be paid an additional
compensation of at least thirty percent (30%) of his
regular wage for work performed on Sundays and
holidays.
(c) Work performed on any special holiday shall be paid
an additional compensation of at least thirty percent
(30%) of the regular wage of the employee. Where such
holiday work falls on the employees scheduled rest day,
he shall be entitled to an additional compensation of at
least fifty per cent (50%) of his regular wage.
(d) Where the collective bargaining agreement or other
applicable employment contract stipulates the payment
of a higher premium pay than that prescribed under this
Article, the employer shall pay such higher rate.
LABORICADIZ 23
 Chapter III HOLIDAYS, SERVICE INCENTIVE LEAVES
AND SERVICE CHARGES
ARTICLE 94. Right to holiday pay. (a) Every worker
shall be paid his regular daily wage during regular
holidays, except in retail and service establishments
regularly employing less than ten (10) workers;
(b) The employer may require an employee to work on
any holiday but such employee shall be paid a
compensation equivalent to twice his regular rate; and
(c) As used in this Article, holiday includes: New Years
Day, Maundy Thursday, Good Friday, the ninth of April,
the first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth and thirtieth of
December and the day designated by law for holding a
general election.
Every employee covered by the Holiday Pay Rule is entitled
to his/her daily basic wage. The employee is entitled to at
least 100% of his/her basic wage even if he or she did not
report for work, provided he/she is present or is on leave of
absence with pay on the work day immediately preceding the
holiday.
Purpose of holiday pay: It is a legislated benefit enacted as
part of the Constitutional imperative that the State shall afford
protection to labor. It is not merely to prevent diminution of the
monthly income of the workers on account of work
interruptions, it is also intended to enable the worker to
participate in the national celebrations held during the days
identified as with great historical and cultural significance.
Although the worker is forced to take a rest, he earns what he
should earn, that is, his holiday pay.
What happens if 2 regular holidays fall on the same date?
The worker should be paid for both days. Art. 94 of the Labor
Code affords a worker the enjoyment of paid regular holidays,
and such is mandatory, regardless of whether an employee is
paid on a monthly or daily basis. It is a statutory benefit
demandable by the law. Since a worker is entitled to the
enjoyment of 10 paid regular holidays, the fact that the 2
holidays fall on the same date should not operate to reduce to
nine 9 the 10 holiday pay benefits a worker is entitled to
receive. (Asian Transmission v CA)
Are teachers paid holiday pay?
The school is exempt from paying hourly paid members of
faculty their pay for regular holidays, whether the same be
during the regular semesters of the school year or during
semestral, Christmas, or Holy Week vacations.
Regular holidays specified as such by the law are known to
both the school and faculty members as no class days,
certainly the latter do not expect payment for said unworked
days, and they knew of such upon signing of their teaching
contracts.
BUT, the school must pay the hourly paid faculty members
their hourly rate on days declared as special holidays or for
some reason classes are called off, or shortened for the hours
they are supposed to have taught, whether extensions of
class days be ordered or not; in case of extensions said
faculty members shall likewise be paid their hourly rates
should they teach during said extensions.
IN Leyte IV Electric Cooperative v LEYECO IV Employees,
the Court held that the petitioner was no longer liable to pay
the employees holiday pay on top of their regular salary, as
the divisor used in computing the wages was 360, which is
more than the minimum 263 days resulting from the deduction
of the 51un-worked days from 365 days. This means that, the
employees were being paid for almost all of the days in the
year, which includes the holidays. Thus, being paid holiday
pay incorporated into their salaries, they are no longer entitled
to claim additional holiday pay.
Every employee is entitled to the payment of holiday pay, and
Starr Weigand
an issuance from the Secretary of Labor cannot negate such
right. In the case of Chartered Bank v Ople, the Court held
that the Secretary of Labor acted in excess of his jurisdiction
when he issued a policy and the implementing rules and
regulations which limited the grant of holiday pay to
employees not uniformly paid by the month. Obviously, since
all employees are entitled to holiday pay by the law, clearly,
the Secretary of Labor cannot contravene the law and limit its
scope, and exclude employees paid uniformly by the month,
irrespective of the number of days worked. This ruling was
used in the case of Odango v NLRC, wherein the Court
denied the claim of the petitioners, as it was grounded on the
provision in the IRR which was struck down previously by the
Court.
In the case of Wellington Investment v Trajano, the Court said
that employees, receiving monthly compensation, is no longer
entitled to an additional pay aside from his usual holiday pay,
when the regular holiday falls on a Sunday. The monthly
salaries of the employees in the case already provided for
compensation for every working day of the year including
holidays specified by the law. The wages left no day
unaccounted for, and even included days when no work was
done due to fortuitous event, thus, the employer is not obliged
to pay for anything more.
ARTICLE 95. Right to service incentive leave. (a) Every
employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five
days with pay.
(b) This provision shall not apply to those who are
already enjoying the benefit herein provided, those
enjoying vacation leave with pay of at least five days and
those employed in establishments regularly employing
less than ten employees or in establishments exempted
from granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial
condition of such establishment.
(c) The grant of benefit in excess of that provided herein
shall not be made a subject of arbitration or any court or
administrative action.
Service Incentive Leave Pay: A yearly benefit of 5 days with
pay, enjoyed by an employee who has rendered at least 1
year of service. Unless specifically excepted, all
establishments are required to grant service incentive leave to
their employees.
at least one year of service service within 12 months,
whether continuous or broken reckoned from the date the
employee started working. Service incentive leave is
demandable after one year of service.
Purpose: Granted by law as a motivation for the employee to
stay longer with the employer. (JPL Marketing v CA)
Delimitation in the grant of service incentive leave:
The grant has been delimited by the IRR of the Labor Code to
apply only to those employees not specifically excluded by
Sec. 1 Rule V.
Commutation of unused service incentive leave credits:
the employee may choose to either use his leave credits or
commute it to its monetary equivalent if not exhausted at the
end of the year. If the employee entitled to such 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. Thus, an employee who has served
for one year is entitled to it, and may claim it as leave days or
he may collect its monetary value.
Other leave benefits:
Vacation and Sick Leaves benefits not mandated by law,
but are contained in the CBA or granted by the employer in
the exercise of its management prerogative.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
Maternity Leave granted under RA 7322
Paternity Leave granted under RA 8187
Parental Leave under the Solo Parents Welfare Act
Leave for victims of violence against women and their
children RA 9262
Military Leave under PD No. 183
ARTICLE 96. Service charges. All service charges
collected by hotels, restaurants and similar
establishments shall be distributed at the rate of eighty-
five percent (85%) for all covered employees and fifteen
percent (15%) for management. The share of the
employees shall be equally distributed among them. In
case the service charge is abolished, the share of the
covered employees shall be considered integrated in
their wages.
Tip A sum of money given for good service
- a gratuity, gift, present fee, or money given as
to a servant to secure better or more prompt
service.
Bonus A gratuity given by an employer in order to inspire
the employee to exert more effort in his work.
Handbook on Workers Statutory Monetary Benefits
(Guidelines on Service Charges)
Sharing
All rank-and-file employees of employers collecting service
charges are entitled to an equal share in the 85% of the total
of such charges. The remaining 15% of the charges may be
retained by the management to answer for losses and
breakages and for distribution to managerial employees, at
the discretion of the management in the latter case.
Payments
The shares of the employees in the service charges shall be
distributed to them once every 2 weeks or twice a month at
intervals not exceeding 16 days.
Where the company stopped collecting service charges, the
average share previously enjoyed by the employees for the
past 12 months immediately preceding such stoppage shall
be integrated into their basic wages.
Tips
Where a restaurant or similar establishment does not collect
service charges but has a practice or policy of monitoring and
pooling tips given voluntarily by its customers to its
employees, the pooled tips should be monitored, accounted
and distributed in the same manner as service charges.
Benefits for Seafarers:
Entitlement to disability benefits by seamen on overseas work
is a matter governed, not only by medical findings but, by law
and by contract. Every seaman and the vessel owner are
required to execute the POEA Standard Employment
Contract as a condition prior to the deployment for overseas
work. The POEA Standard Employment Contract is
supplemented by the CBA. (Vergara v Hamonia)
As with all other kinds of worker, the terms and conditions of a
seafarer's employment is governed by the provisions of the
contract he signs at the time he is hired. But unlike that of
others, deemed written in the seafarer's contract is a set of
standard provisions set and implemented by the POEA, called
the Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going
Vessels, which are considered to be the minimum
requirements acceptable to the government for the
Starr Weigand
employment of Filipino seafarers on board foreign ocean-
going vessels. The issue of whether Masangcay can legally
demand and claim disability benefits from Trans-Global and
Ventnor for an illness that became apparent during his
contract of employment with the shipping company, is
governed by the provisions of the POEA Standard Terms and
Conditions Governing the Employment of Filipino Seafarers
on Board Ocean-Going Vessels; hence, it is said standard
terms and conditions which are relevant and need to be
construed in the present case. The 2000 POEA Amended
Standard Terms and Conditions Governing the Employment
of Filipino Seafarers on Board Ocean-Going Vessels[39] that
is considered appended in his contract of employment and is
controlling for purposes of resolving the issue at hand and not
the 1996 POEA Revised Amended Standard Terms and
Conditions Governing the Employment of Filipino Seafarers
on Board Ocean-Going Vessels. (Masangcay v Trans-global)
It should be remembered that seafarers are not regular
employees, no matter how long they have been rehired by
their employers. They are contractual employees, and
governed by the contracts they sign every time they go
abroad. Their employement is contractually fised for a certain
period of time, and upon expiration of their contracts, their
employment automatically ceased. Thus, after the expiry of
the contract, if the employer refuses to hire them again, the
employer is not guilty of illegal dismissal, as there is no
dismissal to speak of. (Millares v NLRC)
_________________________________________________
_
PRESIDENTIAL DECREE NO. 851
REQUIRING ALL EMPLOYERS TO PAY THEIR
EMPLOYEES
A 13th-MONTH PAY
WHEREAS, it is necessary to further protect the level of
real wages from the ravage of worldwide inflation;
WHEREAS, there has been no increase in the legal
minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune time
for society to show its concern for the plight of the
working masses so they may properly celebrate
Christmas and New Year.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by virtue
of the powers vested in me by the Constitution, do
hereby decree as follows:
Section 1. All employers are hereby required to pay all
their employees receiving a basic salary of not more than
P1,000 a month, regardless of the nature of their
employment, a 13th-month pay not later than December
24 of every year.
Sec. 2. Employers already paying their employees a 13th-
month pay or its equivalent are not covered by this
Decree.
Sec. 3. This Decree shall take effect immediately.
Done in the City of Manila, this 16th day of December
1975.
th
Purpose of the grant of 13 month pay:
th
PD 851, or the 13 Month Pay Law, which required all
th
employers to pay their employees a 13 month pay, was
issued to protect the level of real wages form the ravages of
worldwide inflation. It was enacted when it was noted that
there had been no increase in the minimum wage since 1970
and the Christmas season was an opportune time for society
to show its concern for the plight of the working masses so
LABORICADIZ 25
that they may properly celebrate Christmas an New Year.
It was primarily given to alleviate the plight of the workers and
to help them cope with the exorbitant increases in the cost of
living.
th
Only rank-and-file employees are entitled to the 13
month pay.
th th
How much is the 13 month pay? The minimum 13 month
pay required by law shall not be less than 1/12 of the total
basic salary earned by an employee within a calendar year.
Basis in computing: The basic salary of the employee is
th
used as the basis in determining the 13 month pay. Any
compensation or remuneration not part of the basic salary is
th
excluded as basis in computation of the 13 month pay.
What is basic salary? It includes all remunerations or
earning paid by this employer for services rendered but does
not include allowances and monetary benefits which are not
considered or integrated as 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, and cost-of-living allowances. However, these salary-
related benefits should be included as part of the basic salary
in the computation of the 13th month pay if by individual or
collective agreement, company practice or policy, the same
are treated as part of the basic salary of the employees.
th
Computation of the 13 month pay of employees
receiving regular wages:
For employees receiving regular wages, the SC interpreted
basic salary to mean, not the amount actually received the
employee, but the 1/12 of their standard monthly wage
multiplied by their length of service within a given calendar
year. Thus, excluded therefrom are payments for sick,
vacation and maternity leaves, night differentials, regular
holiday pay, and premiums for work done on rest days and
th
special holidays. In cases decided by the SC, the 13 month
pay due an employee was computed based in the employees
basic monthly wage multiplied by the number of months
worked in a calendar year prior to separation from
th
employment. The computation for the 13 month pay should
properly begin from the first day of employment.
Theres a catch, though. If payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay, and
premiums for work done on rest days and special holidays,
which are legally excluded from the computation of 13th
month pay, are included by the employer in its previous
computations and such act ripens into a company practice,
then these items cant be excluded without violating the
prohibition against diminution or elimination of benefits.
What about Christmas bonus and 14th month pay? Both the
Christmas bonus and 14th month pay, which are generally
categorized as bonus, are different from 13th-month pay.
th
Pro-rated 13 Month Pay:
There is pro-ration only in cases of resignation or separation
from work. Under such circumstances, an employee is
th
entitled to 13 month pay in proportion to the length of time
during the year, reckoned from the time he started working
during the calendar year.
th
The computation of the 13 month pay should be based
on the length of service and not on the actual wage
earned by the worker.
Exception Employees who are paid a guaranteed minimum
wage or commissions earned, whichever is higher, are
th
entitled to 13 month pay based on total earnings.
th
Nature of 13 month pay: Such pay is in the nature of
th
wages. The 13 month pay is included in the definition of
wage. Under the Labor Code, from which the employer is
Starr Weigand
prohibited from making any deductions without the
employees knowledge and consent.
th
Equivalent of 13 month pay: Mid-year bonus and
th
Christmas bonus are equivalents of the 13 month pay. The
th
bonus must be equal to the 13 month pay due the employee;
otherwise, the employer shall pay the difference.
Benefits in the form of food or electricity are not proper
th
substitute for the 13 month pay. So, also, year-end rewards
th
for loyalty and service cannot be considered in lieu of 13
month pay.
th
Difference between bonus under the CBA and the 13 month
pay:
Bonus under the CBA 13the month pay
th
Bonuses provided in The 13 month pay by the
graduating amounts law.
depending on the length of
service is an addition to the
legal requirement. It is an
obligation created by the
contract between the
management and workers.
When bonus is deemed part of the wage:
GR: A bonus is a gratuity or an act of liberality which the
recipient has no right to demand it as a matter of right.
Exception: A bonus is a demandable or enforceable
obligation when it is made part of the wage or salary or
compensation of the employee. W/N a bonus forms part of
the 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.
In Boie-Takeda v dela Serna, the Court held that the medical
representatives were not salesmen, and did not effect any
sale of article at all. The additional payment which they
received were not in fact commission but rather, partook of
the nature of a profit-sharing bonus. Thus, these
commissions, which were in reality productivity bonuses, did
not form part of the basic salary and were not included in the
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computation of the 13 month pay.
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Are piece-rate workers entitled to 13 month pay? The
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piece-rate workers should be paid their 13 month pay since
they are employees, not independent contractors.
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Seafarers are not entitled to 13 month pay: In the
absence of any provision in his contract, a seafarer under the
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law is not entitled to 13 month pay. PD 851 contemplates the
situation of land-based workers, and not seafarers who
generally earn more than domestic land-based workers.
Is there a cap, i.e., only those receiving a salary below
P1,000 may receive 13th month pay?
Prior to 1986, only those who receive a monthly salary of not
more than PhP1,000 are entitled to receive 13th month pay.
This cap was removed under Memorandum Order No. 28
issued by former President Corazon Aquino.
REVISED GUIDELINES
ON THE IMPLEMENTATION OF THE 13TH MONTH PAY
LAW.
1. Removal of Salary Ceiling.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.

On August 13, 1986, President Corazon C. Aquino issued
Memorandum Order No. 28 which provides as follows:
"Section 1 of Presidential Decree No. 851 is hereby
modified to the extent that all employers are hereby
required to pay all their rank-and-file employees a 13th
month pay not later than December 24 of every
year."chan robles virtual law library
Before its modification by the aforecited Memorandum
Order, P.D. No. 851 excludes from entitlement to the 13th
month pay those employees who were receiving a basic
salary of more than P1,000.00 a month. With the removal
of the salary ceiling of P1,000.00, all rank and file
employees are now entitled to a 13th month pay
regardless of the amount of basic salary that they receive
in a month if their employers are not otherwise exempted
from the application of P.D. No. 851. Such employees are
entitled to the benefit regardless of their designation or
employment status, and irrespective of the method by
which their wages are paid, provided that they have
worked for at least one (1) month during a calendar year.
2. Exempted Employers.
The following employers are still not covered by P.D. No.
851:
a. The Government and any of its political subdivisions,
including government-owned and controlled
corporations, excepts those corporations operating
essentially as private subsidiaries of the Government;
b. Employers already paying their employees a 13th
month pay or more in a calendar year or its equivalent at
the time of this issuance;
c. Employers of household helpers and persons in the
personal service of another in relation to such workers;
and
d. Employers of those who are paid on purely
commission, boundary, or task basis, and those who are
paid a fixed amount for performing specific work,
irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate
basis in which case the employer shall grant the required
13th month pay to such workers.
As used herein, workers paid on piece-rate basis shall
refer to those who are paid a standard amount for every
piece or unit of work produced that is more or less
regularly replicated, without regard to the time spent in
producing the same.
The term "its equivalent" as used on paragraph (b) hereof
shall include Christmas bonus, mid-year bonus, cash
bonuses and other payments amounting to not less than
1/12 of the basic salary but shall not include cash and
stock dividends, cost of living allowances and all other
allowances regularly enjoyed by the employee, as well as
non-monetary benefits. Where an employer pays less
than required 1/12th of the employees basic salary, the
employer shall pay the difference.
3. Who are Rank-and File Employees.
The Labor Code distinguishes a rank-and-file employee
from a managerial employee. It provides that a
managerial employee is one who is vested with powers of
prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off, recall
discharge, assign or discipline employees, or to
effectively recommend such managerial actions. All
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employees not falling within this definition are
considered rank-and-file employees.
The above distinction shall be used as guide for the
purpose of determining who are rank-and-file employees
entitled to the mandated 13th month pay.
4. Amount and payment of 13th Month Pay
(a) Minimum of the Amount. The minimum 13th month
pay required by law shall not be less than one-twelfth of
the total basic salary earned by an employee within a
calendar year. For the year 1987, the computation of the
13th month pay shall include the cost of living
allowances (COLA) integrated into the basic salary of a
covered employee pursuant to Executive Order 178.
E.O. No. 178 provides, among other things, that the P9.00
of the daily COLA of P17.00 for non-agricultural workers
shall be integrated into the basic pay of covered
employees effective 1 May 1987, and the remaining P8.00
effective 1 October 1987. For establishments with less
than 30 employees and paid-up capital of P500,000 or
less, the integration of COLAs shall be as follows: P4.50
effective on 1 May 1987; P4.50 on 1 October 1987; and
P8.00 effective 1 January 1988. Thus, in the computation
of the 13th month pay for 1987, the COLAs integrated into
the basic pay shall be included as of the date of their
integration.
Where the total P17.00 daily COLA was integrated
effective 1 May 1987 or earlier the inclusion of said COLA
as part of the of the basic pay for the purpose of
computing the 13th month pay shall be reckoned from
the date of actual integration.
The "basic salary" of an employee for the purpose of
computing the 13th month pay shall include all
remunerations or earning paid by this employer for
services rendered but does not include allowances and
monetary benefits which are not considered or integrated
as 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,
and cost-of-living allowances. However, these salary-
related benefits should be included as part of the basic
salary in the computation of the 13th month pay if by
individual or collective agreement, company practice or
policy, the same are treated as part of the basic salary of
the employees.
(b) Time of Payment. The required 13th month pay
shall be paid not later than December 24 of each year. An
employer, however, may give to his employees one half
() of the required 13th month pay before the opening of
the regular school year and the other half on before the
24th of December of every year. The frequency of
payment of this monetary benefit may be the subject of
agreement between the employer and the
recognized/collective bargaining agent of the employees.
5. 13th Month Pay for Certain Types of Employees.
(a) Employees Paid by Results. Employees who are
paid on piece work basis are by law entitled to the 13th
month pay.
Employees who are paid a fixed or guaranteed wage plus
commission are also entitled to the mandated 13th month
pay, based on their total earnings during the calendar
year, i.e., on both their fixed or guaranteed wage and
commission.
(b) Those with Multiple Employers. Government
employees working part time in a private enterprise,
LABORICADIZ 27
including private educational institutions, as well as
employees working in two or more private firms, whether
on full or part time basis, are entitled to the required 13th
month pay from all their private employers regardless of
their total earnings from each or all their employers.chan
robles virtual law library
(c) Private School Teachers. Private school teachers,
including faculty members of universities and colleges,
are entitled to the required 13th month pay, regardless of
the number of months they teach or are paid within a
year, if they have rendered service for at least one (1)
month within a year.
6. 13th Month Pay of Resigned or Separated Employee.
An employee who has resigned or whose services were
terminated at any time before the time for payment of the
13th month pay is entitled to this monetary benefit in
proportion to the length of time he worked during the
year, reckoned from the time he started working during
the calendar year up to the time of his resignation or
termination from the service. Thus, if he worked only
from January up to September his proportionate 13th
month pay should be equivalent of 1/12 his total basic
salary he earned during that period.
The payment of the 13th month pay may be demanded by
the employee upon the cessation of employer-employee
relationship. This is consistent with the principle of
equity that as the employer can require the employee to
clear himself of all liabilities and property accountability,
so can the employee demand the payment of all benefits
due him upon the termination of the relationship.
7. Non-inclusion in Regular Wage.
The mandated 13th month pay need not be credited as
part of regular wage of employees for purposes of
determining overtime and premium pays, fringe benefits
insurance fund, Social Security, Medicare and private
retirement plans.
8. Prohibitions against reduction or elimination of
benefits. chan robles virtual law library
Nothing herein shall be construed to authorize any
employer to eliminate, or diminish in any way,
supplements, or other employee benefits or favorable
practice being enjoyed by the employee at the time of
promulgation of this issuance.
The Handbook on Workers Statutory Monetary Benefits
issued by the Bureau of Working Conditions of the DOLE
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in 2006 provides the Guidelines on the 13 month pay:
Coverage: All employees are required to pay their rank and
file employees regardless of nature of the method by which
their wages are paid, provided they worked for at least 1
th
month during a calendar year. 13 month pay should be given
to the employees not later than December 24 of every year.
Who are rank and file employees: Rank and file employees
are basically differentiated from managerial employees. A
managerial employee is one who is vested with powers of
prerogatives to lay down and execute management policies
and/or to hire, transfer, suspend, lay-off, recall discharge,
assign or discipline employees, or to effectively recommend
such managerial actions. All employees not falling within this
definition are considered rank-and-file employees.
th
Minimum Amount: The minimum 13 month pay required
by law shall not be less than 1/12 of the total basic salary
earned by an employee within a calendar year. (Refer to
previous discussion on basic salary)
Time of payment: not later than December 24 of every year.
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An employer, however, may give to the employee of the
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required 13 month pay before the opening of the regular
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school year and the other half on or before the 24 of
December or every year. The frequency of the payment of the
monetary benefit may be subject to agreement between the
employer and the recognized/collective bargaining agent of
the employees.
Could the employer withhold the 13th month pay?
No, the payment of 13th month pay is mandatory, specifically
provided under Presidential Decree (P.D.) No. 851. In case of
non-payment of 13th month pay, covered employees could
complain at the Department of Labor and Employment
(DOLE) or the National Labor Relations Commission (NLRC).
Is 13th month pay taxable?
No, as long as the amount does not exceed P30,000. Only
the amount in excess of P30,000 is taxable.
Are there employers who are exempted from paying 13th
month pay?
Yes. The following employers are not required to pay 13th
month pay under P.D. 851, unless the grant thereof have
become a policy or practice:
a. The Government and any of its political subdivisions,
including government-owned and controlled corporations,
excepts those corporations operating essentially as private
subsidiaries of the Government.
b. Employers already paying their employees a 13th month
pay or more in a calendar year or its equivalent at the time of
this issuance.
c. Employers of household helpers and persons in the
personal service of another in relation to such workers.
d. Employers of those who are paid on purely commission,
boundary, or task basis, and those who are paid a fixed
amount for performing specific work, irrespective of the time
consumed in the performance thereof, except where the
workers are paid on piece-rate basis in which case the
employer shall grant the required 13th month pay to such
workers.
th
13 month pay for certain types of employees:
1) Employees who are paid on piece work basis are
th
by law entitled to the 13 month pay.
2) Employees who are paid a fixed or guaranteed
wage plus commission are also entitled to the
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mandated 13 month pay, based on their earnings
during the calendar year, i.e. on both their fixed or
guaranteed wage and commission.
3) Employees with multiple employers.
Workers who work in two or more companies or private
employers, whether on full or part time basis, are entitled to
the required 13th month pay from all their private employers
regardless of their total earnings from each or all their
employers.
Government employees working part time in a private
enterprise, including private educational institutions, as well
as employees working in 2 or more private firms, whether on
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full or part-time basis, are entitled to the required 13 month
pay from all their private employers regardless of their total
earnings from each of all their employers.
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13 month pay of resigned or separated employee:
An employee who has resigned or whose services are
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terminated at any time before the time of payment of the 13
month pay is entitled to his monetary benefit in proportion to
the length of time he worked during the year reckoned from
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
the time he started working during the calendar year up to the
time of his resignation or termination from the service.
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Non-inclusion in regular wage: The mandated 13 month
pay need not be credited as part of the regular wage of
employees for purposes of determining OT and premium
payments, fringe benefits as well as contributions to the State
Insurance Fund, Social Security, Medicare and private
retirement plans.
Title II WAGES
Chapter I PRELIMINARY MATTERS
ARTICLE 97. Definitions. As used in this Title:
(a) Person means an individual, partnership,
association, corporation, business trust, legal
representatives, or any organized group of persons.
(b) Employer includes any person acting directly or
indirectly in the interest of an employer in relation to an
employee and shall include the government and all its
branches, subdivisions and instrumentalities, all
government-owned or controlled corporations and
institutions, as well as non-profit private institutions, or
organizations.
(c) Employee includes any individual employed by an
employer.
(d) Agriculture includes farming in all its branches and,
among other things, includes cultivation and tillage of
soil, dairying, the production, cultivation, growing and
harvesting of any agricultural and horticultural
commodities, the raising of livestock or poultry, and any
practices performed by a farmer on a farm as an incident
to or in conjunction with such farming operations, but
does not include the manufacturing or processing of
sugar, coconuts, abaca, tobacco, pineapples or other
farm products.
(e) Employ includes to suffer or permit to work.
(f) Wage paid to any employee shall mean the
remuneration or earnings, however designated, capable
of being expressed in terms of money, whether fixed or
ascertained on a time, task, piece, or commission basis,
or other method of calculating the same, which is
payable by an employer to an employee under a written
or unwritten contract of employment for work done or to
be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by
the Secretary of Labor and Employment, of board,
lodging, or other facilities customarily furnished by the
employer to the employee. Fair and reasonable value
shall not include any profit to the employer, or to any
person affiliated with the employer.
ARTICLE 98. Application of Title. This Title shall not
apply to farm tenancy or leasehold, domestic service and
persons working in their respective homes in needle
work or in any cottage industry duly registered in
accordance with law.
Wages Remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed
or ascertained on a time, task, piece of commission basis, or
other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract
of employment for work done or to be done, or for service
rendered or to be rendered.
Under Art. 97, wages include the fair and reasonable value as
determined by the Sec. of Labor, or board, lodging and other
facilities customarily furnished by the employer to the
employee. Customary is founded on long-established and
constant practice connoting regularity.
Facilities includes articles or services for the benefit of the
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employee or his family. They are not facilities within the
meaning of the law is they were provided for the employers
benefit or convenience.
Thus, in the case of Millares v NLRC, the receipt of an
allowance on a monthly basis did not ipso facto characterize it
as regular and forming part of the salary because the grant
was subject to peculiar circumstances which were present:
lack of space in the housing facility, the heavy volume of
vehicle request, the hostile environment of the workplace. The
continuous enjoyment of the allowance was based on
contingencies, the occurrence of which wrote finish to such
enjoyment.
Before an employer may deduct the value of facilities from the
employees wages, it must first satisfy the following:
1) proof that such facilities are customarily furnished
by the trade
2) the provision of deductible facilities is voluntarily
accepted in writing by the employee, and
3) the facilities are charged at fair and reasonable
value.
The law is clear that mere availment is not sufficient to allow
deductions from employees wages.
Food or snacks or other convenience provided by the
employers are deemed as supplements if they are granted for
the convenience of the employer. The criterion is making a
distinction between a supplement and facility does not so
much lie in the kind, but the purpose.
Although the acceptance by the workers of a lower wage that
that mandated by law is prohibited, the deduction of certain
facilities as authorized by law, however, does not come within
this prohibition.
Wages Salaries
Compensation paid to blue Paid to white collar workers
collar workers; for skilled or and denote a higher grade of
unskilled manual labor paid employment a superior grade
at stated daily, weekly, of services and a position of
monthly, or seasonal periods. office.
The distinction is important for purposes of determining W/N
the employers compensation is subject to garnishment or
attachment. Art. 1708 provides that that laborers wages
shall not be subject to execution or attachment, except for
debts incurred for food, shelter, clothing, and medical
attendance.
What is a living wage? It is one which is as nearly adequate
as is economically feasible to maintain the minimum
standards of living necessary for the health, efficiency and
general well-being of the employers within the framework of
the national economic and social development program.
Exclusions from coverage:
1) Persons in the personal service of another
2) Homeworkers in needlework
3) Workers employed in cottage industries duly
registered in accordance with law and who perform
the work in their homes.
4) Workers in duly registered cooperatives as
recommended by the Bureau of Cooperative
Development and approved by the Secretary of
Labor; and
5) Farm tenancy or leasehold.
Equal pay for equal work Principle: Persons who work with
substantially equal qualifications, skill effort, and
responsibility, under similar conditions, should be paid similar
salaries. But, this should not management prerogative, which
must be exercised in good faith and with due regard to the
rights of labor. They are not absolute prerogatives, but are
subject to legal limits, collective bargaining agreements, and
the general principles of fair play and justice.
LABORICADIZ 29

Chapter II MINIMUM WAGE RATES
ARTICLE 99. Regional minimum wages. The minimum
wage rates for agricultural and non-agricultural
employees and workers in each and every region of the
country shall be those prescribed by the Regional
Tripartite Wages and Productivity Boards. (As amended
by Section 3, Republic Act No. 6727, June 9, 1989).
ARTICLE 100. Prohibition against elimination or
diminution of benefits. Nothing in this Book shall be
construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed
at the time of promulgation of this Code.
Non-diminution of Benefits
An employer who overpaid due to an error, may deduct the
overpayment from the salaries of the employees. This does
not amount to diminution of benefits. Diminution of benefits is
the unilateral withdrawal by the employer of the benefits
already enjoyed by the employees. There is diminution of
benefits when it is shown that:
1. The grant or benefit is founded on a policy or has
ripened into a practice over a long period;
2. The practice is consistent and deliberate;
3. The practice is not due to error in the construction
or application of a doubtful or difficult question of law;
4. The diminution or discontinuance is done
unilaterally by the employer.
The test of long practice has been enunciated thus: Where
the company agreed to continue giving holiday pay knowing
fully well that said employees are not covered by the law
requiring payment of holiday pay. (Oceanic Pharmaceuticals v
Inciong)
An erroneously granted benefit may be withdrawn without
violating the prohibition against non-diminution of benefits.
No vested right accrued to the respondents when the
employer corrected its error by crediting the salary increase
for the year 2001 against the salary increase granted under a
wage order, as it was all in accordance with the CBA.
Although it is the states responsibility to afford protection to
labor, this policy should not be used as an instrument to
oppress management and capital. In resolving disputes
between labor and capital, fairness and justice should always
prevail. (TSPIC Corp. v TSPIC Employees Union)
In American Wire Employees v American Wire, the
employees contended that the employer was guilty of
diminution of benefits, when unilaterally withdrew some
benefits that they have been enjoying since time immemorial
such as, SERVICE AWARD, CHRISTMAS PARTY,
PROMOTIONAL INCREASE AND PREMIUM PAY OF 35%
for services rendered during Holy week, etc. The Court held
that the employer was not guilty of violation of Art. 100, The
benefits/entitlements subjects of the instant case are all
bonuses which were given by the private respondent out of its
generosity and munificence, being given out as a
management prerogative by the employer, and in addition to
those mandated by the law. A bonus is an amount granted
and paid to an employee for his industry and loyalty which
contributed to the success of the employers business and
made possible the realization of profits. 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. 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, which is not the case here.
The ruling in this case is similar to that in the case of Protacio
v Laya Maranghaya. In the latter, the Court held that the
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manager was not entitled to the lump sum bonus being
claimed, as the amounts previously received as such bonus
were based on the firms performance and cash position. A
bonus is not a demandable and enforceable obligation. If the
bonus is paid only if profits are realize3d or a certain amount
of productivity achieved, it cannot be considered part of
wages. If the desired goal of production is not obtained, of the
amount of actual work accomplished, the bonus does not
accrue. It is only demandable when it is made part of the
wage or salary or compensation. And if that is the case, the
amount is usually fixed. Only when the employer promises
and agrees to give w/o any conditions imposed for its
payment such as success of business or greater production
or output, does the bonus become part of the wages. The
granting of a bonus is basically a management prerogative
w/c cannot be forced upon the employer who may not be
obliged to assume the onerous burden of granting bonuses or
other benefits aside fm the employees basic salaries or
wages.
In Boie-Takeda v dela Serna, the Court held that the medical
representatives were not salesmen, and did not effect any
sale of article at all. The additional payment which they
received were not in fact commission but rather, partook of
the nature of a profit-sharing bonus. Thus, these
commissions, which were in reality productivity bonuses, did
not form part of the basic salary and were not included in the
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computation of the 13 month pay.
ARTICLE 101. Payment by results. - (a) The Secretary of
Labor and Employment shall regulate the payment of
wages by results, including pakyao, piecework, and other
non-time work, in order to ensure the payment of fair and
reasonable wage rates, preferably through time and
motion studies or in consultation with representatives of
workers and employers organizations.
RA 6727 The Wage Rationalization Act: mandates the
fixing of the statutory minimum wages applicable to different
industrial sectors, namely, non-agricultural, agricultural
plantation, and non-plantation, cottage/handicraft, and
retail/service, depending on the number of workers or
capitalization or annual gross sales in some sectors.
RA 6727 establishes the Regional Tripartite Wages and
Productivity Boards, which has the authority to fix the wage
rate in the different regions of the country.
Coverage: The wage increases prescribed under wage
orders apply to all private sector workers and employees
regardless of their position, designation, or status and
irrespective of the method by which their wages are paid.
Exclusions:
1) Househelpers, including family drivers and workers
in the personal service of another whose conditions
of work are prescribed in RA 7655
2) Workers and employees: a) in the retail/service
establishments regularly employing not more than
10 (and had applied for exemptions with and as
determined by the appropriate regional Boards); b)
of distressed establishments; and c) of other firms
or employers as determined by the Board, when
specifically exempted from compliance for a period
fixed by the Board.
3) Workers of registered Barangay Micro Business
Enterprises (BMBEs) with Certificates of Authority
issued by the Office of the Municipal or City
Treasurer.
If the employer fails to pay the required minimum wage rate,
the employer is made liable for double indemnity.
The minimum wage of workers paid by results is determined
through:
1) time and motion studies, and
2) consultation with representatives of employers and
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
 workers organizations in a tripartite conference
called by the DOLE Secretary.
Serious business losses is not a defense to payment of labor
standards benefits. The employer cannot exempt itself from
liability to pay minimum wages because of poor financial
conditions of a company. The payment of minimum wages is
not dependent on the employers ability to pay.
If there is a wage order, the same would automatically alter
the employment contract. If there is
contracting/subcontracting, if under the contract, principals
liability is limited only to the increase in the minimum pay (not
for overtime pay and other benefits).
Only those employees receiving salaries below the prescribed
minimum wage are entitled to the wage increases in the wage
order.
The provision os the CBA should be read in harmony
with the wage orders, whose benefits should be given
only to those employees covered thereby.
Non-diminution of benefits
Requisites for voluntary employer practice such that the
same cannot be unilaterally withdrawn anymore:
a) It should have been practiced over a long period of
time; and
b) It must be shown to have been consistent and
deliberate.
The test of long practice: Where the company agreed to
continue giving holiday pay knowing fully well that said
employee is not covered by the law requiring payment of
holiday pay
If the grant of the benefits has ripened into company practice
or policy, then the employer cannot peremptorily withdraw
them.
Wage Distortion
It is caused by the issuance of a wage order. If there is no
wage order, there is no wage distortion.
Elements of wage distortion:
1) An existing hierarchy of positions with
corresponding salary rates;
2) A significant change in the salary rate of a lower
pay class without a concomitant increase in the
salary of a higher one;
3) The elimination of the distinction between the 2
levels; (quantitative difference is eliminated, but
total elimination is not required.)
4) The existence of the distortion in the same region of
the country.
Conflicts due to wage distortion is not a strikeable issue, and
is thus not a valid ground for notice of strike and such is
illegal.
How to resolve conflicts due to wage distortion:
1) Follow the provisions of the CBA or negotiate with
the employer;
2) Present the matter before the Commission;
3) Submit the matter to the Labor Artbiter.
Chapter III PAYMENT OF WAGES
ARTICLE 102. Forms of payment. No employer shall
pay the wages of an employee by means of promissory
notes, vouchers, coupons, tokens, tickets, chits, or any
object other than legal tender, even when expressly
requested by the employee. Payment of wages by check
or money order shall be allowed when such manner of
payment is customary on the date of effectivity of this
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Code, or is necessary because of special circumstances
as specified in appropriate regulations to be issued by
the Secretary of Labor and Employment or as stipulated
in a collective bargaining agreement.
ARTICLE 103. Time of payment. Wages shall be paid at
least once every two (2) weeks or twice a month at
intervals not exceeding sixteen (16) days. If on account of
force majeure or circumstances beyond the employers
control, payment of wages on or within the time herein
provided cannot be made, the employer shall pay the
wages immediately after such force majeure or
circumstances have ceased. No employer shall make
payment with less frequency than once a month.
The payment of wages of employees engaged to perform
a task which cannot be completed in two (2) weeks shall
be subject to the following conditions, in the absence of
a collective bargaining agreement or arbitration award:
(1) That payments are made at intervals not exceeding
sixteen (16) days, in proportion to the amount of work
completed;
(2) That final settlement is made upon completion of the
work.
ARTICLE 104. 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.
ARTICLE 105. Direct payment of wages. Wages shall be
paid directly to the workers to whom they are due,
except:
(a) In cases of force majeure rendering such payment
impossible or under other special circumstances to be
determined by the Secretary of Labor and Employment in
appropriate regulations, in which case, the worker may
be paid through another person under written authority
given by the worker for the purpose; or
(b) Where the worker has died, in which case, the
employer may pay the wages of the deceased worker to
the heirs of the latter without the necessity of intestate
proceedings. The claimants, if they are all of age, shall
execute an affidavit attesting to their relationship to the
deceased and the fact that they are his heirs, to the
exclusion of all other persons. If any of the heirs is a
minor, the affidavit shall be executed on his behalf by his
natural guardian or next-of-kin. The affidavit shall be
presented to the employer who shall make payment
through the Secretary of Labor and Employment or his
representative. The representative of the Secretary of
Labor and Employment shall act as referee in dividing the
amount paid among the heirs. The payment of wages
under this Article shall absolve the employer of any
further liability with respect to the amount paid.
ARTICLE 106. Contractor or subcontractor. Whenever
an employer enters into a contract with another person
for the performance of the formers work, the employees
of the contractor and of the latters subcontractor, if any,
shall be paid in accordance with the provisions of this
Code.
In the event that the contractor ormsubcontractor fails to
pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable
with his contractor or subcontractor to such employees
to the extent of the work performed under the contract, in
the same manner and extent that he is liable to
employees directly employed by him.
The Secretary of Labor and Employment may, by
appropriate regulations, restrict or prohibit the
contracting-out of labor to protect the rights of workers
established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as
LABORICADIZ 31
well as differentiations within these types of contracting
and determine who among the parties involved shall be
considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision
of this Code.
There is labor-only contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others,
and the workers recruited and placed by such person are
performing activities which are directly related to the
principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to
theworkers in the same manner and extent as if the latter
were directly employed by him.
ARTICLE 107. Indirect employer. The provisions of the
immediately preceding article shall likewise apply to any
person, partnership, association or corporation which,
not being an employer, contracts with an independent
contractor for the performance of any work, task, job or
project.
ARTICLE 108. Posting of bond. An employer or indirect
employer may require the contractor or subcontractor to
furnish a bond equal to the cost of labor under contract,
on condition that the bond will answer for the wages due
the employees should the contractor or subcontractor, as
the case may be, fail to pay the same.
ARTICLE 109. Solidary liability. The provisions of
existing laws to the contrary notwithstanding, every
employer or indirect employer shall be held responsible
with his contractor or subcontractor for any violation of
any provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter, they
shall be considered as direct employers.
IN the case of Eparwa v Liceo de Cagayan, the Court held
that he contractor is made liable by virtue of his status as
direct employer. The principal, on the other hand, is made the
indirect employer of the contractors employees for purposes
of paying the employees their wages should the contractor be
unable to pay them. This joint and several liability facilitates
payment of the workers.
In that case, it was held that the solidary liability of principal
and contractor does not preclude the right of reimbursement
from his co-debtor by the one who paid. The security guards
immediate recourse for the payment of the increases is with
their direct employer. However in that case, the contract for
security services had already EXPIRED without being
amended in compliance with a wage order. The contractor
does not demand from the principal any adjustment in the
contract price. Given the peculiar circumstances, if the
principal pays the security guards, it cannot claim
reimbursement from contractor. But in case it is contractor
that pays them, the latter can claim reimbursement from
principal in lieu of an adjustment, considering that the
contract, had expired and had not been renewed.
For the security guards, the actual source of the payment of
their wage differentials and premium for holiday and rest day
work does not matter as long as they are paid. They may
collect from anyone of the solidary debtors. Solidary liability
does not mean that, as between themselves, two solidary
debtors are liable for only half of the payment.
The Principals ultimate liability comes into play because of
the expiration of the Contract for Security Services. There is
no privity of contract between the security guards and the
principal, but its liability to the security guards remains
because of Articles 106, 107 and 109 of the Labor Code. The
direct employer is already precluded from asking the principal
for an adjustment in the contract price because of the
expiration of the contract, but the direct employers liability to
the security guards remains because of their employer-
employee relationship. In lieu of an adjustment in the contract
price, the direct employer may claim reimbursement from the
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principal for any payment it may make to the security guards.
However, the principal cannot claim any reimbursement from
the direct employer for any payment it may make to the
security guards.
ARTICLE 110. Worker preference in case of bankruptcy.
In the event of bankruptcy or liquidation of an employers
business, his workers shall enjoy first preference as
regards their wages and other monetary claims, any
provisions of law to the contrary notwithstanding. Such
unpaid wages and monetary claims shall be paid in full
before claims of the government and other creditors may
be paid. (As amended by Section 1, Republic Act No.
6715, March 21, 1989).
Workers preference in case of bankruptcy
In the case of Lingkod ng Manggagawa sa Rubberworld v
Rubberworld, the Court held that the proceedings before the
labor arbiter and the order and writ subsequently issued by
the NLRC are null and void having been undertaken or issued
in violation of a SEC suspension order. Thus, the parties are
left in the same state they were in prior to the issuance of the
said decisions.
ARTICLE 111. Attorneys fees. (a) In cases of unlawful
withholding of wages, the culpable party may be
assessed attorneys fees equivalent to ten percent of the
amount of wages recovered.
(b) It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings for
the recovery of wages, attorneys fees which exceed ten
percent of the amount of wages recovered.
Although the law mandates wages to be paid in legal tender,
the law itself allows payment of wages by means of bank
checks where it is customary to do so, or such is called for by
special circumstances.
The employers obligation to pay his workers just
compensation and treatment carries with it the corollary right
to expect from the workers adequate work, diligence and
good conduct.
The law does not consider as valid any agreement whereby a
worker agrees to receive less compensation than what he is
entitled to recover.
If a company cannot pay a living wage, it has no business
operating at the expense of the lives of its workers.
No work-no pay Principle
If there is no work performed by the employee, there can be
no wage or pay unless, or course the laborer was able, willing
and ready to work but was illegally locked out, suspended, or
dismissed, or otherwise illegally prevented from working.
Thus, Off-days are not paid days.
Workers preference in case of bankruptcy
Art. 110 of the Labor Code is contingent upon the institution of
bankruptcy or insolvent proceedings against the employer.
Hence, the preferential right given to workers under the article
may be invoked only during bankruptcy or insolvency
proceedings against the employer. These proceedings
provide the only proper venue for the enforcement of a
creditors preferential right, such as that under Art. 110.
What the provision establishes is not a lien, but merely a
preference of credit in favor of employees. Unlike a lien, a
preference of credit does not create a charge upon any
particular property of the debtor. This simply means that
during the bankruptcy or insolvency proceedings against the
properties of the employer, the employees have the
advantage of having their unpaid wages satisfied ahead of
certain claims which may be proved therein.
Labor claims against corporations under receivership: If
the corporation is under receivership, PD 902-A provides that
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
all actions for claims against a corporation, partnership or
association under management or receivership pending
before any court, tribunal, board or body shall be suspended
accordingly. No preference is given to claims of employees
for wages.
Attorneys fees in labor cases
10% attorneys fees may be assessed only in cases where
there is an unlawful withholding of wages. The fees may be
assessed in cases arising form CBA negotiations that may be
charged against union funds in an amount to be agreed upon
by the parties.
It was stated in Ortiz v SMC, that attorneys fees are of 2
concepts:
a. Ordinary - it is the reasonable compensation paid to
a lawyer by his client for the legal services the former has
rendered to the latter.
Basis: The fact of the attys employment by and his
agreement w/ the client
b. Extraordinary - it is deemed an indemnity for
damages ordered by the court to be paid by the losing party in
a litigation
When it may be availed of: Art. 2208 of the Civil Code,
particularly par. 7 w/c pertains to action for recovery of wages
and is payable NOT to the lawyer but to the client, unless
theyve agreed that the award shall pertain to the lawyer as
additional compensation or as part thereof. And, this is what
Art. 111 of the Labor Code contemplates.
Attorneys fees based on quantum meruit
In determining the amount of attorneys fees based on
quantum meruit, the Court invariably takes into account the
amount and character of the services rendered, the labor,
time and trouble involved, the nature and importance of the
activity in which the services were rendered, the responsibility
imposed, and the results secured.
Non-lawyers are not entitled to attorneys fees.
Union Service fees: the deductions for union service fees
are authorized by law and do not require individual check-off
authorizations.
Dept. Order No. 18-02: RULES IMPLEMENTING ARTICLES
106 TO 109
OF THE LABOR CODE, AS AMENDED
DO 18-02 is usually cited by the Court when dealing with
contracting cases.
By virtue of the power vested in the Secretary of Labor
and Employment under Articles 5 (Rule-making) and 106
(Contractor or Subcontractor) of the Labor Code of the
Philippines, as amended, the following regulations
governing contracting and subcontracting arrangements
are hereby issued:
Section 1. Guiding principles. - Contracting and
subcontracting arrangements are expressly allowed by
law and are subject to regulation for the promotion of
employment and the observance of the rights of workers
to just and humane conditions of work, security of
tenure, self-organization, and collective bargaining.
Labor-only contracting as defined herein shall be
prohibited.
Basically, in contracting, there are 3 parties:
1) The Principal, who contracts with the contractor
2) The contractor who, upon contracting with the
principal, contracts with the workers
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3) The workers who contract with the contractor.
Thus, there are 2 contracts involved:
1) Between the principal and the contractor; and
2) Between the contractor and the workers.
Section 2 . Coverage. - These Rules shall apply to all
parties of contracting and subcontracting arrangements
where employer-employee relationship exists. Placement
activities through private recruitment and placement
agencies as governed by Articles 25 to 39 of the Labor
Code are not covered by these Rules.
Section 3. Trilateral Relationship in Contracting
Arrangements. - In legitimate contracting, there exists a
trilateral relationship under which there is a contract for a
specific job, work or service between the principal and
the contractor or subcontractor, and a contract of
employment between the contractor or subcontractor
and its workers. Hence, there are three parties involved in
these arrangements, the principal which decides to farm
out a job or service to a contractor or subcontractor, the
contractor or subcontractor which has the capacity to
independently undertake the performance of the job,
work or service, and the contractual workers engaged by
the contractor or subcontractor to accomplish the job
work or service.
In legitimate contracting, there exists a trilateral relationship
under which there is a contract for a specific job, work or
service between the principal and the contractor or
subcontractor, and a contract of employment between the
contractor or subcontractor and its workers. Hence, there
are three parties involved in these arrangements, the
principal which decides to farm out a job or service to a
contractor or subcontractor, the contractor or subcontractor
which has the capacity to independently undertake the
performance of the job, work or service, and the contractual
workers engaged by the contractor or subcontractor to
accomplish the job work or service.
Section 4. Definition of Basic Terms. - The following
terms as used in these Rules, shall mean:
(a) "Contracting" or "subcontracting" refers to an
arrangement whereby a principal agrees to put out or
farm out with a contractor or subcontractor the
performance or completion of a specific job, work or
service within a definite or predetermined period,
regardless of whether such job, work or service is to be
performed or completed within or outside the premises of
the principal.
(b) "Contractor or subcontractor" refers to any person or
entity engaged in a legitimate contracting or
subcontracting arrangement.
What does the agreement of contracting or subcontracting
involve?
Basically, three things:
1) Job work/service which is farmed out;
2) This service is only within a definite or predetermined
period;
3) Regardless of whether or not it is carried out inside or
outside the premises of the principal.
(c) "Contractual employee" includes one employed by a
contractor or subcontractor to perform or complete a job,
work or service pursuant to an arrangement between the
latter and a principal.
(d) "Principal" refers to any employer who puts out or
farms out a job, service or work to a contractor or
subcontractor.
Section 5. Prohibition against labor-only contracting. -
Labor-only contracting is hereby declared prohibited. For
LABORICADIZ 33
this purpose, labor-only contracting shall refer to an
arrangement where the contractor or subcontractor
merely recruits, supplies or places workers to perform a
job, work or service for a principal, and any of the
following elements are present:
(i) The contractor or subcontractor does not have
substantial capital or investment which relates to the job,
work or service to be performed and the employees
recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly
related to the main business of the principal; or
(ii) the contractor does not exercise the right to control
over the performance of the work of the contractual
employee.
The foregoing provisions shall be without prejudice to
the application of Article 248 (C) of the Labor Code, as
amended.
"Substantial capital or investment" refers to capital
stocks and subscribed capitalization in the case of
corporations, tools, equipment, implements, machineries
and work premises, actually and directly used by the
contractor or subcontractor in the performance or
completion of the job, work or service contracted out.
The "right to control" shall refer to the right reserved to
the person for whom the services of the contractual
workers are performed, to determine not only the end to
be achieved, but also the manner and means to be used
in reaching that end.
Under this DO, there is labor-only contracting if there are 3
things:
1) The contactor recruits, supplies or places workers
to perform work for the principal;
2) There is lack of substantial capital; and
3) The contractor has no control over work of the
employee.
What is right of control? It is basically the right to control
over the ends and means of the work. Remember the control
test in determining the existence of an employer-employee
relationship. This is basically the same test.
Section 6. Prohibitions. - Notwithstanding Section 5 of
these Rules, the following are hereby declared prohibited
for being contrary to law or public policy:
(a) Contracting out of a job, work or service when not
done in good faith and not justified by the exigencies of
the business and the same results in the termination of
regular employees and reduction of work hours or
reduction or splitting of the bargaining unit;
(b) Contracting out of work with a "cabo" as defined in
Section 1 (ii), Rule I, Book V of these Rules. "Cabo" refers
to a person or group of persons or to a labor group
which, in the guise of a labor organization, supplies
workers to an employer, with or without any monetary or
other consideration whether in the capacity of an agent
of the employer or as an ostensible independent
contractor;
(c) Taking undue advantage of the economic situation or
lack of bargaining strength of the contractual employee,
or undermining his security of tenure or basic rights, or
circumventing the provisions of regular employment, in
any of the following instances:
(i) In addition to his assigned functions, requiring the
contractual employee to perform functions which are
currently being performed by the regular employees of
the principal or of the contractor or subcontractor;
(ii) Requiring him to sign, as a precondition to
employment or continued employment, an antedated
resignation letter; a blank payroll; a waiver of labor
standards including minimum wages and social or
welfare benefits; or a quitclaim releasing the principal,
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contractor or subcontractor from any liability as to
payment of future claims; and
(iii) Requiring him to sign a contract fixing the period of
employment to a term shorter than the term of the
contract between the principal and the contractor or
subcontractor, unless the latter contract is divisible into
phases for which substantially different skills are
required and this is made known to the employee at the
time of engagement;
(d) Contracting out of a job, work or service through an
in-house agency which refers to a contractor or
subcontractor engaged in the supply of labor which is
owned, managed or controlled by the principal and which
operates solely for the principal;
(e) Contracting out of a job, work or service directly
related to the business or operation of the principal by
reason of a strike or lockout whether actual or imminent;
(f) Contracting out of a job, work or service being
performed by union members when such will interfere
with, restrain or coerce employees in the exercise of their
rights to self organization as provided in Art. 248 (c) of
the Labor Code, as amended.
In a nutshell, although not prohibited as labor-only contracting
under the Labor Code, the following are prohibited:
1) Lack of good faith or the contracting is not justified
by the exigencies of the business;
2) Contacting of work with a cabo, which refers to
persons/group of persons or a labor group, which,
under the guise of being a labor organization,
supplies workers to an employer, with or without
monetary consideration, whether as an agent of the
employer or an ostensible independent contractor;
3) Taking undue advantage of the economic situation
or lack of bargaining strtength of the contractual
employee (Ex. Because of the lack of educational
attainment of the worker, the contractor forces the
worker to work even if he is paid an amount lower
than the minimum wage);
4) Making the contractual worker perform work of
regular employees, on top of his/her work as
contractuals;
5) As a precondition to employment, the worker is
required to sign an antedated resignation letter,
blank payroll, waiver or quitclaim waiving any future
claims;
6) Requiring the worker to sign a contract for a shorter
term than the contract between the principal and
the contractor (the rule is that the period of
employment must be co-terminous with the contract
between the principal and the contractor, except if
the work is clearly divisible.);
7) The contractor is actually the principal (Ex. If the
principal puts up another company, owned by it,
who carries out the contracting for such principal);
8) Contracting out due to a strike or lockout (Sir, said
that under the Labor Code, what is allowed is
employing TEMPORARY workers. Here, what is
prohibited is contracting non-temporary workers,
who will take over the work of those who are on
strike or lockout.);
9) Contracting interferes with the rights of Union
Members.
If you renege on any of the acts, it is a ground for solidary
liability between the principal and the third party contractor.
Section 7. Existence of an employer-employee
relationship. - The contractor or subcontractor shall be
considered the employer of the contractual employee for
purposes of enforcing the provisions of the Labor Code
and other social legislation. The principal, however, shall
be solidarily liable with the contractor in the event of any
violation of any provision of the Labor Code, including
the failure to pay wages.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
The principal shall be deemed the employer of the
contractual employee in any of the following cases as
declared by a competent authority:
(a) where there is labor-only contracting; or
(b) where the contracting arrangement falls within the
prohibitions provided in Section 6 (Prohibitions) hereof.
Thus, where there is labor-only contracting, the principal is
deemed the employer of the contractuals, and thus liable to
them, along with the contractor, for claims due to violations of
labor laws.
Section 8. Rights of Contractual Employees. - Consistent
with Section 7 of these Rules, the contractual employee
shall be entitled to all the rights and privileges due a
regular employee as provided for in the Labor Code, as
amended, to include the following:
(a) Safe and healthful working conditions;
(b) Labor standards such as service incentive leave, rest
days, overtime pay, holiday pay, 13th month pay and
separation pay;
(c) Social security and welfare benefits;
(d) Self-organization, collective bargaining and peaceful
concerted action; and
(e) Security of tenure.
Section 9. Contract between contractor or subcontractor
and contractual employee. - Notwithstanding oral or
written stipulations to the contrary, the contract between
the contractor or subcontractor and the contractual
employee, which shall be in writing, shall include the
following terms and conditions:
(a) The specific description of the job, work or service to
be performed by the contractual employee;
(b) The place of work and terms and conditions of
employment, including a statement of the wage rate
applicable to the individual contractual employee; and
(c) The term or duration of employment, which shall be
coextensive with the contract of the principal and
subcontractor, or with the specific phase for which the
contractual employee is engaged, as the case may be.
The contractor or subcontractor shall inform the
contractual employee of the foregoing terms and
conditions on or before the first day of his employment.
What are required to be included in the contract bet. The
contractor/subcontractor and the employee?
The contract, which shall be in writing, and shall include:
1) The job description of the worker;
2) The place of work and the terms and conditions
thereof;
3) And, the term or duration of the employment;
4) Including the wage rate.
Section 10. Effect of Termination of Contractual
Employment. - In cases of termination of employment
prior to the expiration of the contract between the
principal and the contractor or subcontractor, the right of
the contractual employee to separation pay or other
related benefits shall be governed by the applicable laws
and jurisprudence on termination of employment.
Where the termination results from the expiration of the
contract between the principal and the contractor or
subcontractor, or from the completion of the phase of the
job, work or service for which the contractual employee
is engaged, the latter shall not be entitled to separation
pay. However, this shall be without prejudice to
completion bonuses or other emoluments, including
retirement pay as may be provided by law or in the
contract between the principal and the contractor or
subcontractor.
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If the services of the employee is terminated prior to the end
of the contract with the principal and the contractor, the
employee is entitled to separation pay and other benefits.
If the termination is results form the expiration of the contract
between the principal and the contractor, no separation pay is
to be granted, but the employee is entitled to bonuses, and
retirement pay as provided by law.
Section 11. Registration of Contractors or
Subcontractors. - Consistent with the authority of the
Secretary of Labor and Employment to restrict or prohibit
the contracting out of labor through appropriate
regulations, a registration system to govern contracting
arrangements and to be implemented by the Regional
Offices is hereby established.
The registration of contractors and subcontractors shall
be necessary for purposes of establishing an effective
labor market information and monitoring.
Failure to register shall give rise to the presumption that
the contractor is engaged in labor-only contracting.
As a requirement to be a contractor or subcontractor,
registration with the DOLE is required. And, Failure to
register gives rise to the presumption that the contractor
is engaged in labor-only contracting.
Section 12. Requirements for registration. - A contractor
or subcontractor shall be listed in the registry of
contractors and subcontractors upon completion of an
application form to be provided by the DOLE. The
applicant contractor or subcontractor shall provide in the
application form the following information:
(a) The name and business address of the applicant and
the area or areas where it seeks to operate;
(b) The names and addresses of officers, if the applicant
is a corporation, partnership, cooperative or union;
(c) The nature of the applicant's business and the
industry or industries where the applicant seeks to
operate;
(d) The number of regular workers; the list of clients, if
any; the number of personnel assigned to each client, if
any and the services provided to the client;
(e) The description of the phases of the contract and the
number of employees covered in each phase, where
appropriate; and
(f) A copy of audited financial statements if the applicant
is a corporation, partnership, cooperative or a union, or
copy of the latest ITR if the applicant is a sole
proprietorship.
The application shall be supported by:
(a) A certified copy of a certificate of registration of firm
or business name from the Securities and Exchange
Commission (SEC), Department of Trade and Industry
(DTI), Cooperative Development Authority (CDA), or from
the DOLE if the applicant is a union; and
(b) A certified copy of the license or business permit
issued by the local government unit or units where the
contractor or subcontractor operates.
The application shall be verified and shall include an
undertaking that the contractor or subcontractor shall
abide by all applicable labor laws and regulations.
Section 13. Filing and processing of applications. - The
application and its supporting documents shall be filed in
triplicate in the Regional Offices where the applicant
LABORICADIZ 35
principally operates. No application for registration shall
be accepted unless all the foregoing requirements are
complied with. The contractor or subcontractor shall be
deemed registered upon payment of a registration fee of
P100.00 to the Regional Office.
Where all the supporting documents have been
submitted, the Regional Office shall deny or approve the
application within seven (7) working days after its filing.
Upon registration, the Regional Office shall return one
set of the duly-stamped application documents to the
applicant, retain one set for its file, and transmit the
remaining set to the Bureau of Local Employment. The
Bureau shall devise the necessary forms for the
expeditious processing of all applications for
registration.
Section 14. Duty to produce copy of contract between the
principal and the contractor or subcontractor. - The
principal or the contractor or subcontractor shall be
under an obligation to produce a copy of the contract
between the principal and the contractor in the ordinary
course of inspection. The contractor shall likewise be
under an obligation to produce a copy of the contract of
employment of the contractual worker when directed to
do so by the Regional Director or his authorized
representative.
A copy of the contract between the contractual employee
and the contractor or subcontractor shall be furnished
the certified bargaining agent, if there is any.
Section 15. Annual Reporting of Registered Contractors. -
The contractor or subcontractor shall submit in triplicate
its annual report using a prescribed form to the
appropriate Regional Office not later than the 15th of
January of the following year. The report shall include:
(a) A list of contracts entered with the principal during
the subject reporting period;
(b) The number of workers covered by each contract with
the principal;
(c) A sworn undertaking that the benefits from the Social
Security System (SSS), the Home Development Mutual
Fund (HDMF), PhilHealth, Employees Compensation
Commission (ECC), and remittances to the Bureau of
Internal Revenue (BIR) due its contractual employees
have been made during the subject reporting period.
The Regional Office shall return one set of the duly-
stamped report to the contractor or subcontractor, retain
one set for its file, and transmit the remaining set to the
Bureau of Local Employment within five (5) days from
receipt thereof.
Section 16. Delisting of contractors or subcontractors. -
Subject to due process, the Regional Director shall
cancel the registration of contractors or subcontractors
based on any of the following grounds:
(a) Non-submission of contracts between the principal
and the contractor or subcontractor when required to do
so;
(b) Non-submission of annual report;
(c) Findings through arbitration that the contractor or
subcontractor has engaged in labor-only contracting and
the prohibited activities as provided in Section 6
(Prohibitions) hereof; and
(d) Non-compliance with labor standards and working
conditions.
Section 17. Renewal of registration of contractors or
subcontractors. - All registered contractors or
subcontractors may apply for renewal of registration
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every three years. For this purpose, the Tripartite
Industrial Peace Council (TIPC) as created under
Executive Order No. 49, shall serve as the oversight
committee to verify and monitor the following:
(a) Engaging in allowable contracting activities; and
(b) Compliance with administrative reporting
requirements.
Section 18. Enforcement of Labor Standards and Working
Conditions. - Consistent with Article 128 (Visitorial and
Enforcement Power) of the Labor Code, as amended, the
Regional Director through his duly authorized
representatives, including labor regulation officers shall
have the authority to conduct routine inspection of
establishments engaged in contracting or subcontracting
and shall have access to employer's records and
premises at any time of the day or night whenever work
is being undertaken therein, and the right to copy
therefrom, to question any employee and investigate any
fact, condition or matter which may be necessary to
determine violations or which may aid in the enforcement
of the Labor Code and of any labor law, wage order, or
rules and regulations issued pursuant thereto.
The findings of the duly authorized representative shall
be referred to the Regional Director for appropriate action
as provided for in Article 128, and shall be furnished the
collective bargaining agent, if any.
Based on the visitorial and enforcement power of the
Secretary of Labor and Employment in Article 128 (a), (b),
(c) and (d), the Regional Director shall issue compliance
orders to give effect to the labor standards provisions of
the Labor Code, other labor legislation and these
guidelines.
Sec. 18 in relation to Sec. 128 of the Labor Code: If the
employee suspects that you are a labor-only contractor, the
employee can report the matter directly to the DOLE.
In a case, Jethro security guards were employed in Yakult,
and the petitioner Garcia reported that there were violations
being committed by the agency. The DOLE issued an order
for the agency and the employer to rectify the violations,
which they failed/refused to do. Thus, the Regional Director
issued a compliance order, requiring Yakult and the agency to
pay jointly and severally. This was affirmed by the SC. One of
the issues in the case was w/n it was to be indorsed to the
labor arbiter, as there was evidence that was not considered
in the inspection. The SC said the evidence was considered
during inspection. It also held that the Secretary of labor has
quasi-judicial powers.
But compared with the Bombo Radyo case, the decision was
not very clear. At the very least, the case involved only a
mere statement regarding the quasi-judicial powers of the
Secretary.
Section 19. Solidary liability. - The principal shall be
deemed as the direct employer of the contractual
employees and therefore, solidarily liable with the
contractor or subcontractor for whatever monetary
claims the contractual employees may have against the
former in the case of violations as provided for in
Sections 5 (Labor-Only contracting), 6 (Prohibitions), 8
(Rights of Contractual Employees) and 16 (Delisting) of
these Rules. In addition, the principal shall also be
solidarily liable in case the contract between the principal
and contractor or subcontractor is preterminated for
reasons not attributable to the fault of the contractor or
subcontractor.
Section 20. Supersession. - All rules and regulations
issued by the Secretary of Labor and Employment
inconsistent with the provisions of this Rule are hereby
superseded. Contracting or subcontracting arrangements
in the construction industry, under the licensing
coverage of the PCAB and shall not include shipbuilding
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
and ship repairing works, however, shall continue to be
governed by Department Order No. 19, series of 1993.
Section 21. Effectivity. - This Order shall be effective
fifteen (15) days after completion of its publication in two
(2) newspapers of general circulation.
In the case of Alviado v Procter & Gamble, the Court said:
Labor laws expressly prohibit "labor-only" contracting. To
prevent its circumvention, the Labor Code establishes an
employer-employee relationship between the employer and
the employees of the labor-only contractor. The petitioners
in this case worked as merchandisers of P&G beginning in
the 1980s. They all individually signed employment contracts
with either Promm-Gem or SAPS for periods of more or less
five months at a time. They were assigned at different outlets,
supermarkets and stores where they handled all the products
of P&G. They received their wages from Promm-Gem or
SAPS. SAPS and Promm-Gem imposed disciplinary
measures on erring merchandisers for reasons such as
habitual absenteeism, dishonesty or changing day-off without
prior notice. P&G is principally engaged in the manufacture
and production of different consumer and health products,
which it sells on a wholesale basis to various supermarkets
and distributors. To enhance consumer awareness and
acceptance of the products, P&G entered into contracts with
Promm-Gem and SAPS for the promotion and merchandising
of its products. The petitioners were allegedly dismissed by
Promm-Gem and SAPS, due to alleged habitual absenteeism,
dishonesty and other causes. Thus, the petitioners filed a
complaint with the labor arbiter, which eventually reached the
SC. The court said, that clearly, the law and its implementing
rules allow contracting arrangements for the performance of
specific jobs, works or services. Indeed, it is management
prerogative to farm out any of its activities, regardless of
whether such activity is peripheral or core in nature. However,
in order for such outsourcing to be valid, it must be made to
an independent contractor because the current labor rules
expressly prohibit labor-only contracting.
To emphasize, there is labor-only contracting when the
contractor or sub-contractor merely recruits, supplies or
places workers to perform a job, work or service for a
principal and any of the following elements are present:
i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or service
to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the
principal; or
ii) The contractor does not exercise the right to control over
the performance of the work of the contractual employee.
First, the Court discussed the distinction between labor-only
contracting. Art. 106, then as rhetorical basis, it cited Dept.
Order 18-02. In the Dept. Order, the Court cited Sec. 3, which
provides that when you have job contracting, there is a
trilateral relationship. Then, it cited sec. 5, on the prohibition
against labor-only contracting. Under the Dept. Order, the
word or is used. It speaks only of the agency of supplying
labor, and any of the following elements: supply of services,
and control, capital OR performing activities directly related to
the principals business. As to PromGem, its capital stock was
1 million, paid up capital is about PhP 700,000, with its own
warehouse and office, 3 registered vehicles, and other clients,
supplied workers with relative materials, markers, etc. thus,
several factors were pointed out: authorized capital stock,
warehouse, vehicles, tools provided, and based on such, the
Court held that it is a legitimate contractor. But as to SAPS, it
was not a legitimate job contractor. It only had PhP31,000 as
its capital stock, and is just about one month for the wages of
the employees, and there was no other evidence to prove its
legitimacy. The Court cited the Binoya case, wherein
substantial capitalization was not enough to prove legitimate
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job contracting, as other factors would have to be considered.
The Court ruled that the employer of the merchandisers, is
P&G, and the latter was ordered to reinstate the said
employees and pay all their benefits from the start of their
employment (in the 1980s) until the amounts are fully paid.
nd
On June 6, 2011, the Court denied P&Gs 2 MR. The Court
said that there is no basis for P&G's claim that the Court erred
in not applying the four-fold test, particularly the control
test in determining whether SAPS is a legitimate independent
contractor or a labor-only contractor. he control test is
merely one of the factors to consider. This is clearly deduced
from the above-provision which states that labor-only
contracting exists when any of the two elements is present.
In our March 9, 2010 Decision, it was established that SAPS
has no substantial capitalization and it was performing
merchandising and promotional activities which are directly
related to P&G's business. Since SAPS met one of the
requirements, it was enough basis for us to hold that it is a
labor-only contractor. Consequently, its principal, P&G, is
considered the employer of its employees. This is pursuant to
our ruling in Aklan v. San Miguel Corporation where it was
held that [a] finding that a contractor is a labor-only
contractor, as opposed to permissible job contracting, is
equivalent to declaring that there is an employer-employee
relationship between the principal and the employees of the
supposed contractor, and the labor-only contractor is
considered as a mere agent of the principal, the real
employer.
Neri Case: Provided that substantial capital is sufficient to
prove legitimate job contracting, due to the word or.
Other Cases (Binoya, 224 SCRA 469; Meralco v NLRC, 14
March 2008): Capital is not enough to establish such fact, but
other factors must be taken into account.
In The case of Sasan v NLRC, EPCIB contracted with HI for
the latter to provide the former with janitors and messengers,
and the petitioners in the case, served EPCIB as such. The
petitioners become regular employees of E-PCIBank with
respect to the activities for which they were employed, having
continuously rendered janitorial and messengerial services to
the bank for more than one year; that E-PCIBank had direct
control and supervision over the means and methods by
which they were to perform their jobs; and that their dismissal
by HI was null and void because the latter had no power to do
so since they had become regular employees of E-PCIBank.
The Court held that HI was a legitimate job contractor. It
provided for the differences between labor-only contracting
and legitimate job contracting.
Permissible job contracting or subcontracting refers to an
arrangement whereby a principal agrees to put out or farm out
to a contractor or subcontractor the performance or
completion of a specific job, work or service within a definite
or predetermined period, regardless of whether such job,
work or service is to be performed or completed within or
outside the premises of the principal. A person is considered
engaged in legitimate job contracting or subcontracting if the
following conditions concur:
(a) The contractor or subcontractor carries on a distinct and
independent business and undertakes to perform the job,
work or service on its own account and under its own
responsibility according to its own manner and method, and
free from the control and direction of the principal in all
matters connected with the performance of the work except
as to the results thereof;(b) The contractor or subcontractor
has substantial capital or investment; and(c) The agreement
between the principal and contractor or subcontractor assures
the contractual employees entitlement to all labor and
occupational safety and health standards, free exercise of the
right to self-organization, security of tenure, and social and
welfare benefits.
In contrast, labor-only contracting, a prohibited act, is an
LABORICADIZ 37
arrangement where the contractor or subcontractor merely
recruits, supplies or places workers to perform a job, work or
service for a principal. In labor-only contracting, the following
elements are present:
(a) The contractor or subcontractor does not have
substantial capital or investment to actually perform the job,
work or service under its own account and responsibility; and
(b) The employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are
directly related to the main business of the principal.
It is not enough to show substantial capitalization or
investment in the form of tools, equipment, etc. Other facts
that may be considered include the following: whether or not
the contractor is carrying on an independent business; the
nature and extent of the work; the skill required; the term and
duration of the relationship; the right to assign the
performance of specified pieces of work; the control and
supervision of the work to another; the employer's power with
respect to the hiring, firing and payment of the contractor's
workers; the control of the premises; the duty to supply
premises, tools, appliances, materials and labor; and the
mode and manner or terms of payment. Simply put, the
totality of the facts and the surrounding circumstances of the
case are to be considered. In the case at bar, we find
substantial evidence to support the finding of the NLRC,
affirmed by the Court of Appeals, that HI is a legitimate job
contractor. We take note that HI has been issued by the
Department of Labor and Employment (DOLE) Certificate of
Registration. When the control of the principal is limited
only to the result of the work, independent job
contracting exists.
In Coca-Cola v Agito, Respondents filed before the NLRC two
complaints against petitioner Coca-cola for reinstatement with
backwages, regularization, nonpayment of 13th month pay,
and damages. They allege that they were salesmen of Coca-
cola for years but not regularized and that they were
dismissed without cause and due process. Coca-cola allege
that respondents were employees of Interserve who were
tasked to perform contracted services under a Contract of
Services executed between petitioner and Interserve. Said
Contract is a legitimate job contracting, given that the
Interserve was a bona fide independent contractor. Coca-cola
presented the following pieces of evidence: (1) the Articles of
Incorporation of Interserve; (2) the Certificate of Registration
of Interserve with the Bureau of Internal Revenue; (3) the
Income Tax Return, with Audited Financial Statements, of
Interserve for 2001; and (4) the Certificate of Registration of
Interserve as an independent job contractor, issued by the
Department of Labor and Employment (DOLE). The Court
held Coca-cola liable, as Interserve was not a legitimate job
contractor. The work of respondents, constituting distribution
and sale of Coca-Cola products, is clearly indispensable to
the principal business of petitioner. The repeated re-hiring of
some of the respondents supports this finding. The Contract
between petitioner and Interserve does not even specify the
work or the project that needs to be performed or completed
by the latters employees. The Court cannot make a
reasonable determination if Interserve had substantial capital
or investment to undertake the job it was contracting with
petitioner. Noticeably, petitioner failed to submit evidence to
establish that the service vehicles and equipment of
Interserve were sufficient to carry out its service contract with
petitioner.Interserve also did not exercise the right to control
the performance of the work of respondents. Interserve did
not obligate itself to perform an identifiable job, work, or
service for petitioner, but merely bound itself to provide the
latter with specific types of employees.
There is "labor-only" contracting where the person supplying
workers to an employee does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and
placed by such persons are performing activities which are
directly related to the principal business of such employer. In
such cases, the person or intermediary shall be considered
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merely as an agent of the employer who shall be responsible
to the workers in the same manner and extent as if the latter
were directly employed by him.
Labor-only contracting is an arrangement wherein the
contractor merely acts as an agent in recruiting and supplying
the principal employer with workers for the purpose of
circumventing labor law provisions setting down the rights of
employees. It is not condoned by law.
Labor-only contracting shall refer to an arrangement where
the contractor or subcontractor merely recruits, supplies, or
places workers to perform a job, work or service for a
principal, and any of the following elements are [is] present:
i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work, or service
to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing
activities which are directly related to the main business of the
principal; or
ii) The contractor does not exercise the right to control the
performance of the work of the contractual employee. (Sec
105 IRR)
"Substantial capital or investment" refers to capital stocks and
subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries and work premises,
actually and directly used by the contractor or subcontractor
in the performance or completion of the job, work, or service
contracted out.
The "right to control" shall refer to the right reversed to the
person for whom the services of the contractual workers are
performed, to determine not only the end to be achieved, but
also the manner and means to be used in reaching that end.
The case of Climaco, supra., is in contrast with the case of
Calamba Medical v NLRC, where the hospital was held to be
the employer of the physician respondents, and there was
thus an employer-employee relationship in existence. The
Court used the control test to come up with a decision,
wherein it was found that an employment relationship exists
between a physician and a hospital if the hospital controls
both the means and the details of the process by which the
physician is to accomplish his task. Where a person who
works for another does so more or less at his own pleasure
and is not subject to definite hours or conditions of work, and
is compensated according to the result of his efforts and not
the amount the element of control is absent. The spouses-
doctors maintained specific work-schedules, as determined
by petitioner through its medical director, which consisted of
24-hour shifts totaling forty-eight hours each week and which
were strictly to be observed under pain of administrative
sanctions. That CMC exercised control over spouses-doctors
gains light from the undisputed fact that in the emergency
room, the operating room, or any department or ward for that
matter, spouses-doctors work is monitored through its
nursing supervisors, charge nurses and orderlies. Without the
approval or consent of CMC or its medical director, no
operations can be undertaken in those areas. For control test
to apply, it is not essential for the employer to actually
supervise the performance of duties of the employee, it being
enough that it has the right to wield the power. With respect to
spouses-doctors sharing in some hospital fees, this scheme
does not sever the employment tie between them and CMC
as this merely mirrors additional form or another form of
compensation or incentive similar to what commission-based
employees receive as contemplated in Article 97 (f) of the
Labor Code. The spouses-doctors were in fact made subject
to petitioner-hospitals Code of Ethics, the provisions of which
cover administrative and disciplinary measures on negligence
of duties, personnel conduct and behavior, and offenses
against persons, property and the hospitals interest. More
importantly, the CMC itself provided incontrovertible proof of
the employment status of respondents, namely, the
identification cards it issued them, the payslips and BIR W-2
(now 2316) Forms which reflect their status as employees,
and the classification as salary of their remuneration.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
Moreover, it enrolled respondents in the SSS and Medicare
(Philhealth) program. It bears noting at this juncture that
mandatory coverage under the SSS Law is premised on the
existence of an employer-employee relationship, except in
cases of compulsory coverage of the self-employed. It would
be preposterous for an employer to report certain persons as
employees and pay their SSS premiums as well as their
wages if they are not its employees. They were illegally
dismissed for failure to afford them due process.
Labor-only contracting would give rise to:
(1) the creation of an employer-employee relationship
between the principal and the employees of the contractor or
sub-contractor; and
(2) the solidary liability of the principal and the contractor to
the employees in the event of any violation of the Labor Code.
The joint and several liability of the contractor and the
principal is mandated to assure compliance with the
provisions in the Code including the statutory minimum wage.
The contractor is made liable by virtue of his status as direct
employer. On the other hand, the principal is made liable as
the indirect employer of the contractors employees for the
purposes of paying the employees their wages should the
contractor be unable to pay them. This liability facilitates, if
not, guarantees payment of the workers performance for any
work, task, job and project, thus giving them ample protection
as provided by law. However, if the contractor pays the
employees, it has the right to claim reimbursement from the
principal, who is ultimately liable for the wages. But, prior to
such payment, no right of reimbursement arises. (Jaguar
Security v Sales)
Chapter IV PROHIBITIONS REGARDING WAGES
ARTICLE 112. Non-interference in disposal of wages.
No employer shall limit or otherwise interfere with the
freedom of any employee to dispose of his wages. He
shall not in any manner force, compel, or oblige his
employees to purchase merchandise, commodities or
other property from any other person, or otherwise make
use of any store or services of such employer or any
other person.
ARTICLE 113. Wage deduction. No employer, in his own
behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent
by the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the
insurance;
(b) For union dues, in cases where the right of the worker
or his union to check-off has been recognized by the
employer or authorized in writing by the individual
worker concerned; and
(c) In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor
ARTICLE 114. Deposits for loss or damage. No
employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of
loss of or damage to tools, materials, or equipment
supplied by the employer, except when the employer is
engaged in such trades, occupations or business where
the practice of making deductions or requiring deposits
is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor and Employment in
appropriate rules and regulations.
ARTICLE 115. Limitations. No deduction from the
deposits of an employee for the actual amount of the loss
or damage shall be made unless the employee has been
heard thereon, and his responsibility has been clearly
Starr Weigand
shown.
ARTICLE 116. Withholding of wages and kickbacks
prohibited. - It shall be unlawful for any person, directly
or indirectly, to withhold any amount from the wages of a
worker or induce him to give up any part of his wages by
force, stealth, intimidation, threat or by any other means
whatsoever without the workers consent.
General Rule: An employer cannot unilaterally make any
deduction from the wages of his employees unless he is
authorized by law, or regulations by the Secretary of Labor.
Although there is no specific provision as to W/N an employer
can withhold an employees wages for debts due the
employer, Art. 1706 of the CC allows the employer to do so.
If the employer can deduct from the wages of the employee
for debts due the former, the question that may be asked is:
ow much can such deduction be? The law is silent in this
regard. But, in order to afford the employee an adequate
subsistence for himself and his family, the deduction from his
wages should not exceed 20% of his wages in a week. This is
by analogy based on Sec. 11, Rule VIII, Book III of the
Omnibus Implementing Rules of the Labor Code.
Deducting an amount form the employees salary as
companys share for job procurement is NOT LEGAL as it
is against public policy. The constitutional provisions on
social justice and protection to labor in the declarations of
Principles and State Policies, impose upon the courts the duty
to be ever vigilant in protecting the rights of workers who are
placed in a contractually disadvantaged position and who sign
waivers or provisions contrary to law and public policy.
Notwithstanding an agreement to the contrary, between the
worker and the employer, the agreement for such deduction is
void ab initio being contrary to law and public policy. (Mercury
Drug v Dayao)
In cases of unlawful withholding of wages, the culpable party
may be assessed attorneys fees equivalent to 10% of the
amount of wages recovered and that it shall be unlawful for
any person to demand or accept, in any judicial or
administrative proceedings for the recovery of wages, fees
which exceed 10% of the amount of wages recovered. In the
case of Ortiz v SMC, the attorney prayed that the SC grant
him attys fees based equivalent to those awarded in the
lower court, as compared to the amount which was provided
in the compromise between his clients and the company. The
Court held that the attys fees awarded in the 2 cases pertains
not to the lawyer but to the complainants therein. The lawyer
has neither alleged nor shown that there was an agreement
bet. him and his clients that such award would pertain to him.
What they did agree upon was that the 10% attys fees shall
be deducted from the amount of the gross settlement. A
provision of the compromise, w/c states that the complainants
requested and that SMC has deducted the 10% from the
gross settlement, cannot be taken to mean an agreement to
give the attys fees to the lawyer. This is because the lawyer
was not a party to said documents, and that such amount was
to be deducted from the gross settlements and not the
amounts awarded by NLRC.
An employees obligation arising from non-payment of
stock subscription to the corporation cannot validly be
deducted from the wages and other benefits due the
employee. (Apodaca v NLRC)
Labor Code provisions on wage protection:
1) Prohibition as to deduction from wages without
authorization, except only as authorized by law;
2) Prohibition as to withholding of wages and
kickbacks;
3) Freedom of disposition wages by the employees;
4) Payment of wages in legal tender;
LABORICADIZ 39
 5) Direct payment of wages to employee;
6) Direction as to period of payment of wages; and
7) Direction as to place of payment of wages.
Allowable deductions:
1) Taxes, ie withholding taxes
2) SSS contributions
3) Philhealth contributions
4) Agency fees
5) Union service fees: but there must be written
authority form the employee
6) Deduction from employees wages for debts due
the employer.
Illegal Deposits:
Art. 114 of the Labor Code prohibits requiring employees to
make deposits. It was held in a case that deposits required of
taxi drivers by employers to defray any shortage in their
boundary is covered by such prohibition. The deposits made
were illegal and the taxi driver must be refunded therefore. It
can be deduced from the article that the same provides the
rule on deposits for loss or damage to tools, materials, or
equipment supplied by employer. Clearly, the same does not
apply to nor permit deposits to defray any deficiency which
the taxi drivers may incur int eh remittance of their
boundary.
ARTICLE 117. Deduction to ensure employment. It shall
be unlawful to make any deduction from the wages of any
employee for the benefit of the employer or his
representative or intermediary as consideration of a
promise of employment or retention in employment.
ARTICLE 118. Retaliatory measures. It shall be unlawful
for an employer to refuse to pay or reduce the wages and
benefits, discharge or in any manner discriminate against
any employee who has filed any complaint or instituted
any proceeding under this Title or has testified or is
about to testify in such proceedings.
ARTICLE 119. False reporting. It shall be unlawful for
any person to make any statement, report, or record filed
or kept pursuant to the provisions of this Code knowing
such statement, report or record to be false in any
material respect.
Chapter V WAGE STUDIES, WAGE AGREEMENTS AND
WAGE DETERMINATION
ARTICLE 120. Creation of National Wages and
Productivity Commission. - There is hereby created a
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).
ARTICLE 121. Powers and functions of the Commission.
The Commission shall have the following powers and
functions:
(a) To act as the national consultative and advisory body
to the President of the 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
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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.
The Commission shall be composed of the Secretary of
Labor and Employment as ex-officio chairman, the
Director-General of the National Economic and
Development Authority (NEDA) as ex-officio vice-
chairman, and 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. The Executive Director of the
Commission shall also be a member of the Commission.
The Commission shall be assisted by a Secretariatto 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.
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).
ARTICLE 122. Creation of Regional Tripartite Wages and
Productivity Boards. - There is hereby created Regional
Tripartite Wages and Productivity Boards, hereinafter
referred to as Regional Boards, in all regions, including
autonomous regions as may be established by law. The
Commission shall determine the offices/headquarters of
the respective Regional Boards.
The Regional Boards shall have the following powers and
functions in their respective territorial jurisdictions:
(a) To develop plans, programs and projects relative to
wages, incomes and productivity improvement for their
respective regions;
(b) To determine and fix minimum wage rates applicable
in their regions, provinces or industries therein and to
issue the corresponding wage orders, subject to
guidelines issued by the Commission;
(c) To undertake studies, researches, and surveys
necessary for the attainment of their functions,
objectives and programs, and to collect and compile data
on wages, incomes, productivity and other related
information and periodically disseminate the same;
(d) To coordinate with the other Regional Boards as may
be necessary to attain the policy and intention of this
Code;
(e) To receive, process and act on applications for
exemption from prescribed wage rates as may be
provided by law or any Wage Order; and
(f) To exercise such other powers and functions as may
be necessary to carry out their mandate under this Code.
Implementation of the plans, programs, and projects of
the Regional Boards referred to in the second paragraph,
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
letter (a) of this Article, shall be through the respective
regional offices of the Department of Labor and
Employment within their territorial jurisdiction; Provided,
however, That the Regional Boards shall have technical
supervision over the regional office of the Department of
Labor and Employment with respect to the
implementation of said plans, programs and projects.
Each Regional Board shall be composed of the Regional
Director of the Department of Labor and Employment as
chairman, the Regional Directors of the National
Economic and Development Authority and the
Department of Trade and Industry as vice-chairmen and
two (2) members each from workers and employers
sectors who shall be appointed by the President of the
Philippines, upon the recommendation of the Secretary
of Labor and Employment, to be made on the basis of the
list of nominees submitted by the workers and employers
sectors, respectively, and who shall serve for a term of
five (5) years.
Each Regional Board to be headed by its chairman shall
be assisted by a Secretariat. (As amended by Republic
Act No. 6727, June 9, 1989).
ARTICLE 123. Wage Order. Whenever conditions in the
region so warrant, the Regional Board shall investigate
and study all pertinent facts; and based on the standards
and criteria herein prescribed, shall proceed to determine
whether a Wage Order should be issued. Any such Wage
Order shall take effect after fifteen(15) days from its
complete publication in at least one (1) newspaper of
general circulation in the region.
In the performance of its wage-determining functions, the
Regional Board shall conduct public
hearings/consultations, giving notices to employees and
employers groups, provincial, city and municipal officials
and other interested parties.
Any party aggrieved by the Wage Order issued by the
Regional Board may appeal such order to the
Commission within ten (10) calendar days from the
publication of such order. It shall be mandatory for the
Commission to decide such appeal within sixty (60)
calendar days from the filing thereof.
The filing of the appeal does not stay the order unless the
person appealing such order shall file with the
Commission, an undertaking with a surety or sureties
satisfactory to the Commission for the payment to the
employees affected by the order of the corresponding
increase, in the event such order is affirmed. (As
amended by Republic Act No. 6727, June 9, 1989).
ARTICLE 124. Standards/Criteria for minimum wage
fixing. The regional minimum wages to be established
by the Regional Board shall be as nearly adequate as is
economically feasible to maintain the minimum
standards of living necessary for the health, efficiency
and general well-being of the employees within the
framework of the national economic and social
development program. In the determination of such
regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:
(a) The demand for living wages;
(b) Wage adjustment visvis the consumer price index;
(c) The cost of living and changes or increases therein;
(d) The needs of workers and their families;
(e) The need to induce industries to invest in the
countryside;
(f) Improvements in standards of living;
(g) The prevailing wage levels;
(h) Fair return of the capital invested and capacity to pay
of employers;
(i) Effects on employment generation and family income;
and
(j) The equitable distribution of income and wealth along
the imperatives of economic and social development.
The wages prescribed in accordance with the provisions
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of this Title shall be the standard prevailing minimum
wages in every region. These wages shall include wages
varying with industries, provinces or localities if in the
judgment of the Regional Board, conditions make such
local differentiation proper and necessary to effectuate
the purpose of this Title.
Any person, company, corporation, partnership or any
other entity engaged in business shall file and register
annually with the appropriate Regional Board,
Commission and the National Statistics Office, an
itemized listing of their labor component, specifying the
names of their workers and employees below the
managerial level, including learners, apprentices and
disabled/handicapped workers who were hired under the
terms prescribed in the employment contracts, and their
corresponding salaries and wages.
Where the application of any prescribed wage increase
by virtue of a law or wage order issued by any Regional
Board results in distortions of the wage structure within
an establishment, the employer and the union shall
negotiate to correct the distortions. Any dispute arising
from wage distortions shall be resolved through the
grievance procedure under their collective bargaining
agreement and, if it remains unresolved, through
voluntary arbitration. Unless otherwise agreed by the
parties in writing, such dispute shall be decided by the
voluntary arbitrators within ten (10) calendar days from
the time said dispute was referred to voluntary
arbitration.
In cases where there are no collective agreements or
recognized labor unions, the employers and workers
shall endeavor to correct such distortions. Any dispute
arising therefrom shall be settled through the National
Conciliation and Mediation Board and, if it remains
unresolved after ten (10) calendar days of conciliation,
shall be referred to the appropriate branch of the National
Labor Relations Commission (NLRC). It shall be
mandatory for the NLRC to conduct continuous hearings
and decide the dispute within twenty (20) calendar days
from the time said dispute is submitted for compulsory
arbitration.
The pendency of a dispute arising from a wage distortion
shall not in any way delay the applicability of any
increase in prescribed wage rates pursuant to the
provisions of law or wage order.
As used herein, a wage distortion shall mean a situation
where an increase in prescribed wage rates results in the
elimination or severe contraction of intentional
quantitative differences in wage or salary rates between
and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other
logical bases of differentiation.
All workers paid by result, including those who are paid
on piecework, takay, pakyaw or task basis, shall receive
not less than the prescribed wage rates per eight (8)
hours of work a day, or a proportion thereof for working
less than eight (8) hours.
All recognized learnership and apprenticeship
agreements shall be considered automatically modified
insofar as their wage clauses are concerned to reflect the
prescribed wage rates. (As amended by Republic Act No.
6727, June 9, 1989).
ARTICLE 125. 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).
ARTICLE 126. Prohibition against injunction. No
preliminary or permanent injunction or temporary
restraining order may be issued by any court, tribunal or
other entity against any proceedings before the
Commission or the Regional Boards. (As amended by
LABORICADIZ 41
Republic Act No. 6727, June 9, 1989).
ARTICLE 127. 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).
Wage Distortion
In the case of Prubankers Association v Prudential Bank, the
Court held that there was no wage distortion when the wage
order was implemented by the respondent within one region.
Wage distortion involves 4 elements:
1) An existing hierarchy of position with corresponding
salary rates.
2) A significant change in the salary rate of a lower
pay class without a concomitant increase in the
salary of a higher one.
3) The elimination of the distinction between the 2
levels.
4) The existence of the distortion in the same region of
the country.
In the case, the last element was lacking, as the elimination of
the distinction between ranks of employees occurred, not
within the region where the wage order was implemented, but
between that region and another.
In the case of Metrobank v National Wages and Productivity
Commission, the Court struck down a wage order which was
issued providing for an across the board wage increase. The
RTWPB did not determine or fix the minimum wage rate by
the "floor-wage method" or the "salary-ceiling method" in
issuing the Wage Order. The RTWPB did not set a wage level
nor a range to which a wage adjustment or increase shall be
added. Instead, it granted an across-the-board wage increase
of P15.00 to all employees and workers of Region 2. In doing
so, the RTWPB exceeded its authority by extending the
coverage of the Wage Order to wage earners receiving more
than the prevailing minimum wage rate, without a
denominated salary ceiling. As correctly pointed out by the
OSG, the Wage Order granted additional benefits not
contemplated by R.A. No. 6727.
There are two ways of fixing the minimum wage: the "floor-
wage" method and the "salary-ceiling" method. The "floor-
wage" method involves the fixing of a determinate amount to
be added to the prevailing statutory minimum wage rates. On
the other hand, in the "salary-ceiling" method, the wage
adjustment was to be applied to employees receiving a
certain denominated salary ceiling. In other words, workers
already being paid more than the existing minimum wage (up
to a certain amount stated in the Wage Order) are also to be
given a wage increase. (Ibid.)
Chapter VI ADMINISTRATION AND ENFORCEMENT
ARTICLE 128. Visitorial and enforcement power. - (a) The
Secretary of Labor and Employment or his duly
authorized representatives, including labor regulation
officers, shall have access to employers records and
premises at any time of the day or night whenever work
is being undertaken therein, and the right to copy
therefrom, to question any employee and investigate any
fact, condition or matter which may be necessary to
determine violations or which may aid in the enforcement
of this Code and of any labor law, wage order or rules
and regulations issued pursuant there to.
(b) Notwithstanding the provisions of Articles 129 and
217 of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue
compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based
on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course
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of inspection. The Secretary or his duly authorized
representatives shall issue writs of execution to the
appropriate authority for the enforcement of their orders,
except in cases where the employer contests the findings
of the labor employment and enforcement officer and
raises issues supported by documentary proofs which
were not considered in the course of inspection. (As
amended by Republic Act No. 7730, June 2, 1994).
An order issued by the duly authorized representative of
the Secretary of Labor and Employment under this Article
may be appealed to the latter. In case said order involves
a monetary award, an appeal by the employer may be
perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited
by the Secretary of Labor and Employment in the amount
equivalent to the monetary award in the order appealed
from. (As amended by Republic Act No. 7730, June 2,
1994).
(c) The Secretary of Labor and Employment may likewise
order stoppage of work or suspension of operations of
any unit or department of an establishment when non-
compliance with the law or implementing rules and
regulations poses grave and imminent danger to the
health and safety of workers in the workplace. Within
twenty-four hours, a hearing shall be conducted to
determine whether an order for the stop page of work or
suspension of operations shall be lifted or not. In case
the violation is attributable to the fault of the employer,
he shall pay the employees concerned their salaries or
wages during the period of such stoppage of work or
suspension of operation.
(d) It shall be unlawful for any person or entity to
obstruct, impede, delay or otherwise render ineffective
the orders of the Secretary of Labor and Employment or
his duly authorized representatives issued pursuant to
the authority granted under this Article, and no inferior
court or entity shall issue temporary or permanent
injunction or restraining order or otherwise assume
jurisdiction over any case involving the enforcement
orders issued in accordance with this Article.
(e) Any government employee found guilty of violation of,
or abuse of authority, under this Article shall, after
appropriate administrative investigation, be subject to
summary dismissal from the service.
(f) The Secretary of Labor and Employment may, by
appropriate regulations, require employers to keep and
maintain such employment records as may be necessary
in aid of his visitorial and enforcement powers under this
Code.
Article 128 (b) of the Labor Code, as amended by Republic
Act 7730 states that the visitorial and enforcement power of
the DOLE comes into play only "in cases when the
relationship of employer-employee still exists." It also
underscores the underlying the grant of power to the DOLE
which is "to give effect to the labor standard provision of this
Code and other labor legislation."
The clause "in cases where the relationship of employer-
employee still exists" signifies that the employer-employee
relationship must have existed even before the emergence of
the controversy. Necessarily, the DOLEs power does not
apply in two instances, namely: (a) where the employer-
employee relationship has ceased; and (b) where no such
relationship has ever existed.
The first situation when it can be ascertained that employer-
employee relationship no longer exists, the case shall
immediately be endorsed by the Regional Director to NLRC
because it is the NLRC which has jurisdiction in view of the
termination of the employer-employee relationship. The same
procedure has to be followed in the second situation since it is
the NLRC that has jurisdiction in view of the absence of
employer-employee relationship between the evidentiary
parties from the start.
Clearly the law accords a prerogative to the NLRC over the
claim when the employer-employee relationship has
terminated or such relationship has not arisen at all. The
reason is obvious. In the second situation especially, the
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
existence of an employer-employee relationship is a matter
which is not easily determinable from an ordinary inspection
because the elements of such a relationship are not verifiable
from a mere ocular examination. The intricacies and
implications of an employer-employee relationship demand
that the level of scrutiny should be far above the cursory and
the mechanical. More often than not, the question of
employer-employee relationship becomes a battle of
evidence, the determination of which should be
comprehensive and intensive and therefore best left to the
specialized quasi-judicial body that is the NLRC. It can be
assumed that the DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of
the existence of an employer-employee relationship. Such
prerogatival determination, however, cannot be coextensive
with the visitorial and enforcement power itself. Indeed, such
determination is merely preliminary, incidental and collateral
to the DOLEs primary function of enforcing labor standards
provisions. The determination of the existence of employer-
employee relationship is still primarily lodged with the NLRC.
This is the meaning of the clause "in cases where the
relationship of employer-employee still exists" in Art. 128 (b).
The existence of an employer-employee relationship is a
statutory prerequisite to and a limitation on the power of the
Secretary of Labor, one which the legislative branch is entitled
to impose. This is to eliminate the prospect of competing
conclusions of the Secretary of Labor and the NLRC, on a
matter fraught with questions of fact and law, which is best
resolved by the quasi-judicial body, which is the NRLC, rather
than an administrative official of the executive branch of the
government.
This decision should not be considered as placing an undue
burden on the Secretary of Labor in the exercise of visitorial
and enforcement powers. A mere assertion of absence of
employer-employee relationship does not deprive the DOLE
of jurisdiction over the claim under Article 128 of the Labor
Code. At least a prima facie showing of such absence of
relationship is needed to preclude the DOLE from the
exercise of its power. (Bombo Radyo v Sec. of Labor)
ARTICLE 129. Recovery of wages, simple money claims
and other benefits. Upon complaint of any interested
party, the Regional Director of the Department of Labor
and Employment or any of the duly authorized hearing
officers of the Department is empowered, through
summary proceeding and after due notice, to hear and
decide any matter involving the recovery of wages and
other monetary claims and benefits, including legal
interest, owing to an employee or person employed in
domestic or household service or househelper under this
Code, arising from employer-employee relations:
Provided, That such complaint does not include a claim
for reinstatement: Provided further, That the aggregate
money claims of each employee or househelper does not
exceed Five thousand pesos (P5,000.00). The Regional
Director or hearing officer shall decide or resolve the
complaint within thirty (30) calendar days from the date
of the filing of the same. Any sum thus recovered on
behalf of any employee or househelper pursuant to this
Article shall be held in a special deposit account by, and
shall be paid on order of, the Secretary of Labor and
Employment or the Regional Director directly to the
employee or househelper concerned. Any such sum not
paid to the employee or househelper because he cannot
be located after diligent and reasonable effort to locate
him within a period of three (3) years, shall be held as a
special fund of the Department of Labor and Employment
to be used exclusively for the amelioration and benefit of
workers.
Any decision or resolution of the Regional Director or
hearing officer pursuant to this provision may be
appealed on the same grounds provided in Article 223 of
this Code, within five (5) calendar days from receipt of a
copy of said decision or resolution, to the National Labor
Relations Commission which shall resolve the appeal
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within ten (10) calendar days from the submission of the
last pleading required or allowed under its rules.
The Secretary of Labor and Employment or his duly
authorized representative may supervise the payment of
unpaid wages and other monetary claims and benefits,
including legal interest, found owing to any employee or
househelper under this Code. (As amended by Section 2,
Republic Act No. 6715, March 21, 1989).
While it is true that under Articles 129 and 217 of the Labor
Code, the Labor Arbiter has jurisdiction to hear and decide
cases where the aggregate money claims of each employee
exceeds P5,000.00, said provisions of law do not contemplate
nor cover the visitorial and enforcement powers of the
Secretary of Labor or his duly authorized representatives,
under art. 128. Art. 128 retains and strengthens the power of
the Secretary of Labor or his duly authorized representatives
to issue compliance orders to give effect to the labor
standards provisions of said Code and other labor legislation
based on the findings of labor employment and enforcement
officer or industrial safety engineer made in the course of
inspection.
In order to divest the Regional Director or his
representatives of jurisdiction, the following elements
must be present:
(a) that the employer contests the findings of the labor
regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to
examine evidentiary matters; and
(c) that such matters are not verifiable in the normal
course of inspection.
The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after
receipt of the notice of inspection results. And in the case of
Ex-Bataan Veteran Security v Sec. of Labor, the petitioner did
not contest the findings of the Labor Regulations Officer.
Further the pieces of documentary evidence that it presented
to the court are verifiable in the normal course of inspection
because all employment records are maintained in the
workplace.
In cases where the complaint for violation of labor standard
laws preceded the termination of the employee and the filing
of the illegal dismissal case, it would not be in consonance
with justice to charge the complainants with engaging in
forum shopping when the remedy available to them at the
time their causes of action arose was to file separate cases
before different fora. (Iloilo La Filipina v CA)
Title III WORKING CONDITIONS FOR SPECIAL GROUPS
OF EMPLOYEES
Chapter I EMPLOYMENT OF WOMEN
ARTICLE 130. Nightwork prohibition. No woman,
regardless of age, shall be employed or permitted or
suffered to work, with or without compensation:
(a) In any industrial undertaking or branch thereof
between ten oclock at night and six oclock in the
morning of the following day; or
(b) In any commercial or non-industrial undertaking or
branch thereof, other than agricultural, between midnight
and six oclock in the morning of the following day; or
(c) In any agricultural undertaking at nighttime unless
she is given a period of rest of not less than nine (9)
consecutive hours.
ARTICLE 131. Exceptions. - The prohibitions prescribed
by the preceding Article shall not apply in any of the
following cases:
(a) In cases of actual or impending emergencies caused
by serious accident, fire, flood, typhoon, earthquake,
epidemic or other disasters or calamity, to prevent loss
of life or property, or in cases of force majeure or
imminent danger to public safety;
LABORICADIZ 43
(b) In case of urgent work to be performed on
machineries, equipment or installation, to avoid serious
loss whichthe employer would otherwise suffer;
(c) Where the work is necessary to prevent serious loss
of perishable goods;
(d) Where the woman employee holds a responsible
position of managerial or technical nature, or where the
woman employee has been engaged to provide health
and welfare services;
(e) Where the nature of the work requires the manual skill
and dexterity of women workers and the same cannot be
performed with equal efficiency by male workers;
(f) Where the women employees are immediate members
of the family operating the establishment or undertaking;
and
(g) Under other analogous cases exempted by the
Secretary of Labor and Employment in appropriate
regulations.
The 2 previous articles have been amended by RA 10151: An
Act allowing the employment of night workers.
All persons are now allowed to work at night, except those in
the agricultural, stock raising, fishing, maritime transport and
inland navigation industries, during a period of not less than 7
consecutive hours, form 12mn to 6am the next day.
Women Night workers are given additional measures to
ensure their safety ad provide an alternative to night work.
REPUBLIC ACT NO. 10151
AN ACT ALLOWING THE EMPLOYMENT OF NIGHT
WORKERS, THEREBY REPEALING ARTICLES 130 AND
131 OF PRESIDENTIAL DECREE NUMBER FOUR
HUNDRED FORTY-TWO, AS AMENDED, OTHERWISE
KNOWN AS THE LABOR CODE OF THE PHILIPPINES
Be it enacted by the Senate and House of Representatives of
the Philippines in Congress assembled:
SECTION 1. Article 130 of the Labor Code is hereby
repealed.
SEC. 2. Article 131 of the Labor Code is hereby repealed.
SEC. 3. The subsequent articles in Boot Three, Title III,
Chapter I to Chapter IV of Presidential Decree No. 442 are
hereby renumbered accordingly.
SEC. 4. A new chapter is hereby inserted after Book Three,
Title III of Presidential Decree No. 442, to read as follows:
Chapter V
Employment of Night Workers
Art. 154. Coverage. This chapter shall apply to all persons,
who shall be employed or permitted or suffered to work at
night, except those employed in agriculture, stock raising,
fishing, maritime transport and inland navigation, during a
period of not less than seven (7) consecutive hours, including
the interval from midnight to five oclock 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 a 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.
Art. 155. Health Assessment, At their request, workers
shall have the right to undergo a health assessment without
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charge and to receive advice on how to reduce or avoid
health problems associated with their work:
(a) Before taking up an assignment as a night worker;
(b) At regular intervals during such an assignment; and
(c) If they experience health problems during such an
assignment which are not caused by factors other than the
performance of night work.
With the exception of a finding of unfitness for night work, the
findings of such assessments shall not be transmitted to
others without the workers consent and shall not be used to
their detriment.
Art. 156. Mandatory Facilities. Suitable first-aid facilities
shall be made available for workers performing night work,
including arrangements where such workers, where
necessary, can be taken immediately to a place for
appropriate treatment. The employers are likewise required to
provide safe and healthful working conditions and adequate
or reasonable facilities such as 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.
Art. 157. Transfer. Night workers who are certified as unfit
for night work, due to health reasons, shall be transferred,
whenever practicable, to a similar job for which they are fit to
work.
If such transfer to a similar job is not practicable, these
workers shall be granted the same benefits as other workers
who are unable to work, or to secure employment during such
period.
A night worker certified as temporarily unfit for night work
shall be given the same protection against dismissal or notice
of dismissal as other workers who are prevented from working
for reasons of health.
Art. 158. Women Night Workers. 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:
(a) Before and after childbirth, for a period of at least sixteen
(16) weeks, which shall be divided between the time before
and after childbirth;
(b) 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:
(1) During pregnancy;
(2) During a specified time beyond the period, after childbirth
is fixed pursuant to subparagraph (a) above, the length of
which shall be determined by the DOLE after consulting the
labor organizations and employers.
During the periods referred to in this article:
(i) A woman worker shall not be dismissed or given notice of
dismissal, except for just or authorised causes provided for in
this Code that are not connected with pregnancy, childbirth
and childcare responsibilities.
(ii) A woman worker shall not lose the benefits regarding her
status, seniority, and access to promotion which may attach
to her regular night work position.
Pregnant women and nursing mothers may he allowed to
work at night only if a competent physician, other than the
company physician, shall certify their fitness to render night
work, and specify, in the ease of pregnant employees, the
period of the pregnancy that they can safely work.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.

The measures referred to in this article may include transfer
to day work where this is possible, the provision of social
security benefits or an extension of maternity leave.
The provisions of this article shall not have the effect of
reducing the protection and benefits connected with maternity
leave under existing laws.
Art. 159. Compensation. The compensation for night
workers in the form of working time, pay or similar benefits
shall recognize the exceptional nature of night work.
Art. 160. Social Services.Appropriate social services shall
be provided for night workers and, where necessary, for
workers performing night work.
Art. 161. Night Work Schedules. Before introducing work
schedules requiring the services of night workers, the
employer shall consult the workers representatives/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.
SEC. 5. The subsequent articles starting from Book Four,
Title I, Chapter I of Presidential Decree No. 442 are hereby
renumbered accordingly.
SEC. 6. Application. The measures referred to in this
chapter shall be applied not later than six (G) months from the
effectivity of this Act.
SEC. 7. Guidelines. The DOLE shah promulgate
appropriate regulations in addition to existing ones to ensure
protection, safety and welfare of night workers.
SEC. 8. Penalties. Any violation of this Act, and the rules
and regulations issued pursuant hereof shall be punished with
a fine of not less than Thirty thousand pesos (P30,000.00) nor
more than Fifty thousand pesos (P50,000.00) or
imprisonment of not less than six (6) months, or both, at the
discretion of the court. If the offense is committed by a
corporation, trust, firm, partnership or association, or other
entity, the penalty shall be imposed upon the guilty officer or
officers of such corporation, trust, firm, partnership or
association, or entity.
SEC. 9. Separability Clause. If any portion of this Act is
declared unconstitutional, the same shall not affect the validity
and effectivity of the other provisions not affected thereby.
SEC. 10. Repealing Clause. All laws, acts, decrees,
executive orders, rules and regulations or other issuances or
parts thereof, which are inconsistent with this Act, are hereby
modified and repealed.
SEC. 11 Effectivity Clause. This Act shall take effect after
fifteen (15) days following its publication in two (2) national
newspapers of general circulation.
Constitutional provisions protecting women:
Art. II, Sec. 14: recognizes the role of women in nation-
building and commands the State to ensure, at all times, the
fundamental equality before the law of women and men.
Art. XIII, Sec. 3: requires the State to afford full protection to
labor and to promote the full employment and equality of
employment opportunities for all, including an assurance of
entitlement to tenurial security of all workers.
Art. XIII, Sec. 14: mandates that the State shall protect
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working women through provisions for opportunities that
would enable them to reach their full potential.
Labor Code provisions protecting women:
Art. 132: ensures the right of women to be provided with
facilities and standards which the Sec. of labor may establish
to ensure their health and safety.
Art. 138: ensures that women employed in nightclubs, cocktail
lounges, massage clinics, bars or other similar establishments
shall be considered an employee.
Art. 135: recognizes a womans right against discrimination
with respect to terms and conditions of employment on
account simply of sex.
Art. 136: explicitly prohibits discrimination merely by reason of
the marriage of a female employee.
Sex-plus discrimination: Under American jurisprudence, job
requirements which establish employer preference or
condition relating to the marital status of an employee are
categorized as sex-plus discrimination where it is on one
sex and not on the other.
Failure of an employee to formally inform the employer of her
pregnancy cannot be considered as grave misconduct directly
connected to her work as to constitute just cause for
termination of employment.
ARTICLE 132. Facilities for women. The Secretary of
Labor and Employment shall establish standards that will
ensure the safety and health of women employees. In
appropriate cases, he shall, by regulations, require any
employer to:
(a) Provide seats proper for women and permit them to
use such seats when they are free from work and during
working hours, provided they can perform their duties in
this position without detriment to efficiency;
(b) To establish separate toilet rooms and lavatories for
men and women and provide at least a dressing room for
women;
(c) To establish a nursery in a workplace for the benefit of
the women employees therein; and
(d) To determine appropriate minimum age and other
standards for retirement or termination in special
occupations such as those of flight attendants and the
like.
ARTICLE 133. Maternity leave benefits. - (a) Every
employer shall grant to any pregnant woman employee
who has rendered an aggregate service of at least six (6)
months for the last twelve (12) months, maternity leave of
at least two (2) weeks prior to the expected date of
delivery and another four (4) weeks after normal delivery
or abortion with full pay based on her regular or average
weekly wages. The employer may require from any
woman employee applying for maternity leave the
production of a medical certificate stating that delivery
will probably take place within two weeks.
(b) The maternity leave shall be extended without pay on
account of illness medically certified to arise out of the
pregnancy, delivery, abortion or miscarriage, which
renders the woman unfit for work, unless she has earned
unused leave credits from which such extended leave
may be charged.
(c) The maternity leave provided in this Article shall be
paid by the employer only for the first four (4) deliveries
by a woman employee after the effectivity of this Code.
Accreditation of leave benefits: Where the pregnant
woman employee fails to avail of the 2-weeks pre-delivery
leave, or any portion thereof, the same shall be added to her
post-delivery leave with pay.
Payment of extended maternity leave: When so requested
LABORICADIZ 45
by the woman employee, the extension of her maternity leave
shall be paid by the employer from her unused vacation and
sick leave credits, where the extended leave is due to illness
medically certified to arise out of her pregnancy, delivery,
complete abortion or miscarriage which renders her unfit for
work.
ARTICLE 134. Family planning services; incentives for
family planning. - (a) Establishments which are required
by law to maintain a clinic or infirmary shall provide free
family planning services to their employees which shall
include, but not be limited to, the application or use of
contraceptive pills and intrauterine devices.
(b) In coordination with other agencies of the government
engaged in the promotion of family planning, the
Department of Labor and Employment shall develop and
prescribe incentive bonus schemes to encourage family
planning among female workers in any establishment or
enterprise.
ARTICLE 135. Discrimination prohibited. It shall be
unlawful for any employer to discriminate against any
woman employee with respect to terms and conditions of
employment solely on account of her sex.
The following are acts of discrimination:
(a) Payment of a lesser compensation, including wage,
salary or other form of remuneration and fringe benefits,
to a female employees as against a male employee, for
work of equal value; and
(b) Favoring a male employee over a female employee
with respect to promotion, training opportunities, study
and scholarship grants solely on account of their sexes.
Criminal liability for the willful commission of any
unlawful act as provided in this Article or any violation of
the rules and regulations issued pursuant to Section 2
hereof shall be penalized as provided in Articles 288 and
289 of this Code: Provided, That the institution of any
criminal action under this provision shall not bar the
aggrieved employee from filing an entirely separate and
distinct action for money claims, which may include
claims for damages and other affirmative reliefs. The
actions hereby authorized shall proceed independently of
each other. (As amended by Republic Act No. 6725, May
12, 1989).
ARTICLE 136. Stipulation against marriage. It shall be
unlawful for an employer to require as a condition of
employment or continuation of employment that a
woman employee shall not get married, or to stipulate
expressly or tacitly that upon getting married, a woman
employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise
prejudice a woman employee merely by reason of her
marriage.
The Court in the case of Star Paper v Simbol, ruled that the
policy of the petitioner which prohibited marriage between its
employees was void. There was no reasonable business
necessity which would justify such a policy. In order to justify
a no-spouse policy, the company must be able to show a
reasonable business necessity. This the company failed to
do, as there was no showing that the employees would be
less efficient if they married each other.
In contrast, the Court in Duncan v Glaxo, upheld the company
policy of the petitioner due to the existence of a reasonable
business necessity. The policy involved a prohibition to marry
an employee of a company which was its competitor. There
was no absolute prohibition, as the marriage only lead to the
transfer of the petitioner to another locality, and there was
obviously a reasonable business purpose in prohibiting
marriage of employees with employees of competitors, as the
company had the right to keep its business secrets and other
information to itself. The marriage would obviously lead to
conflict of interest which would detrimental to the said
company.
Starr Weigand
ARTICLE 137. Prohibited acts. (a) It shall be unlawful
for any employer:
(1) To deny any woman employee the benefits provided
for in this Chapter or to discharge any woman employed
by him for the purpose of preventing her from enjoying
any of the benefits provided under this Code.
(2) To discharge such woman on account of her
pregnancy, or while on leave or in confinement due to her
pregnancy;
(3) To discharge or refuse the admission of such woman
upon returning to her work for fear that she may again be
pregnant.
ARTICLE 138. Classification of certain women workers .
Any woman who is permitted or suffered to work, with or
without compensation, in any night club, cocktail lounge,
massage clinic, bar or similar establishments under the
effective control or supervision of the employer for a
substantial period of time as determined by the Secretary
of Labor and Employment, shall be considered as an
employee of such establishment for purposes of labor
and social legislation.
Sexual Harassment Law
SECTION 3. Work, Education or Training -
Related, Sexual Harassment Defined. - Work,
education or training-related sexual harassment
is committed by an employer, employee,
manager, supervisor, agent of the employer,
teacher, instructor, professor, coach, trainor, or
any other person who, having authority,
influence or moral ascendancy over another in a
work or training or education environment,
demands, requests or otherwise requires any
sexual favor from the other, regardless of
whether the demand, request or requirement for
submission is accepted by the object of said Act.
(a) In a work-related or employment
environment, sexual harassment is committed
when:
(1) The sexual favor is made as a condition
in the hiring or in the employment, re-
employment or continued employment of said
individual, or in granting said individual favorable
compensation, terms of conditions, promotions,
or privileges; or the refusal to grant the sexual
favor results in limiting, segregating or
classifying the employee which in any way
would discriminate, deprive ordiminish
employment opportunities or otherwise
adversely affect said employee;
(2) The above acts would impair the
employee's rights or privileges under existing
labor laws; or
(3) The above acts would result in an
intimidating, hostile, or offensive environment
for the employee.
(b) In an education or training environment,
sexual harassment is committed:
(1) Against one who is under the care,
custody or supervision of the offender;
(2) Against one whose education, training,
apprenticeship or tutorship is entrusted to the
offender;
(3) When the sexual favor is made a condition
to the giving of a passing grade, or the granting
of honors and scholarships, or the payment of a
stipend, allowance or other benefits, privileges,
or consideration; or
(4) When the sexual advances result in an
intimidating, hostile or offensive environment for
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
 the student, trainee or apprentice.
Any person who directs or induces another
to commit any act of sexual harassment as
herein defined, or who cooperates in the
commission thereof by another without which it
would not have been committed, shall also be
held liable under this Act.
This law was taken from the US and covers 2 acts:
1) Request for favors in exchange for something
2) Hostile type of environment (but no request is
made)
- it is not required that the victim gives into the
request.
- The employer is also liable if it fails to act on a
report on harassment: its liability is joint and
several with the offender.
Remedies:
1) Victime may file a criminal case
2) Victim may file a separate and independent civil
case for (moral) damages
3) Report to the employer, who shall investigate and
provide for the appropriate penalty/sanction.
Chapter II EMPLOYMENT OF MINORS
(RA 9231 on minors, attached as annex B)
ARTICLE 139. Minimum employable age. (a) No child
below fifteen (15) years of age shall be employed, except
when he works directly under the sole responsibility of
his parents or guardian, and his employment does not in
any way interfere with his schooling.
(b) Any person between fifteen (15) and eighteen (18)
years of age may be employed for such number of hours
and such periods of the day as determined by the
Secretary of Labor and Employment in appropriate
regulations.
(c) The foregoing provisions shall in no case allow the
employment of a person below eighteen (18) years of age
in an undertaking which is hazardous or deleterious in
nature as determined by the Secretary of Labor and
Employment.
ARTICLE 140. Prohibition against child discrimination. -
No employer shall discriminate against any person in
respect to terms and conditions of employment on
account of his age.
The prohibitions of the Labor Code on the employment of
minors have been superceded by Sec. 12, Art. VIII of RA
7610, known as the Special Protection of Children Against
Child Abuse, Exploitation and Discrimination Act, as amended
by RA 7658.
RA 7610 and RA 7658 dealt only with minors below 15 years
of age. These laws did not cover minors who were 15, 16,
and 17 years of age. Also, unless the work was hazardous or
deleterious in nature, the employers were free to hire minors
who were 15 but below 18 years of age, and make them work
under terms and conditions of employment applicable to
adults.
On Dec. 19, 2003, RA 9231 was passed expanding the
special protection given to minors under 15 years of age to
include those who are 15, 16, and 17 years of age who, after
all, are still minors under the protection of the Family Code.
Under the law, Child shall apply to all persons under 18 years
of age.
Working hours of a child are regulated by the law as follows:
1) A child below 15 may be allowed to work for not
more than 20 hours a week, provided, that the
Starr Weigand
work shall not be more that 4 hours at any given
day.
2) A child 15 but below 18 shall not be allowed to
work for more than 8 hours a day and in no case
beyond 40 hours a week.
3) No child below 18 shall be allowed to work
between 8:00 pm and 6:00 am the next day and
no child 15 but below 18 shall be allowed to work
between 10:00pm and 6:00am the following day.
Employment of child in public entertainment: A childs
employment or participation in public entertainment or
information through cinema, theater, radio or television or
other forms of media is allowed. Provided, that the
employment is concluded by the childs parents or legal
guardian, with the express agreement of the child concerned,
if possible, and the approval of the DOLE. Provided further,
that the following requirements in all instances are strictly
complied with:
a) The employer shall ensure the protection, health,
safety, morals and normal development of the child.
b) The employer shall institute measure to prevent the
childs exploitation or discrimination taking into
account the system and level of remuneration and
the duration and arrangement of working time. And,
c) The employer shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing program for
training and skills acquisition of the child.
In the said cases where any such child may be employed, the
employer shall first secure, before engaging such child, a
work permit from the DOLE which shall ensure observance of
the above requirements.
Prohibition against worst forms of child labor: No child
shall be engaged in the worst forms of child labor. The
phrase, worst forms of child labor shall refer to any of the
following:
1) All forms of slavery, or practices similar thereto;
2) Prostitution, pornography, etc.;
3) Illegal or illicit activities, including production and
trafficking of drugs and volatile substances; or
4) Work, which by its nature or the circumstances in
which it is carried out, is hazardous or likely to be
harmful to the health, safety or morals of children,
such that it:
- debases, degrades or demeans the intrinsic
worth and dignity of a child as a human being;
or
- exposes the child to physical, emotional or
sexual abuse, or is found to be highly stressful
psychologically or may prejudice morals; or
- is performed underground, underwater or at
dangerous heights; or
- involves the use of dangerous machinery,
equipment, and tools such as power-driven or
explosive power-actuated tools; or
- exposes the child to physical danger such as,
but not limited to the dangerous feats of
balancing, physical strength, or contortion, or
which requires the manual transport or heavy
loads; or
- is performed in an unhealthy environment,
exposing the child to hazardous working
conditions, elements, substances, co-agents
or processes involving ionizing, radiation, fire,
flammable substances, noxious components
and the like, or to extreme temperature, noise
levels, or vibrations; or
- is performed under particularly difficult
conditions; or
- exposes the child to biological agents such as
bacteria, fungi, viruses, protozoans,
nematodes and other parasites; or
- involves the manufacture or handling of
LABORICADIZ 47
 explosives and other pyrotechnic products.
Prohibition on the employment of children in certain
advertisements: No child shall be employed as a model in
any advertisement directly or indirectly, promoting alcoholic
beverages, intoxicating drinks, tobacco, and its by-products,
gambling or any form of violence of pornography.
Chapter III EMPLOYMENT OF HOUSEHELPERS
ARTICLE 141. Coverage. - This Chapter shall apply to all
persons rendering services in households for
compensation.
Domestic or household service shall mean service in
the employers home which is usually necessary or
desirable for the maintenance and enjoyment thereof and
includes ministering to the personal comfort and
convenience of the members of the employers
household, including services of family drivers.
ARTICLE 142. Contract of domestic service. - The original
contract of domestic service shall not last for more than
two (2) years but it may be renewed for such periods as
may be agreed upon by the parties.
ARTICLE 143. Minimum wage. (a) Househelpers shall
be paid the following minimum wage rates:
(1) Eight hundred pesos (P800.00) a month for
househelpers in Manila, Quezon, Pasay, and Caloocan
cities and municipalities of Makati, San Juan,
Mandaluyong, Muntinlupa, Navotas, Malabon, Paraaque,
Las Pias, Pasig, Marikina, Valenzuela, Taguig and Pateros
in Metro Manila and in highly urbanized cities;
(2) Six hundred fifty pesos (P650.00) a month for those in
other chartered cities and first-class municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for those
in other municipalities.
Provided, That the employers shall review the
employment contracts of their househelpers every three
(3) years with the end in view of improving the terms and
conditions thereof.
Provided, further, That those househelpers who are
receiving at least One thousand pesos (P1,000.00) shall
be covered by the Social Security System (SSS) and be
entitled to all the benefits provided thereunder. (As
amended by Republic Act No. 7655, August 19, 1993).
ARTICLE 144. Minimum cash wage. The minimum wage
rates prescribed under this Chapter shall be the basic
cash wages which shall be paid to the househelpers in
addition to lodging, food and medical attendance.
ARTICLE 145. Assignment to non-household work. No
househelper shall be assigned to work in a commercial,
industrial or agricultural enterprise at a wage or salary
rate lower than that provided for agricultural or non-
agricultural workers as prescribed herein.
ARTICLE 146. Opportunity for education. If the
househelper is under the age of eighteen (18) years, the
employer shall give him or her an opportunity for at least
elementary education. The cost of education shall be part
of the househelpers compensation, unless there is a
stipulation to the contrary.
ARTICLE 147. Treatment of house helpers. The
employer shall treat the house helper in a just and
humane manner. In no case shall physical violence be
used upon the house helper.
ARTICLE 148. Board, lodging, and medical attendance.
The employer shall furnish the house helper, free of
charge, suitable and sanitary living quarters as well as
adequate food and medical attendance.
ARTICLE 149. Indemnity for unjust termination of
services. If the period of household service is fixed,
Starr Weigand
neither the employer nor the house helper may terminate
the contract before the expiration of the term, except for
a just cause. If the house helper is unjustly dismissed, he
or she shall be paid the compensation already earned
plus that for fifteen (15) days by way of indemnity.
If the house helper leaves without justifiable reason, he
or she shall forfeit any unpaid salary due him or her not
exceeding fifteen (15) days.
ARTICLE 150. Service of termination notice. If the
duration of the household service is not determined
either in stipulation or by the nature of the service, the
employer or the house helper may give notice to put an
end to the relationship five (5) days before the intended
termination of the service.
ARTICLE 151. Employment certification. Upon the
severance of the household service relation, the
employer shall give the househelper a written statement
of the nature and duration of the service and his or her
efficiency and conduct as househelper.
ARTICLE 152. Employment record. The employer may
keep such records as he may deem necessary to reflect
the actual terms and conditions of employment of his
househelper, which the latter shall authenticate by
signature or thumbmark upon request of the employer.
The provisions of the Labor Code on househelpers, should be
read in conjunction with Arts. 1689 to 1699 of the Civil Code:
CHAPTER 3 - WORK AND LABOR
SECTION 1. - Household Service (n)
Art. 1689. Household service shall always be
reasonably compensated. Any stipulation that
household service is without compensation shall
be void. Such compensation shall be in addition
to the house helper's lodging, food, and medical
attendance.
Art. 1690. The head of the family shall furnish,
free of charge, to the house helper, suitable and
sanitary quarters as well as adequate food and
medical attendance.
Art. 1691. If the house helper is under the age of
eighteen years, the head of the family shall give
an opportunity to the house helper for at least
elementary education. The cost of such education
shall be a part of the house helper's
compensation, unless there is a stipulation to the
contrary.
Art. 1692. No contract for household service shall
last for more than two years. However, such
contract may be renewed from year to year.
Art. 1693. The house helper's clothes shall be
subject to stipulation. However, any contract for
household service shall be void if thereby the
house helper cannot afford to acquire suitable
clothing.
Art. 1694. The head of the family shall treat the
house helper in a just and humane manner. In no
case shall physical violence be used upon the
house helper.
Art. 1695. House helper shall not be required to
work more than ten hours a day. Every house
helper shall be allowed four days' vacation each
month, with pay.
Art. 1696. In case of death of the house helper, the
head of the family shall bear the funeral expenses
if the house helper has no relatives in the place
where the head of the family lives, with sufficient
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
 means therefor.
Art. 1697. If the period for household service is
fixed neither the head of the family nor the house
helper may terminate the contract before the
expiration of the term, except for a just cause. If
the house helper is unjustly dismissed, he shall
be paid the compensation already earned plus
that for fifteen days by way of indemnity. If the
house helper leaves without justifiable reason, he
shall forfeit any salary due him and unpaid, for
not exceeding fifteen days.
Art. 1698. If the duration of the household service
is not determined either by stipulation or by the
nature of the service, the head of the family or the
house helper may give notice to put an end to the
service relation, according to the following rules:
(1) If the compensation is paid by the day, notice
may be given on any day that the service shall
end at the close of the following day;
(2) If the compensation is paid by the week, notice
may be given, at the latest on the first business
day of the week, that the service shall be
terminated at the end of the seventh day from the
beginning of the week;
(3) If the compensation is paid by the month,
notice may be given, at the latest, on the fifth day
of the month, that the service shall cease at the
end of the month.
Art. 1699. Upon the extinguishment of the service
relation, the house helper may demand from the
head of the family a written statement on the
nature and duration of the service and the
efficiency and conduct of the house helper.
Domestic Helper defined: Rule XIII, Sec. 1 (b), Book 3 of
the Labor Code defines househelper or domestic helper:
Househelper is synonymous to the term domestic servant
and shall refer to any person, whether male or female, who
renders services in and about the employers home and which
services are usually necessary or desirable for the
maintenance and enjoyment thereof, and ministers
exclusively to the personal comfort and enjoyment of the
employers family.
The definition clearly contemplates such househelper or
domestic servant who is employed in the employers home to
minister exclusively to the personal comfort and enjoyment of
the employers family. Such definition covers family drivers,
domestic servants, laundry women, yayas, gardeners,
houseboys and other similar househelps.
The real test to determine whether one is a
househelper/domestice servant, is the place where the
services are rendered. In the case of Apex Mining v NLRC,
the Court held that the employee, who performed laundry
services in the staffhouse of the petitioner was a regular
employee and not a househelper, as the laundry was done,
not in the home of the employer and for the latters enjoyment
and the benefit of his family, but in the staffhouses of the
company, and obviously, for the benefit of the latter. Thus, the
employee was said to be a regular employee entitled to the
regular benefits granted by law to regular employees. The
definition cannot be interpreted to include househelp or
laundrywomen working in staffhouses of a company who
attends to the needs of the companys guests and other
persons availing of said facilities. It cannot be considered to
extend to a driver, houseboy, or gardener exclusively working
in the company. They may not be considered as within the
meaning of househelper or domestic servant as defined by
Starr Weigand
the law.
The criteria is the personal comfort and enjoyment of the
family of the employer in the home of said employer. While it
may be true that the nature of the work of a househelper,
domestic servant, or laundrywoman in a home or in a
company staffhouse may be similar in nature, the difference
in their circumstances is that in the former instance they are
actually serving the family while in the latter case, whether it
is a corporation or single-proprietorship engaged in business
of industry or any agricultural or similar pursuit, service is
being rendered in the staffhouses or within the premises of
the business of the employer. In such instance, they are
employees of the company or employer in the business
concerned entitled to the privileges of a regular employee.
(Ibid.)
In the case of Barcenas v NLRC, the Court held that although
initially, the petitioner was a regular employee of he Buddhist
temple, as she was to receive and assist Chinese visitors to
the temple, act as tourist guide for foreign Chinese visitors,
attend to the callers of the Head Monk as well as to the food
for the temple visitors, run errands for the Head Monk such as
paying the Meralco, PLDT, MWSS bills and act as liaison in
some government offices. When she left to give birth to a son
(fathered by the head monk), her services as an employee
were terminated, as she never went back until the death of
the said monk. Upon her return, she was no longer tasked to
perform the same duties, and she even admitted that she only
came back to protect the interests of her son in the temple.
Thus, she was no longer an employee, and she cannot claim
illegal dismissal and benefits. She obviously was not to be
considered a househelper as she did not perform domestic
services in the home of the employer, for the benefit of the
latter and the latters family, and neither did her duties consist
of domestic work.
Does the term medical attendance include expenses of
hospitalization? The right to medical attendance, exclusive
of hospitalization, is statutory in character. What is more,
even where specifically conferred by statute, said right to
medical attendance is deemed subject to the rule of
necessity, in the sense that the said right is dependent upon
the need for said medical attendance. Hence, the question of
whether expenses of hospitalization, are included in medical
attendance, should not, and cannot, be decided in abstract.
The determination of the issue must depend upon the
circumstances surrounding each case it is only fair that,
except in cases of extreme urgency, the party who may have
to defray the cost of medical attendance and/or
hospitalization, be given a say, in the choice of physician who
will treat the patient and/or the hospital in which he will be
confined. (Cuajao v Chua Lo Tan)
Chapter IV EMPLOYMENT OF HOMEWORKERS
ARTICLE 153. Regulation of industrial homeworkers.
The employment of industrial homeworkers and field
personnel shall be regulated by the government through
the appropriate regulations issued by the Secretary of
Labor and Employment to ensure the general welfare and
protection of homeworkers and field personnel and the
industries employing them.
ARTICLE 154. Regulations of Secretary of Labor. The
regulations or orders to be issued pursuant to this
Chapter shall be designed to assure the minimum terms
and conditions of employment applicable to the industrial
homeworkers or field personnel involved.
ARTICLE 155. Distribution of homework. For purposes
of this Chapter, the employer of homeworkers 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,
LABORICADIZ 49
agent contractor, sub-contractor 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; or
(2) Sells any goods, articles or materials to be processed
or fabricated in or about a home and then rebuys them
after such processing or fabrication, either by himself or
through some other person.
Implementing Ruled: DO No. 005-92
Industrial homework a system of production under which
work for an employer or contractor is carried out by a
homeworker at his/her own home. Materials may or may not
be furnished by the employer or contractor.
It differs form regular factory production:
Homework Regular factory
production
Decentralized form of More centralized, as
production, where there usually the workers work
is ordinarily very little at the premises of the
supervision or regulation employer.
of methods of work.
Industrial homeworker a worker, who is engaged in
industrial homework.
Home any room, house, apartment or other premises used
regularly, in whole or in part, as dwelling place, except those
situated within the premises or compound of an employer,
contractor or subcontractor and the work performed therein is
under the active or personal supervision by or for the latter.
Employer any natural or artificial person who, for his own
account or benefit, or on behalf of any person residing
outside the Philippines, directly or indirectly, or through any
employer, 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 dispensed of or distributed in accordance with
his direction; or
2) sells any goods, articles, or materials for the
purpose of having such goods or articles processed
in or about a home and then repurchases them
himself or through another after such processing.
Contractor/Subcontractor any person who, for the
account or benefit of an employer, delivers, or causes to be
delivered to a homeworker goods or articles to be processed
in or about his home and thereafter to be returned, disposed
of or distributed in accordance with the direction of the
employer.
Processing manufacturing, fabricating, finishing repairing,
altering, packing, wrapping, or handling in any way connected
with the production or preparation of an article or material.
Self-organization: Homeworkers shall have the right to form,
join, or assist organizations of their own choosing in
accordance with the law.
Homeworker organizations shall acquire legal personality and
entitled to rights and privileges granted by law to legitimate
labor organizations upon issuance of the certificate of
registration from the DOLE.
Payment: Immediately upon receipt of the finished goods or
articles, the employer shall pay the homeworker, or the
contractor/subcontractor, as the case may be, for the work
performed, minus the corresponding share of the homeworker
of SSS, Medicare and ECC premium contributions which shall
be remitted by the contractor/subcontractor to the SSS as
Starr Weigand
employers share. Where payment is made to a
contractor/subcontractor, the homeworker shall likewise be
paid immediately after the goods or articles have been
collected from the workers.
Standard rates: to be prescribed by the Sec. of Labor.
Deductions: No employer, contractor or subcontractor shall
make any deduction from the homeworkers earnings for the
value of the materials which have been lost, destroyed, soiled
or otherwise damaged unless the following conditions are
met:
1) the homeworker concerned is clearly shown to be
responsible for the loss or damage;
2) the homeworker 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 damage;
and
4) the deduction is made at such rate that the amount
deducted does not exceed 20% of the
homeworkers earnings in a week.
Conditions for payment of work: The employer may require
the homeworker to redo the work which has been improperly
done without having to pay the stipulated rate again.
An employer, contractor or subcontractor need not pay the
homeworker for any work which has been done on goods and
articles which have been returned for reasons attributable to
the fault of the homeworker.
Enforcement: The Regional Director has the power to order
and administer compliance with the provisions of the law and
regulations affecting the terms and conditions of employment
of homeworkers and shall have the jurisdiction in cases
involving violations of this Rule.
Complaints for violations of labor standards and the terms
and conditions of employment involving claims of
homeworkers in an amount not more than PhP 5,000 per
homeworker shall be heard and decided by the by the
Regional Director. He shall have the power to order and
administer, after due notice and hearing, compliance with the
provisions of this Rule.
In cases where the findings of the Regional Office show that
the money claims due a homeworker exceed PhP 5,000, the
same shall be endorsed to the appropriate Regional
Arbitration Branch fo the NLRC.
Non-compliance with the order issued by the Regional
Director can be the subject of prosecution in accordance with
the penal provisions of the Labor Code.
In case of disagreement between the homeworker and the
employer, contractor or subcontractor on a matter falling
under the rule, either party may refer the case to the Regional
Office having jurisdiction over the workplace of the
homeworker. The Regional Office shall decide the case within
10 days form receipt thereof. its decision shall be final and
executory.
Duties of employer, contractor and subcontractor:
The employer shall provide in its contracts that the employees
or homeworkers of the contractor and the latters
subcontractor shall be paid in accordance with the provisions
of the rule.
If the contractor/subcontractor fails to pay the wages or
earnings of the homeworer, the employer shall be jointly and
severally liable with the contractor/subcontractor o the
workers of the latter, to the extent that the work was
performed under such contract, as if the homeworkers were
directly employed by the employer.
The employer, contractor/subcontractor shall assist the
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
homeworkers in the maintenance of basic safe and healthful
working conditions at the homeworkers place of work.
Employment of Minor as Homeworkers: Shall be governed
by the provisions on minor in the Labor Code and the laws on
employment of minors.
Prohibitions for homework: No homework shall be
performed on the following: 1) explosives, fireworks and
articles of like character; 2) drugs and poisons; and 3) other
articles, the processing of which requires exposure to toxic
substances.
Assistance to registered homeworkers organization,
employers, contractors and subcontractors: The regional
office shall provide technical assistance to registered
homeworkers organizations, employers, contractors and
subcontractors relative to the following:
1) Information on wages and other benefits;
2) Conduct of time and motion studies to ensure fair
and reasonable output rates;
3) Skills training;
4) Maintenance on entitlement to social security and
employees compensation benefits;
5) Facilitation of loans with government and non-
government financial institutions; and
6) Information on availment of housing programs
under PAG-IBIG.
Homewokrers shall receive not less than the
applicable statutory minimum wage rates
prescribed under the Regional Wage Orders.
They are not entitled to holiday pay, service
th
incentive leave pay, 13 month pay (except those
paid on piece-rate basis), overtime or premium pay
and night differential pay.
Homeworkers now enjoy the right to self-
organization for purposes of collective bargaining.
Since homeworkers organizations or association
are given the rights and privileges granted by law to
legitimate labor organizations upon issuance of the
certificate of registration, it follows that they also
have the right tot strike or engage in concerted
activity in accordance with law.
BOOK FOUR
HEALTH, SAFETY AND SOCIAL WELFARE BENEFITS
Book four is all about health, safety and social welfare of the
employees.
Title I
MEDICAL, DENTAL AND OCCUPATIONAL SAFETY
Chapter I
MEDICAL AND DENTAL SERVICES
ARTICLE 156. First-aid treatment. Every employer shall
keep in his establishment such first-aid medicines and
equipment as the nature and conditions of work may
require, in accordance with such regulations as the
Department of Labor and Employment shall prescribe.
The employer shall take steps for the training of a
sufficient number of employees in first-aid treatment.
ARTICLE 157. Emergency medical and dental services.
It shall be the duty of every employer to furnish his
employees in any locality with free medical and dental
attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the
number of employees exceeds fifty (50) but not more
than two hundred (200) except when the employer does
not maintain hazardous workplaces, in which case, the
services of a graduate first-aider shall be provided for the
protection of workers, where no registered nurse is
Starr Weigand
available. The Secretary of Labor and Employment shall
provide by appropriate regulations, the services that
shall be required where the number of employees does
not exceed fifty (50) and shall determine by appropriate
order, hazardous workplaces for purposes of this Article;
(b) The services of a full-time registered nurse, a part-
time physician and dentist, and an emergency clinic,
when the number of employees exceeds two hundred
(200) but not more than three hundred (300); and
(c) The services of a full-time physician, dentist and a
full-time registered nurse as well as a dental clinic and an
infirmary or emergency hospital with one bed capacity
for every one hundred (100) employees when the number
of employees exceeds three hundred (300).
In cases of hazardous workplaces, no employer shall
engage the services of a physician or a dentist who
cannot stay in the premises of the establishment for at
least two (2) hours, in the case of those engaged on part-
time basis, and not less than eight (8) hours, in the case
of those employed on full-time basis. Where the
undertaking is non-hazardous in nature, the physician
and dentist may be engaged on retainer basis, subject to
such regulations as the Secretary of Labor and
Employment may prescribe to insure immediate
availability of medical and dental treatment and
attendance in case of emergency. (As amended by
Presidential Decree NO. 570-A, Section 26).
In Singco v Shangri-La Mactan, Petitioners insist that under
Article 157 of the Labor Code, Shangri-la is required to hire a
full-time registered nurse, apart from a physician, hence, their
engagement should be deemed as regular employment, the
provisions of the MOA notwithstanding; and that the MOA is
contrary to public policy as it circumvents tenurial security
and, therefore, should be struck down as being void ab initio.
At most, they argue, the MOA is a mere job contract. The
MOA was entered into between the Doctor, who employed
petitioners for her clinic in Shangri-La, which MOA was for the
retention of the said doctor. The Court held that, contrary to
petitioners postulation, Art. 157 does not require the
engagement of full-time nurses as regular employees of a
company employing not less than 50 workers. Under the
foregoing provision, Shangri-la, which employs more than 200
workers, is mandated to "furnish" its employees with the
services of a full-time registered nurse, a part-time physician
and dentist, and an emergency clinic which means that it
should provide or make available such medical and allied
services to its employees, not necessarily to hire or employ a
service provider. While it is true that the provision requires
employers to engage the services of medical practitioners in
certain establishments depending on the number of their
employees, nothing is there in the law which says that
medical practitioners so engaged be actually hired as
employees, adding that the law, as written, only requires the
employer "to retain", not employ, a part-time physician who
needed to stay in the premises of the non-hazardous
workplace for two (2) hours. The term "full-time" in Art. 157
cannot be construed as referring to the type of employment of
the person engaged to provide the services, for Article 157
must not be read alongside Art. 280 in order to vest employer-
employee relationship on the employer and the person so
engaged. The phrase "services of a full-time registered
nurse" should thus be taken to refer to the kind of
services that the nurse will render in the companys
premises and to its employees, not the manner of his
engagement. The Court also held that the doctor was a
legitimate job contractor, as she was the person who paid
them their wages and SSS contributions, as well as had
control over their work.
ARTICLE 158. When emergency hospital not required.
The requirement for an emergency hospital or dental
clinic shall not be applicable in case there is a hospital or
dental clinic which is accessible from the employers
establishment and he makes arrangement for the
LABORICADIZ 51
reservation therein of the necessary beds and dental
facilities for the use of his employees.
When is an emergency hospital not required?
See Art. 158. It is not required when there a hospital/dental
clinic which is accessible from the employers
establishment, AND he makes arrangements therein for
the reservation of beds and dental facilities for the use of
his employees.
Where the employer is not required to put up an emergency
hospital the IRRs specify that the existing hospital should be
within 5 kilometers form the workplace or is accessible
within a 25-minute travel. The employer must provide
transport in emergency cases.
ARTICLE 159. Health program. The physician engaged
by an employer shall, in addition to his duties under this
Chapter, develop and implement a comprehensive
occupational health program for the benefit of the
employees of his employer.
ARTICLE 160. Qualifications of health personnel. The
physicians, dentists and nurses employed by employers
pursuant to this Chapter shall have the necessary
training in industrial medicine and occupational safety
and health. The Secretary of Labor and Employment, in
consultation with industrial, medical, and occupational
safety and health associations, shall establish the
qualifications, criteria and conditions of employment of
such health personnel.
ARTICLE 161. Assistance of employer. It shall be the
duty of any employer to provide all the necessary
assistance to ensure the adequate and immediate
medical and dental attendance and treatment to an
injured or sick employee in case of emergency.
IRR, Book IV, Rule 1, provide details in addition to the codal
provisions.
First-aid treatment Adequate, immediate and necessary
medical and dental attention or remedy, given in case of injury
or sudden illness, suffered by a worker during employment,
irrespective of whether or not such injury or illness is work-
related, before more extensive medical and/or dental
treatment can be secured. It does not include continued
treatment or follow-up treatment for an injury or illness.
Hazardous workplaces: (the list is not exhaustive)
1) Where the nature of the work exposes workers to
dangerous environmental elements, contaminations
or work conditions including ionizing radiations,
chemicals, fires, flammable substances, noxious
components and the like.
2) Where the workers are engaged in construction
work, logging, fire-fighting, mining, quarrying,
blasting, stevedoring, dock work, deep sea fishing,
and mechanized farming.
3) Where workers are engaged in the manufacture or
handling of explosives and other pyrotechnic
products.
4) Where the workers use or are exposed to heavy or
power-driven machinery or equipment.
5) Where the workers use or are exposed to power-
driven tools.
What medical/dental services should an employer
proved?
If employees exceed 50, but not more than 200 services of
a full-time registered nurse, except if the employer does not
maintain a hazardous workplace (in which case, services of a
graduate first-aider is sufficient).
If the number of employees exceed 200 but not more than
300 full-time registered nurse, part-time physician and
dentist and an emergency clinic
Starr Weigand
If the number of employees exceed 300 services of a full-
time physician, dentist and a full-time registered nurse as well
as a dental clinic, and an infirmary or emergency hospital with
one bed capacity for every 100 employees.
For hazardous workplaces physician or dentist engaged
must stay in the premises for at least 2 hours for part-time or
at least 8 hours for full-time.
If non-hazardous physician or dentist may be engaged on a
retainer basis.
When is an emergency hospital required?
Infirmary/emergency hospital is required for employers with
more than 300 employees.
Chapter II
OCCUPATIONAL HEALTH AND SAFETY
ARTICLE 162. Safety and health standards. The
Secretary of Labor and Employment shall, by appropriate
orders, set and enforce mandatory occupational safety
and health standards to eliminate or reduce occupational
safety and health hazards in all workplaces and institute
new, and update existing, programs to ensure safe and
healthful working conditions in all places of employment.
ARTICLE 163. Research. It shall be the responsibility of
the Department of Labor and Employment to conduct
continuing studies and research to develop innovative
methods,techniques and approaches for dealing with
occupational safety and health problems; to discover
latent diseases by establishing causal connections
between diseases and work in environmental conditions;
and to develop medical criteria which will assure insofar
as practicable that no employee will suffer impairment or
diminution in health, functional capacity, or life
expectancy as a result of his work and working
conditions.
ARTICLE 164. Training programs. The Department of
Labor and Employment shall develop and implement
training programs to increase the number and
competence of personnel in the field of occupational
safety and industrial health.
ARTICLE 165. Administration of safety and health laws.
(a) The Department of Labor and Employment shall be
solely responsible for the administration and
enforcement of occupational safety and health laws,
regulations and standards in all establishments and
workplaces wherever they may be located; however,
chartered cities may be allowed to conduct industrial
safety inspections of establishments within their
respective jurisdictions where they have adequate
facilities and competent personnel for the purpose as
determined by the Department of Labor and Employment
and subject to national standards established by the
latter.
(b) The Secretary of Labor and Employment may, through
appropriate regulations, collect reasonable fees for the
inspection of steam boilers, pressure vessels and
pipings and electrical installations, the test and approval
for safe use of materials, equipment and other safety
devices and the approval of plans for such materials,
equipment and devices. The fee so collected shall be
deposited in the national treasury to the credit of the
occupational safety and health fund and shall be
expended
exclusively for the administration and enforcement of
safety and other labor laws administered by the
Department of Labor and Employment.
The employer is required to observe safety standards and
provide safety devises. On the part of the employee, he/she is
required to also use proper safeguards and devices:
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
Book IV, Rule 2, Sec. 6: General duties of workers:
1) Every worker shall cooperate with the employer in
carrying out the provisions of the Rules. He shall
report to his superior any work hazard he may
discover in his workplace, without prejudice to his
right to report the matter to the regional Office
concerned.
2) Every worker shall make proper use of all the
safeguards and safety devises furnished for his
protection and the protection of others and shall
follow all instructions made by the employer in
compliance with the provisions of the Rules.
Title II
EMPLOYEES COMPENSATION AND STATE INSURANCE
FUND
This title covers 2 traditional social legislation: SSS and GSIS.
Chapter I
POLICY AND DEFINITIONS
ARTICLE 166. Policy. The State shall promote and
develop a tax-exempt employees compensation program
whereby employees and their dependents, in the event of
work-connected disability or death, may promptly secure
adequate income benefit and medical related benefits.
ARTICLE 167. Definition of terms. As used in this Title,
unless the context indicates otherwise:
(a) Code means the Labor Code of the Philippines
instituted under Presidential Decree Numbered four
hundred forty-two, as amended.
(b) Commission means the Employees Compensation
Commission created under this Title.
(c) SSS means the Social Security System created
under Republic Act Numbered Eleven hundred sixty-one,
as amended.
(d) GSIS means the Government Service Insurance
System created under Commonwealth Act Numbered
One hundred eighty-six, as amended.
(e) System means the SSS or GSIS, as the case may be.
(f) Employer means any person, natural or juridical,
employing the services of the employee.
(g) Employee means any person compulsorily covered
by the GSIS under Commonwealth Act Numbered One
hundred eighty-six, as amended, including the members
of the Armed Forces of the Philippines, and any person
employed as casual, emergency, temporary, substitute or
contractual, or any person compulsorily covered by the
SSS under Republic Act Numbered Eleven hundred sixty-
one, as amended.
(h) Person means any individual, partnership, firm,
association, trust, corporation or legal representative
thereof.
(i) Dependent means the legitimate, legitimated or
legally adopted or acknowledged natural child who is
unmarried, not gainfully employed, and not over twenty-
one (21) years of age or over twenty-one (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; the legitimate
spouse living with the employee and the parents of said
employee wholly dependent upon him for regular
support.
(j) Beneficiaries means the dependent spouse until
he/she 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
Starr Weigand
income benefit.
(k) Injury means any harmful change in the human
organism from any accident arising out of and in the
course of the employment.
(l) Sickness 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 contracting the same is increased by working
conditions. For this purpose, the Commission is
empowered to determine and approve occupational
diseases and work-related illnesses that may be
considered compensable based on peculiar hazards of
employment.
(m) Death means loss of life resulting from injury or
sickness.
(n) Disability means loss or impairment of a physical or
mental function resulting from injury or sickness.
(o) Compensation means all payments made under this
Title for income benefits and medical or related benefits.
(p) Income benefit means all payments made under this
Title to the providers of medical care, rehabilitation
services and hospital care.
(q) Medical benefit means all payments made under
this Title to the providers of medical care, rehabilitation
services and hospital care.
(r) Related benefit means all payments made under this
Title for appliances and supplies.
(s) Appliances means crutches, artificial aids and other
similar devices.
(t) Supplies means medicine and other medical, dental
or surgical items.
(u) Hospital means any medical facility, government or
private, authorized by law, an active member in good
standing of the Philippine Hospital Association and
accredited by the Commission.
(v) Physician means any doctor of medicine duly
licensed to practice in the Philippines, an active member
in good standing of the Philippine Medical Association
and accredited by the Commission.
(w) Wages or Salary, insofar as they refer to the
computation of benefits defined in Republic Act No. 1161,
as amended, for SSS and Presidential Decree No. 1146,
as amended, for GSIS, respectively, except that part in
excess of Three Thousand Pesos.
(x) Monthly salary credit means the wage or salary
base for contributions as provided in Republic Act
Numbered Eleven hundred sixty-one, as amended, or the
wages or salary.
(y) Average monthly salary credit in the case of the
SSS means the result obtained by dividing the sum of the
monthly salary credits in the sixty-month period
immediately following the semester of death or
permanent disability by sixty (60), except where the
month of death or permanent disability falls within
eighteen (18) calendar months from the month of
coverage, in which case, it is the result obtained by
dividing the sum of all monthly salary credits paid prior
to the month of contingency by the total number of
calendar months of coverage in the same period.
(z) Average daily salary credit in the case of the SSS
means the result obtained by dividing the sum of the six
(6) highest monthly salary credits in the twelve-month
period immediately preceding the semester of sickness
or injury by one hundred eighty (180), except where the
month of injury falls within twelve (12) calendar months
from the first month of coverage, in which case it is the
result obtained by dividing the sum of all monthly salary
credits by thirty (30) times the number of calendar
months of coverage in the period.
In the case of the GSIS, the average daily salary credit
shall be the actual daily salary or wage, or the monthly
salary or wage divided by the actual number of working
days of the month of contingency.
(aa) Quarter means a period of three (3) consecutive
months ending on the last days of March, June,
LABORICADIZ 53
September and December.
(bb) Semester means a period of two consecutive
quarters ending in the quarter of death, permanent
disability, injury or sickness.
(cc) Replacement ratio The sum of twenty percent
and the quotient obtained by dividing three hundred by
the sum of three hundred forty and the average monthly
salary credit.
(dd) Credited years of service For a member covered
prior to January, 1975, nineteen hundred seventy-five
minus the calendar year of coverage, plus the number of
calendar years in which six or more contributions have
been paid from January, 1975 up to the calendar year
containing the semester prior to the contingency. For a
member covered on or after January, 1975, the number of
calendar years in which six or more contributions have
been paid from the year of coverage up to the calendar
year containing the semester prior to the contingency.
(ee) Monthly income benefit means the amount
equivalent to one hundred fifteen percent of the sum of
the average monthly salary credit multiplied by the
replacement ratio, and one and a half percent of the
average monthly salary credit for each credited year of
service in excess of ten years: Provided, That the
monthly income benefit shall in no case be less than two
hundred fifty pesos.
Compensation in this book refers to the employment benefits
given by law because of work-connected injury or disease
that an employee suffers. The benefits may be in cash or
service.
What gives rise to a compensation claim is either an injury or
an occupational disease. Thus, Art. 167 (k) and (l) are
important:
(k) Injury means any harmful change in
the human organism from any accident
arising out of and in the course of the
employment.
(l) Sickness 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 contracting the same is increased by
working conditions. For this purpose, the
Commission is empowered to determine
and approve occupational diseases and
work-related illnesses that may be
considered compensable based on peculiar
hazards of employment.
Injury: For the injury and the resulting disability or death to be
compensable, the injury must be the result of accident
arising out of and in the course of employment.
A usual question for this would be, if there is injury or illness,
which could result to a disability, can you recover from the
State Insurance Fund?
For Injury, look at (k), it must arise out of and in the course
of employment.
For Sickness, look at (l), it must be listed as an occupational
disease, or it must be any illness caused by the employment
subject to proof that the risk of contracting it is increased by
working conditions.
So there is really no requirement that there be a causal
connection between the employment and illness, but the risk
of contracting such is increased by the employment.
Proof of direct causal connection, is, however, not
indispensable, as it is enough that the claimant shows proof
of reasonable work-connection. The disease should have
been brought about largely by the conditions present in the
nature of the job. Strict rules of evidence are not demanded,
Starr Weigand
and the degree required is only substantial evidence, which is
such evidence as a reasonable mind would accept as
sufficient to support a conclusion.
Main problem: When would you consider an injury to arise
out of or in the course of employment? If the employee was
going to or coming back from work, and such is done in a
continuing act, and there was no diversion from the regular
route or path taken, and the employee is injured, then such
employee may recover.
If that is the usual route, and the employee makes a sudden
turn, or deviates therefrom, and such met an accident, can he
recover? Sir said he does not know. But since it involves a
labor related case, maybe the employee can recover, and the
employee who is on an official special errand, away form the
place of work, and he was injured, he may also recover.
2 components of the coverage formula - arising out of
and in the course of employment
these are separate tests which should be independently
satisfied. The concept of compensation coverage is unitary,
not dual, and is best expressed by the word, work-
connection.
ECC Resolution No 3914-A: Extended the compensable
coverage for off-premises injury from near the premises up to
the residence of the employee. An injury or death of a
covered member in an accident while he is going to, or
coming from, the workplace shall be considered compensable
if the following conditions are established or definitely proven:
1) The act of the employee of going to, or coming
from, the, the workplace must have been a
continuing act, that is, he had not been diverted
from it by any other activity, and he had not
departed from his usual route to, or from, his
workplace; and
2) Regarding an employee on special errand, the
special errand must have been official and in
connection with his work.
24-hour Duty Doctrine: police and soldiers are by the nature
of their functions technically on duty for 24 hours, but the
doctrine serves more of an after-the-fact validation of their
acts to place them within the scope of the guidelines on
compensation rather than a blanket license to benefit them in
all situations that may give rise to their deaths. The doctrine
should not be sweepingly applied to all acts and
circumstances causing the death of the police officer, but
only to those which, although not on official line of duty,
are nonetheless, basically police service in character.
(Ex. A fire-truck driver cannot be compensated for his injuries
suffered when the vehicle he was riding in was not the fire-
truck and he was on his way home from a dinner with his
friend. The accident happened at a time when he was in the
process of something which had nothing to do with his duty,
and neither was he from work nor was he on his way there.)
Sickness: For sickness and the resulting disability or death to
be compensable, the sickness must be the result of an
occupational disease listed in the Rules. The specified
conditions should be satisfied, otherwise, proof must be
shown that the risk of contracting the disease is increased by
the working conditions.
Employment Incidents: It is settled that injuries sustained in
connection with acts reasonably incidental to the employment
are deemed as arising out of such employment. Generally,
such work incidents include:
1) acts of personal ministrations for the comfort or
convenience of the employee;
2) acts for the benefit of the employer;
3) acts done to further the goodwill of the business;
4) slight deviations from work, from curiosity or
otherwise; and
5) acts in emergencies.
Even the employment itself may lead to a dispute leading to
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
the assault of the employee.
Acts of personal ministrations for the comfort and
convenience of the employee: Examples are going to the
toilet, etc.
If the employee was engaged in an act or activity beneficial to
the employer, is deemed to have arisen out of the
employment, which is compensable.
For slight deviations from work, the main question is: Is the
deviation slight? Ex. If you were instructed to go to a client,
but you did not go directly to such client, then you were
injured, is it covered? The commission usually rules in favor
of labor, so, yes.
Outings and Picnics: Recreational activities under the so-
called special engagement rule which is one of the
exceptions to the direct premises rule. This exception covers
incidents outside of the workplace (picnics, outings, field trips,
etc.) when initiated or sanctioned by the employer. Accidents
befalling employees on those occasions are compensable.
This does not cover private outings of the employees
themselves.
Dual Purpose Doctrine: An employees status of acting in
the course of his employment is not negated by the fact that
he may be pursuing a dual purpose. The dual prupose
doctrine allowing compensation applies where a special trip
would have to be made for the employer if the employee had
not combined the service for the employer with his own going
or coming trip. The Dual purpose doctrine considers as
compensable an injury that an employee sustains while
on a trip undertaken for the benefit of the employer even
if in the course thereof the employee pursues also a
personal purpose. The doctrine may be applied in the
adjudication of employees compensation claims.
Chapter II
COVERAGE AND LIABILITY
ART. 168. Compulsory coverage. - Coverage in the State
Insurance Fund shall be compulsory upon all employers
and their employees not over sixty (60) years of age:
Provided, That an employee who is over (60) years of age
and paying contributions to qualify for the retirement or
life insurance benefit administered by the System shall
be subject to compulsory coverage.
ARTICLE. 169. Foreign employment. The Commission
shall ensure adequate coverage of Filipino employees
employed abroad, subject to regulations as it may
prescribe.
ARTICLE. 170. Effective date of coverage. Compulsory
coverage of the employer during the effectivity of this
Title shall take effect on the first day of his operation, and
that of the employee, on the date of his employment.
The employees compensation law applies to all
employers, public or private, and to all employees, public
ro private, including casual, emergency, temporary or
substitute employees. The term employee includes
member of the Armed Forces of the Philippines.
Filipinos working abroad for employers doing business in the
Philippines are covered by the employees compensation law.
They are entitled to the same benefits as for those working in
the Philippines.
ARTICLE. 171. Registration. Each employer and his
employees shall register with the System in accordance
with its regulations.
ARTICLE. 172. Limitation of liability. The State
Starr Weigand
Insurance Fund shall be liable for compensation to the
employee or his dependents, except when the disability
or death was occasioned by the employees intoxication,
willful intention to injure or kill himself or another,
notorious negligence, or otherwise provided under this
Title.
The article does not allow compensation for any of the 4
reasons enumerated. (intoxication, willful intention to injure or
kill himself or another, notorious negligence, or otherwise)
Intoxication consists in being under the influence of
intoxicating liquor to the extent that one is not entirely himself
or that his judgment is impaired and his act, words, or conduct
is visibly impaired.
Deliberate or willful act on his own life - Suicide is not
compensable, except if the employer agrees to pay
compensation for loss of life of his employee unqualifiedly.
Notorious negligence - something more than simple or
contributory negligence. It signifies a deliberate act of the
employee to disregard his own personal safety. Disobedience
to rules, and/or prohibition does not in itself constitute
notorious negligence, if no intention can be attributed to the
injured to end his life. There is total absence of care, or no
care whatsoever.
ARTICLE. 173. Extent of liability. Unless otherwise
provided, the liability of the State Insurance Fund under
this Title shall be exclusive and in place of all other
liabilities of the employer to the employee, his
dependents or anyone otherwise entitled to receive
damages on behalf of the employee or his dependents.
The payment of compensation under this Title shall not
bar the recovery of benefits as provided for in Section
699 of the Revised Administrative Code, Republic Act
Numbered Eleven hundred sixty-one, as amended,
Republic Act Numbered Forty-eight hundred sixty-four as
amended, and other laws whose benefits are
administered by the System or by other agencies of the
government. (As amended by Presidential Decree No.
1921).
The liability of the State Insurance Fund is exclusive and in
place of all other liabilities of the employer to the employee.
nd
Under the 2 paragraph, there are certain benefits you can
recover in addition to the benefits under the Fund: benefits as
provided for in Section 699 of the Revised Administrative
Code, Republic Act Numbered Eleven hundred sixty-one, as
amended, Republic Act Numbered Forty-eight hundred sixty-
four as amended, and other laws whose benefits are
administered by the System or by other agencies of the
government.
Where the action is selective and the employee or his heirs
have a choice of the benefits under the workmens
compensation law, or damages under the Civil Code, the
employee or the heirs have the option to elect. But once the
lection is done, the claimants are no longer free to opt for the
other remedy. They cannot pursue both actions
simultaneously, at least until the prior claim is rejected by the
compensation commission. But, simultaneous recovery of
benefits under the employees compensation program of the
Labor Code and under the SSS law is allowed in view of the
amendment to Art. 173 by PD 1921.
In the Ysmael case, if you have a choice between State
Insurance Fund and one under the Civil Code for damages,
you cannot pursue both, unless one has already been denied.
You can recover from the State Insurance Fund, and the
SSS.
LABORICADIZ 55
Where are claims against the fund filed? These are filed with
the SSS. The decision of the SSS is appealable to the
Commission, and thereafter to the SC.
The benefits under the SSS law are different from those
under the State Insurance Fund, although the claim is filed
under the said Fund.
ARTICLE. 174. Liability of third party/ies. (a) When the
disability or death is caused by circumstances creating a
legal liability against a third party, the disabled employee
or the dependents, in case of his death, shall be paid by
the System under this Title. In case benefit is paid under
this Title, the System shall be subrogated to the rights of
the disabled employee or the dependents, in case of his
death, in accordance with the general law.
(b) Where the System recovers from such third party
damages in excess of those paid or allowed under this
Title, such excess shall be delivered to the disabled
employee or other persons entitled thereto, after
deducting the cost of proceedings and expenses of the
System.
If an employee is injured or killed by a third party, the
employee or the dependents may file compensation claim
with the System. The System, after paying, shall proceed
against the liable third party. If it recovers more than what it
paid, it can deduct its expenses, then deliver the remainder to
the employee or whoever is entitled to it in his behalf.
ARTICLE. 175. Deprivation of the benefits. Except as
otherwise provided under this Title, no contract,
regulation or device whatsoever shall operate to deprive
the employee or his dependents of any part of the income
benefits and medical or related services granted under
this Title. Existing medical services being provided by
the employer shall be maintained and continued to be
enjoyed by their employees.
This Article protects the employees right to benefits given by
the law. No agreement or contract is allowed whose effect is
to deprive the employee of those benefits.
Chapter III
ADMINISTRATION
ARTICLE. 176. Employees Compensation Commission.
(a) To initiate, rationalize, and coordinate the policies of
the employees compensation program, the Employees
Compensation Commission is hereby created to be
composed of five ex-officio members, namely: the
Secretary of Labor and Employment as Chairman, the
GSIS General Manager, the SSS Administrator, the
Chairman of the Philippine Medical Care Commission,
and the Executive Director of the ECC Secretariat, and
two appointive members, one of whom shall represent
the employees and the other, the employers, to be
appointed by the President of the Philippines for a term
of six years. The appointive member shall have at least
five years experience in workmens compensation or
social security programs. All vacancies shall be filled for
the unexpired term only. (As amended by Section 19 [c],
Executive Order No. 126).
(b) The Vice Chairman of the Commission shall be
alternated each year between the GSIS General Manager
and the SSS Administrator. The presence of four
members shall constitute a quorum. Each member shall
receive a per diem of two hundred pesos for every
meeting that is actually attended by him, exclusive of
actual, ordinary and necessary travel and representation
expenses. In his absence, any member may designate an
official of the institution he serves on full-time basis as
his representative to act in his behalf. (As amended by
Section 2, Presidential Decree No. 1368).
(c) The general conduct of the operations and
management functions of the GSIS or SSS under this
Title shall be vested in its respective chief executive
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officers, who shall be immediately responsible for
carrying out the policies of the Commission.
(d) The Commission shall have the status and category of
a government corporation, and it is hereby deemed
attached to the Department of Labor and Employment for
policy coordination and guidance. (As amended by
Section 2, Presidential Decree No. 1368).
ARTICLE. 177. Powers and duties. The Commission
shall have the following powers and duties:
(a) To assess and fix a rate of contribution from all
employers;
(b) To determine the rate of contribution payable by an
employer whose records show a high frequency of work
accidents or occupational diseases due to failure by the
said employer to observe adequate safety measures;
(c) To approve rules and regulations governing the
processing of claims and the settlement of disputes
arising therefrom as prescribed by the System;
(d) To initiate policies and programs toward adequate
occupational health and safety and accident prevention
in the working environment, rehabilitation other than
those provided for underArticle 190 hereof, and other
related programs and activities, and to appropriate funds
therefor; (As amended by Section 3, Presidential Decree
No. 1368).
(e) To make the necessary actuarial studies and
calculations concerning the grant of constant help and
income benefits for permanent disability or death and the
rationalization of the benefits for permanent disability
and death under the Title with benefits payable by the
System for similar contingencies: Provided, That the
Commission may upgrade benefits and add new ones
subject to approval of the President: and Provided,
further, That the actuarial stability of the State Insurance
Fund shall be guaranteed: Provided, finally, That such
increases in benefits shall not require any increases in
contribution, except as provided for in paragraph (b)
hereof; (As amended by Section 3, Presidential Decree
No. 1641).
(f) To appoint the personnel of its staff, subject to civil
service law and rules, but exempt from WAPCO law and
regulations;
(g) To adopt annually a budget of expenditures of the
Commission and its staff chargeable against the State
Insurance Fund: Provided, That the SSS and GSIS shall
advance on a quarterly basis, the remittances of
allotment of the loading fund for the Commissions
operational expenses based on its annual budget as duly
approved by the Department of Budget and Management;
(As amended by Section 3, Presidential Decree No. 1921).
(h) To have the power to administer oath and affirmation,
and to issue subpoena and subpoena duces tecum in
connection with any question or issue arising from
appealed cases under this Title;
(i) To sue and be sued in court;
(j) To acquire property, real or personal, which may be
necessary or expedient for the attainment of the
purposes of this Title;
(k) To enter into agreements or contracts for such
services and as may be needed for the proper, efficient
and stable administration of the program;
(l) 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.
(As amended by Section 18, Presidential Decree No. 850).
ARTICLE. 178. Management of funds. All revenues
collected by the System under this Title shall be
deposited, invested, administered and disbursed in the
same manner and under the same conditions,
requirements and safeguards as provided by Republic
Act Numbered eleven hundred sixty-one, as amended,
with regard to such other funds as are thereunder being
paid to or collected by the SSS and GSIS, respectively:
Provided, That the Commission, SSS and GSIS may
disburse each year not more than twelve percent of the
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
contribution and investment earnings collected for
operational expenses, including occupational health and
safety programs, incidental to the carrying out of this
Title.
ARTICLE. 179. Investment of funds. Provisions of
existing laws to the contrary notwithstanding, all
revenues as are not needed to meet current operational
expenses under this Title shall be accumulated in a fund
to be known as the State Insurance Fund, which shall be
used exclusively for payment of the benefits under this
Title, and no amount thereof shall be used for any other
purpose. All amounts accruing to the State Insurance
Fund, which is hereby established in the SSS and GSIS,
respectively, shall be deposited with any authorized
depository bank approved by the Commission, or
invested with due and prudent regard for the liquidity
needs of the System. (As amended by Section 4,
Presidential Decree No. 1368).
ARTICLE. 180. Settlement of claims. The System shall
have original and exclusive jurisdiction to settle any
dispute arising from this Title with respect to coverage,
entitlement to benefits, collection and payment of
contributions and penalties thereon, or any other matter
related thereto, subject to appeal to the Commission,
which shall decide appealed cases within twenty (20)
working days from the submission of the evidence.
The system has original and exclusive jurisdiction to settle
disputes under the Title, and such decisions are appealable to
the ECC, for a period of 30 days. The decisions of the ECC
may be brought on petition for certiorari to the SC within 10
days. The decision becomes final 10 days after receipt of the
decision of the SC.
ARTICLE. 181. Review. Decisions, orders or resolutions
of the Commission may be reviewed on certiorari by the
Supreme Court on question of law upon petition of an
aggrieved party within ten (10) days from notice thereof.
ARTICLE. 182. Enforcement of decisions. (a) Any
decision, order or resolution of the Commission shall
become final and executory if no appeal is taken
therefrom within ten (10) days from notice thereof. All
awards granted by the Commissionin cases appealed
from decisions of the System shall be effected within
fifteen days from receipt of notice.
(b) In all other cases, decisions, orders and resolutions of
the Commission which have become final and executory
shall be enforced and executed in the same manner as
decisions of the Court of First Instance, and the
Commission shall have the power to issue to the city or
provincial sheriff or to the sheriff whom it may appoint,
such writs of execution as may be necessary for the
enforcement of such decisions, orders or resolutions,
and any person who shall fail or refuse to comply
therewith shall, upon application by the Commission, be
punished by the proper court for contempt.
Claims against the State Insurance Fund are filed before the
SSS.
Chapter IV
CONTRIBUTIONS
ARTICLE. 183. Employers contributions. (a) Under such
regulations as the System may prescribe, beginning as of
the last day of the month when an employees
compulsory coverage takes effect and every month
thereafter during his employment, his employer shall
prepare to remit to the System a contribution equivalent
to one percent of his monthly salary credit.
(b) The rate of contribution shall be reviewed periodically
Starr Weigand
and subject to the limitations herein provided, may be
revised as the experience in risk, cost of administration
and actual or anticipated as well as unexpected losses,
may require.
(c) Contributions under this Title shall be paid in their
entirety by the employer and any contract or device for
the deductions of any portion thereof from the wages or
salaries of the employees shall be null and void.
(d) When a covered employee dies, becomes disabled or
is separated from employment, his employers obligation
to pay the monthly contribution arising from that
employment shall cease at the end of the month of
contingency and during such months that he is not
receiving wages or salary.
ARTICLE. 184. Government guarantee. The Republic of
the Philippines guarantees the benefits prescribed under
this Title, and accepts general responsibility for the
solvency of the State Insurance Fund. In case of any
deficiency, the same shall be covered by supplemental
appropriations from the national government.
Only the employer, and not the employee, contributed to
the State Insurance Fund. Unlike the SSS, the employee
does not contribute. You cannot provide that the employee
will shoulder the contribution to the fund.
Penalties to an employer who is delinquent in paying his
contributions include, imprisonment, and/or fine, and a 3%
penalty pr month from the date the contribution falls due until
paid.
What are the benefits? In general, they are services, income
benefit and, funeral benefit.
Chapter V
MEDICAL BENEFITS
ARTICLE. 185. Medical services. Immediately after an
employee contracts sickness or sustains an injury, he
shall be provided by the System during the subsequent
period of his disability with such medical services and
appliances as the nature of his sickness or injury and
progress of his recovery may require, subject to the
expense limitation prescribed by the Commission.
ARTICLE. 186. Liability. - The System shall have the
authority to choose or order a change of physician,
hospital or rehabilitation facility for the employee, and
shall not be liable for compensation for any aggravation
of the employees injury or sickness resulting from
unauthorized changes by the employee of medical
services, appliances, supplies, hospitals, rehabilitation
facilities or physicians.
ARTICLE. 187. Attending physician. Any physician
attending an injured or sick employee shall comply with
all the regulations of the System and submit reports in
prescribed forms at such time as may be required
concerning his condition or treatment. All medical
information relevant to the particular injury or sickness
shall, on demand, be made available to the employee or
the System. No information developed in connection with
treatment or examination for which compensation is
sought shall be considered as privileged communication.
ARTICLE. 188. Refusal of examination or treatment. If
the employee unreasonably refuses to submit to medical
examination or treatment, the System shall stop the
payment of further compensation during such time as
such refusal continues. What constitutes an
unreasonable refusal shall be determined by the System
which may, on its own initiative, determine the necessity,
character and sufficiency of any medical services
furnished or to be furnished.
LABORICADIZ 57

ARTICLE. 189. Fees and other charges. All fees and
other charges for hospital services, medical care and
appliances, including professional fees, shall not be
higher than those prevailing in wards of hospitals for
similar services to injured or sick persons in general and
shall be subject to the regulations of the Commission.
Professional fees shall only be appreciably higher than
those prescribed under Republic Act Numbered sixty-one
hundred eleven, as amended, otherwise known as the
Philippine Medical Care Act of 1969.
ARTICLE. 190. Rehabilitation services. (a) The System
shall, as soon as practicable, establish a continuing
program, for the rehabilitation of injured and
handicapped employees who shall be entitled to
rehabilitation services, which shall consist of medical,
surgical or hospital treatment, including appliances if
they have been handicapped by the injury, to help them
become physically independent.
(b) As soon as practicable, the System shall establish
centers equipped and staffed to provide a balanced
program of remedial treatment, vocational assessment
and preparation designed to meet the individual needs of
each handicapped employee to restore him to suitable
employment, including assistance as may be within its
resources, to help each rehabilitee to develop his mental,
vocational or social potential.
Compensation extended to the employees (or to
beneficiaries) are of 3 kinds:
1) Services
- medical services, appliances and supplies
- rehabilitation services
2) Cash Income Benefit or Pension due to:
- temporary total disability
- permanent total disability
- permanent partial disability
- death
3) Funeral benefit
The medical services, appliances and supplies shall be
provided to the afflicted employee beginning on the first day
of injury or sickness, during the subsequent period of his
disability, and as the progress of his recovery may require,
subject to the IRR, which requires submission of periodic
medical report from the attending physician.
Chapter VI
DISABILITY BENEFITS
ARTICLE. 191. Temporary total disability. (a) Under
such regulations as the Commission may approve, any
employee under this Title who sustains an injury or
contracts sickness resulting in temporary total disability
shall, for each day of such a disability or fraction thereof,
be paid by the System an income benefit equivalent to
ninety percent of his average daily salary credit, subject
to the following conditions: the daily income benefit shall
not be less than Ten Pesos nor more than Ninety Pesos,
nor paid for a continuous period longer than one hundred
twenty days, except as otherwise provided for in the
Rules, and the System shall be notified of the injury or
sickness. (As amended by Section 2, Executive Order No.
179).
(b) The payment of such income benefit shall be in
accordance with the regulations of the Commission. (As
amended by Section 19, Presidential Decree No. 850).
ARTICLE. 192. Permanent total disability. (a) Under
such regulations as the Commission may approve, any
employee under this Title who contracts sickness or
sustains an injury resulting in his permanent total
disability shall, for each month until his death, be paid by
the System during such a disability, an amount
equivalent to the monthly income benefit, plus ten
percent thereof for each dependent child, but not
Starr Weigand
exceeding five, beginning with the youngest and without
substitution: Provided, That the monthly income benefit
shall be the new amount of the monthly benefit for all
covered pensioners, effective upon approval of this
Decree.
(b) The monthly income benefit shall be guaranteed for
five years, and shall be suspended if the employee is
gainfully employed, or recovers from his permanent total
disability, or fails to present himself for examination at
least once a year upon notice by the System, except as
otherwise provided for in other laws, decrees, orders or
Letters of Instructions. (As amended by Section 5,
Presidential Decree No. 1641).
(c) The following disabilities shall be deemed total and
permanent:
(1) Temporary total disability lasting continuously for
more than one hundred twenty days, except as otherwise
provided for in the Rules;
(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.
(d) The number of months of paid coverage shall be
defined and approximated by a formula to be approved
by the Commission.
ARTICLE. 193. Permanent partial disability. (a) Under
such regulations as the Commission may approve, any
employee under this Title who contracts sickness or
sustains an injury resulting in permanent partial disability
shall, for each month not exceeding the period
designated herein, be paid by the System during such a
disability an income benefit for permanent total disability.
(b) The benefit shall be paid for not more than the period
designated in the following schedules:
Complete and permanent No. of Months
loss of the use of
One thumb 10
One index finger 8
One middle finger 6
One ring finger 5
One little finger 3
One big toe 6
One toe 3
One arm 50
One hand 39
One foot 31
One leg 46
One ear 10
Both ears 20
Hearing of one ear 10
Hearing of both ears 50
Sight of one eye 25
(c) A loss of a wrist shall be considered as a loss of the
hand, and a loss of an elbow shall be considered as a
loss of the arm. A loss of an ankle shall be considered as
loss of a foot, and a loss of a knee shall be considered as
a loss of the leg. A loss of more than one joint shall be
considered as a loss of one-half of the whole finger or
toe: Provided, That such a loss shall be either the
functional loss of the use or physical loss of the member.
(As amended by Section 7, Presidential Decree No. 1368).
(d) In case of permanent partial disability less than the
total loss of the member specified in the preceding
paragraph, the same monthly income benefit shall be
paid for a portion of the period established for the total
loss of the member in accordance with the proportion
that the partial loss bears to the total loss. If the result is
a decimal fraction, the same shall be rounded off to the
next higher integer.
(e) In cases of simultaneous loss of more than one
member or a part thereof as specified in this Article, the
same monthly income benefit shall be paid for a period
equivalent to the sum of the periods established for the
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
loss of the member or the part thereof. If the result is a
decimal fraction, the same shall be rounded off to the
next higher integer.
(f) In cases of injuries or illnesses resulting in a
permanent partial disability not listed in the preceding
schedule, the benefit shall be an income benefit
equivalent to the percentage of the permanent loss of the
capacity to work. (As added by Section 7, Presidential
Decree No. 1368).
(g) Under such regulations as the Commission may
approve, the income benefit payable in case of
permanent partial disability may be paid in monthly
pension or in lump sum if the period covered does not
exceed one year. (As added by Section 7, Presidential
Decree No. 1368).
Nothing in the law prohibits the conversion of permanent
partial disability benefit to permanent total disability benefit, if
it is shown that the employees ailment qualifies as such.
Furthermore, the grant of permanent total disability benefit to
an employee who was initially compensated for permanent
partial disability but is found to be suffering from permanent
total disability would not be prejudicial to the government to
give it reason to deny the claim. This is consistent with the
primary purpose of PD 626, which is to provide meaningful
protection to the working class against the hazards of
disability, illness or other contingencies resulting form the loss
of income as well as the constitutional mandate to afford full
protection to labor.
Chapter VII
DEATH BENEFITS
ARTICLE. 194. Death. - (a) Under such regulations as the
Commission may approve, the System shall pay to the
primary beneficiaries upon the death of the covered
employee under this Title, an amount equivalent to his
monthly income benefit, plus ten percent thereof for each
dependent child, but not exceeding five, beginning with
the youngest and without substitution, except as
provided for in paragraph (j) of Article 167 hereof:
Provided, however, That the monthly income benefit shall
be guaranteed for five years: Provided, further, That if he
has no primary beneficiary, the System shall pay to his
secondary beneficiaries the monthly income benefit but
not to exceed sixty months: Provided, finally, That the
minimum death benefit shall not be less than fifteen
thousand pesos. (As amended by Section 4, Presidential
Decree No. 1921).
(b) Under such regulations as the Commission may
approve, the System shall pay to the primary
beneficiaries upon the death of a covered employee who
is under permanent total disability under this Title, eighty
percent of the monthly income benefit and his
dependents to the dependents pension: Provided, That
the marriage must have been validly subsisting at the
time of disability: Provided, further, That if he has no
primary beneficiary, the System shall pay to his
secondary beneficiaries the monthly pension excluding
the dependents pension, of the remaining balance of the
five-year guaranteed period: Provided, finally, That the
minimum death benefit shall not be less than fifteen
thousand pesos. (As amended by Section 4, Presidential
Decree No. 1921).
(c) The monthly income benefit provided herein shall be
the new amount of the monthly income benefit for the
surviving beneficiaries upon the approval of this decree.
(As amended by Section 8, Presidential Decree No. 1368).
(d) Funeral benefit. A funeral benefit of Three thousand
pesos (P3,000.00) shall be paid upon the death of a
covered employee or permanently totally disabled
pensioner. (As amended by Section 3, Executive Order
No. 179).
The death benefit here is the same in amount as the benefits
Starr Weigand
for permanent total disability or for permanent partial
disability. It is an amount equivalent to his monthly income
benefit, plus 10% for each dependent child
Funeral benefit has been increased by the ECC to
PhP10,000.
Chapter VIII
PROVISIONS COMMON TO INCOME BENEFITS
ARTICLE. 195. Relationship and dependency. All
questions of relationship and dependency shall be
determined as of the time of death.
All questions of relationship are determined as of the time of
death. In the Asiapro case, SSS for the purpose of
determining coverage, can determine the existence of an
employer-employee relationship.
Art. 167 enumerates the dependents:
(i) Dependent means the legitimate,
legitimated or legally adopted or acknowledged
natural child who is unmarried, not gainfully
employed, and not over twenty-one (21) years
of age or over twenty-one (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; the legitimate spouse living with the
employee and the parents of said employee
wholly dependent upon him for regular
support.
The test of dependency: not whether the claimants
could support life without contributions, but whether they
depend on such contributions as part of their income or
means of living.
The ECC is empowered to resolve disputes in
compensation claims. If there are 2 women claiming as
lawful wives of the deceased, the Commission must
resolve the dispute.
The Commission may act as referee and arbitrator
between the claimants and help them reach mutually
acceptable compromise settlement of allotting
compensation among themselves and their dependent
children, if any, in order to avoid unnecessary expense,
delay and litigation between them.
ARTICLE. 196. Delinquent contributions. (a) An
employer who is delinquent in his contributions shall be
liable to the System for the benefits which may have been
paid by the System to his employees or their dependents,
and any benefit and expenses to which such employer is
liable shall constitute a lien on all his property, real or
personal, which is hereby declared to be preferred to any
credit, except taxes. The payment by the employer of the
lump sum equivalent of such liability shall absolve him
from the payment of the delinquent contribution and
penalty thereon with respect to the employee concerned.
(b) Failure or refusal of the employer to pay or remit the
contribution herein prescribed shall not prejudice the
right of the employee or his dependents to the benefits
under this Title. If the sickness, injury, disability or death
occurs before the System receives any report of the
name of his employee, the employer shall be liable to the
System for the lump sum equivalent to the benefits to
which such employee or his dependents may be entitled.
Failure or refusal of the employer to remit the contribution
shall not prejudice the employee and his beneficiaries of the
benefits due under the Title.
ARTICLE. 197. Second injuries. If any employee under
LABORICADIZ 59
permanent partial disability suffers another injury which
results in a compensable disability greater than the
previous injury, the State Insurance Fund shall be liable
for the income benefit of the new disability: Provided,
That if the new disability is related to the previous
disability, the System shall be liable only for the
difference in income benefits.
ARTICLE. 198. Assignment of benefits. No claim for
compensation under this Title is transferable or liable to
tax, attachment, garnishment, levy or seizure by or under
any legal process whatsoever, either before or after
receipt by the person or persons entitled thereto, except
to pay any debt of the employee to the System.
The claims are not transferrable. They are not subject to
garnishment, levy, etc. except to pay debts of the employee to
the system, and such is the only exception.
ARTICLE. 199. Earned benefits. Income benefits shall,
with respect to any period of disability, be payable in
accordance with this Title to an employee who is entitled
to receive wages, salaries or allowances for holidays,
vacation or sick leaves and any other award of benefit
under a collective bargaining or other agreement.
ARTICLE. 200. Safety devices. In case the employees
injury or death was due to the failure of the employer to
comply with any law or to install and maintain safety
devices or to take other precautions for the prevention of
injury, said employer shall pay the State Insurance Fund
a penalty of twenty-five percent (25%) of the lump sum
equivalent of the income benefit payable by the
System to the employee. All employers, specially those
who should have been paying a rate of contribution
higher than required of them under this Title, are
enjoined to undertake and strengthen measures for the
occupational health and safety of their employees.
ARTICLE. 201. Prescriptive period. No claim for
compensation shall be given due course unless said
claim is filed with the System within three (3) years from
the time the cause of action accrued. (As amended by
Section 5, Presidential Decree No. 1921).
The 3 year period is to be counted form the time the
employee lost his earning capacity (the time when the
Cause of Action accrued), not form the time the illness was
discovered.
ARTICLE. 202. Erroneous payment. (a) If the System in
good faith pays income benefit to a dependent who is
inferior in right to another dependent or with whom
another dependent is entitled to share, such payments
shall discharge the System from liability, unless and until
such other dependent notifies the System of his claim
prior to the payments.
(b) In case of doubt as to the respective rights of rival
claimants, the System is hereby empowered to determine
as to whom payments should be made in accordance
with such regulations as the Commission may approve. If
the money is payable to a minor or incompetent, payment
shall be made by the System to such person or persons
as it may consider to be best qualified to take care and
dispose of the minors or incompetents property for his
benefit.
ARTICLE. 203. Prohibition. No agent, attorney or other
person pursuing or in charge of the preparation or filing
of any claim for benefit under this Title shall demand or
charge for his services any fee, and any stipulation to the
contrary shall be null and void. The retention or
deduction of any amount from any benefit granted under
this Title for the payment of fees for such services is
prohibited. Violation of any provision of this Article shall
be punished by a fine of not less than five hundred pesos
nor more than five thousand pesos, or imprisonment for
Starr Weigand
not less than six months nor more than one year, or both,
at the discretion of the court.
According to Sir, this provision is confusing. If you act as
lawyer of a person claiming against the fund, you cannot
demand attorneys fees. If the government will pay, the
claimant is exempted. It may be interpreted to mean that a
lawyer cannot claim any fees whatsoever.
ARTICLE. 204. Exemption from levy, tax, etc. All laws to
the contrary notwithstanding, the State Insurance Fund
and all its assets shall be exempt from any tax, fee,
charge, levy, or customs or import duty and no law
hereafter enacted shall apply to the State Insurance Fund
unless it is provided therein that the same is applicable
by expressly stating its name.
Chapter IX
RECORDS, REPORTS AND PENAL PROVISIONS
ARTICLE. 205. Record of death or disability. - (a) 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 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.
(b) All entries in the employers logbook shall be made by
the employer or any of his authorized official after
verification of the contingencies or the employees
absences for a period of a day or more. Upon request by
the System, the employer shall furnish the necessary
certificate regarding information about any contingency
appearing in the logbook, citing the entry number, page
number and date. Such logbook shall be made available
for inspection to the duly authorized representative of the
System.
(c) Should any employer fail to record in the logbook an
actual sickness, injury or death of any of his employees
within the period prescribed herein, give false
information or withhold material information already in
his possession, he shall be held liable for fifty percent of
the lump sum equivalent of the income benefit to which
the employee may be found to be entitled, the payment of
which shall accrue to the State Insurance Fund.
(d) In case of payment of benefits for any claim which is
later determined to be fraudulent and the employer is
found to be a party to the fraud, such employer shall
reimburse the System the full amount of the
compensation paid.
ARTICLE. 206. Notice of sickness, injury or death.
Notice of sickness, injury or death shall be given to the
employer by the employee or by his dependents or
anybody on his behalf within five days from the
occurrence of the contingency. No notice to the employer
shall be required if the contingency is known to the
employer or his agents or representatives.
Art. 206 is very, very important. If you were injured or with
an illness the General Rule is to notify the employer within 5
day from the occurrence of the contingency, but such
notification is not required if the contingency is known by the
employer. See ECC Resolution no. 2127 below.
ECC Resolution No. 2127: Notice of injury, sickness or
death of the employee need not be given to the employer in
any of the following situations:
1) When the employee suffers the contingency within
the employers premises;
2) When the employee officially files an application for
leave of absence by reason of the contingency from
which he suffers;
3) When the employer provides medical services
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
 and/or medical supplies to the employee who
suffers from the contingency; and
4) When the employer can be reasonably presumed to
have knowledge of the employees contingency, in
view of the following circumstances:
- The employee was performing an official
function for the employer when the
contingency occurred;
- The employees contingency has been
publicized through mass media outlets; or
- The specific circumstances of the occurrence
of the contingency have been such that the
employer can be reasonably presumed to
have readily known it soon thereafter; and
- Any other circumstances that may give rise to
a reasonable presumption that the employer
has been aware of the contingency.
It has been held that the employers act of extending and
paying for the medical assistance suffices for and obviates
the need to give the employer the notice required by the law.
ARTICLE. 207. Penal provisions. (a) The penal
provisions of Republic Act Numbered Eleven Hundred
Sixty-One, as amended, and Commonwealth Act
Numbered One Hundred Eighty-Six, as amended, with
regard to the funds as are thereunder being paid to,
collected or disbursed by the System, shall be applicable
to the collection, administration and disbursement of the
Funds under this Title. The penal provisions on coverage
shall also be applicable.
(b) Any person who, for the purpose of securing
entitlement to any benefit or payment under this Title, or
the issuance of any certificate or document for any
purpose connected with this Title, whether for him or for
some other person, commits fraud, collusion,
falsification, misrepresentation of facts or any other kind
of anomaly, shall be punished with a fine of not less than
five hundred pesos nor more than five thousand pesos
and an imprisonment for not less than six months nor
more than one year, at the discretion of the court.
(c) If the act penalized by this Article is committed by any
person who has been or is employed by the Commission
or System, or a recidivist, the imprisonment shall not be
less than one year; if committed by a lawyer, physician or
other professional, he shall, in addition to the penalty
prescribed herein, be disqualified from the practice of his
profession; and if committed by any official, employee or
personnel of the Commission, System or any government
agency, he shall, in addition to the penalty prescribed
herein, be dismissed with prejudice to re-employment in
the government service.
ARTICLE. 208. Applicability. This Title shall apply only
to injury, sickness, disability or death occurring on or
after January 1, 1975.
ARTICLE. 208-A. Repeal. All existing laws, Presidential
Decrees and Letters of Instructions which are
inconsistent with or contrary to this Decree, are hereby
repealed: Provided, That in the case of the GSIS,
conditions for entitlement to benefits shall be governed
by the Labor Code, as amended: Provided, however, That
the formulas for computation of benefits, as well as the
contribution base, shall be those provided under
Commonwealth Act Numbered One Hundred Eighty-Six,
as amended by Presidential Decree No. 1146, plus twenty
percent thereof. (As added by Section 9, Presidential
Decree No. 1368 [May 1, 1978] and subsequently
amended by Section 7, Presidential Decree No. 1641).
Title III
MEDICARE
ARTICLE. 209. Medical care. The Philippine Medical
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Care Plan shall be implemented as provided under
Republic Act Numbered Sixty-One Hundred Eleven, as
amended.
National Health Insurance Art (RA 7875): initiated the
National Health Insurance Program intending to provide
health insurance coverage and health care services for all
Filipinos. Implementation is the task of the Philippines Health
Insurance Corporation. PHIC has taken over the assets and
functions of the Philippines Medical Care Commission, which
therefore no longer exists. In or about the year 2000, PHIC is
expected to do Medicare operations of SSS and GSIS.
Title IV
ADULT EDUCATION
ARTICLE. 210. Adult education. Every employer shall
render assistance in the establishment and operation of
adult education programs for their workers and
employees as prescribed by regulations jointly approved
by the Department of Labor and Employment and the
Department of Education, Culture and Sports.
Annex A
REPUBLIC ACT NO. 7277
.
AN ACT PROVIDING FOR THE REHABILITATION, SELF-DEVELOPMENT AND
SELF-RELIANCE OF DISABLED PERSONS AND THEIR INTEGRATION INTO
THE MAINSTREAM OF SOCIETY AND FOR OTHER PURPOSES.
TITLE I GENERAL PROVISIONS
CHAPTER I BASIC PRINCIPLE
Section 1. Title. This Act shall be known and cited as the "Magna Carta for
Disabled Persons."
Sec. 2. Declaration of Policy The grant of the rights and privileges for
disabled persons shall be guided by the following principles:
(a) Disabled persons are part of Philippine society, thus the State shall give
full support to the improvement of the total well-being of disabled persons
and their integration into the mainstream of society. Toward this end, the
State shall adopt policies ensuring the rehabilitation, self-development and
self-reliance of disabled persons. It shall develop their skills and potentials
to enable them to compete favorably for available opportunities.
chan robles virtual law library
(b) Disabled persons have the same rights as other people to take their
proper place in society. They should be able to live freely and as
independently as possible. This must be the concern of everyone the
family, community and all government and nongovernment organizations.
Disabled persons' rights must never be perceived as welfare services by the
Government.
(c) The rehabilitation of the disabled persons shall be the concern of the
Government in order to foster their capacity to attain a more meaningful,
productive and satisfying life. To reach out to a greater number of disabled
persons, the rehabilitation services and benefits shall be expanded beyond
the traditional urban-based centers to community based programs, that will
ensure full participation of different sectors as supported by national and
local government agencies.
(d) The State also recognizes the role of the private sector in promoting the
welfare of disabled persons and shall encourage partnership in programs
that address their needs and concerns.
(e) To facilitate integration of disabled persons into the mainstream of
society, the State shall advocate for and encourage respect for disabled
persons. The State shall exert all efforts to remove all social, cultural,
economic, environmental and attitudinal barriers that are prejudicial to
disabled persons.
Sec. 3. Coverage. This Act shall cover all disabled persons and, to the
extent herein provided, departments, offices and agencies of the National
Government or nongovernment organizations involved in the attainment of
the objectives of this Act.
Sec. 4. Definition of Terms. For purposes of this Act, these terms are
defined as follows:
(a) Disabled persons are those suffering from restriction or different abilities,
as a result of a mental, physical or sensory impairment, to perform an
activity in the manner or within the range considered normal for a human
being;
(b) Impairment is any loss, diminution or aberration of psychological,
physiological, or anatomical structure or function;
LABORICADIZ 61
(c) Disability shall mean 1) a physical or mental impairment that substantially
limits one or more psychological, physiological or anatomical function of an
individual or activities of such individual; 2) a record of such an impairment;
or 3) being regarded as having such an impairment;
(d) Handicap refers to a disadvantage for a given individual, resulting from
an impairment or a disability, that limits or prevents the function or activity,
that is considered normal given the age and sex of the individual;
(e) Rehabilitation is an integrated approach to physical, social, cultural,
spiritual, educational and vocational measures that create conditions for the
individual to attain the highest possible level of functional ability;
(f) Social Barriers refer to the characteristics of institutions, whether legal,
economic, cultural, recreational or other, any human group, community, or
society which limit the fullest possible participation of disabled persons in
the life of the group. Social barriers include negative attitudes which tend to
single out and exclude disabled persons and which distort roles and inter-
personal relationships;
(g) Auxiliary Aids and Services include:
(1) qualified interpreters or other effective methods of delivering materials to
individuals with hearing impairments;
(2) qualified readers, taped tests, or other effective methods of delivering
materials to individuals with visual impairments;
(3) acquisition or modification of equipment or devices; and
(4) other similar services and actions or all types of aids and services that
facilitate the learning process of people with mental disability.
(h) Reasonable Accommodation include 1) improvement of existing facilities
used by employees in order to render these readily accessible to and usable
by disabled persons; and 2) modification of work schedules, reassignment
to a vacant position, acquisition or modification of equipment or devices,
appropriate adjustments or modifications of examinations, training materials
or company policies, rules and regulations, the provision of auxiliary aids
and services, and other similar accommodations for disabled persons;
(i) Sheltered Employment refers to the provision of productive work for
disabled persons through workshops providing special facilities, income-
producing projects or homework schemes with a view to giving them the
opportunity to earn a living thus enabling them to acquire a working capacity
required in open industry;
(j) Auxiliary Social Services are the supportive activities in the delivery of
social services to the marginalized sectors of society;
(k) Marginalized Disabled Persons refer to disabled persons who lack access
to rehabilitative services and opportunities to be able to participate fully in
socioeconomic activities and who have no means of livelihood and whose
incomes fall below the poverty threshold;
(l) Qualified Individual with a Disability shall mean an individual with a
disability who, with or without reasonable accommodations, can perform the
essential functions of the employment position that such individual holds or
desires. However, consideration shall be given to the employer's judgment
as to what functions of a job are essential, and if an employer has prepared a
written description before advertising or interviewing applicants for the job,
this description shall be considered evidence of the essential functions of
the job;
(m) Readily Achievable means a goal can be easily attained and carried out
without much difficulty or expense. In determining whether an action is
readily achievable, factors to be considered include
(1) the nature and cost of the action;
(2) the overall financial resources of the facility or facilities involved in the
action; the number of persons employed at such facility; the effect on
expenses and resources, or the impact otherwise of such action upon the
operation of the facility;
(3) the overall financial resources of the covered entity with respect to the
number of its employees; the number, type and location of its facilities; and
(4) the type of operation or operations of the covered entity, including the
composition, structure and functions of the work force of such entity; the
geographic separateness, administrative or fiscal relationship of the facility
or facilities in question to the covered entity.
(n) Public Transportation means transportation by air, land and sea that
provides the public with general or special service on a regular and
continuing basis;
(o) Covered Entity means an employer, employment agency, labor
organization or joint-labor management committee; and
(p) Commerce shall be taken to mean as travel, trade, traffic, commerce,
transportation, or communication among the provinces or between any
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foreign country or any territory or possession and any province.
TITLE II
RIGHTS AND PRIVILEGES OF DISABLED PERSONS
CHAPTER I EMPLOYMENT
Sec. 5. Equal Opportunity for Employment. No disable person shall be
denied access to opportunities for suitable employment. A qualified disabled
employee shall be subject to the same terms and conditions of employment
and the same compensation, privileges, benefits, fringe benefits, incentives
or allowances as a qualified able bodied person.
Five percent (5%) of all casual emergency and contractual positions in the
Departments of Social Welfare and Development; Health; Education, Culture
and Sports; and other government agencies, offices or corporations
engaged in social development shall be reserved for disabled persons.
Sec. 6. Sheltered Employment If suitable employment for disabled
persons cannot be found through open employment as provided in the
immediately preceding Section, the State shall endeavor to provide it by
means of sheltered employment. In the placement of disabled persons in
sheltered employment, it shall accord due regard to the individual qualities,
vocational goals and inclinations to ensure a good working atmosphere and
efficient production.
Sec. 7. Apprenticeship. Subject to the provisions of the Labor Code as
amended, disabled persons shall be eligible as apprentices or learners:
Provided, That their handicap is not as much as to effectively impede the
performance of job operations in the particular occupation for which they
are hired; Provided, further, That after the lapse of the period of
apprenticeship, if found satisfactory in the job performance, they shall be
eligible for employment.
Sec. 8. Incentives for Employers. (a) To encourage the active
participation of the private sector in promoting the welfare of disabled
persons and to ensure gainful employment for qualified disabled persons,
adequate incentives shall be provided to private entities which employ
disabled persons.
(b) Private entities that employ disabled persons who meet the required
skills or qualifications, either as regular employee, apprentice or learner,
shall be entitled to an additional deduction, from their gross income,
equivalent to twenty-five percent (25%) of the total amount paid as salaries
and wages to disabled persons: Provided, however, That such entities
present proof as certified by the Department of Labor and Employment that
disabled persons are under their employ: Provided, further, That the
disabled employee is accredited with the Department of Labor and
Employment and the Department of Health as to his disability, skills and
qualifications.
(c) Private entities that improve or modify their physical facilities in order to
provide reasonable accommodation for disabled persons shall also be
entitled to an additional deduction from their net taxable income, equivalent
to fifty percent (50%) of the direct costs of the improvements or
modifications. This Section, however, does not apply to improvements or
modifications of facilities required under Batas Pambansa Bilang 344. chan
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Sec. 9. Vocational Rehabilitation. Consistent with the principle of equal
opportunity for disabled workers and workers in general, the State shall take
appropriate vocational rehabilitation measures that shall serve to develop
the skills and potentials of disabled persons and enable them to compete
favorably for available productive and remunerative employment
opportunities in the labor market.
The State shall also take measures to ensure the provision of vocational
rehabilitation and livelihood services for disabled persons in the rural areas.
In addition, it shall promote cooperation and coordination between the
government and nongovernmental organizations and other private entities
engaged in vocational rehabilitation activities.
The Department of Social Welfare and Development shall design and
implement training programs that will provide disabled persons with
vocational skills to enable them to engage in livelihood activities or obtain
gainful employment. The Department of Labor and Employment shall
likewise design and conduct training programs geared towards providing
disabled persons with skills for livelihood.
Sec. 10. Vocational Guidance and Counseling. The Department of Social
and Welfare and Development, shall implement measures providing and
evaluating vocational guidance and counseling to enable disabled persons
to secure, retain and advance in employment. It shall ensure the availability
and training of counselors and other suitably qualified staff responsible for
the vocational guidance and counseling of disabled persons.
Sec. 11. Implementing Rules and Regulations. The Department of Labor
and Employment shall in coordination with the Department of Social Welfare
and Development (DSWD) and National Council for the Welfare of the
Disabled Persons (NCWDP) shall promulgate the rules and regulations
necessary to implement the provisions under this Chapter.
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
 CHAPTER II EDUCATION
Sec. 12. Access to Quality Education. The State shall ensure that
disabled persons are provided with access to quality education and ample
opportunities to develop their skills. It shall take appropriate steps to make
such education accessible to all disabled persons. It shall be unlawful for
any learning institution to deny a disabled person admission to any course it
offers by reason of handicap or disability.
The State shall take into consideration the special requirements of disabled
persons in the formulation of educational policies and programs. It shall
encourage learning institutions to take into account the special needs of
disabled persons with respect to the use of school facilities, class
schedules, physical education requirements, and other pertinent
consideration.
The State shall also promote the provision by learning institutions,
especially higher learning institutions of auxiliary services that will facilitate
the learning process for disabled persons.
Sec. 13. Assistance to Disabled Students. The State shall provide
financial assistance to economically marginalized but deserving disabled
students pursuing post secondary or tertiary education. Such assistance
may be in the form of scholarship grants, student loan programs, subsidies,
and other incentives to qualified disabled students in both public and private
schools. At least five percent (5%) of the allocation for the Private Education
Student Financial Assistance Program created by virtue of R.A. 6725 shall be
set aside for disabled students pursuing vocational or technical and degree
courses.
Sec. 14. Special Education. The State shall establish, maintain and
support complete, adequate and integrated system of special education for
the visually impaired, hearing impaired, mentally retarded persons and other
types of exceptional children in all regions of the country. Toward this end,
the Department of Education, Culture and Sports shall establish, special
education classes in public schools in cities, or municipalities. It shall also
establish, where viable, Braille and Record Libraries in provinces, cities or
municipalities.
The National Government shall allocate funds necessary for the effective
implementation of the special education program nationwide. Local
government units may likewise appropriate counterpart funds to supplement
national funds.
Sec. 15. Vocational or Technical and Other Training Programs. The State
shall provide disabled persons with training in civics, vocational efficiency,
sports and physical fitness, and other skills. The Department of Education,
Culture and Sports shall establish in at least one government-owned
vocational and technical school in every province a special vocational and
technical training program for disabled persons. It shall develop and
implement sports and physical fitness programs specifically designed for
disabled persons taking into consideration the nature of their handicap.
Sec. 16. Non-Formal Education. The State shall develop non-formal
education programs intended for the total human development of disabled
persons. It shall provide adequate resources for non-formal education
programs and projects that cater to the special needs of disabled persons.
Sec. 17. State Universities and Colleges. If viable and needed, the State
University or State College in each region or province shall be responsible
for (a) the development of material appliances and technical aids for
disabled persons; (b) the development of training materials for vocational
rehabilitation and special education instructions; (c) the research on special
problems, particularly of the visually-impaired, hearing-impaired, speech-
impaired, and orthopedically-impaired students, mentally retarded, and
multi-handicapped and others, and the elimination of social barriers and
discrimination against disabled persons; and (d) inclusion of the Special
Education for Disabled (SPED) course in the curriculum.
The National Government shall provide these state universities and colleges
with necessary special facilities for visually-impaired, hearing-impaired,
speech-impaired, and orthopedically-impaired students. It shall likewise
allocate the necessary funds in support of the above.
CHAPTER III HEALTH
Sec. 18. National Health Program. The Department of Health in
coordination with the National Council for the Welfare of Disabled Persons,
shall institute a national health program which shall aim to attain the
following:
(a) prevention of disability, whether occurring prenatally or postnatally;
(b) recognition and early diagnosis of disability; and
(c) early rehabilitation of the disabled.
Sec. 19. Rehabilitation Centers. The Department of Health shall establish
medical rehabilitation centers in government provincial hospitals, and shall
include in its annual appropriation the necessary funds for the operation of
such centers.
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The Department of Health shall formulate and implement a program to
enable marginalized disabled persons to avail of free rehabilitation services
in government hospitals.
Sec. 20. Health Services. The State shall protect and promote the right to
health of disabled persons and shall adopt an integrated and comprehensive
approach to their health development which shall make essential health
services available to them at affordable cost.
The National Government shall provide an integrated health service for
disabled persons which shall include, but not limited to, the following:
(a) prevention of disability through immunization, nutrition, environmental
protection and preservation, and genetic counseling; and early detection of
disability and timely intervention to arrest disabling condition; and
(b) medical treatment and rehabilitation.
The Department of Health shall field medical personnel specializing in the
treatment and rehabilitation of disabled persons to provincial hospitals and,
when viable, to municipal health centers. It shall also train its field health
personnel in the provision of medical attention to disabled persons. It shall
further ensure that its field health units have the necessary capabilities to fit
prosthetic and orthotic appliances on disabled persons.
CHAPTER IV AUXILIARY SOCIAL SERVICES
Sec. 21. Auxiliary Social Services. The State shall ensure that
marginalized persons are provided with the necessary auxiliary services that
will restore their social functioning and participation in community affairs.
Towards this end, the Department of Social Welfare and Development shall
develop and implement programs on auxiliary social services that respond
to the needs of marginalized disabled persons. The components of such a
program shall be as follows:
(a) assistance in the acquisition of prosthetic devices and medical
intervention of specialty services;
(b) provision of specialized training activities designed to improve functional
limitations of disabled persons related to communication skills;
(c) development among disabled persons of a positive self-image through
the provision of counseling, orientation and mobility and strengthening daily
living capability;
(d) provision of family care services geared towards developing the
capability of families to respond to the needs of the disabled members of the
family;
(e) provision of substitute family care services and the facilities therefor for
abandoned, neglected, abused and unattached disabled persons who need
custodial care;
(f) provision of after care and follow-up services for the continued
rehabilitation in a community-based setting of disabled persons who were
released from residential care or rehabilitation centers; and
(g) provision of day care services for disabled children of pre-school age.
CHAPTER V
TELECOMMUNICATIONS
Sec. 22. Broadcast Media. Television stations shall be encouraged to
provide a signlanguage inset or subtitles in at least one (1) newscast
program a day and special programs covering events of national
significance.
Sec. 23. Telephone Services. All telephone companies shall be
encouraged to install special telephone devices or units for the hearing-
impaired and ensure that they are commercially available to enable them to
communicate through the telephone system.
Sec. 24. Free Postal Charges for the Disabled. Postal charges shall be
free on the following:
(a) articles and literatures like books and periodicals, orthopedic and other
devices, and teaching aids for the use of the disabled sent by mail within the
Philippines and abroad; and
(b) aids and orthopedic devices for the disabled sent by abroad by mail for
repair:
Provided, That the aforesaid items are for personal purposes only: Provided,
further, That the disabled person is a marginalized disabled as certified by
the Social Welfare and Development Office of the local government unit
concerned or the Department of Social Welfare and Development.
CHAPTER VI ACCESSIBILITY
Sec. 25. Barrier-Free Environment. The State shall ensure the attainment
LABORICADIZ 63
of a barrier-free environment that will enable disabled persons to have
access in public and private buildings and establishments and such other
places mentioned in Batas Pambansa Bilang 344, otherwise known as the
"Accessibility Law".
The national and local governments shall allocate funds for the provision of
architectural facilities or structural features for disabled persons in
government buildings and facilities.
Sec. 26. Mobility. The State shall promote the mobility of disabled
persons. Disabled persons shall be allowed to drive motor vehicles, subject
to the rules and regulations issued by the Land Transportation Office
pertinent to the nature of their disability and the appropriate adaptations or
modifications made on such vehicles.
Sec. 27. Access to Public Transport Facilities. The Department of Social
Welfare and Development shall develop a program to assist marginalized
disabled persons gain access in the use of public transport facilities. Such
assistance may be in the form of subsidized transportation fare.
The said department shall also allocate such funds as may be necessary for
the effective implementation of the public transport program for the disabled
persons.
The "Accessibility Law", as amended, shall be made suppletory to this Act.
Sec. 28. Implementing Rules and Regulations. The Department of
Transportation and Communications shall formulate the rules and
regulations necessary to implement the provisions of this Chapter.
CHAPTER VII
POLITICAL AND CIVIL RIGHTS
Sec. 29. System of Voting. Disabled persons shall be allowed to be
assisted by a person of his choice in voting in the national or local elections.
The person thus chosen shall prepare the ballot for the disabled voter inside
the voting booth. The person assisting shall bind himself in a formal
document under oath to fill out the ballot strictly in accordance with the
instructions of the voter and not to reveal the contents of the ballot prepared
by him. Violation of this provision shall constitute an election offense.
Polling places should be made accessible to disabled persons during
national or local elections.
Sec. 30. Right to Assemble. Consistent with the provisions of the
Constitution, the State shall recognize the right of disabled persons to
participate in processions, rallies, parades, demonstrations, public
meetings, and assemblages or other forms of mass or concerned action held
in public.
Sec. 31. Right to Organize. The State recognizes the right of disabled
persons to form organizations or associations that promote their welfare and
advance or safeguard their interests. The National Government, through its
agencies, instrumentalities and subdivisions, shall assist disabled persons
in establishing self-help organizations by providing them with necessary
technical and financial assistance.
Concerned government agencies and offices shall establish close linkages
with organizations of the disabled persons in order to respond expeditiously
to the needs of disabled persons. National line agencies and local
government units shall assist disabled persons in setting up specific
projects that will be managed like business propositions.
To ensure the active participation of disabled persons in the social and
economic development of the country, their organizations shall be
encouraged to participate in the planning, organization and management of
government programs and projects for disabled persons.
Organizations of disabled persons shall participate in the identification and
preparation of programs that shall serve to develop employment
opportunities for the disabled persons.
TITLE III PROHIBITION ON DISCRIMINATION AGAINST DISABLED
PERSONS CHAPTER I DISCRIMINATION ON EMPLOYMENT
Sec. 32. Discrimination on Employment. No entity, whether public or
private, shall discriminate against a qualified disabled person by reason of
disability in regard to job application procedures, the hiring, promotion, or
discharge of employees, employee compensation, job training, and other
terms, conditions, and privileges of employment. The following constitute
acts of discrimination:
(a) Limiting, segregating or classifying a disabled job applicant in such a
manner that adversely affects his work opportunities;
(b) Using qualification standards, employment tests or other selection
criteria that screen out or tend to screen out a disabled person unless such
standards, tests or other selection criteria are shown to be job-related for the
position in question and are consistent with business necessity;
(c) Utilizing standards, criteria, or methods of administration that:
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(1) have the effect of discrimination on the basis of disability;
or (2) perpetuate the discrimination of others who are subject to common
administrative control.
(d) Providing less compensation, such as salary, wage or other forms of
remuneration and fringe benefits, to a qualified disabled employee, by
reason of his disability, than the amount to which a non-disabled person
performing the same work is entitled;
(e) Favoring a non-disabled employee over a qualified disabled employee
with respect to promotion, training opportunities, study and scholarship
grants, solely on account of the latter's disability;
(f) Re-assigning or transferring a disabled employee to a job or position he
cannot perform by reason of his disability;
(g) Dismissing or terminating the services of a disabled employee by reason
of his disability unless the employer can prove that he impairs the
satisfactory performance of the work involved to the prejudice of the
business entity: Provided, however, That the employer first sought to
provide reasonable accommodations for disabled persons;
(h) Failing to select or administer in the most effective manner employment
tests which accurately reflect the skills, aptitude or other factor of the
disabled applicant or employee that such tests purports to measure, rather
than the impaired sensory, manual or speaking skills of such applicant or
employee, if any; and
(i) Excluding disabled persons from membership in labor unions or similar
organizations.
Sec. 33. Employment Entrance Examination. Upon an offer of
employment, a disabled applicant may be subjected to medical examination,
on the following occasions:
(a) all entering employees are subjected to such an examination regardless
of disability;
(b) information obtained during the medical condition or history of the
applicant is collected and maintained on separate forms and in separate
medical files and is treated as a confidential medical record; Provided,
however, That:
(1) supervisors and managers may be informed regarding necessary
restrictions on the work or duties of the employees and necessary
accommodations;
(2) first aid and safety personnel may be informed, when appropriate, if the
disability may require emergency treatment;
(3) government officials investigating compliance with this Act shall be
provided relevant information on request; and
(4) the results of such examination are used only in accordance with this
Act.
CHAPTER II
DISCRIMINATION ON TRANSPORTATION
Sec. 34. Public Transportation. It shall be considered discrimination for
the franchisees or operators and personnel of sea, land, and air
transportation facilities to charge higher fare or to refuse to convey a
passenger, his orthopedic devices, personal effects, and merchandise by
reason of his disability.
CHAPTER III
DISCRIMINATION ON THE USE OF PUBLIC ACCOMMODATIONS AND
SERVICES
Sec. 35. Public Accommodations and Services. For purposes of this
Chapter, public accommodations and services shall include the following:
(a) an inn, hotel, motel, or other place of lodging, except for an
establishment located within a building that contains not more than five (5)
rooms for rent or hire and that is actually occupied by the proprietor of such
establishment as the residence of such proprietor;
(b) a restaurant, bar, or other establishment serving food or drink;
(c) a motion picture, theater, concert hall, stadium, or other place of
exhibition or entertainment;
(d) an auditorium, convention center, lecture hall, or other place of public
gathering;
(e) a bakery, grocery store, hardware store, shopping center, or other sales
or rental establishment;
(f) a bank, barber shop, beauty shop, travel service, funeral parlor, gas
station, office of a lawyer, pharmacy, insurance office, professional office of
a health care provider, hospital or other service establishment;
(g) a terminal, depot, or other station used for specified public
transportation;
(h) a museum, gallery, library or other place of public display or collection;
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
(i) a park, zoo, amusement park, or other place of recreation;
(j) a nursery, elementary, secondary, undergraduate, or post-graduate
private school, or other place of education;
(k) a gymnasium, health spa, bowling alley, golf course; or
(l) other place of exercise or recreation.
Sec. 36. Discrimination on the Use of Public Accommodations. (a) No
disabled person shall be discriminated on the basis of disability in the full
and equal enjoyment of the goods, services, facilities, privileges,
advantages or accommodations of any place of public accommodation by
any person who owns, leases, or operates a place of public accommodation.
The following constitute acts of discrimination:
(1) denying a disabled person, directly or through contractual, licensing, or
other arrangement, the opportunity to participate in or benefit from the
goods, services, facilities, privileges, advantages, or accommodations of an
entity by reason of his disability;
(2) affording a disabled person, on the basis of his disability, directly or
through contractual, licensing, or other arrangement, with the opportunity to
participate in or benefit from a good service, facility, privilege, advantage, or
accommodation that is not equal to that afforded to other able-bodied
persons; and
(3) providing a disabled person, on the basis of his disability, directly or
through contractual, licensing, or other arrangement, with a good, service,
facility, advantage, privilege, or accommodation that is different or separate
form that provided to other able-bodied persons unless such action is
necessary to provide the disabled person with a good, service, facility,
advantage, privilege, or accommodation, or other opportunity that is as
effective as that provided to others;
For purposes of this Section, the term "individuals or class of individuals"
refers to the clients or customers of the covered public accommodation that
enters into the contractual, licensing or other arrangement.
(b) Integrated Settings Goods, services, facilities, privileges, advantages,
and accommodations shall be afforded to individual with a disability in the
most integrated setting appropriate to the needs of the individual.
(c) Opportunity to Participate Notwithstanding the existence of separate
or different programs or activities provided in accordance with this Section,
an individual with a disability shall not be denied the opportunity to
participate in such programs or activities that are not separate or different.
(d) Association It shall be discriminatory to exclude or otherwise deny
equal goods, services, facilities, advantages, privileges, accommodations or
other opportunities to an individual or entity because of the known disability
of an individual with whom the individual or entity is known to have a
relationship or association.
(e) Prohibitions For purposes of this Section, the following shall be
considered as discriminatory:
(1) the imposition or application of eligibility criteria that screen out or tend
to screen out an individual with a disability or any class or individuals with
disabilities from fully and equally enjoying any goods, services, facilities,
privileges, advantages, or accommodations, unless such criteria can be
shown to be necessary for the provision of the goods, services, facilities,
privileges, or accommodations being offered;
(2) a failure to make reasonable modifications in policies, practices, or
procedures, when such modifications are necessary to afford such goods,
services, facilities, privileges, advantages, or accommodations to
individuals with disabilities, unless the entity can demonstrate that making
such modifications would fundamentally alter the nature of the goods,
facilities, services, privileges, advantages, or accommodations;
(3) failure to take such steps as may be necessary to ensure that no
individual with a disability is excluded, denied services, segregated or
otherwise treated differently than other individuals because of the absence
of auxiliary aids and services, unless the entity can demonstrate that taking
such steps would fundamentally alter the nature of the good, service,
facility, privilege, advantage or accommodation being offered or would result
in undue burden;
(4) a failure to remove architectural barriers, and communication barriers
that are structural in nature, in existing facilities, where such removal is
readily achievable; and
(5) where an entity can demonstrate that the removal of a barrier under
clause (4) is not readily achievable, a failure to make such goods, services,
facilities, privileges, advantages, or accommodations available through
alternative methods if such methods are readily achievable.chan robles virtual
law library
Sec. 37. Use of Government Recreational or Sports Centers Free of Charge.
Recreational or sports centers owned or operated by the Government
shall be used, free of charge, by marginalized disabled persons during their
social, sports or recreational activities.
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Sec. 38. Implementing Rules and Regulations. The Department of Public
Works and Highways shall formulate the rules and regulations necessary to
implement the provisions of this Chapter.
TITLE IV FINAL PROVISIONS
Sec. 39. Housing Program. The National Government shall take into
consideration in its national shelter program the special housing
requirements of disabled persons.
Sec. 40. Role of National Agencies and Local Government Units. Local
government units shall promote the establishment of organizations of
disabled persons in their respective territorial jurisdictions. National
agencies and local government units may enter into joint ventures with
organizations or associations of disabled persons to explore livelihood
opportunities and other undertakings that shall enhance the health, physical
fitness and the economic and social well-being of disabled persons.
Sec. 41. Support From Nongovernment Organizations. Nongovernment
organizations or private volunteer organizations dedicated to the purpose of
promoting and enhancing the welfare of disabled persons shall, as they, are
hereby encouraged, become partners of the Government in the
implementation of vocational rehabilitation measures and other related
programs and projects. Accordingly, their participation in the
implementation of said measures, programs and projects is to be extended
all possible support by the Government.
The Government shall sponsor a volunteer service program which shall
harness the involvement of private individuals in the provision of assistance
to disabled persons.
Sec. 42. Tax Incentives. (a) Any donation, bequest, subsidy or financial
aid which may be made to government agencies engaged in the
rehabilitation of disabled persons and organizations of disabled persons
shall be exempt from the donor's tax subject to the provisions of Section 94
of the National Internal Revenue Code (NIRC), as amended and shall be
allowed as deductions from the donor's gross income for purposes of
computing the taxable income subject to the provisions of Section 29 (h) of
the Code.
(b) Donations from foreign countries shall be exempt from taxes and duties
on importation subject to the provisions of Section 105 of the Tariff and
Customs Code of the Philippines, as amended, Section 103 of the NIRC, as
amended and other relevant laws and international agreements.
(c) Local manufacturing or technical aids and appliances used by disabled
persons shall be considered as a preferred area of investment subject to the
provisions of Executive Order No. 226 otherwise known as the "Omnibus
Investments Code of 1987" and, as such, shall enjoy the rights, privileges
and incentives as provided in said Code such as, but not limited, to the
following:
(1) repatriation of investments;
(2) remittance of earnings;
(3) remittance of payments on foreign contracts;
(4) freedom from expropriations;
(5) freedom from requisition of investment;
(6) income tax holiday;
(7) additional deduction for labor expense;
(8) tax and duty exemption on imported capital equipment;
(9) tax credit on domestic capital equipment;
(10) exemption from contractor's tax;
(11) simplification of customs procedures;
(12) unrestricted use of consigned equipment;
(13) employment of foreign nationals;
(14) tax credit for taxes and duties on raw materials;
LABORICADIZ 65
(15) access to bonded manufacturing/traded warehouse system;
(16) exemption from taxes and duties on imported spare parts; and
(17) exemption from wharfage dues and any export tax, duty, impost and
fee.
Sec. 43. Continuity Clause. Should any department or agency tasked with
the enforcement or formulation of rules and regulations and guidelines for
implementation of any provision of this Act is abolished, merged with
another department or agency or modified, such shall not affect the
enforcement or formulation of rules, regulations and guidelines for
implementation of this Act to the effect that
(a) In case of abolition, the department or agency established to replace the
abolished department or agency shall take-over the functions under this Act
of the abolished department or agency.
(b) In case the department or agency tasked with the enforcement or
formulation of rules, regulations and guidelines for implementation of this
Act is merged with another department or agency, the former shall continue
the functions under this Act of the merged department or agency.
(c) In case of modification, the department or agency modified shall continue
the functions under this Act of the department or agency that has undergone
the modification.
Sec. 44. Enforcement by the Secretary of Justice.
(a) Denial of Right
(1) Duty to Investigate the Secretary of Justice shall investigate alleged
violations of this Act, and shall undertake periodic reviews of compliance of
covered entities under this Act.
(b) Potential Violations If the Secretary of Justice has reasonable cause to
believe that
(1) any person or group of persons is engaged in a pattern or practice of
discrimination under this Act; or
(2) any person or group or persons has been discriminated against under
this Act and such discrimination raises an issue of general public
importance, the Secretary of Justice may commence a legal action in any
appropriate court.
Sec. 45. Authority of Court. The court may grant any equitable relief that
such court considers to be appropriate, including, to the extent required by
this Act:
(a) granting temporary, preliminary or permanent relief;
(b) providing an auxiliary aid or service, modification of policy, practice or
procedure, or alternative method; and
(c) making facilities readily accessible to and usable by individuals with
disabilities.
Sec. 46. Penal Clause. (a) Any person who violates any provision of this
Act shall suffer the following penalties:
(1) for the first violation, a fine of not less than Fifty thousand pesos
(P50,000.00) but not exceeding One hundred thousand pesos (P100,000.00)
or imprisonment of not less than six (6) months but not more than two (2)
years, or both at the discretion of the court; and
(2) for any subsequent violation, a fine of not less than One hundred
thousand pesos (P100,000.00) but not exceeding Two hundred thousand
pesos (P200,000.00) or imprisonment for not less than two (2) years but not
more than six (6) years, or both at the discretion of the court.
(b) Any person who abuses the privileges granted herein shall be punished
with imprisonment of not less than six (6) months or a fine of not less than
Five thousand pesos (P5,000.00), but not more than Fifty thousand pesos
(P50,000.00), or both, at the discretion of the court.
(c) If the violator is a corporation, organization or any similar entity, the
officials thereof directly involved shall be liable therefor.
(d) If the violator is an alien or a foreigner, he shall be deported immediately
after service of sentence without further deportation proceedings.
Sec. 47. Appropriations. The amount necessary to carry out the
provisions of this Act shall be included in the General Appropriations Act of
the year following its enactment into law and thereafter.
Sec. 48. Separability Clause. Should any provisions of this Act be found
unconstitutional by a court of law, such provisions shall be severed from the
remainder of the Act, and such action shall not affect the enforceability of
the remaining provisions of this Act.
Sec. 49. Repealing Clause. All laws, presidential decrees, executive
orders and rules and regulations inconsistent with the provisions of this Act
are hereby repealed or modified accordingly. chan robles virtual law library
Sec. 50. Effectivity. This Act shall take effect fifteen (15) days after its
publication in any two (2) newspapers of general circulation.
Annex B
Republic Act No. 9231 December 19, 2003
AN ACT PROVIDING FOR THE ELIMINATION OF THE WORST FORMS OF
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CHILD LABOR AND AFFORDING STRONGER PROTECTION FOR THE
WORKING CHILD, AMENDING FOR THIS PURPOSE REPUBLIC ACTNO.
7610, AS AMENDED, OTHERWISE KNOWN AS THE "SPECIAL PROTECTION
OF CHILDREN AGAINST CHILD ABUSE, EXPLOITATION AND
DISCRIMINATION ACT"
Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:
Section 1. Section 2 of Republic Act No. 7610, as amended, otherwise known
as the "Special Protection of Children Against Child Abuse, Exploitation and
Discrimination Act", is hereby amended to read as follows:
"Sec. 2. Declaration of State Policy and Principles. - It is hereby declared to
be the policy of the State to provide special protection to children from all
forms of abuse, neglect, cruelty, exploitation and discrimination, and other
conditions prejudicial to their development including child labor and its
worst forms; provide sanctions for their commission and carry out a
program for prevention and deterrence of and crisis intervention in
situations of child abuse, exploitation and discrimination. The State shall
intervene on behalf of the child when the parent, guardian, teacher or person
having care or custody of the child fails or is unable to protect the child
against abuse, exploitation and discrimination or when such acts against the
child are committed by the said parent, guardian, teacher or person having
care and custody of the same.
"It shall be the policy of the State to protect and rehabilitate children gravely
threatened or endangered by circumstances which affect or will affect their
survival and normal development and over which they have no control.
"The best interests of children shall be the paramount consideration in all
actions concerning them, whether undertaken by public or private social
welfare institutions, courts of law, administrative authorities, and legislative
bodies, consistent with the principle of First Call for Children as enunciated
in the United Nations Convention on the Rights of the Child. Every effort
shall be exerted to promote the welfare of children and enhance their
opportunities for a useful and happy life."
Section 2. Section 12 of the same Act, as amended, is hereby further
amended to read as follows:
"Sec. 2. Employment of Children - Children below fifteen (15) years of age
shall not be employed except:
"1) When a child works directly under the sole responsibility of his/her
parents or legal guardian and where only members of his/her family are
employed: Provided, however, That his/her employment neither endangers
his/her life, safety, health, and morals, nor impairs his/her normal
development: Provided, further, That the parent or legal guardian shall
provide the said child with the prescribed primary and/or secondary
education; or
"2) Where a child's employment or participation in public entertainment or
information through cinema, theater, radio, television or other forms of
media is essential: Provided, That the employment contract is concluded by
the child's parents or legal guardian, with the express agreement of the child
concerned, if possible, and the approval of the Department of Labor and
Employment: Provided, further, That the following requirements in all
instances are strictly complied with:
"(a) The employer shall ensure the protection, health, safety, morals and
normal development of the child;
"(b) The employer shall institute measures to prevent the child's exploitation
or discrimination taking into account the system and level of remuneration,
and the duration and arrangement of working time; and
"(c) The employer shall formulate and implement, subject to the approval
and supervision of competent authorities, a continuing program for training
and skills acquisition of the child.
"In the above-exceptional cases where any such child may be employed, the
employer shall first secure, before engaging such child, a work permit from
the Department of Labor and Employment which shall ensure observance of
the above requirements.
"For purposes of this Article, the term "child" shall apply to all persons
under eighteen (18) years of age."
Section 3. The same Act, as amended, is hereby further amended by adding
new sections to be denominated as Sections 12-A, 12-B, 12-C, and 12-D to
read as follows:
"Sec. 2-A. Hours of Work of a Working Child. - Under the exceptions
provided in Section 12 of this Act, as amended:
"(1) A child below fifteen (15) years of age may be allowed to work for not
more than twenty (20) hours a week: Provided, That the work shall not be
more than four (4) hours at any given day;
"(2) A child fifteen (15) years of age but below eighteen (18) shall not be
allowed to work for more than eight (8) hours a day, and in no case beyond
forty (40) hours a week;
"(3) No child below fifteen (15) years of age shall be allowed to work between
eight o'clock in the evening and six o'clock in the morning of the following
day and no child fifteen (15) years of age but below eighteen (18) shall be
allowed to work between ten o'clock in the evening and six o'clock in the
morning of the following day."
"Sec. 12-B. Ownership, Usage and Administration of the Working Child's
Income. - The wages, salaries, earnings and other income of the working
With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.
child shall belong to him/her in ownership and shall be set aside primarily
for his/her support, education or skills acquisition and secondarily to the
collective needs of the family: Provided, That not more than twenty percent
(20%) of the child's income may be used for the collective needs of the
family.
"The income of the working child and/or the property acquired through the
work of the child shall be administered by both parents. In the absence or
incapacity of either of the parents, the other parent shall administer the
same. In case both parents are absent or incapacitated, the order of
preference on parental authority as provided for under the Family Code shall
apply.
"Sec. 12-C. Trust Fund to Preserve Part of the Working Child's Income. - The
parent or legal guardian of a working child below eighteen (18) years of age
shall set up a trust fund for at least thirty percent (30%) of the earnings of
the child whose wages and salaries from work and other income amount to
at least two hundred thousand pesos (P200,000.00) annually, for which
he/she shall render a semi-annual accounting of the fund to the Department
of Labor and Employment, in compliance with the provisions of this Act. The
child shall have full control over the trust fund upon reaching the age of
majority.
"Sec. 12-D. Prohibition Against Worst Forms of Child Labor. - No child shall
be engaged in the worst forms of child labor. The phrase "worst forms of
child labor" shall refer to any of the following:
"(1) All forms of slavery, as defined under the "Anti-trafficking in Persons
Act of 2003", or practices similar to slavery such as sale and trafficking of
children, debt bondage and serfdom and forced or compulsory labor,
including recruitment of children for use in armed conflict; or
"(2) The use, procuring, offering or exposing of a child for prostitution, for
the production of pornography or for pornographic performances; or
"(3) The use, procuring or offering of a child for illegal or illicit activities,
including the production and trafficking of dangerous drugs and volatile
substances prohibited under existing laws; or
"(4) Work which, by its nature or the circumstances in which it is carried out,
is hazardous or likely to be harmful to the health, safety or morals of
children, such that it:
"a) Debases, degrades or demeans the intrinsic worth and dignity of a child
as a human being; or
"b) Exposes the child to physical, emotional or sexual abuse, or is found to
be highly stressful psychologically or may prejudice morals; or
"c) Is performed underground, underwater or at dangerous heights; or
"d) Involves the use of dangerous machinery, equipment and tools such as
power-driven or explosive power-actuated tools; or
"e) Exposes the child to physical danger such as, but not limited to the
dangerous feats of balancing, physical strength or contortion, or which
requires the manual transport of heavy loads; or
"f) Is performed in an unhealthy environment exposing the child to
hazardous working conditions, elements, substances, co-agents or
processes involving ionizing, radiation, fire, flammable substances, noxious
components and the like, or to extreme temperatures, noise levels, or
vibrations; or
"g) Is performed under particularly difficult conditions; or
"h) Exposes the child to biological agents such as bacteria, fungi, viruses,
protozoans, nematodes and other parasites; or
"i) Involves the manufacture or handling of explosives and other pyrotechnic
products."
Section 4. Section 13 of the same Act is hereby amended to read as follows:
"Sec. 13. Access to Education and Training for Working Children - "a) No
child shall be deprived of formal or non-formal education. In all cases of
employment allowed in this Act, the employer shall provide a working child
with access to at least primary and secondary education.
"b) To ensure and guarantee the access of the working child to education
and training, the Department of Education (DEPED) shall: (1) formulate,
promulgate, and implement relevant and effective course designs and
educational programs; (2) conduct the necessary training for the
implementation of the appropriate curriculum for the purpose; (3) ensure the
availability of the needed educational facilities and materials; and (4)
conduct continuing research and development program for the necessary
and relevant alternative education of the working child.
"c) The DEPED shall promulgate a course design under its non-formal
education program aimed at promoting the intellectual, moral and vocational
efficiency of working children who have not undergone or finished
elementary or secondary education. Such course design shall integrate the
learning process deemed most effective under given circumstances."
Section 5. Section 14 of the same Act is hereby amended to read as follows:
"Sec. 14. Prohibition on the Employment of Children in Certain
Advertisements. - No child shall be employed as a model in any
advertisement directly or indirectly promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts, gambling or any form of
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violence or pornography."
Section 6. Section 16 of the same Act, is hereby amended to read as follows:
"Sec. 16. Penal Provisions -
"a) Any employer who violates Sections 12, 12-A, and Section 14 of this act,
as amended, shall be penalized by imprisonment of six (6) months and one
(1) day to six (6) years or a fine of not less than Fifty thousand pesos
(P50,000.00) but not more than Three hundred thousand pesos (P300,000.00)
or both at the discretion of the court.
"b) Any person who violates the provision of Section 12-D of this act or the
employer of the subcontractor who employs, or the one who facilitates the
employment of a child in hazardous work, shall suffer the penalty of a fine of
not less than One hundred thousand pesos (P100,000.00) but not more than
One million pesos (P1,000,000.00), or imprisonment of not less than twelve
(12) years and one (1) day to twenty (20) years, or both such fine and
imprisonment at the discretion of the court.
"c) Any person who violates Sections 12-D(1) and 12-D(2) shall be
prosecuted and penalized in accordance with the penalty provided for by R.
A. 9208 otherwise known as the "Anti-trafficking in Persons Act of 2003":
Provided, That Such penalty shall be imposed in its maximum period.
"d) Any person who violates Section 12-D (3) shall be prosecuted and
penalized in accordance with R.A. 9165, otherwise known as the
"Comprehensive Dangerous Drugs Act of 2002"; Provided, That such
penalty shall be imposed in its maximum period.
"e) If a corporation commits any of the violations aforecited, the board of
directors/trustees and officers, which include the president, treasurer and
secretary of the said corporation who participated in or knowingly allowed
the violation, shall be penalized accordingly as provided for under this
Section.
"f) Parents, biological or by legal fiction, and legal guardians found to be
violating Sections 12, 12-A, 12-B and 12-C of this Act shall pay a fine of not
less than Ten thousand pesos (P10,000.00) but not more than One hundred
thousand pesos (P100,000.00), or be required to render community service
for not less than thirty (30) days but not more than one (1) year, or both such
fine and community service at the discretion of the court: Provided, That the
maximum length of community service shall be imposed on parents or legal
guardians who have violated the provisions of this Act three (3) times;
Provided, further, That in addition to the community service, the penalty of
imprisonment of thirty (30) days but not more than one (1) year or both at the
discretion of the court, shall be imposed on the parents or legal guardians
who have violated the provisions of this Act more than three (3) times.
"g) The Secretary, of Labor and Employment or his/her duly authorized
representative may, after due notice and hearing, order the closure of any
business firm or establishment found to have violated any of the provisions
of this Act more than three (3) times. He/she shall likewise order the
immediate closure of such firm or establishment if:
"(1) The violation of any provision of this Act has resulted in the death,
insanity or serious physical injury of a child employed in such
establishment; or
"(2) Such firm or establishment is engaged or employed in prostitution or in
obscene or lewd shows.
"h) In case of such closure, the employer shall be required to pay the
employee(s) the separation pay and other monetary benefits provided for by
law."
Section 7. The same Act is hereby further amended by adding a new section
to be denominated as Section 16-A, to read as follows:
"Sec. 16-A. Trust Fund from Fines and Penalties - The fine imposed by the
court shall be treated as a Trust Fund, administered by the Department of
Labor and Employment and disbursed exclusively for the needs, including
the costs of rehabilitation and reintegration into the mainstream of society of
the working children who are victims of the violations of this Act, and for the
programs and projects that will prevent acts of child labor."
Section 8. Section 27 of the same Act is hereby amended to read as follows:
"Sec. 27. Who May File a Complaint - Complaints on cases of unlawful acts
committed against children as enumerated herein may be filed by the
following:
"(a) Offended party;
"(b) Parents or guardians;
"(c) Ascendant or collateral relative within the third degree of consanguinity;
"(d) Officer, social worker or representative of a licensed child-caring
institution;
"(e) Officer or social worker of the Department of Social Welfare and
Development;
"(f) Barangay chairman of the place where the violation occurred, where the
child is residing or employed; or
"(g) At least three (3) concerned, responsible citizens where the violation
occurred."
LABORICADIZ 67
Section 9. The same Act is hereby further amended by adding new sections
to Section 16 to be denominated as Sections 16-A, 16-B and 16-C to read as
follows:

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

"The preliminary investigation of cases filed under this Act shall be

terminated within a period of thirty (30) days from the date of filing.

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

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

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

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

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

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

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

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

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

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

Section 12. Repealing Clause. - All laws, decrees, or rules inconsistent with
the provisions of this Act are hereby repealed or modified accordingly.

Section 13. Effectivity. - This Act shall take effect fifteen (15) days from the
date of its complete publication in the Official Gazette or in at least two (2)
national newspapers of general circulation.

Starr Weigand With Codals, Digests and Notes from Books by Atty. Azucena and
Dean Abad. Lecture of Atty. Cadiz incorporated.