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Contracting arrangement Trilateral relationship; not direct hiring Illustration: If San Carlos hires a security agency, the latter provides security guards, or hires a janitorial agency, the latter provides janitors. This is the reason why there is a need for a law to regulate contracting. The principals do not want to hire regular workers. They prefer to hire contractual workers and they do not need to them the minimum wage because they (contractual workers) are not their (principals) employees. The contractor, not the principal, is supposed to take care of the SSS, Philhealth and other social and welfare benefits of the contractual employees. This is what the principal saves in resorting to contracting arrangement. Applicable laws: Arts. 106-109; DO 18-02; DO 14 (security guards); Cooperative Code of the Philippines; Contracting employer (the principal) enters into a contract with the contactor for the performance of the formers work; the employees of the contractor shall be paid in accordance with the provisions of the Code In legitimate contracting arrangement, in case of failure to pay the wages, the principal may be held jointly and severally liable with the contractor or subcontractor. Labor-only contracting is prohibited by law. Labor-only contracting requisites: (1) the contractor has no substantial capital OR investment in the form of tools; AND (2) the work performed is directly related to the business of the principal The requisites must concur to constitute labor-only contracting. Capital is found in the articles of incorporation. Investment could be in the form of tools and equipments. If there is labor-only contracting, the contractor is merely considered an agent or intermediary. The true parties are the principal as the direct employer and the contractual workers as the direct employees. Even in legitimate contracting you are still covered by the Labor Code. Reasons for entering into contracting: to attain economy, expertise and efficiency Whether related or not, it could be a valid area of contracting. Even if it is related, as long as one exercises good faith, it is a valid area of contracting.

San Miguel Case: Aside from its brewery, San Miguel also distributes and sells its beers. What they did was that, instead of selling it themselves, they hired a distributor through contracting. SC: It is a valid contracting even though it is an integral part of their business. Common areas for contracting: construction; janitorial; security; Parties: (1) direct employer; (2) indirect employer. Illustration: San Carlos hires the faculty members. It is the direct employer insofar as the faculty members are concerned. Insofar as the security guards are concerned, it is the indirect employer. Types of indirect employers: (1) employers who have their own employees and hires a contractor (2) employers who do not have their own employees Illustration: You want to construct your residential building. You are an employer. You hire this contractor. You are considered indirect employer with regard to the laborers. If the contractor does not pay correct wages, then that will be your accountability as an employer. You are an employer who does not have your own employees. Labor contracting per se is not illegal. It is labor-only that is prohibited. Labor contracting is allowed in permissible contracting. Labor contracting is a cost-cutting measure. Effect when theres labor-only contracting: it establishes an employer-employee relation between the principal and the contractual employees for a comprehensive purpose for any and all violations of the Labor Code. If it were a labor-only contracting, the principal may be held liable in case of illegal dismissal. In effect, the law holds both of them jointly and severally liable. If it were legitimate contracting, then the liability of the principal comes into play only in case there is failure to pay wages, but without prejudice to the right of the principal to demand reimbursement from the contractor In labor-only contracting, the contractor is merely an agent or intermediary. There are only two (2) parties the principal and the contractual workers. But, it has to be declared by the LA that there exists a labor-only contracting. The contractual workers will now become regular. Contractualization Contractual employee one employed pursuant to a valid contracting arrangement Contracting arrangement involves a specific job, work or service within a definite period regardless where the service is performed
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Control test exists when the principal exercises control, not only on the means, but also on the end to be attained Instances when there is labor-only contracting: (1) security guards in bank giving deposit slips to clients (2) requiring employees to sign in blank (3) hiring shorter than the service contract must be co-terminus with the contract with the principal (4) in-house agency CONTRACTING ARRANGEMENT (Arts. 106-109) There is a special Department Circular applicable to cooperatives. The cooperatives before argued that they should not be covered by the law on contracting arrangement because the members of the cooperative are owners (absence of ER-EE relationship); unlike in a true contracting arrangement where there is a direct ER, an indirect ER, and a contractual EE. What the cooperatives did was to offer their services to principals, saying that they are not covered by the law on contracting arrangement. But the DOLE came up with a circular which provided that as long as the cooperative offers its services to another person (principal) and enters into a contracting arrangement; then it is covered by the law on contracting arrangement. DOLE Circular No. 1, Series of 2007, clarifies the coverage of cooperatives under the law. When you offer your services to undertake a contracting arrangement, notwithstanding the fact that the members are owners, the law on contracting will still apply. The principal will be considered the indirect ER, and the members of the cooperatives as the contractual EE. Department Order No. 14 is an old circular which applies specifically to security guards. Other than those (circulars for cooperatives and security guards), we have Department Order No. 18, Series of 2002 which covers all areas of permissible job contracting, except for cooperatives and security guards where special rules apply. Art. 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 or subcontractor 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 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 the workers in the same manner and extent as if the latter were directly employed by him. If we focus on the provision of Article 106, it will mention that 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. Under this definition, it involves 3 parties: (1) the ER entering into a contract with another person; (2) the contractor; and (3) the contractual EE. Thats the reason why under Department Order No. 18-02, it contemplates of a trilateral relationship. Based on the express provision of the labor code (art. 106), there are already 3 parties involved. Labor contracting is NOT illegal per se. what is illegal is laborONLY contracting. Paragraph 1 of Article 106 defines job contracting. Under this law, the liability of the principal ER applies only in case there is failure on the part of the contractor/subcontractor to pay the wages of the contractual EE. Under settled labor jurisprudence, failure to pay wages in not limited only to non-payment or under-payment of the minimum wage. It also includes non-payment or under-payment of 13th month pay, SIL, night shift differential pay, and other similar labor standards. That will be the joint and several obligation of the principal in case the contractor fails to pay the wages. Under the guidelines enunciated by the SC, the provision does not establish an ER-EE relationship between the principal and the contractual EE. The existence of such relationship exists only between the contractor and the contractual workers. By fiction of law however, such ER-EE relationship will exist only if the contractor fails to pay the wages of his workers. It is only by fiction of law, created for the purpose of protecting the rights of the contractual workers, so that they will be assured that in case their indirect ER fails to comply with labor standard laws, then at least they will be guaranteed that they will be paid by the principal. This is without prejudice on the part of the principal to ask reimbursement from the contractor/sub-contractor. The person that ultimately shoulders the unpaid wages is the contractor/subcontractor. If the principal wants to be further
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protected (aside from his right to ask for reimbursement), the law authorizes the principal to demand from the contractor the posting of a BOND equal to the labor cost. Even though the principal does not require that the contractor post a bond, he can still run against the contractor for the reimbursement of whatever amount he was made to pay to the contractual workers. On the other end, the contractor who fails to pay the wages is also held jointly and severally liable (SOLIDARY OBLIGATION). The contractual workers whose wages were not paid can sue either or both of the parties (principal and/or contractor). A contractual worker who was not paid his minimum wage can file a complaint with the Labor Arbiter against his direct ER alone OR he can implead both the principal and the contractor in the same complaint. If the contractual worker believes that the contractor has no money, the better advice is to implead the principal and the contractor in the same complaint (basis: Article 106 of the Labor Code). In that situation, the principal can file a motion to dismiss the complaint for lack of ER-EE relationship. However, that motion to dismiss will NOT prosper if the cause of action brought by the contractual worker is for payment of wages. But if were a complaint for illegal dismissal, the principal can file a motion to dismiss for lack of ER-EE relationship; because the liability of the principal is only for failure to pay the wages (MONEY CLAIMS), it does not mention of an illegal dismissal case. The 3rd paragraph of Article 106 will tell us the definition of laboronly contracting. By express provision of Department Order No. 18-02 promulgated by SOLE, labor-only contracting is prohibited. Two elements must concur before one can conclude the existence of labor-only contracting (Take note of the conjunction AND): (1) No substantial capital (determined from the articles of incorporation of a corporation or from the financial statements of a single proprietorship/partnership) OR investment (in the form of tools, equipment, machinery); AND (2) Relation of the activities performed by the contractual worker to the business of the principal (necessary or desirable). It must not be directly related, the principal operation may not grind to a halt if the activities are not performed. EFFECT if there is labor-only contracting: the contractor is merely considered an AGENT, an extension of the personality of the principal (who becomes the ER of the contractual workers). Art. 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 107 defines an Indirect ER and covers any person, partnership, association or corporation. Common areas of permissible job contracting (1) Janitorial service(the most common are of permissible job contracting, recognized not only in the private sector but also in the government service (2) Security service EXAMPLE: the City of Cebu hired the services of a private security agency. The City of Cebu (a government entity) is covered by the Labor Code of the Philippines. The word Employer under the Labor Code includes the government, including any subdivision, instrumentality or agency thereof. The activity performed may or may not be related to the business of the principal. EXAMPLE: Janitorial service is not directly related to the business of USC in providing education. So we can apply this principle by analogy. On the other hand, the job/work/service performed could be related to the business of the principal as what happened to the old case of San Miguel Corp. SMC is engaged in brewery, but they were also into the sale and distribution of their products. So what they did for purposes of efficiency/economy, they hired the services of a distributor company to distribute their products. SC held that as long as SMC acted in good faith, even though the job/work/service is related to its business (distribution), it is still considered a permissible area of job contracting. The distributor company in this case was substantially capitalized. Under RA 6727, it also enumerates/recognizes other areas of permissible job contracting. An example is construction projects. That is based on decided SC cases. Employers involved in contracting arrangement: (1) Direct ER (2) Indirect ER Example: if USC hires the services of a security agency, the direct ER of the security guards is the security agency while the indirect ER is USC. Based on the definition of an indirect ER, they are those hiring independent contractors with employees of their own under their control. USC has its own employees, but at the same time, it hires the services of independent contractors. There are two types of indirect ER: (1) Indirect ER in the sense that they have their own set of employees (direct EE), e.g. the academic and nonacademic personnel; and they hire a security agency which has its own contractual EE. USC will be considered a direct ER with regard to the academic and nonacademic personnel. USC will be considered a principal in relation to the security agency. USC will be considered an indirect ER in relation to the security guards.
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(2) Indirect ER without employees of their own, e.g. a person hires the services of a contractor to construct his residential house. Such person is considered a principal in relation to the contractor, and an indirect ER in relation to the contractual workers (foremen, laborers, mason). You become a direct ER if the contractor fails to pay the contractual workers. Resorting to contracting is usually done to effectuate more economic and efficient methods of production, or a company costsaving program. Instead of hiring directly these workers and provide them with tools/equipment, you just leave that business for the contractor to take care for you. In the old case of Serrano vs. NLRC, a department store in Cubao hired the services of a head security officer directly as an EE. Eventually, as a cost-saving measure, the department store hired the services of a security agency, and declared the position of the head security officer as redundant. SC held that it is the prerogative of the ER to hire the services of a contractor, authorized under Article 106, LC. This is true especially in this case where the ER acted in good faith for reasons of economy. In labor-only contracting, the liability is for a comprehensive purpose (for any and all violations of the LC, including illegal dismissal cases and ULP cases). Example: USC hired the services of a security agency. However, the tools/equipment/materials are all owned by USC. What is supplied to USC is only human bodies. So that is a case of labor-only contracting because there is no substantial capital or investment and the activity performed by the security guard is desirable to education (obligation of the school to protect the students against danger). In this case, the security agency will be declared as a labor-only contractor. The security guards will become EE of USC as regular security guards (regular EE). Although a security service is an area of permissible job contracting. But as to whether it is job contracting or labor-only contracting, it depends on the existence of the 2 requisites. In labor-only contracting, as an effect, the law holds both the ER and the contractor responsible to the EE to safeguard the rights of the contractual workers. The contractor is merely an agent, and the principal is made by law responsible to the EE as if they were the ones who hired directly these contractual workers. The entitlement to benefits in case there is labor-only contracting includes all the benefits and rights appurtenant to regular employment. If in your establishment, there is an existing CBA, all the benefits therein (CBA benefits) will be awarded to the contractual worker if there exists labor-only contracting. Everything which you usually provide/give to your regular workers will likewise be awarded and enjoyed by these contractual

workers. Under the law, if there exists labor-only contracting, they will be considered as if you hired them as your EE. Read the recent case of Pulache vs. ABS-CBN. If there exists labor-only contracting, you will be considered a regular EE from day one. It is counted from the date of their employment, if they perform activities directly related to the business of the principal. Department Order No. 18-02 is the only department order that recognizes contractual employment. There is a trilateral relationship in contractual employment (three parties): the principal, the contractor, and the contractual employees. A contractual employee is one employed by a contractor to perform a job/work/service pursuant to an arrangement between the latter and the principal. There is a service contract between the principal and the contractor, and pursuant to that service agreement between the principal and the contractor, a contractual employee is hired. The labor code is silent as to the definition of contracting arrangement. Under Department Order 18-02, contracting arrangement is one where the principal agrees to put out the performance or completion of a specific job/work/service (e.g. janitorial, security, construction), and the period must be definite/predetermined (not open ended) and known at the start. Example: USC hired a security agency for 1 year. At the start, they know already that it is only for 1 year. USC cannot hire a security agency for as long as they need their services (not definite/predetermined); that is invalid contracting. The law says regardless of where you perform the job/work/service whether within or outside the premises of the principal. E.g. security service is performed within the premises of the principal; while messengerial service is performed outside the premises of the principal. The Department Order recognizes two elements (which must concur) to constitute labor-only contracting: (1) lack of substantial capital/investment; AND (2) activities performed are directly related. The Department Order codifies the CONTROL TEST. Whenever the principal exercises control not only means, methods, but also as well as the results, then there exists an ER-EE relationship. So even if USC hires the services of a substantially capitalized security agency, but it is USC which provides the schedule of work, who monitors their time-in/time-out, who requires them to render overtime work, who tells them what specific places in the school that should be guarded, how many guns/ammunitions they should carry on duty; that is already an exercise of control on how to perform their job, and may establish ER-EE relationship. So, even if the contractor is substantially capitalized, even if the work is not directly related, but if the principal exercises control as to the means, the contractual workers will be considered as his employees. Read the latest case of Procter & Gamble.
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Examples of illegal contracting arrangement: (1) A security guard who is also given the assignment of a bank teller. (2) Upon getting yourself employed, you are made to sign a resignation letter. So that at the end of the term, you are considered resigned automatically. You are not yet employed, but you are already resigned. (3) If you hire a contractual employee (e.g. 1 year) but you provide him an employment that is shorter than the service contract. GR: it is illegal contracting; EXC: if the contract is divisible in phases. (4) Creating an in-house agency in order to circumvent the law on illegal contracting. You are considered in-house if the contractor is owned, managed, or controlled by the principal, and was created solely to operate for the principal. It was created to service the principal and to avoid regular employment. (5) You hire the services of a contractor to perform a job related to your principal business, by reason of a strike/lockout, in order to prevent the effectiveness of a strike/lockout. (6) Contracting is a valid exercise of management prerogative, but it will be considered illegal if it amounts to ULP. E.g. there is a union in USC, and to avoid the union from spreading their membership, USC will declare the positions of the union members as redundant, and replace them with a contractor who will supply workers performing the same functions (union busting). Contracting is valid if done in good faith, justified by the exigencies of the business, and it will not result in the termination of employment, reduction of work hours. Under the Department Order, the ER in a contracting arrangement is the contractor. However, even if the contractor is the ER, if he fails to pay the wages, the principal will be jointly and severally (solidarily) liable with the contractor. The principal will be considered the ER when he is declared by competent authority as engaged in labor-only contracting, or where the contracting is one of those prohibited by law. Example: you are a security guard (contractual EE), and you believe that USC and the security agency is engaged in illegal contracting, then you can sue them for regularization (as a regular security guard of USC) before the labor arbiter, and you will prove that they are engaged in labor-only contracting. If you win that case, the security agency will be declared as a mere agent of USC, and the latter will be considered the as the ER. You have to sue; you have to get a judgment rendered by a court of competent jurisdiction (labor arbiter or RD in the exercise of its visitorial/enforcement power). The rights of a contractual worker: (1) They are entitled to a safe and healthful working conditions; (2) They are entitled to labor standard benefits;

(3) They are entitled to social and security benefits; (4) They have the right to self-organization (collective bargaining, strike); (5) They have the right to security of tenure As to the relation of the contractor and the contractual worker, there must be a contract of employment between the contractor and the contractual worker. The contract of employment must contain: (1) The specific description of the job (janitorial, security, etc.) (2) the place of work (3) terms and conditions of employment (4) Term or duration of employment; subject to the condition that such contract should be coterminous with the contract between the principal and the contractor. All these terms are required to be informed to the contractual worker on or before the first day of his employment. Such requirement is reasonable because the contractual worker is not a regular EE; he enjoys security of tenure only until the completion of the contract. The contractual EE may be entitled to separation pay if the employment contract of a contractual worker is terminated before the expiration of the contract; which right shall be governed by applicable laws and jurisprudence on termination. The end of the contract of a contractual worker is considered coterminous with the end of the contract between the principal and the contractor. At the end thereof (no pretermination), the contractual worker is not entitled to separation pay. The contractor must register with the DOLE. If you dont register, there is a rebuttable presumption of labor-only contracting. The contractor has an obligation to report to the DOLE. He has to submit a sworn statement that he complied with SSS, PhilHealth, Pag-ibig, ECC, and the BIR (for the protection of the contractual worker). The SOLE can exercise visitorial/enforcement power, and check whether the security agency is in compliance with law. The SOLE can send a labor inspector to interview the security guards whether the security agency is paying them right. If it is found that they are underpaid, a notice of inspection result can be issued, then USC can be impleaded in that inspection, and be made jointly and severally liable with the contractor. Take note of those instances where there exist a joint and several liability (e.g. when there is labor-only contracting; when there is illegal labor contracting, etc.). Just take note of the cases of DOLE Philippines, Aboitiz Haulers, and GSIS case. Contracting Arrangement (2/25/11) The concept of contracting arrangement involving a trilateral arrangement, the principal-employer, the contactor/ subcontractor and the contactors employees. I also emphasized to
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you that cooperatives which offer their services to perform a specific job, work or service will also be covered by contracting arrangement under Circular No.1 series of 2007 the DOLE said that they are covered under the law on contracting arrangement. There are 2 things that must be emphasized and focused on contracting arrangement. The 1st is the scope of liabilities of the parties. In labor standard there is that joint and several liability of the principal and the contractor. Now the principal in a legitimate contracting becomes an indirect employer and is held jointly and severally liable with the contractor if the latter fails to pay the wages. Ive told you for so many time that when we speak of wages it is not simply limited the minimum wages. It may cover underpayment/no-payment of 13th month pay, underpayment /non-payment of night shift differential pay, premium pay, holiday pay etc. If the contractor is not paying or underpaying its contractual employees with its night shift differential pay, minimum wages, holiday pay not paying at all 13th month pay, the law hold the principal jointly and severally liable with the contractor. This is so in order to protect the rights of the contractual employees. In that situation the principal however has the right to get reimbursement from the contractor of what he has has actually paid. This in line with the essence of joint and several liability that the one who pays has the right to reimbursement from the other such amount that is actually paid to the contractual workers. Therefore, the party that is ultimately liable is the contractor. This is so because he is the direct employer of the contractual employees. One way of freeing itself from that liability is to require the contractor to post a bond in such amount to cover the labor costs. So in case of non-payment by the contractor of wages, the principal will just get from the bond to pay the workers. But sometimes when it is only a small-scale contractor the principal would not require him to post a bond. What he does is just trust the contractor and hope and pray that the contractor will faithfully comply with its obligation to its contractual workers. The 2nd situation is the liability of the principal in case there is the issuance of the increase in the minimum wage. It is covered by RA 6727, yung 1st situation is covered by Art. 106 of the labor code. RA 6727 otherwise known as Wage Rationalization Law. Sec. 6 thereof says that when there is a wage order issued by the board increasing the minimum wage, who will be responsible for the increased in the min wage? Of course the contractor because he is the direct worker of the contractual workers. So it simply means that when there is a new wage order issued the contractor is obligated to adjust the wage it is paying to its contractual workers. In that situation since the increase is brought about by the issuance of a wage order, the law says that the contract between the principal and the contractor is deemed amended. It is the law that amends their contract of service. Such that if the contactor fails to adjust the minimum wage the liability will pass on to the principal. However the principal has no right to demand reimbursement in this instance. Therefore, in this case the ultimate liability is on the part of the principal. This is because as

stated the wage increased is brought by the issuance of wage order and the law that governs is RA 6727 and not Art. 106 of the LC. So try to analyze if the question is about non-payment or underpayment of wages is brought about by issuance of a wage order and determine which law that will govern. So on the 2nd situation while the principal is ultimately responsible/liable but it is limited only to the increment or amount added to the contractual worker (increment lang!). It will not include increases in the overtime pay, night shift differential pay etc., in the ultimate liability of the principal. You know that when there is increase in the min wage there is also an effect on the other labor standard benefits of the workers. For ex., the overtime pay is based on the min wage so if there is an increase lalaki na yung based so tataas yung overtime pay. Again, that is not the responsibility of the principal if the increase in wage resulted from the issuance of a wage order. It is based on the case of NFA vs. Moncada Security, topic on Art. 106. You should be careful about this because this topic on contracting is one of my favorite subject. Will it cover the government? The city of Cebu for example hiring the services of security and janitorial services? Yes because the definition of employer under the LC includes government agencies, instrumentalities, subdivisions etc. One case involving CHR who argued that they should not be covered by the LC considering that they are a government entity, SC said that by reading the definition of employer under the labor code it includes government agencies like the CHR. The mere fact that the principal faithfully pays the contractor can it be considered an excused not to be held jointly and severally liable? NO. It cannot come up with such an excuse because the purpose of the law is for the protection of the contractual employees anyway you can claim for reimbursement from the contractor so in the end you are not prejudiced. If for example the security agency is not paid by the USC, can the security agency sue USC as the principal? Yes. For ex. The contract agreed upon is that the agency will supply USC with 5 security guard for P100,000/month but USC is paying only P50,000 and the contract has been terminated the agency can sue USC. The civil courts have the jurisdiction over such case and not the labor arbiter because there is no employer-employee relationship between USC and the agency. Civil relationship. Based on a SC case, a claim by a contractor against a principal falls within the jurisdiction of the regular court not the labor arbiter. If the company is unionized can it engage in contracting arrangement? Of course, here is no prohibition. It is engaged in such arrangement can it outsource its work, job or service being performed by the union members? Yes, it can as long as it is done in good faith by the employer and not to defeat the rights of the workers to self-organization. It is not illegal as long as it is exercised in good faith and not intended to defeat the rights of the workers to self-organization.
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Art.110 LC. Workers Preference In the event of bankruptcy or liquidation proceedings the 1 st principle there is that provision that requires judicial action/court proceeding. That proceeding is insolvency proceeding. In Insolvency act (old one), it applies to corporate debtors. Under the new law the Financial Rehabilitation and Insolvency Act of 2010 (FRIA) it applies also to individual DEBTORS. So if youre using your credit cards (especially ladies) and you cannot anymore pay it, you can file a petition in court and declare yourself insolvent. But since the old insolvency law is superseded by FRIA, it is now the law that governs insolvency proceeding. The purpose why it requires a judicial action is that in order to effect an equitable distribution of the insolvent debtors property according to the SC. How will that be effected? Well, in that proceeding all the creditors of the insolvent debtor are notified of such proceeding and they are given the opportunity to present, prosecute and ventilate their claims. In the end since they are given the opportunity to present their respective claims they will be an equitable distribution of the insolvent debtors property. Who occupies the 1st preference? We have the workers preference. Those workers who are employed by companies who are suffering from financial distress or financial losses almost leading to bankruptcy and if they will initiate this proceeding then that is when they can assert their preference. The workers preference if they assert it will enjoy the 1st preference among the other creditors. Subject of course to the provision of the Civil Code on concurrence and preference of credit. In the case of Barayoga vs. Asset Privatization Trusts, the SC said that the workers preference under Art.110 is an ordinary preferred credit. It has the priority in the order of preference under Art.2214 of the Civil Code. In that same case the SC however emphasized that the ordinary preferred credit is less superior than a mortgage credit because under the Civil Code it is a special preferred credit. The workers preference under the labor code cannot prevail over that mortgage credit. However, as to the other creditors other than mortgage creditor the workers shall enjoy preference even the claims of government on taxes. What is the scope of the workers claim? It includes not only wages but also other monetary claims superior to that claim of the government on taxes. But unfortunately less superior to that mortgage creditor. Another principle that you will have to remember is the case of the Rubberworld and the case of Tiangco in 2009 citing the case of Rubberworld and PAL Zamora case. If you could remember PAL suffered financial problems, so it filed a petition for corporate rehab before the SEC (now RTC). Under the rules on corporate rehab when you file the petition a receiver is appointed by the court and there is suspension of claims. There was an issue in that case whether such suspension of claims include labor claims. SC said it includes labor claims because it would be otherwise it would defeat the purpose of rehabilitation. The purpose of rehab is to give the company a chance to continue its operation. So SC said that suspension of payment include all claims including labor claims. SO, that is Art. 110 of LC.

Attorneys Fees and Appearance of Lawyers (Art.111 & 222 of LC) In cases of unlawful withholding of wages, culpable party maybe assessed attorneys fees. There are 2 things that you must remember here, withholding of wages; when is it lawful and when is it unlawful. In your study of Labor Standard, no withholding of wages shall be allowed. Thats the rule; do not withhold the employees wages. The exception is when there is consent on the part of the employee. Number 2, when there is debt lawfully due. So under the civil code, you can offset the wage due to the employee for the debt due provided of course that the requisite for valid offsetting shall be complied. Then employer may validly withhold the employees wage for debt lawfully due. So again, when the employer unlawfully withhold the wages he may be assessed attorneys fees in the amount of 10% from the amount awarded. The attorneys fees referred there refer to extraordinary atty.s fees. SC said that there are 2 kinds of atty.s fees; ordinary and extraordinary. Ordinary is the fee paid for services rendered by the lawyer. Of course you can make with an arrangement with your client how much is your attorneys fees. But that is not the attorneys fees we are referring to under art.111. Attorneys fees in the concept of damages is what is referred here. Does this provision limit itself to just unlawful withholding of wages? Is the labor arbiter prevented from awarding attorneys fees other than unlawful withholding of wages? The SC said NO. There is also another concept of attorneys fees under Art. 2206(?) of the civil code. When the party suing you was compelled to litigate or prosecute his right/interest then he may be awarded attorneys fees even more than 10%. In civil law, when attorneys fees is awarded in the concept of damages it may be reduced/tempered by the court if it is unreasonable. Art. 222 of the LC. Non-lawyers are not allowed to appear before the LA or the Commission except in certain instances. If you are a party to the case or you represent a union member or the union itself provided that you are authorized then you may appear before a labor arbiter or the commission. You must be accredited by a legal clinic. The requisites of these can be found on the implementing rules. Also if he is the president of a corporation who is a party to the case he can represent the same even if he is not a lawyer. However the implementing rules require that he must be empowered by a power of attorney through a resolution of the board authorizing him to represent the said corp. If the complainant worker is represented by a lawyer and he prevailed in the case and is awarded his monetary claims plus attorneys fees, the same belongs to the worker and not to the lawyer because it is in the concept of damages. No. 2 reason is that the lawyer is not a party to the case hence not entitled to the same. But of course there is nothing wrong with the worker giving the attorneys fees to the lawyer if he wants to on top of the ordinary fees. Since it pertains to the worker, can he waive the same and execute a quitclaim without the conformity of the lawyer? YES. This is what happened in the case of Atty. Ortiz. The
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client of Atty.Ortiz won the case before the LA but the employer appealed the same. Since it is not immediately executory, the worker became impatient. The worker approached the employer and asked that they are willing to accept 3M instead of the LA award of 5M without the knowledge and consent of Atty. Ortiz. They entered with a compromise with the employer and the lawyer was left out. Atty.Ortiz objected because he contended that his attorneys fees of 10% of 5M becomes 10% of 3M only. The SC said that your consent is not necessary since the attorneys fees belongs to the client and not to you the lawyer. Your recourse is to sue the client if you are so minded. The Atty. has no legal personality. The workers have the right to waive their attorneys fees. The case of Loy Jr. 2009, involves a lawyer representing a union to negotiate a CBA with the employer. Syempre in negotiating such CBA with the employer may service dyan. When you are hired by a union to negotiate a CBA, you do a lot of work. You have to prepare a proposal for the CBA. Then you must understand also the industry which the employer belongs. In this case, the problem is that the lawyer did not get a board resolution authorizing him to represent the union. The union, when they finished negotiation they tried to deprived the lawyer of his attorneys fees that he deserved contending that he was not authorized by the Board. The Sc said that the lawyer may recover attorneys fees based on that negotiation on the basis of quantum meruit (as much as he deserved). Even in the absence of the board resolution provide it is with the (1) knowledge and acquiescence of the board and (2) the union benefited from such representation. This just based on Unjust Enrichment principle. In that same case there was a pronouncement by the SC that The practice of law is a decent profession not a money-making venture. Therefore you cannot claim interest on your attorneys fees.

But the right to have a role in nation-building and the right to safe is and healthful working condition taking to account their maternal functions is only available to women. The constitution also provides that the state renounces war as an instrument of national policy and adopts the generally accepted principles of international law as part of the laws of the land (Doctrine of Incorporation). We have international conventions on the rights of women. UN Convention on the elimination of all forms of discrimination against women adopted by the UN General Assembly in 1979, and ratified by the Philippines in 1981. Provisions of the labor code on employment of women: Nightwork prohibition prohibits ER from employing women during certain hours of the day. The prohibition is already OBSOLETE in the sense that the Magna Carta of Women has considered it as among the DISCRIMINATORY provisions (deprives women of equal work-opportunity) that should be removed from the labor code. With the onset of the call-center industry (operates 24-7, many of its EE wok at night), the SOLE has issued a regulation that exempts women call-center agents from being covered by the nightwork prohibition. Family Planning Service (Art. 134, LC) ER can make available family planning service devices to their workers in the workplace. ART. 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. Stipulation against marriage prohibits the ER from imposing as a condition for employment that a woman shall not get married, or that she could be considered resigned of she gets married/pregnant. The law regards marriage as an inviolable social institution. If there was no such prohibition, it would encourage the conduct of illicit relations just to get employed ART. 137. Prohibited acts. - (a) It shall be unlawful for any employer:
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MISCELLANEOUS PROVISIONS EMPLOYMENT OF WOMEN the universal norm that women should be regarded with love and respect. But that injunction has been responded by men with indifference on the belief that women belong to the inferior sex (women described as a vulnerable sector of society, hence the need for laws for their protection). That is the reason why there is a special provision in the labor code for the employment of women (no provision on employment of men/gays in the LC). Constitutional provision on employment of women: the state recognizes the role of women in nation-building. It ensures the fundamental equality before the law of women and men (Sec. 14, Art. 2 & Art. 13). The state also recognizes the right of women to safe and healthful working condition taking to account their maternal functions. The right to self-organization is available to both men and women.

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(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. ART. 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 (WOMEN WORKING IN NIGHT CLUBS). These women working in night clubs will be considered EE but subject to certain conditions for purposes of labor standards. If the woman is in fact an EE (4-fold test); Art. 138 do not apply. But in those situations where a woman who is hired to work in a night club/ sauna bath/ parlor, etc. is not paid her compensation, and there is doubt as to the existence of an ER-EE relationship between the establishment and the women, you apply Art. 138 to determine whether these women working therein are entitled to protection/ labor standards benefits. Del Monte Phils. Case (2007) A woman EE got herself pregnant. Her pregnancy caused her daily morning sickness, and because of that she became irritable. She incurred several absences from work. Del Monte terminated her from work because of these absences. Art. 137 was applied by SC in declaring that the termination was illegal because the ER is prohibited by law from discriminating against women by reason of her pregnancy. When a woman becomes pregnant, the ER should be more understanding and give more leniency to the condition/behavior of the woman worker. Pregnancy is a continuing condition accompanied by various symptoms and related illness. Anti-Violence Against Women and their Children Act (VAWC) (can be invoked by women only). 10 day-leave of absence with pay (subject to certain conditions) is required to be given to women who suffer violence on their person. The purpose of the 10-day leave with pay is to consult a doctor/lawyer. Mail-Order Bride law prohibits exporting of Filipino women for purposes of contracting marriage abroad. Anti-sexual harassment law prohibits the ER from imposing as a condition of employment that the woman shall have sex with the ER.

Women in development and nation building the law that allows married women to borrow money on their own. Magna Carta of Women (took effect September 1, 2010) prohibits educational institutions from discriminating against faculty-women who becomes pregnant. Expanded Breast-Feeding Promotion Act of 2009 breast-feeding EE is entitled to a LACTATION PERIOD, a total of 40 minutes on every 8-hour of work (on top of your regular meal period). The period you spend in walking through and from the lactation station to the workplace will be considered as compensable hours of work.

EMPLOYMENT OF HOUSE HELPERS (Art. 141-152) Domestic or household service it involves ministering to the personal comfort and convenience of the ER. Household service includes the services of family drivers, as long as they minister to the personal comfort and convenience of the ER or his family. Laws governing the employment of house helpers: (1) labor code; (2) civil code (in case of conflict, the provisions of the labor code will apply). Salient features in employment of house helper: (1) The ER is the head of the family (a human being), NOT a corporation. A human being (not a juridical person) is the only one eligible to be an ER of a house helper. (2) The services are performed in and about (immediate/adjacent) the ERs home. (3) The services are exclusively for the personal needs and comfort of the ER and/or his family. Under the labor code, house helpers have a monthly wage rate (P800, P600, P550 depending on the location). Employment duration: the initial period should not be more than 2 years (to prevent exploitation and abuse of the house helper). The subsequent period will depend upon the agreement of the parties. The rights of a house helper: (1) The right to a just and humane treatment. (2) The right to a suitable (habitable) and living quarter free of charge (not a bodega) (3) The right to indemnity (in the form of damages) in case of unjust termination (15 days salary + unpaid salary). (4) The right to a certificate of employment. (5) The right to funeral expenses (given to the heirs) if he has no relatives with sufficient means to support. (6) The right to adequate food and medical attendance.
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(7) The right to opportunity for elementary education if he is under 18 years of age. If he wants to undergo elementary education, his school expenses will be taken from his salary, unless the parties agree otherwise. (8) The right to retirement pay (1/2 month pay for every year of service = 22.5 days/year of service). (9) If you are paying your house helper a minimum monthly wage of P1000, and he is under 60 years of age, he must be reported to the SSS as a compulsory member. The minimum age of employment of a house helper is 15, provided that the workplace is not deleterious/ hazardous (under D.O. No. 4, Series of 1999). Remington Industrial vs. Campaneda (2006) a person who works at the company premises whose duty was to cook and prepare merienda for the companys employees is a regular EE, and not a house helper. He does not cater exclusively to the personal comfort/convenience of the head of the family. Apex Mining Company case (1991) read EMPLOYMENT OF CHILDREN Children 15 and above can be employed but not in hazardous/ deleterious workplaces. ER is prohibited from hiring children below 15, except in certain conditions (e.g. under the direct control of the family). Children below 15: the hours of work should not be more than 20 hours a week; not more than 4 hours a day. Children 15 but below 18: not more than 40 hours a week, not more than 8 hours a day. Prohibited hours of work:

Conditions that must be present to hire a children below 15: 1. Cannot hire to promote liquor or cigarette 2. Child actors needs work permit from DOLE Employment of special workers 1. Apprentice 2. Learners 3. Handicapped workers Know the meaning of: Apprentice APPRENTICESHIP agreement Not less than 3 months nor more than 6 months period of apprenticeship for purposes of training Age of apprentice: at least 15 yrs of age Apprentice compensation at least 75% of the applicable minimum wage except when it is required as requisite for graduation Employment of apprentice under the labor code should only involve to companies belong to highly technical industries employment of technical knowledge, e.g. electronics Under the DOLE department orders allows the hiring of apprentice other than highly technical industries. LEARNERS ER has to prove that there is no regular worker available to perform the job. Not more than 3 months

In hiring an apprentice there is no obligation to hire them as regular worker. Unlike in hiring a learner there is an obligation.

Below 15 8pm 6 am 15 below 18 = 10pm 6am Children 15 yrs old may be hired as a househelper.

The period of apprenticeship is not a probationary period.

HANDICAPPED WORKERS CHILD LABOR any work or economic activity performed by a child that subject him to any form of exploitation or harmful to his health and safety or physical, mental or psychological development (DO 65-04) Worst forms of child labor: 1. Slavery 2. Serfdom What is recognized is: 1. Wage system 2. Free artisan or independent contractorship any person whose earning capacity is impaired by reason of his age or disability. He is essentially a contractual worker. You can fix the duration of his employment. At the end of which, there is no obligation to hire him as a regular worker Entitled to at least 75% of applicable minimum wage

Bernardo vs. NLRC involving those deafs and mutes who were hired by bank to sort out bundles of coins and bills previously hired as handicapped workers and paid below minimum wage they complained later found out that they are not handicapped
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workers but qualified disqualified persons. They are considered regular workers entitled to the minimum wage.

MAGNA CARTA FOR DISABLED PERSON distinguishes between qualified disabled person and not qualified. If qualified disabled person although suffered disability considered as any regular able bodied person entitled to all the benefits appurtenant to regular employment. Incentives of ERs for hiring apprentice, learners and handicapped: study this (just refer to notes) DO No. 68-04 series of 2004 as amended by department of labor circular no. 2 apprenticeship and employment program: 15 yrs or above may be hired as apprentice as long as unemployed Establishment must employ 10 or more regular workers to qualify. The no. of apprentices should not be more than 20% total regular workforce. Apprentice period not less than 3 months but not more than 6 months Available in garment sector, automotive, electronics, process sector, food processing Not employees but trainees

DUAL TRAINING SYSTEM LAW of 1994 allows the employment of students as trainees, no ER-EE relationship, entitled to at least 75% of the applicable minimum wage Employment of Non-resident Alien GR: All foreign nationals who intend to gain employment must obtain an ALIEN EMPLOYMENT PERMIT Exceptions: 1. 2. 3. Member of the diplomatic service ambassadors, consul Foreign govt officials accredited by phil govt and with reciprocity agreement with phil govt Officers and staff of an international org e.g ADB, IRRI which the phil is a member including their legitimate spouses who also desire to work in the phil Foreign nationals elected as member of the board of a corporation provided did not occupy any other position and they only have voting right. Foreign nationals who come to teach in universities and colleges as exchange professor, or come here to present and conduct research projects provided there is an agreement with the school Permanent resident foreign nationals temporary or permanent visa holders Owners of foreign principals whose companies are accredited with POEA who comes to the Philippines for a limited period and purposely interview applicants for employment abroad All foreign nationals exempted by law

4.

5.

6. 7.

Employment of students WORKING SCHOLAR Working scholar check the meaning There exists no ER-EE relationship.

8. There is no provision of the labor code on employment of students, its only on working scholars. Not even found on the labor code but on the implementing rules. RA 7323 as amended by RA 9547 Special program for employment of students focus on this accdg to Atty. Marquez Allows establishments to employ students if they have at least 10 persons Must be poor and deserving students 15-25 yrs old If in the secondary level can be employed only during summer and Christmas vacation If tertiary, vocational or technical education can be employed anytime of the year Period of employment 20 days to not more than 52 working days except when hired during Christmas vacation which should be 10 days to not more than 15 days Wage minimum wage but paid 60% in cash by the employer, 40% by the govt in the form of voucher for books and other expenses This is apart from employment of apprentice

Governing Rule: DO 97-09 series of 2009 Revised rules for the issuance of employment permit to foreign nationals Right of Foreigners to self-organization = no right to form but only JOIN a labor union. Provided: 1. 2. 3. they are holders of a valid employment permit National of a country which grants the same privilege to Filipino workers (RECIPROCITY) Certification from DFA that they country which they belong grants the same privilege to Filipino workers

EMPLOYMENT OF SENIOR CITIZEN RA 9994 Expanded senior citizen act of 2010 ER is entitled to additional deductions from Gross income equivalent to 50% of total amount paid as salaries and wages to senior citizen provided that senior citizen is employed for at least 6 months duration.

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EMPLOYMENT OF OVERSEAS FILIPINO WORKERS RA 8042 was recently amendment by RA 10022 which lapsed into law by inaction. Migrant Workers and Overseas Filipino Act Policy of the state: to provide local employment (not to encourage and promote overseas employment). The law reiterates the fundamental principle that the state affords full protection to labor. The law encourages transacting with other countries to consummate a multilateral or bilateral agreements with the Philippine government. The sole purpose of this objective is to afford protection to migrant workers. In other words, Filipinos working abroad are safer if theyre work in countries with whom we have existing multilateral and bilateral agreements. This amendatory law expanded the free access of workers to free skills and livelihood program. After their overseas employment contract has ended, they have to go back to the Philippines. Under this law, they are provided with certain programs and activities in which these overseas Filipino workers can engage in while they are in the country. This amendatory law defines the governments migration management program. If the government has no choice but to allow its citizens to seek employment abroad, then it has to make sure, for example, that the mechanisms are all in place to make sure that proper dissemination are provided to these workers even before they leave the country. For example, there is a prospect of employment in Japan, then the Philippine government will have to adopt the so-called migration management program to inform them of the existing laws in Japan, etc. The focus of this amendatory law is to enable the setting up of these mechanisms to assist the migrant workers should they decide to pursue overseas employment. The amendatory law identifies the government agencies (DOLE, DFA, OWWA, POEA) involved in the migration management program with specified roles for each agency. Under the amendatory law, it makes mention of even the local government units as added agencies to establish the migration management program. How can these local government units participate? They can allow setting up of transit offices so that workers in the provinces need not go to Manila to apply for employment with these recruitment and placement agencies. They can get assistance from the LGU. Other salient features: Guaranty of migrant workers rights Deployment of overseas Filipino workers or migrant workers should only be done in countries where their rights are protected.

Guaranties that workers will only be deployed in countries where they are protected: (1) Receiving or host country must have existing labor and social legislations. (2) Host country must have existing bilateral agreement with the Philippines for the protection of migrant workers. (3) Multilateral agreements involving two or more countries resolutions, declaration, conventions between the Philippines and the host countries are needed before deployment has to be made. (4) Receiving country must have positive and concrete measures to protect the migrant workers. positive and concrete measures include legislative and executive initiatives, diplomatic negotiations, programs, projects, activities and other acts by receiving country aimed at protecting the rights of migrant workers Illegal recruitment now includes reprocessing of OFWs for inexistent work. (Recruiters assure workers that there jobs available commensurate to their qualifications, only to find out, after signing the employment contract and upon getting there, that the jobs do no exists. The recruiter will provide those workers with different employment contract for a different job. This is illegal. Some illegal and prohibited activities: (1) Allowing foreigner to own and manage a licensed recruitment agency (2) Grant a loan to an overseas Filipino worker with interest exceeding 8 percent per annum, which will be used for payment of legal and allowable placement fees (3) Compulsory and exclusive medical examination recruitment agency will not entertain medical examination and insurance coverage except through their company-owned or managed corporation. Increased penalty for illegal recruitment: imprisonment 12-20 years fine not less than P1M nor more than P2M Simple prosecution and process: Mere affidavits of operatives or personnel from DOJ/POEA who are knowledgeable of the commission of illegal recruitment would be enough to initiate prosecution. The task to prosecute is now coordinated between the DOJ and POEA. Persons liable: juridical persons officers having ownership, control, management or direction of their business; responsible employees/agents Prescriptive period: illegal recruitment cases 5 years economic sabotage 20 years
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Economic sabotage can either be an illegal recruitment committed BY A SYNDICATE or illegal recruitment in a LARGE SCALE. Definition of terms: Recruitment and placement 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 Illegal recruitment if undertaken by non-licensee or non-holder of authority Illegal recruitment by a syndicate carried out BY a group of 3 or more persons in conspiracy Illegal recruitment in a large scale committed AGAINST 3 or more persons A non-licensee or a non-holder of authority CAN commit illegal recruitment and placement even against one person. The law says, if committed against 2 or more persons, you are deemed engaged in illegal recruitment and placement. According to SC, that is a mere presumption of evidence, but it (the number of persons against whom this act is committed) is not an essential ingredient of the offense of illegal recruitment. Contracted worker Filipino worker with employment contracts already processed by the POEA for overseas deployment Manning agency engaged in the recruitment and placement of seafarers for ships plying international waters and for related maritime activities. Seafarer any person who is employed or engaged in overseas employment in any capacity on board a ship other than a government ship used for military or non-commercial purposes. The definition shall include fishermen, cruise ship personnel and those serving on mobile offshore and drilling units in the high seas. Overseas Filipinos migrant workers, other Filipino nationals and their dependents abroad. Overseas Filipino Worker or Migrant Worker person who is to be engaged, is engaged, or has been engaged in a remunerated activity in a state of which he or she is not a citizen or on board a vessel navigating the foreign seas other than a government ship used for military or non-commercial purposes, or on an installation located offshore or on the high seas. *** Points for clarification: Appeal from the decision of the voluntary arbitrator Applicable rule is not the NLRC rules of procedure but the Revised Guidelines of the Conduct of Voluntary Arbitration Proceedings

complimented by DO 40-03. There is a provision in DO 40-30 that a motion for reconsideration shall not be allowed. Revised guidelines, MR is likewise will be denied TENG vs. PACADA (2010) The Supreme Court considered such provision, not allowing motion for reconsideration as a remedy from the decision of the voluntary arbitrator, is without basis; in excess of the exercise of the rule making power of the DOLE. The remedy of the adverse party from the decision of the voluntary arbitrator is appeal under Rule 43 of the Rules of Court, Petition for Review to the Court of Appeals; however, since voluntary arbitrator is exercising quasi-judicial function, under the principle of exhaustion of administrative remedies, it is therefore appropriate that a MOTION FOR RECONSIDERATION be filed as a remedy, which is to be filed within 10 days under the Labor Code, to enable the voluntary arbitrator to correct itself. And such filing of MR will interrupt the period to appeal under Rule 43. Is the compromise settlement under Art. 227 without the assistance of a counsel valid?

YULTEK(?) CASE: Compromise settlement is valid even if it was entered into without the assistance of a counsel, as long as its requisites are present: Consideration is reasonable Signed voluntarily by the parties Approved by the Labor Arbiter, or in case it is at the DOLE Secretarys level, approved by the Secretary (by Atty. Marquez) Subscribed & sworn to before the LA

As long as the employee entered the compromise settlement voluntarily, meaning he is aware of the consequences of the settlement he has entered into, the same is valid. Counsel/Lawyer is not indispensable to the validity of the compromise because he is just an agent of the party. When a lawyer is defrauded by the compromise agreement regarding his attorneys fees, he can complain against his client but not to the extent of impugning or assailing as invalid the compromise settlement. Is non submission of reportorial requirements is a ground of cancellation of union registration.

The Labor Code only provides for 3 grounds for cancellation of union registration (Art. 239):
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1.

Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the ratification; Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election of officers, and the list of voters; Voluntary dissolution by the members.

2.

3.

the nominees of workers and employers organizations, respectively. The Chairman of the Commission shall be designated by the President of the Philippines from among its members. The term of the appointive members shall be three (3) years: Provided, That the terms of the first six (6) appointive members shall be one (1), two (2) and three (3) years for every two members, respectively: Provided, further, That they shall continue to hold office until their successors shall have been appointed and duly qualified. All vacancies, prior to the expiration of the term, shall be filled for the unexpired term only. (Sec.3, RA 8292) The law created SSS on the basis of compulsory coverage. It is an exercise of the police power of the state, it does not infringe on your right to join or not to join organization. The law requires compulsory coverage because of 2 aspects: 1. To determine who is entitled to protection and who may eventually get benefits 2. So that the Government will know who is obliged to contribute or pay to the system SSS law is a universal coverage. The presumption is in favor of the coverage. So in case of doubt, the presumption is that a person is covered. GR: Coverage (presumption) EXC: Specifically excluded by law Compulsory Coverage: (a) All employees not over sixty (60) years of age - regardless of income (b) Employers - regardless of age (c) Domestic helpers - monthly income shall not be less than P1,000.00 a month (d) Spouses - engaged in other vocation or employment (e) Self employed persons i. includes self employed professionals ii. partners and single proprietors in businesses iii. actors and actresses, directors, scriptwriters and news correspondents - not fall within the definition of the term employee iv. Professional athletes, coaches, trainers and jockeys v. Individual farmers and fishermen. Voluntary Coverage: (a) Spouses
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In the book of Azucena, it made mention of DELETION when there is non-submission of reportorial requirements within 5 years, upon the initiative of the Bureau. This is different from cancellation. In deletion, the union membership is deleted from the list of the Bureau; however it does not lose its personality. In cancellation, it loses its personality. SOCIAL LEGISLATION SOCIAL SECURITY LAW (Social Security Act of 1997, RA 8292) Social Security Act of 1997 established a tax exempt social security. Tax exempt social security means that all benefits, payments, made to the SSS is exempt from all taxes and charges; it is exempt from execution, garnishment, attachment, or levy. The only exception to the exemption from execution, garnishment, attachment or levy, is when the person you owe money is the Government. SSS is the administrative agency of government with regard to the social security law. Take note: Composition of SSS The SSS shall be directed and controlled by a Social Security Commission, hereinafter referred to as Commission, composed of the Secretary of Labor and Employment or his duly designated undersecretary, the SSS president and seven (7) appointive members, three (3) of whom shall represent the workers group, at least one of whom shall be a woman; three (3), the employers group, at least one (1) of whom shall be a woman; and one (1), the general public whose representative shall have adequate knowledge and experience regarding social security, to be appointed by the President of the Philippines. The six (6) members representing workers and employers shall be chosen from among

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- who devote full time to managing the household and family affairs (b) Filipinos recruited by foreign-based employers for employment abroad Registration (Commentary) Registration is generally not important; it is not required by law. It is important in a way, for the determination of persons covered and entitled for the benefits, and determination of persons obligated to contribute. Date of coverage: Employee: First day of employment regardless of status permanent, probationary, contractual, fixed, etc. Employer: first day of operation of business. Date is immaterial, as long as operating as an employer he is covered under the SSS. The benefit received by the employer is the relief from providing benefits to his employees. Self employed: upon registration

Benefits: 1. Retirement 2. Disability: Permanent Total, Permanent Partial or Temporary Total ANTI-SEXUAL HARASSMENT LAW (Anti-Sexual Harassment Act of 1995, RA 7877) State Policy: The State shall value the dignity of every individual, enhance the development of its human resources, guarantee full respect for human rights, and uphold the dignity of workers, employees, applicants for employment, students or those undergoing training, instruction or education. Who may be liable: 1. Employer 2. Employee 3. Manager 4. Supervisor 5. Agent of the employer 6. Teacher 7. Instructor 8. Professor 9. Coach 10. Trainer 11. Any other person having authority, influence or moral ascendancy over another Other persons who can be held equally liable: Principal by induction, indispensable cooperation Law is not applicable to harassment by employee to co-employee due to absence of authority, influence or moral ascendancy. Note: but may be ground for SEXUAL MISCONDUCT which is a ground for termination (sexual perversity in the workplace) How committed: Person liable 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. Elements: 1. The sexual favor is made as a condition: a. In hiring or in the employment, reemployment or continued employment of said individual b. In granting said individual favorable compensation, terms, conditions, promotions or privileges c. The refusal to grant the sexual favor results in limiting, segregating, or classifying the employee which in any way would discriminate, deprive or diminish employment
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Note: SSS retirement benefit is on top of all benefits to be received by the employee, because there is contribution from the employee.

GSIS LAW (The Government Service Insurance System Act of 1997, RA 8291) Membership is also compulsory. GR: It covers all employees receiving compensation who have not reached the compulsory retirement age, irrespective of employment status Note: Compulsory retirement age is 60 years old w/ at least 15 years of service Employee or Member - Any person receiving compensation while in the service of an employer as defined herein, whether by election or appointment, irrespective of status of appointment, including barangay and Sanggunian officials; EXC: (1) Members of the Armed Forces of the Philippines (2) Members of the Philippine National Police (3) Contractuals with no employer-employee relationship

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opportunities employee 2.

or

otherwise

adversely

affect

said

The employer or head of office, educational or training, institution shall disseminate or post a copy for the information of all concerned. Remedy of offended party File complaint to the employer thru the committee, or File case to court (ex. for injunction) including civil liability

The above acts would impair the employees rights or privileges under existing labor laws The above acts would result in an intimidating, hostile or offensive environment for the employee

3.

Note: Gravamen of sexual harassment is abuse of power Components/Nature Unsolicited, unwelcome, usually repeated, done consciously, intended/deliberated, uninvited, emphasizes on persons sexuality Grave offenses: it need not be repeated Forms: physical, verbal, visual Where usually committed: Not limited to work environment or office; office related social functions; outside the office; conferences; over telephones/mobile phone/fax/email; social network places. Criminal liability: 1 month 6 months of imprisonment fine 10 thousand pesos 20 thousand pesos Both Note: May be subject to probation. Aside from criminal liability, administrative penalties may be imposed by the head of office depending on the gravity of the offense, may be but not limited to reprimand, suspension, termination or dismissal. Duty of Employer 1. Promulgate appropriate rules and regulations prescribing the procedure for investigation of sexual harassment cases as well as guidelines on proper decorum in the workplace 2. Create a COMMITTEE ON DECORUM AND INVESTIGATION of cases on sexual harassment Composition: 1 representative from the management, 1 representative from the employees: (supervisor, rank & file), in case of work place In the case of the educational or training institution, the committee: at least one (1) representative from the administration, the trainers, instructors, professors or coaches and students or trainees, as the case may be. Investigate cases of anti-harassment

Prescription: 3 years (criminal prosecution) SC: strictly speaking, there is no time period. The 3 year prescriptive period is only for the criminal prosecution. Note: Labor Arbiter has no jurisdiction SC doctrine: Law is extended to protect against over-sexed superiors EMPLOYEE COMPENSATION PROGRAM This law establishes a STATE INSURANCE FUND. Source of fund: Employers contribute solely to the State Insurance Fund. Employers are the members, who are required to register. ECP is the system which created the State Insurance Fund.GSIS and SSS are the administering agencies of ECP Purpose: Employees & dependents will be entitled to benefits: medical, income, etc. work connected/related injury or death Benefits: Sickness, disability, death by reason of EMPLOYMENT ACCIDENT Sickness, disability or death by reason of OCCUPATIONAL DISEASES

Note: AIDS is not a occupational disease, as to the reason refer to case (no idea, not mentioned) [possible question MCQ] Conditions for compensability INJURY (memorize!) 1. The employee must have been injured at the place where the work required him to be 2. The employee must have been performing his official functions If the injury is sustained elsewhere, the employee must have been executing an order of the employer

3.

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4.

The injury was not due to the employees intoxication, willful intention to injure or kill himself or another, or, notorious negligence

If the employer is at fault, and the claim is denied, the employer will be liable to pay penalties. Failure to comply with health and safety laws, install safety devices, the employer is liable to pay the State Insurance Fund penalty 25% equivalent benefit payable to the employee. Note: When the requisites are present, employee is entitled to the claim. Remedies: Injury or death either occupational accident or listed among the occupational diseases 1. Recovery/File a claim from ECC thru the SSS, or 2. File an action for tort against the employer to the regular courts Principle Against Double Compensation GR: Employee cannot avail of both remedies simultaneously; availing of one remedy bars the other. Acceptance of benefit from one remedy excludes getting additional benefit from the other. EXC: when there is a supervening event/s or fact after the occurrence of such injury which would allow the filing of a court action. Examples:

Note: Injuries incurred by a health worker while doing overtime work shall be considered as work-connected. Conditions for compensability OCCUPATIONAL DISEASES (off the record, added just in case) 1. Employees work must involve the risk described therein 2. The disease was contracted as a result of the employees exposure to the described risks 3. The disease was contracted within the period of exposure and other such factors necessary to contract it 4. There was no notorious negligence on the part of the employee Liability State Insurance Fund is exclusive and it pays all other liabilities of employer to the employee. However, payment will not bar the recovery of benefits from SSS law, because it is a different law, there is no double recovery. Failure to record injury within 5 days, withhold material information, or omission on the part of ER (etc.) subject to penalty. Penalty: 50% of the lump sum equivalent of income benefit Note: This is in addition to the imposable fine of 500 pesos & imprisonment of 6 months 1 year Categories of Disability: Temporary Total if as a result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period not exceeding 120 days. Permanent Partial if as a result of the injury or sickness, the employee suffers a permanent partial loss of the use of any part of his body. Permanent Total if as a result of the injury or sickness, the employee is unable to perform any gainful occupation for a continuous period exceeding 120 days. Grounds for the denial of claim: 1. Injury due to the employees intoxication 2. willful intention to injure or kill himself or another 3. notorious negligence 4. Failure to notify SSS Prescriptive period: 3 years from the occurrence of such injury

(1) An employee files a claim to ECL, however later found out that the reason for the injury was due to the negligence of the employer, in this case employee may file damages against the employer because the choice of one remedy is grounded on MISTAKE OF FACT (or ignorance) (2) When upon investigation, SSS found out that the injury suffered by the employee was due to the gross negligence of the employer; the employee may be allowed to pursue an action for damages before the regular courts. Note: This is true even if the employee has already been compensated or given the benefit Resolution of the SC: when the amount awarded by the court is higher than the claim or benefit received, subtract the benefit received by the employee from the amount adjudged/awarded. So in this instance, there is still no double compensation.

Labor Law Review (Finals)

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