Labor Law I

Part I Introductory Materials Section 1. Labor Law in General 1.1

Labor Law Defined [S, R, J]

1. Labor Legislation – Consists of statutes, regulations and jurisprudence governing the relations between capital and labor by: a. providing for certain terms and conditions of employment or b. providing a legal framework within which these terms and conditions and the employment relationships may be • negotiated • adjusted and • administered. 2. Social Legislation – Includes all laws that provide particular kinds of protection or benefits to society or segments thereof in furtherance of social justice. In that sense, labor laws are necessarily social legislation. • promote public welfare 1.2

Law Classification

1. Labor Standards Law – That which sets out the minimum terms, conditions and benefits of employment that ER’s must provide or comply with and to which EE’s are entitled as a matter of legal right. Ex. 8-hour labor law 2. Labor Relations Law – That which defines [S R D & IM] • the status, rights and duties • and the institutional mechanisms that govern the individual and collective interaction of ER’s and EE’s or their representatives. Ex. Book V of Labor Code 3. Welfare Legislation – designed to take care of contingencies which may affect workers, e.g. where there is loss of income for research beyond the worker’s control. – BENEFITS * Social Security Law. 1.3

History and Origin

1.4

Basis for Enactment

1. Art. II, Sec.5, Const. : The maintenance of peace and order, the protection of life, liberty, and property, and the promotion of

2 general welfare are essential for the enjoyment by all the people of the blessing of democracy. 2. Art. II, Sec. 18, Const. : The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. 3. Art. XIII, Sec. I, Const. : The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. * Labor and social legislation are enacted pursuant to the police power of the State. This is its inherent power to enact wholesome and reasonable laws to promote order, safety, health, morals and general welfare of society. In its exercise the state may interfere with personal liberty, with property and with business and occupation. (Calalang vs. Williams). * No longer may the due process clause and the freedom of contract be invoked to challenge labor and social legislation. This has long been discarded since the 1937 case of West Coast Hotel vs. Parish (US) and the 1924 case of Pp. vs. Pomar (RP). * Labor relation laws enable workers to obtain from their employers more than the minimum benefits set by labor standard laws 1.5

Law and Worker

The SC reaffirms its concern for the lowly worker who, often at the mercy of his ER, must look up to the law for protection. Fittingly, the law regards him with tenderness and even favor and always with hope in his capacity to help in shaping the nation’s future. It is an error to take him for granted. (Cebu Royal Plant vs. Deputy Minister of Labor) Section 2. Labor and the Constitution 2.1 Constitutional Provisions 1. Art. II, Sec. 9, Const. : The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. 2. Art. II, Sec. 10, Const. : The State shall promote social justice in all phases of national development.

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3. Art. II, Sec. 13, Const. : The State recognized the role of the youth in nation-building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. . . 4. Art. II, Sec. 14, Const. : The State recognizes the role of women in nation-building, and shall ensure their fundamental equality before the law of women and men. 5. Art. II, Sec. 18, Const. : The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. 6. Art. XIII, Sec. 1, Const. : The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments. 7. Art. XIII, Sec. 3 (1st par), Const. : The State shall *afford full protection to labor, local and overseas, organized and unorganized, and *promote full employment and equality of employment opportunities for all . . . 8. Art. XIII, Sec. 4, Const. : The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to win collectively or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof . . . 9. Art. XIII, Sec. 11, Const. : The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all the people at affordable cost . . . 10. The present Constitution has gone further than the 1973 Constitution in guaranteeing vital social and economic rights to marginalized groups of society, including labor. The framers of the Constitution intended to give primacy to the rights of labor and afford the sector “full protection” regardless of the geographical location of the workers and whether they are organized or not (Globe Mackay vs. NLRC). 2.2 Protection to Labor 1. Art. XIII, Sec. 3, Const. : The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to 1) self organization, 2) collective bargaining and negotiations, and 3)

4 peaceful and concerted activities including the right to strike in accordance with law. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and ER’s and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce mutual compliance therewith to foster industrial peace. The State shall regulate the relations between worker’s and ER’s, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns in investment, expansion and growth. 1935 Const. : The State shall afford protection to labor, especially to working women and minors, and shall regulate the relation between landowner and tenant, and between labor and capital in industry and in agriculture. The State may provide for compulsory arbitration. Three aggregates of power against which the individual employee needs protection 1. collective labor - Union 2. collective capital - management 3. collective bargaining relationship * The law, while protecting the rights of laborers, does not authorize the oppression or destruction of the employer Laissez Faire 1. Laissez faire or the principle of free enterprise never found full acceptance in this jurisdiction . . . (ACCFA vs. CUGCO) 2.3

Labor Sector

1. Art. II, Sec. 18, Const. : The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. 2.4

Policy Considerations – Social Justice

1. Art. II, Sec. 10, Const. : The State shall promote social justice in all phases of national development. 2. What does social justice envision? It envisions [E, R, C] a. equitable diffusion of wealth and political power for the common good; b. regulation of the acquisition, ownership, disposition of property and its increments;

use

and

c. and creation of economic opportunities based on freedom of initiative and self-reliance. (Art. XIII, Sec. 1 & 2, Const. ; Alcantara)

5 Definition [H, E, P, A] 1. Social justice is neither communism nor despotism, nor atornism, nor anarchy, but the humanization of laws and the equalization of social and economic forces so that justice in its rational and objectively secular conception may at least be approximated. It means the promotion of the welfare of the people, the adoption of measures by the government to ensure economic stability of all the competent elements of society, through the exercise of powers underlying the existence of all governments on the timehonored principle of salus populi est suprema lex. (Calalang vs. Williams) 2. What does social justice guarantee? Social justice does not champion division of property of economic status; what it guarantees are equality of opportunity, equality of political rights, equality before the law, equality between values given and received, and equitable sharing of the social and material goods on the basis of efforts exerted in their production. (Guido vs. RPA) • •

“Those who have less in life should have more in law” “Equal pay for equal wok”

Limits of Use * The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best it may mitigate the penalty but it certainly will not condone the offense. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. (PLDT vs. NLRC) 2.5

Specific Labor Rights

* Art. XIII, Sec. 3, Const. : [In the relation between workers and ER’s the following rights shall be assured by the State: a. Rights to self-organization b. Right to collective bargaining c. Right to collective negotiations d. Right to peaceful and concerted Activities including the right to strike e. Right to security of Tenure f. Right to just and humane Conditions of work g. Right to a living Wage h. Right to participate in policy and Decision-making processes (WACT BOND) * Only to those that affect the rights of employees and have repercussions on their right to security of tenure. Protection to Labor 1. The law must protect labor, at least to the extent of raising him to equal footing in bargaining relations with capital and to shield him from abuses brought about by the necessity for survival. It is

6 safe to presume, therefore, that an EE or laborer who waives in advance any benefit granted him by law does so, certainly not in his interest or through generosity but under the forceful intimidation of urgent need; and hence, he could not have so acted, freely and voluntarily. (Sanchez vs. Harry Lyons) 2.6

Other Rights

1. Art. II, Sec. 10, Const. contracts shall be passed.

: No law impairing the obligation of

*** Compassionate Justice - disregarding rigid rules and giving due weight to all the equities of the case - years of service without derogatory record taken into account - harshness of penalty also taken into account 2. Art. III, Sec. 16, Const. : All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial or administrative bodies. 3. Art. III, Sec. 18 (2), Const. : No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted. Labor as Property * The right of a person to his labor is deemed property within the meaning of the Constitutional guarantees. That is his means of livelihood. He cannot be deprived of his labor or work without due process of law. (Phil. Movieworkers Assn. Vs. Premiere Productions) Due Process Requirements * The twin requirements of notice and hearing constitutes essential elements of due process in cases of EE dismissal: the requirement of notice is intended to inform the EE of the ER’s intent to dismiss and the reason for the proposed dismissal; upon the other hand, the requirement of hearing affords the EE an opportunity to answer his ER’s charges against him and accordingly to defend himself therefrom before dismissal is effected. Neither of these 2 requirements can be dispensed with without running afoul of the Constitution. (Century Textile vs. NLRC) Liberty of Contract and State Interference * Legislation appropriate to safeguard to people’s vital interests may modify or abrogate contracts already in effect. Reservation of essential attributes of sovereign power is read into contracts as a postulate of the legal order. All contracts made with reference to any matter that is subject to regulation under the police power must be understood as made in reference to the possible exercise of that power. (Abella/Had. Danao vs. NLRC) such was the case when Art. 283 of the Labor Code granted severance pay to workers who at the time of their employment were not entitled under the law to receive such pay. (Id.)

7 ** Employees have a vested and demandable right over existing benefits voluntarily granted to them by their employer. MGT. Rights [C P S T] 1. Right to conduct business 2. Right to prescribe rules 3. Right to select employees 4. Right to transfer and discharge employees Waiver and Compromise * Not all waivers and quitclaims are invalid as against public policy 1. It is only when there is clear proof that the waiver was wangled an unsuspecting person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. 2. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. (Sicangco vs. NLRC) 3. Should a party fail or refuse to comply with the terms of a valid compromise or amicable settlement, the other party could either enforce the compromise by a writ of execution, or regard it as rescinded and to insist upon his original demand. (Morales vs. NLRC) - Voluntary consideration – not unconscionable - Waiver of future benefits is not valid and binding - The law does not consider as valid any agreement a. to receive less compensation on what a worker is entitled to recover b. to prevent him from demanding benefits to which he is entitled * Instances when quitclaim, waiver or compromise is valid: 1. C, a national promoter salesman, with high educational attainment, tendered his resignation after a spot audit found out that he had a tentative shortage of Php49,005.59. It is unbelievable that C, occupying a responsible position, and with high education attainment, can be rattled and confused into signing a resignation letter, on account of a mere spot audit. (Callanta vs. NLRC) 2. Bank and EE’s association, entered into a CBA providing for the withdrawal of the pending case of the association against the bank for non-payment of Php60.00 ECOLA. There is nothing in the compromise which contravenes the law, morals, good customs, public order, or public policy. (Monte de Piedad vs. MOLE) 3. During pendency of appeal before the NLRC, workers executed a voluntary affidavit before the Labor Arbiter declaring intention to withdraw appeal in lieu of payment of severance pay. The affidavits executed voluntarily and knowingly in the presence of

8 the Labor Arbiter has the effect and authority of res judicata. (Olaybar vs. NLRC) 4. A number of EE’s made quitclaims in exchange for the dropping of charges of embezzlement of P25 million which the EE’s allegedly embezzled. The consideration for the waiver is adequate. (PBC vs. Echiveri) Instances when quitclaim, waiver or compromise invalid: 1. A worker hospitalized for several times for work-related accidents was told by an immediate supervisor and a personnel officer to retire and execute a quitclaim or else would be dismissed and got nothing. The retirement and quitclaim was made under threat of dismissal. (Alcantara) 2. A messenger with 5 years employment resigned and executed a quitclaim after being told by his manager to resign or else charges will be filed against him. The threat was unjust since the messenger did not commit any unlawful act. There was intimidation, which vitiated consent. (Guatson Tours vs. NLRC) 3. A quitclaim of future benefits made by an EE at the time of employment (Alcantara) 4. After the CIR rendered a decision ordering the ER to pay wage differentials, the EE’s executed a quitclaim waiving their rights under the decision. The quitclaim contravenes public policy since after a civil action is filed in court, the cause of action may not be subject of compromise unless the same is with leave of court. ( Pampanga Sugar Devt. Vs. Sugar Workers Assn.) 5. A quitclaim executed by an OFW repatriated to the Philippines because of an illness requiring surgical treatment in consideration of the return travel fund. There was no consideration since the EE regularly contributed to the fund. Besides, the quitclaim is negotiable and in congruous to the declared policy of the State to afford protection to labor and to assure the right of workers to security of tenure. (Cuales vs. NLRC) 6. ER appealed the decision of the POEA awarding $3,800.00 disability benefits to worker. During pendency of appeal, the worker executed a quitclaim in exchange for Php18,000.00 since at the time the worker needed money for medical treatment. The law does not consider valid any agreement to receive less compensation than what the workers should receive. It was clear that the worker was forced to accept the payment out of necessity.(PISC vs. NLRC) 7. After the finality of judgment awarding them severance pay, the workers executed a quitclaim before labor arbiter who had no participation in the case. Such settlements must be approved by the labor arbiter before whom the case is being heard. (St. Gothard Pub vs. NLRC) •

Quitclaims are ineffective to bar recovery of the full measure of the worker’s rights

9 •

Dire Necessity is not an acceptable ground to annul releases unless there is showing that a. workers were forced to execute them b. the considerations for the quitclaims where unconscionably low Management Prerogatives 1. Right to select and discharge employees – with valid cause 2. promulgate reasonable employment rules and regulation 3. designation of work to employees 4. transfer and promote employees 5. control company operations 6. install money-saving devices 7. re-clarify or abolish positions 8. sell or close business Drug Testing G. R. : cannot – right to privacy Exception: - if job or occupation involve public safety Ex.ample: a. bus drivers b. security guards Participation in Decision-making Process Only if it affects his [R, D, W]: c. rights d. duties e. welfare - not management prerogatives regarding operation - must at least be informed 1.

2.

business

The law explicitly considers it a State Policy “to ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. However, a line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of EE’s. in treating the latter, management should see to it that EE’s are at least properly informed of its decisions or modes of action. (PAL vs. NLRC) In this respect, a legislation providing a worker’s representation in the Board of Directors of corporations is not valid since the constitutional guaranty does not include the worker’s right to participate in the management of the enterprise. (Alcantara) May the ER be compelled to share with its EE’s the prerogative of formulating a code of discipline? I a code of discipline unilaterally formulated by the ER enforceable? Yes, the ER has the obligation to share with its EE’s its prerogative of formulating a code of discipline since this will be affecting their rights and benefits. A code of discipline unilaterally formulated and promulgated by the ER would be unenforceable. (Id.)

Section 3. Labor and the Civil Code

10 3. 1 Role of Law 1. Art. 1700, NCC : The relation between capital and labor are merely contractual. They are so impressed with public interest that labor contracts must yield to common good. Therefore, such contracts are subject to special laws on labor unions, collective bargaining, strikes, lockouts, closed shops, wages, working conditions, hours of labor and similar subjects. 3.2 ER-EE Standard of Conduct * Art. 1701 : Neither capital nor labor shall act oppressively against the other, or impair the convenience of the public. Fair Treatment * The NCC states that every person must in the exercise of his rights, and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. (AHS Phils. vs. NLRC)

11 Law Compliance * The return-to-work order in this case not so much confers a right as it imposes a duty and while as a right it may be waived, it must be discharged as a duty even against a worker’s will. Thus, it does not constitute a violation of the right against involuntary servitude. (Sarmiento vs. Tuico) This is differentiated from the instance where there is a mere breach of contractual stipulation. While the EE may be held liable for damages by virtue of the breach of contract, he may not be compelled to work against his will because this will be involuntary servitude. (Alcantara) EE Obedience and Complaince ER Orders * It is a recognized principle that company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and valid on the parties and must be complied with until finally revised or amended unilaterally or preferable through negotiation or by a competent authority. (SMC vs. Ubaldo) Deliberate disregard or disobedience of rules, defiance of management authority by the EE’s cannot be countenance. Until and unless the rules or orders imposed by the ER are declared to be illegal or improper by competent authority, the EE’s ignore or disobey them at their own peril. (GTE Directories vs. Sanchez) ER Obligation * An EE must be treated as a disdained subordinate but with respect and fairness, if not affection and gratitude due to an equal partner. (Lagniton vs. NLRC) Section 4. The Labor Code of the Philippines 4.1 Decree Title * Art. 1 : “Labor Code of the Philippines” 4.2 Effectivity * Art. 2 : 6 months after its promulgation. 4. 3 Applicability 1. Art. 6: All rights and benefits granted under this Code shall, except as many otherwise be provided, apply alike to all workers, whether agricultural, or non-agricultural. 2. Art. 276: The terms and conditions of employment of all government of all government EE’s, including EE’s of GOCC’s shall be governed by the Civil Service Law. 3. Art. IX-B, Sec. 2(1), Const. :The Civil Service embraces all branches of Government, including GOCC’s with original charters. Test-GOCC

12 1. The rule now is that only the GOCC’s with original charters come under the Civil Service Law. (Cabrera vs. NLRC) 4.4 Implementing Rules 1. Art. 5: Implementing rules and regulations of the DOLE and other government agencies of the Code shall become effective * 15 days after announcement of their adoption in newspapers of general circulation. Limitation –Rule Making Power 1. * This power is limited to the promulgation of rules and regulations to effectuate policies of the Code. Such rules and regulations must conform to the terms and standard prescribed in the statute. They cannot supplant its plain and explicit command. (Alcantara) * A rule or regulation promulgated by an administrative body, such as the DOLE, to implement a law, in excess of its rule-making authority is void. (Azucena) 2. Examples of void IRR’s: * IRR providing the 10-day period specified in Art. 223 refers to working days as stated in the article. * An IRR providing that EE’s paid by the month shall be presumed to be paid for all days in the month, whether worked or not. In effect, will except EE’s paid by the month from the enjoyment of the holiday pay benefit. (Insular Bank EE Union vs. Inciong) * IRR of RA 6715 excluding security guards from those allowed to join unions. (MERALCO vs. SOLE) * IRR including commission in the computation of 13th month pay. Unduly expanded the concept of “basic salary”. (Boie-Takeda vs. De La Serna) 4.5 Policy Declaration * Art. 3: The State shall (APERA) 1. 2. 3. 4. 5.

Afford protection to labor Promote full employment Ensure equal work opportunities regardless of sex, race or creed Regulate the relations between workers and ER’s. Assure the rights of workers to self-organization, collective bargaining, security of tenure, and just humane conditions of work.

4.6 Law Interpretation 1. Art. 4 : 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.

13 2. Art. 1702, NCC : In case of doubt, all labor legislation and labor contracts shall be construed in favor of the safety and decent living of the laborer. In Favor Labor-Rationale * This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the law. The policy is to extend the decree’s applicability to a greater number of EE’s to enable them to avail of the benefits under the law, in consonance with the State’s avowed policy to give maximum aid and protection to labor. (Abella vs. NLRC) Liberal Construction * Are the provisions violative of the equal protection clause? No. The ER and the laborer do not stand on equal footing; to ensure equality, the latter must, be afforded protection. Insofar as labor contracts are concerned, the same are usually drafted and prepared by the ER. All doubts in their provisions should therefore be resolved against it. (Alcantara)

Doubt * When these are 2 or more possible explanations regarding an issue affecting worker’s rights, that which favors the worker must be chosen. (Clemente vs. GSIS) No doubt * The provision in case of doubt does not apply where the pertinent provisions of the Labor Code leave no room for doubt either in their interpretation or application. (Bonifacio vs. GSIS) Sweeping Interpretation * The Supreme Court cannot also adopt a sweeping interpretation of the law, lest it engages itself in judicial legislation. (Bravo vs. EEC) Factual Consideration and Rationality * The care and solitude in the protection and vindication of the right of workingmen cannot justify disregard of relevant facts or schewal of rationality in the construction of the text of applicable rules in order to arrive at disposition in favor of an EE. (PAL vs. NLRC) Equity and Moral Consideration * Considerations of equity and social justice cannot prevail against the expressed provisions of labor laws. (Manning vs. NLRC)

14 Balancing Conflicting Claims * The basic policy of the law is to balance or to coordinate the rights and interests of both workers and ER’s. It should not be deduced that the basic policy is to favor labor to prejudice capital. (Azucena) 4.7 Enforcement and Sanctions 1. Art. 217 (a) (2), (3), (4), (6): Jurisdiction of Labor Arbiters and the Commission 1. The Labor Arbiters shall have exclusive and original jurisdiction, except as otherwise provided, the following cases involving all workers: (unfair labor practice) 2. Termination disputes (qualified by Art. 261 which grant voluntary arbitrators original and exclusive jurisdiction over all unresolved grievances arising from CBAs and company personnel policies); 3. Cases involving terms and conditions of employment, if accompanied with a claim for reinstatement (including claims of OFW’s arising out of an ER-EE relationship, including claims for actual, moral and exemplary damages, as provided in Sec. 10, Migrant Workers Act); 4. Claims for actual, moral, exemplary and other damages arising from the ER-EE relations; 5. Except claims for EE’s Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from the ER-EE relations; including - those of persons in domestic or household service, involving an amount exceeding Php5,000, regardless of whether of whether accompanied with a claim for reinstatement. 6. Disputes arising from Art. 264 including legality of strikes and lockouts 2. Art. 128 : Visitorial and Enforcement Power of the Secretary of Labor or his duly authorized representative. 1. Accesss to ER’s records and premises at anytime of the day or night whenever work is being undertaken therein and copy thereform; 2. Question any EE; and 3. Investigate any fact, condition or matter which may be necessary to determine violations of this Code of any labor law, wage order or rules and regulations issued pursuant thereto. * In cases where the relationship of ER-EE still exists, the power to issue Compliance Orders to give effect to the labor standard provisions of this Code and other social legislation.  Writs of execution to the appropriate authority shall be issued for the enforcement of the said orders, except in cases: a. where the ER contests the findings of the labor employment and enforcement officer; and b. raises issues supported by documentary profits which were not considered in the course of inspection.

15 * Order Stoppage of work or suspension of operations of any unit or department of an establishment when non-compliance poses grave and imminent danger to the health and safety of workers in the workplace.  Within 24 hours, a hearing shall be conducted to determine whether an order for the stoppage of work and suspension of operations shall be lifted or not.  In case the violation is attributable to the fault of the ER, he shall pay EE’s their EE’s their salaries or wages during said period. * It shall be unlawful for any person to Obstruct, impede, delay or otherwise render ineffective the order of the Secretary of Labor. * No inferior court shall issue a temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders in accordance with this Article. * Any government EE found guilty of violation, after appropriate administrative investigation, be subject to Summary dismissal from the service. * The Secretary of Labor may require ER’s to keep and maintain Employment records as may be necessary. (AS CONES) 3. Art. 129. Recovery of wages, simple money and other benefits. * The Regional Director of the DOLE or any of the duly authorized hearing officers of the Department is empowered, through summary proceedings 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 a person employed in domestic or household service: Provided  such complain does not include claim for reinstatement  aggregate money claims of each househelper does not exceed P5,000.00 * The complaint shall be resolved within 30 days from the date of the filing of the same. 4. Art. 288 : Penalties and Jurisdiction a. Except, as otherwise provided in the Code, or unless the acts complained of hinges in a question or interpretation or implementation of ambiguous provisions of an existing CBA, any violation of this Code declared to be unlawful or penal in nature shall be punished with:  a fine not less than P1,000.00 nor more than P10,000.00.  or imprisonment of not less than 3 months nor more than 3 years.  Or both such fine and imprisonment at the discretion of the court. In addition to such penalty any alien found guilty shall be  summarily deported upon completion of service of service. b. Any criminal offense punished under this Code shall be under the concurrent jurisdiction of the MTC and the RTC. 5. Art. 289 : The penalty (of the offenses listed in the Labor Code) shall be imposed upon the guilty officer of officers of a corporation,

16 trust, firm, partnership, association pr entity which committed said offenses. 6. Art. 290. Prescription of Offensses * Offenses penalized under this Code and the IRR’s – 3 years. * Unfair labor practice – 1 year from accrual of such unfair labor practice. 7. Art. 291 : Prescription of Money Claims- All money claims arising from ER-EE relations accruing during the effectivity of this Code – 3 years from the time the cause of action is accrued. 8. Art. 292 : Money claims specified in Art. 291shall be filed before the appropriate entity independently of the criminal action that may be instituted in the proper courts. Pending the final determination of the merit of money claims filed with the appropriate entity, no civil action shall be filed with any court.  This provision shall not apply to EE’s compensation cases which shall be processed and determined strictly in accordance with the pertinent provisions of this Code. Section 5. Work Relationship 5. 1 Work Relationship ER and EE 1. Art. 97 (a) and (b) : “Person” means individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons. (b) “ER” includes any person acting directly or indirectly in the interest of the ER in relation to an EE and shall include the Government and all its branches, subdivisions and instrumentalities, all GOCC’s and institutions, as well as nonprofit private institutions, or organizations. 2. Art. 167 (f) and (g) : (f) “ER” means any person, natural or juridical, employing the services of the EE. (g) “EE” means any person compulsory covered by the GSIS . . ., including members of the AFP, and any person employed as casual, emergency, temporary, substitute or contractual, or any person compulsory covered by the SSS. . . 3. Art. 212 (e) and (f) : “ER” includes any person acting in the interest of the ER directly or indirectly. The term shall not include any labor organization or any of its officers except when acting as an ER. (f) “EE” includes any person in the employ of an ER. The term shall not be limited to the EE’s of a particular ER, unless this Code explicitly states. It shall include any individual whose work has ceased as a result or in connection with any current labor dispute or because of unfair labor practice if he has not obtained any other substantially equivalent or regular employment.

17 CLASSIFICATION 1. casual 2. regular 3. emergency 4. temporary 5. substitute 6. contractual 4. Is the purchaser of the assets of an ER corporation considered a successor ER of the latter’s EE? No. Labor contracts are not enforceable against a transferee of an enterprise, labor contracts being in personam, thus binding only between parties. ER-EE Relationship Contractor

–

Independent

Contractor

and

Labor

1. Art. 106 : Contractor or subcontractor – a. Whenever an ER enters into a contract with another person for the performance of the former’s work, the EE’s of the contractor and of the latter’s subcontractor, if any shall be paid in accordance with the provisions of this Code. In the event that the contractor or the subcontractor fails to pay the wages of his EE in accordance with this Code, the ER shall be jointly and severally be liable with his contractor or subcontractor to such EE’s to the extent of the work performed under the contract, in the same manner and extent that he is liable to EE’s directly employed by him. b. There is “labor-only” contracting where: 1. the person supplying in workers to an ER does not have [C,I]  substantial capital  [substantial] investment in the form of tools, equipment, machineries, work premises, among others 2. and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such ER. In such cases, the person or intermediary shall be considered merely as an agent of the ER who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. 2. Sec. 9, Rule VIII, Book III, IRR’s : (a) Any person who undertakes to supply workers to an ER shall be deemed to be engaged in labor-only contracting where such person : * Does not have  substantial capital  [substantial] investment in the form of tools, equipment, machineries, work premises and other materials; and * The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the ER in which the workers are habitually employed.

18 Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the ER who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (c) For cases not falling under this Article, the Secretary of Labor shall determine through whether or not the contracting out is permissible in the light of the circumstances of each case and after considering the operating needs of the ER and the rights of the workers involved. 3. Art. 107 : Indirect ER – The provisions of the immediately preceding Article shall likewise apply in any person, partnership, association or corporation which, not being an ER, contracts with an independent contractor for the performance of any work, job or project. 4. Art. 109 : Every ER or indirect ER shall be held responsible with his contractor or subcontractor for any violation of the provisions of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered direct ER’s. 5. Sec. 8, Rule VIII, Book III, IRR’s : Job Contracting – There is job contracting permissible under the Code if the following conditions are met: 1. The contractor carries on an independent business and undertakes the contract work [A R M - F] a. on his own account b. under his own responsibility c. according to his own manner and method d. free from the control and direction of his ER or principal in all matters connected with the performance of the work except as to the results thereof; and 2. The contractor has a. substantial capital or b. [substantial] investment in the form of tools, machineries, work premises, and other materials which are necessary in the conduct of his business. *Where the ER-EE relationship has become ascertained, the ER becomes bound by statutory requirements pertaining, though not limited, to terms and conditions of employment, labor relations and post employment. (Phone-Poulenc vs. NLRC) Nonetheless, when a contractor fails to pay the wages of his EE’s, the ER who contracted out the job to the contractor becomes jointly and severally liable with his contractor to the EE’s of the latter “to the extent of the work performed under the contract” as if such ER were the ER of the contractor’s EE’s. The law itself, establishes an ER-EE relationship between the ER and the job contractor’s EE’s for a limited purpose i.e. in order to ensure that the latter get paid the wages due them. A similar situation obtains where there is a “labor-only” contracting. This time, however, for a comprehensive purpose: “ER for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.” The law in effect holds both the ER and the “labor only” contractor responsible to the latter’s EE’s for more effective safeguarding of the EE’s rights under the Labor Code. (PBC vs. NLRC)

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A. DETERMINATION * In determining whether the relationship is that of ER and EE or one of independent contractor, each case must be determined on its own facts and all the features of the relationship must be considered. (Villaluga vs. NLRC) ** the existence of an ER-EE relationship is a question of law and cannot be made the subject of agreement * the nature of ones business is not determined by self-serving appellations one attaches thereto but by the tests provided by statute and prevailing case law B. FACTORS 1. The existence of ER-EE relationship is determined by the following elements namely: a. the Selection and engagement of the EE’s b. the payment of Wages c. the power of Dismissal; and d. the power to control the EE’s conduct (WEDS) although the latter is the most important element. (Rosario Brothers vs. Ople) No particular form of evidence is required to prove the existence of an ER-EE relationship. Any competent and relevant evidence to prove the relationship may be admitted (Opulencia vs. NLRC) 2. Is there an ER-EE relationship? * Workers under a pakiao agreement arranged by G whom PRC considered as an independent contractor. ER gives orders to G, on where to store the copra, when to bring out, how much to load and where, and what class of copra to handle. The equipment used is owned by PRC. Yes. PRC has direct control over the handling of the copra. The control test is satisfactorily met. * Piece workers subject to specifications. Yes. The fact that the making of the basket is subject to Dy’s specifications indicates the existence of control. (Dy Koh Beng vs. ILMU) * Tailors, pressers, stitchers and similar workers employed by COD on a piece-work basis. The EE’s are governed by the company’s regulations i.e. 8-hour workday, recording of attendance etc… Furthermore, a master cutter distributes job orders equally, supervises the work and sees to it that they were finished as soon as possible. Yes. The worker’s conduct in the performance of their work was controlled by the company (Rosario vs. Ople) * Cargadores and pahinantes recruited by SMC through a labor contractor who are governed by the regulations of the SMC whose work consisted of loading, unloading, pilling or palleting empty bottles and wooden shells from company trucks and warehouses. Yes. The evidence firmly establishes the control exercised by the SMC. (BLUM vs. Zamora)

20 * Shoe shiners who had their own customers but shared proceeds with company. No. The company does not exercise any degree of control or supervision over his work. The shoe shiner is a partner in trade. (Besa vs. Trajano) * Vendees of cigarettes who are governed by the regulations of the vendor company i.e. definite sales territory, requirement to submit daily, weekly and monthly reports, etc. Yes. Vendor company had control over the vendee. (SSS vs. CA) *I. S, a prominent social figure, had an agreement with TWS to act as “branch manager; The agreement provided that she would be entitled to a part of the commission on sale of tickets; and that she would share in the expenses of maintaining the office. She was also a signatory to a lease agreement covering the branch’s premises, holding herself solidarily liable for the prompt payment of rentals. No. I. S was not subject to the control by TWS. The services rendered by I.S must have been done by her pursuant to a contract of agency. (Sevilla vs. CA) * A plant manager hired by a marble company which was about to close in a few month’s time due to business losses. The company had no control over the former, either as to hours of work or method of accomplishing the work. The former was entitled to a percentage of the net profits of the company for that period. No. Manager was merely a party to a joint venture. (CMC vs. NLRC) * Fishermen-crew of a trawl fishing vessel subject to control and supervision of the owner of the vessel i.e. conduct of fishing operations; time to report to fishing port, etc… Yes. (Ruga vs. NLRC) * Tailors, seamstresses and other workers of a haberdashery who were paid on a piece-rate basis. They were directed by the proprietor of the establishment as specified by the customers. They were required to finish jobs orders in one day before due date. Yes. They did not exercise independence in their own methods, but on the contrary were subject to the control of the establishment from the beginning of their task to their completion. They also had to rely on the tools and equipment supplied by the haberdashery. (Makati Haberdashery vs. NLRC) * The power of control refers merely to the existence of the power and not the actual exercise thereof. * Caddles who are not under the control and supervision of the golf club as to working hours, manner of carrying out their services, etc. No. The club did not have the measure of control over the incidents of the caddy’s work and compensation that the ER would possess. (Manila vs. IAC) * College teachers. Yes. The Court takes judicial notice that a university controls the work of the members of its faculty; that it prescribes the courses or subjects that they teach and the time and place for teaching. (Feati vs. Bautista) * Jeepney drivers working under the boundary system. Yes. The driver does not have any interest in the business because he did not invest

21 anything in the acquisition of jeeps and did not participate in the management thereof. (Citizen’s League of Free Workers vs. Abbas) C. CONTROL TEST *** There is an ER-EE relationship where the ER controls or has reserved the right to control the EE not only as the result of the work but also as to the means by which said work is to be accomplished (Paradise vs. Ng). The test merely calls for the existence of the right to control the manner of doing the work not the actual exercise of the right. (Ruga vs. NLRC) The line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired results without dictating the means or methods employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first , which aim only to promote the result, create no ER-EE relationship unlike the second, which addresses both the result and the means to achieve it. (Insular Life vs. NLRC) The control test calls merely for the existence of the right to control and manner of doing work, not the actual exercise of the right. (Dy Keh Beng) D. ECONOMIC TEST 1. The absence of ER-EE relationship may be determined through economic tests like the inclusion of the EE in the payrolls, having irregular compensation and having a personal stake in the business. (Sevilla vs. NLRC) E. AGREEMENT * The existence of an ER-EE relationship is a question of law and being such, it cannot be made the subject of an agreement. (Tabas vs. CMC) 5.2 Independent Contractor and Labor Contractor Only 1. Art. 106 : Contractor or subcontractor a. Whenever an ER enters into a contract with another person for the performance of the former’s work, the EE’s of the contractor and of the latter’s subcontractor, if any shall be paid in accordance with the provisions of this Code. In the event that the contractor or the subcontractor fails to pay the wages of his EE in accordance with this Code, the ER shall be jointly and severally liable with his contractor or subcontractor to such EE’s to the extent of the work performed under the contract, in the same manner and extent that he is liable to EE’s directly employed by him. b.

There “labor-only” [considered as agent] contracting where: * the person supplying workers to an ER does not have  substantial capital  [substantial] investment in the form of tools, equipment, machineries, work premises, among others

22 With respect to the first requirement, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction “or”. (Neri vs. NLRC) 2. and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such ER. With respect to the second requirement, the service provided by janitors, firemen, mechanics, hired helpers and similar workers are considered directly related to the operations of a company since this is necessary to the proper maintenance of the premises and machineries as well as the protection of the company premises against fires. (Guarin vs. NLRC) In such cases, the person intermediary shall be considered merely as an agent of the ER who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. *** Factors to Determine existence of Independent Contractor Relationship: 1. whether the contractor is carrying on an independent business; 2. whether the work is part of the ER’s general business; 3. the nature and extent of the work; 4. the skill required; 5. the terms and duration of the relationship; 6. the right to assign the performance of the work to another; 7. the control and supervision of the work and the ER’s powers with respect to the hiring, firing and payment of salaries; 8. the duty to supply premises, tools and appliances. (Mafinco vs. Ople) ** Examples of Independent Contractor: * Commission agent : IPC Company entered into agreement with registered representatives who worked on a commission basis. While the agents were subject to a set of rules and regulations governing the performance bond; the termination for certain causes, however, the agents were not required to report to work; to devote their time exclusively for the company; to account for their time nor submit a record of their activities; and that they were paid on a commission based on a certain percentage of sales. The fact that for a certain specified causes (failure to meet annual quota) the relationship may be terminated does not mean such control exists, for the causes of termination have no relation to the means and methods of work. (IPC vs. SSS) * Dealership : A contract whereby one engages to purchase and sell soft drinks on trucks supplied by the manufacturer but providing that the other party (peddler) shall have the right to employ his own workers, shall post a bond to protect the manufacturer against losses shall be responsible for damages caused to third person, shall obtain the necessary licenses and permits and bear the expenses incurred in the sale of the soft drinks. (Mafinco vs. NLRC)

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Another dealership agreement wherein the dealer: handles the products in accordance with existing laws and regulations; sends his orders to the factory plant; is supplied by the factory with a delivery truck and all expenses for repairs are borne by the factory; receives no commission but given a discount for all sales; is responsible alone for any violation of the law, sells the product at the price agreed upon between the parties; and posts a surety bond of not less than P10,000.00. (La Suerte vs. Director of Labor Relations) * Security Agency : Shipping company entered into an agreement with a security agency wherein the security agency was responsible for the hiring and assignment of the guards, the guards were not known to the shipping company for it dealt directly with the agency, and a payment of a lump sum to the agency who in turn paid the compensation of the individual watchmen. Under the circumstances, the guards cannot be considered EE’s of the shipping company. It is the security agency that recruits, hires and assigns the work of the watchmen. It is the wages to which the watchman is entitled. The powers to dismiss lies with the agency. Lastly, since the company has to deal with the agency, and not with the individual watchmen, on matters, pertaining to the contracted task, it stands to reason that the company does not exercise any power or control over the watchmen’s conduct. (APL vs. Clave) * Stevedoring Services : SHIPSIDE entered into a “Contract for Services” with La Union providing among others that the latter would furnish all labor needed for stevedoring work in piers controlled by the former. The net balance of the stevedoring charges will be divided equally among the parties. The records do not show any participation on the part of SHIPSIDE with respect to the selection and engagement of the individual stevedores. The terms and conditions of their services are matters determined not by SHIPSIDE but by La Union. It is also sufficiently established that La Union exercised supervision and control over its labor force. While SHIPSIDE occasionally issued instructions to the stevedores, such instructions, in legal contemplation are mere requests since the privity of contract lies between the workers and La Union. (SHIPSIDE vs. NLRC) * Collection Agency : Singer entered into a “collection agency agreement” with collectors providing among others that the collector is to be considered at all times to be an independent contactor; he was required to comply with certain rules and regulations (i.e. use of authorized receipts, monthly collection quota, cash bond, and submission of report of all collections at least once a week); and his services can be terminated in case of failure to satisfy these regulations. However, the agent was not required to observe office hours or to report to Singer except for remitting his collections. He did not have to devote his time exclusively for Singer and the manner and method of collection were left solely to the discretion of the agent, and he shouldered his transaction services. ( * Messengerial/Janitorial Services : Janitors were hired by CSI and assigned to La Union Carbide. They drew their salaries from CSI. CSI exercised control over them through a SCI EE who gave orders and instructions. Moreover, CSI had the power to assign its janitors to

24 various clients and pull them out. CSI was a registered service contractor and did business with a number of known companies in the country. It maintains its own office and had its own office equipment. It furnishes its janitors the cleaning equipment. (Rhone-Poulene vs. NLRC) BCC, capitalized at P1 million fully subscribed and paid for provided janitorial and other services to various firms. It hired A and B and assigned them to work for FEBTC. The two reported for work wearing the prescribed uniform of the BCC; their leave of absences were filed directly with BCC; and their salaries drawn only from BCC. FEBTC however issued a job description which detailed the functions of two. Applying the control test, BCC is the ER of the two. Furthermore, it had substantial capital. The guidelines in the job description were laid down merely to ensure the desired result was achieved. It did not, however, tell how the work should be performed. (Neri vs. NLRC) * Repair and Maintenance Service : F doing business, was hired by Shell to conduct a hydro-pressure test. He was paid a lump sum for the work he and his men accomplished. He utilized his own tools and equipment. He accepted business from other companies. He was not controlled by Shell with regard to the manner in which he conducted the test. (Pilipinas Shell vs. CA) ** Instances of Labor-Only Contracting * Agency hiring : PBC and CESI entered into an agreement under which the latter undertook to supply the former with 11 messengers. The agreement provided that the messengers would remain EE’s of CESI; PBC remitted to CESI amount equivalent to the wages of the messengers; CESI in turn paid them and their names are not included in the PBC’s payroll; the bank, in cases of dismissal would request CESI, and CESI would in fact withdraw such messenger, and the messengers performed their functions within the bank’s premises. CESI cannot be considered a job contractor because its undertaking is not the performance of a specific job; it merely undertook to provide the bank with a certain number of persons able to carry out the work of messengers. (PBC vs. NLRC) Under the Work Contract between A and a motorshop, A undertook to supply labor and supervision in the performance of automotive body painting work. A and his men were paid lump sum, the company supplied the tools, equipment, machineries and materials and moreover, the jobs were done in the premises of the motor shop. Aside from the fact that the company exercised control and direction over the work done by A and his men, the line of work-automobile painting – was directly related to, if not an integral part of the regular business of the motor shop. (Broadway Motors vs. NLRC) LS provided helpers, janitors, mechanics to NP, a corporation engaged in garment manufacturing. The agreement between the two provided that LS shall provide NP with workers, NP shall pay LS a fee based on rates fixed by the agreement, there is no ER-EE relationship between the two and LS shall have exclusive direction in the selection, engagement and discharge of its personnel and the latter shall be

25 within is full control. LS is a “labor-only” contractor since it is merely an agent to procure workers for the real ER. (Guarin) * Security Guard Hiring : Hyatt and VSS entered into a contract of services wherein VSS agreed to protect the properties and premises of Hyatt by providing security guards. The security guards filled up Hyatt employment application forms and submitted the forms to the Security Department of the hotel. Their wages were paid directly by Hyatt and their assignments, promotions, supervisions and dismissal were approved by the Chief Security Officer of Hyatt. (Vallum Security vs. NLRC) Section 6. Employment Policies, Recruitment and Placement of Workers, and Agencies 6. 1 Employment Policies 1. Art. 12 : Statement of Objectives – It is the policy of the State: a. To promote and maintain a state of 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 of employment; c. To facilitate a free choice of Available employment by persons seeking work in conformity with national interest; d. To facilitate and regulate the Movement of workers in conformity with 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 of public employment offices and rationalize the participation of the private sector in the Recruitment and placement of workers, locally and overseas, to serve national development objectives; g. To issue careful selection of Filipino workers for overseas employment in order to protect the good name of the Philippines abroad. (AFP MARC) 6.2 Employment Agencies Private Sector-Agencies and Entities A. PARTIES A.1. Worker * Art. 13 (a) “Worker” – any member of the labor force, whether employed or unemployed A.2 Agency

26 * Art. 13 (c) : “Private fee-charging employment agency” – any person or entity engaged in the recruitment or placement of workers for a fee which is charged directly or indirectly, from the workers or ER’s or both. A.3 Entity * Art. 13 (e) : “Private recruitment entity” – 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 the ER’s or both. B. ALLOWED ENTITIES B.1 Allowed Private Agencies and Entities * Art. 16 : 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. Sec. 1, Rule III, Book I, IRR’s – No person or entity shall engage in the recruitment and placement of workers either for local or overseas employment except the following: [allowed agencies] 1. public employment agencies 2. POEA 3. private recruitment entities 4. private employment agencies 5. shipping or manning agents or representatives; and 6. such other persons or entities as may be authorized by the Secretary. *Art. 25 : . . . 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. B.2 Prohibited Business Agencies and Entities 1. Art. 18 : Ban on Direct Hiring – No ER may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. a. Direct hiring by members of the diplomatic corps; b. International organizations and such other ER’s as may be; c. allowed by the Secretary of Labor is exempted from this provision. 2. Art. 26 : 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. C. GOVERNMENT TECHNIQUES OF REGULATION – PRIVATE RECRUITMENT AND PLACEMENT BUSINESS C.1 Licensing, Citizenship, Transferability and Fees

Capitalization,

Duration,

27 1. Art. 27 : Citizenship Requirement: a. Only Filipino citizens or b. Only corporations, partnerships or entities at least 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. 2. Art. 28 : Capitalization – Substantial determined by the Secretary of Labor. (P1 M)

capitalization

as

Sec. 1, Rule V, Book I, IRR’s : Qualification of Applicants for Private employment agencies – All applicants for licenses to operate private employment agencies either for local or overseas recruitment and placement shall possess the following qualifications. . . 3. Art. 29 : Non-tranferability of License or Authority * No license or authority shall be used directly or indirectly by any other person other than the one in whose favor it was issued; or * at any place other than that stated in the license of authority * nor such 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 everywhere shall be subject to the prior approval of the DOLE. 4. Art. 15 (a) 2 : (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: 2) To establish and maintain a registration and/or licensing system to regulate private sector participation in the recruitment and placement of workers, locally or 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. 5. Distinguish authority from license? “Authority” means a document issued by the Secretary of Labor and Employment authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity; while a “license” is the document issued to a person or entity to operate a private employment agency. (Art. 13) 6. What is the duration of a license recruit? A license is valid for a period of 2 years from the date of issuance unless sooner cancelled, revoked or suspended for violation of the Labor Code or its IRR’s. * non-tranferrable C.2 Bonds 1. Art. 31 : All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor

28 to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as appropriate. 2. The purpose of bonds is to insure that if the rights of these overseas workers are violated by their ER’s recourse would still be available to them against the local companies that recruited them for the foreign principal. (Stronghold vs. CA) C.3 Workers Fees * Art. 32 : Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until 1. he has obtained employment through its efforts; or 2. he 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 the schedule of allowable fees. C.4 Reports Submission * Art. 33 : 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 job, wages, other terms and conditions, and other employment data. Percentage of salary remittance 1. seaman – 80% 2. construction worker – 70% 3. professional workers with free board and lodging – 70% 4. professional without board and lodging – 50% 5. domestic helpers – 50% 6. other workers – 50% C.5 Prohibited Practices [IF FAITS CHOW] 1. Art. 34 : Prohibited Practices – It shall be unlawful for any individual, entity license or holder of authority: 1. To charge or accept; directly or indirectly, any amount greater than that specified in the schedule of allowable fees, or make a worker pay any amount greater than that actually received by him as a loan or advance; 2. To furnish or publish any false notice or information or document in relation to recruitment or employment; [includes the act of furnishing fake employment documents to a worker. (Azucena) 3. To give any false notice, testimony, information or document or commit any Act of misrepresentation for the purpose of securing a license of authority under this Code; 4. 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 so designed to liberate the worker from oppressive terms and conditions of employment;

29 5. To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; 6. 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; 7. To obstruct or attempt to obstruct inspection by the secretary of Labor or by his duly authorized representatives; 8. 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 of information as may be required by the Secretary of Labor; 9. To substitute or alter employment contracts approved and verified by the DOLE from the time of actual signing thereof by the parties up to and including the period of expiration of the same without the approval of the Secretary of Labor Unless it is to improve the terms and conditions of employment. (Vir-Jen vs. NLRC); 10. To become an officer or member of any corporation engaged in Travel agency or to be engaged directly or indirectly in the management of a travel agency; 11. To Withhold or deny travel documents from applicant workers before departure for monetary or financial consideration other than those authorized under this Code and its implementing rules and regulations. 2. A, Filipina, was recruited by a local private employment agency for a tutoring job abroad. Upon arrival in the place of employment, she was made to work as a housemaid. What advice will you give her? I will advice the Filipina to commence a criminal action against the employment agency for violation of Art. 34 of the Labor Code. She was recruited under false pretense. (Alcantara) 3. STC, a travel agency, advertised for young women to work as domestic helpers in Hongkong. Five women who left for Hongkong were later brought to prostitution houses. Have the officers of STC committed any unlawful acts? Yes. Violation of Art. 26 and Art. 34 (d) and (f) of the Labor Code. (Alcantara) C.6 Illegal Recruitment 1. Art. 13 (b) : “Recruitment and Placement” - Act of [CECTUHPI] a. Canvassing b. Enlisting c. Contracting d. Transporting e. Utilizing f. Hiring or g. Procuring workers and h. Includes referrals, contracts 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 2 or more persons shall be deemed engaged in

30 recruitment or placement. [The number of persons dealt with is not, an essential ingredient of the act of recruitment or placement. The provision merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to 2 or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment or placement. (Pp vs. Panis) ** Illegal termination - full reimbursement fees + 12% - salaries for unexpired portion or 3 mos. For every year of unexpired term – whichever is lower ** Liability of private employment agency – employment contract - joint and solidary with employer - all claims and liabilities that may arise in connection with the implementation of the contracts 2. Any recruitment activities, including the prohibited practices, enumerated under Art. 34 of this Code, to be undertaken by nonlicensees or non-holders of authority shall be deemed illegal and punishable under Art. 39 of this Code. * 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 Art. 39 hereof. - non-bailable - life imprisonment ** Illegal recruitment by a syndicate – Carried out by a group of 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 in large scale – Committed against 3 or more persons individually or as a group. [When the Labor Code speaks of illegal recruitment, “committed against 3 or more persons”, it must be understood as referring to the number of complainants therein, otherwise, prosecutions for single crimes of illegal recruitment can be cumulated to make out a case of large scale illegal recruitment. In other words, a conviction for largescale illegal recruitment must be based on a finding in each case if illegal recruitment of 3 or more persons whether individually or as a group. (Pp vs. Reyes) 3. Sec. 8, Migrant Workers Act : A criminal action arising from illegal recruitment as defined herein shall be filed with the RTC of the province or city where the offense was committed or where the offended party actually resides at the time of the commission of the offense: provided, That the court where the criminal action is first filed shall acquire jurisdiction to the exclusion of other courts.

31 4. The crime of illegal recruitment has 2 elements: a. That the offender is a non-license or non-holder of authority to lawfully engage in the recruitment and placement of workers; and b. That the offender undertakes any of the recruitment activities defined under Art. 13 (b) of the Labor Code or any of the prohibited practices enumerated under Art. 34 of the same Code. 5. G convinced F and S, that they could be employed for France for a fee. G was also able to persuade A that he could give A a working visa. Nothing happened to F, S and A. G did not have any license to recruit or authority to recruit? A may be charged and convicted of a largescale illegal recruitment since he did not have the license or authority to recruit, and yet recruit at least 3 persons. (Pp vs. Turda) Furthermore, he can also be convicted and charged of estafa since the latter is a malum in se while the former is a malum prohibium (Id.) 6. NATO, a national union of teachers was able to find jobs abroad for its member by directly contacting other teachers organizations in foreign countries, without charging additional fees. Is this legal? No. Only persons or entities with appropriate license or authority can engage in recruitment and placement of workers. Contact services are activities that fall within the scope of recruitment and placement of workers. (Alcantara) 7. A paper manufacturing company in Cainta would like to know if it needs to obtain a license authority before it can recruit workers for its plant. No license or authority is necessary. The company is not engaged in the business of recruitment and placement of workers, it is not recruiting workers to be employed by others. It does not represent a principal. It is recruiting its own workers. (Alcantara) C.7 Rule Making * The Secretary of Labor and Employment has the power and authority not only to restrict and regulate the recruitment and placement activities of all agencies but also promulgate rules and regulations to carry out the objectives and implement the provisions governing said activities. (Eastern Assurance vs. Secretary of Labor) C. 8 Enforcement 1. Art. 36 : 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. Sec. 2, Rule VI, Book I, IRR’s : Pending investigation of the complaint or report, the Secretary may suspend the license of the private employment agency concerned. . . 2. Art. 37 : The Secretary or his duly authorized representatives may, at any time, inspect the premises, books of account and

32 records of any person or entity covered by this Title, require it to submit records regularly on prescribed forms, and act on violations of any provisions of any provisions of this Title. Public Sector Agencies A. EMPLOYMENT OFFICES AND THE POEA 1. Art. 14 (a) : The Secretary of Labor shall have the power and authority: (a) To organize and establish new employment agencies in addition to the existing employment offices under the DOLE as the need arises. 2. Sec. 3, EO 247 : POEA functions a. Regulate private sector participation in the recruitment and overseas placement of workers by setting up a licensing and registration system; b. Formulate and implement in coordination with appropriate entities concerned, a system for promoting and monitoring the overseas employment of Filipino workers taking into consideration their welfare and the domestic manpower requirements; c. Protect the rights of Filipino workers to fair and equitable recruitment and employment practices and ensure their welfare; d. Exercise original and exclusive jurisdiction to hear and decide all pre-employment cases which are administrative in character involving or arising out of violation of recruitment laws, rules and regulations, or violation of the conditions for issuance of license or authority to recruit workers. The POEA has no jurisdiction to hear and decide a claim for enforcement of a foreign judgment. Such a claim must be brought before the regular courts. (Pacific Asia vs. NLRC) B. Definition of Terms Sec. 1 (j), (w), (z), (ff), and (qq), Rule II, Book I, Rules and regulations on Overseas Employment – 1. “Contract Worker” - Any person working or who has worked overseas under a valid employment contract. 2. “Manning agency” – Any person or entity recruiting seamen for vessels plying international waters and fore related maritime activities. 3. “Name Hire” – Worker who is able to secure employment overseas on his own without the assistance or participation of an agency. 4. “Overseas employment” – Employment of a worker outside the Philippines, including employment on hoard vessels plying international waters covered by a valid employment contract.

33 5. “Placement fee” – Amount charged by a private employment agency from a worker for its services in securing employment. 6. “Service fee” – Amount charged by a license from its foreign ER as payment for actual services rendered in relation to the recruitment and employment of workers for said principal. 6. 3 Sanctions 1. Art. 35 : Suspension and/or Cancellation of License or Authority – The Secretary of Labor shall have the power to suspend or cancel any license or authority to recruit EE’s for overseas employment for violations of rules and regulations by the DOLE, the POEA, or for violation of the provisions of this, and other applicable laws . . 2. Art. 39 : Penalties – Violations of any provisions of this Tile or IRR’s by license or holder of authority : a. imprisonment of not less than 2 years nor more than 5 years b. or a fine of not less than P10,000.00 nor more than P50,000.00 c. or both such imprisonment and fine, at the discretion of the court. 3. Violation of any of the provisions thereof or its implementing rules and regulations by a non-license or non-holder of authority a. imprisonment of not less than 4 years nor more than 8 years b. or a fine of not less than P20,000.00 nor more than P100,000.00 c. or both such imprisonment and fine, at the discretion of the court. 4. 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: * Illegal recruitment: a. imprisonment of not less than 6 years and 1 day but not more than 12 years and b. a fine of not less than P200,000.00 nor more than P500,000.00. * Illegal recruitment constituting Economic Sabotage: c. life imprisonment; and d. a fine of not less than P500,000.00 nor more than P1,000,000.00. * The maximum penalty shall be imposed if: a . the person illegally recruited is less than 18 years of age; or b. committed by a non-license or non-holder of authority.

34

* The Secretary of Labor or his duly authorized representative may order the closure of illegal recruitment establishments. 5. Art. 38 (c) of the Labor Code granting the Secretary of Labor the power to issue search or arrest warrants is declared unconstitutional and null and void. (Salazar vs. Achacoso) -

money claims arising from ER-EE relationship prescribes in 3 years strict rules of evidence are not applicable in claims for compensation and disability benefits

5. In case of breach of the employment contract by a foreign-based ER, may the private employment agency or recruitment entity be held liable? What is the nature of the liability of the recruitment and placement agency and its principal? Yes. The agency or entity undertakes under oath to assume full and complete responsibility for all claims and liabilities which may arise in connection with the use of the license or authority. The agency is jointly severally liable with the principal or foreign-based ER for any of the violations of recruitment agreement contract of employment. (Ambraque vs. NLRC; Pp vs. Catan) Section 7. Alien Employment 7. 1 Technique of Regulation-Employment Permit 1. Art. 40 : Employment Permit of Non-resident Aliens – Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign ER who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the DOLE . . . For an enterprise registered in preferred areas of investments, said employment permit must be issued upon recommendation of the government agency charged with the supervision of the registered enterprise. Sec. 7, Rule XIV, Book I, IRR’s : The employment permit shall be valid for a minimum period of 1 year. 2. Art. 41 : Prohibition Against Transfer of Employment – (a) After the issuance of an employment permit, the alien shall not transfer to another job or change his ER without prior approval of the Secretary of Labor. Art. 288 : Any alien found guilty shall be summarily deported upon completion of service of sentence. 3. May an ER in the Philippines employ a worker who is not a Filipino citizen? Yes, except to nationalized activities such as: a. public utility to develop, exploit and utilize natural resources – 60% Filipino; b. Mass media – 100% owned by Filipino citizens c. Advertising – 70% Filipino owned d. Retail Business – 100% Filipino owned

35 e. Financing business – 60% Filipino owned 4. Are there exceptions to the prohibition against employment of aliens in entities engaged in nationalized activities? Yes, when (a) the Secretary of Justice specifically authorizes the employment of technical personnel; or (b) where aliens are elected members of Board of Directors in proportion to their allowable participation in the capital; or (c) when allowed under certain special laws. (Alcantara) Coverage * A resident alien need not obtain an employment permit in order to be employed in the Philippines. (Almodiel vs. NLRC) Employment Permit – Conditions for Grant 1. Art. 40 : The employment permit may be issued to a nonresident alien or to the applicant ER after a determination of: [W A C] a. competent b. able and c. willing at the time of the application to perform the services for which the alien is desired. [The DOLE is the agency vested with jurisdiction to determine the question of availability of the local workers. (General Milling vs. Torres) 2. Sec. 5, Rule XIV, Book I, IRR’s : Requirements for Employment Permit Applicants – The applicant for an employment permit shall be accompanied by the following: a. Curriculum vitae signed by the applicant indicating the educational background, his work experience and other data showing that he possesses technical skills in his trade or profession. b. Contract of employment between the ER and the principal, which shall embody the following, among others:  That the non-resident alien shall comply with all applicable laws and rules and regulations;  That the non-resident alien worker and ER shall bind themselves to train at least 2 Filipino understudies; and  A designation by the ER of at least 2 understudies which must be the most ranking regular EE’s in the section or department for which the expatriates are being hired to ensure actual transfer of technology. Section 8. Development of Human Resources 8.1 Objectives - Definitions 1. Art. 43 : It is the objectives of this [F E D] a. Title to Develop human resources b. Establish training institutions, and c. Formulate such plans and programs as will ensure efficient allocation, development and utilization of the nation’s

36 manpower and thereby promote employment accelerate economic and social growth.

and

2. What is human resources development? Process by which the actual and potential labor force is made systematically to acquire greater knowledge, skills and capabilities for the nation’s sustained economic and social growth. (Sec. 1, Rule I, Book II, IRR’s) 3. Define manpower? Is the portion of the population which has actual or potential capability to contribute to the production of goods and services. (Sec. 1 (c), Rule I, Book II, IRR’s) 4. Is human resources development intended solely to train workers? No. Manpower development also means training for self-employment. This is known as “entrepreneurship” (Art. 44 (b). 5. What is dual system/training? It refers to a delivery system of quality technical and vocational education which requires training to be carried out alternatively in 2 venues: a. in school and b. in the production plant. In school, training provides the trainee the theoretical foundation, basic training, develops his skill and proficiency in actual working conditions as it continues personal discipline and work value. (Sec. 4 (p), RA 7796) 8.2 Program Incentive * Art. 52 : Deduction from taxable income of ½ of the value of labor training but not to exceed 10% direct labor wage: Provided, That in the case of apprenticeship programs, the program is recognized by DOLE. 8.3 Training and Employment of Special Workers – Apprentices, Learners and Handicapped Workers Policy Objectives * What is the policy of the State on apprenticeship? 1. To help meet the demand of the economy for trained manpower; 2. To establish a national apprenticeship program through participation of ER’s workers, and government and nongovernment agencies; and 3. To establish apprenticeship standards for the protection of apprentices. (Art. 57) Definition 1. Art. 58 : “Apprenticeship” – Practical training on the job supplemented by related theoretical instruction. 2. Art. 73 : “Learners” – 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 3 months.

37 3. Art. 78 : “Handicapped workers” – Those whose earning capacity is impaired by age or physical or mental deficiency or injury Who Can Employ and When A. APPRENTICES –must be approved by TESDA 1. Art. 60 : Only ER’s in highly technical industries and only in apprenticeable occupations may employ apprentices. Sec. 1, Rule IV, Book II, IRR’s : “Highly Technical Industries” – Trade, business, enterprise, industry or other activity which is engaged in the application of advanced technology. Art. 58 : “Apprenticeship Occupation” – Requires more than 3 months of practical training supplemented by related theoretical instruction. -

1 month probation prior approval by TESDA of the proposed apprenticeship program is a condition sine qua non before an apprenticeship can be validly entered into employer is not obliged to employ the apprentice after the completion of his training

2. Art. 70 : Apprenticeship programs shall be primarily voluntary except: a. When national security or particular requirements of economic development so demand, the President may require compulsory training where the shortage of trained manpower is deemed critical by the Secretary of Labor. b. Where services of foreign technicians are utilized by private companies in apprenticeable trades. B. LEARNERS - Learnership programs must be approved by TESDA * Art. 74 : Learners may be employed when: 1. no experienced worker is available 2. the employment of learners is necessary to prevent curtailment of employment opportunities 3. and the employment does not create unfair competition in terms of labor costs or impair or lower working standards. C. HANDICAPPED WORKERS * Art. 79 : Handicapped workers may be employed when their employment 1. is necessary to prevent curtailment of employment opportunities; and 2. when it not create unfair competition in labor costs or lower working standards. Conditions of Employment - not exceed 8 hours

38 -

allowed overtime

* Art. 61 : 1. Period of apprenticeship shall not exceed 6 months. 2. Wages shall not start below 75% of the minimum wage. 3. Apprenticeship program must be duly approved by TESDA or apprentices becomes regular EE. This must be evidenced by an apprenticeship agreement. (Nitto Enterprises vs. NLRC) Ratio of theoretical vs. on the job training > 100: 2000 - may work overtime – duly credited as his training time * Art. 72 : The Secretary of Labor may authorize the: 1. hiring of apprentices without compensation whose training on the job is required by the school or training program curriculum as a requisite for graduation or board examination. There is no ER-EE relationship between students on one hand, and schools, where there is written agreement between them under which the former agree to work for the latter in exchange for the privilege to study free of charge. (Sec. 14, Rule X, Book III, IRR’s) 2. A clerk in the College of Law of a University worked without pay but was allowed to take up no more than 3 units per semester free of charge. The clerk resigned and demanded payment of unpaid wages. Is the clerk entitled to unpaid wages? Yes. Sec. 14, Rule X, Book III, IRR’s : only applies in instances where the students are given real opportunity, including such facilities as may be reasonably necessary to finish their chosen courses under such arrangement. In this problem, the clerk was not given any real opportunity to finish law as he was allowed to take up no more than 3 units per semester. There is therefore an ER-EE relationship between the clerk and the university. (Alcantara) 3. Qualifications of an Apprentice: a. At least 15 years of age: provided, those below 18 years of age shall not work in hazardous occupations; b. Be physically fit for the occupation. c. Possess vocational aptitude and capacity. d. Possess the ability to comprehend, and follow oral and written instructions. (Sec. 11, Rule VI, Book III, IRR’s) 4. A 5-star hotel would like to have an apprentice program dishwashers? No. This is not an apprenticeable program occupation because proficiency can be attained within a very short period. Besides, the hotel industry is not highly technical. (Alcantara) 5. After working for 1 month may an apprentice be dismissed without cause? No. After the probationary period of 1 month, the apprenticeship agreement may be terminated only for cause. 6. Causes for termination of apprenticeship agreement by apprentice: a. Repeated violation by ER of agreement

39 b. Cruel or inhuman treatment c. Personal problems which prevents performance (bad health) d. Substandard working conditions

a

satisfactory

EMPLOYER a. habitual absentism b. willful disobedience e.g. rules c. insubordination – lawful order d. poor physical conditions – apprentice e. theft or malicious destruction f. poor efficiency of performance g. engaging in violence h. gross misconduct i. bad health or continuing illness. (Sec. 25, Rule VI, Book II, IRR’s) * employer must make a commitment to employ the business B. LEARNERS - learnership must be approved by TESDA 1. Art. 75 : 1. Duration of the learnership period shall be 3 months; 2. Wages and salary rates begin at not less than 75% minimum wage; and 3. A commitment to employ learners if they so desire, as regular EE’s upon completion of the learnership.  All learners who have been allowed or suffered work during the first 2nd months to be deemed EE’s training is terminated by the ER before the end of the stipulated period though no fault of the learner. 2. Art. 76 : Learners employed in piece or incentive-rate jobs during training shall be paid in full for the work done. 3. J entered into a learnership agreement with employer A. Before the end of 2 months, A terminated the agreement. When J requested for a chance to let him finish the 3 months period. At the end of 3 months, A refused to hire J. Is the stand of A sustainable? No. A has a commitment under the learnership agreement to employ J as a regular worker upon the completion of the learnership. C. HANDICAPPED WORKERS [A P M I] 1. Art. 80 :  Rates to be paid to handicapped workers shall not be less than 75% of the applicable minimum wage.  Employment agreement must state the duration of the employment period and the work to be performed. 2. Art. 81 : 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.

40 Enforcement 1. Art. 66 : Appeal to the Secretary of Labor - The decision of the authorized agency of the DOLE may be appealed to the Secretary of Labor within 5 days from receipt of the decision. The decision of the Secretary of Labor shall be final and executory. 2. Art. 67 : Exhaustion of Administative shall institute any action for the apprenticeship agreement or damages agreement, unless he has exhausted all remedies.

Remedies – No person enforcement of any for breach of any such available administrative

Section 9. Conditions of Employment – Hours of Work 9. 1 Hours Regulation Rationale and Enforcement * The 8-hour labor law was designed not only to safeguard the health and welfare of the laborer but in a way to minimize unemployment by forcing ER’s, in cases, where more than an 8-hour operations is necessary, to utilize different shifts of laborers working only for 8 hours each. (Manila Terminal vs. CIR) 9.2 Coverage I. Art. 82 : The provisions of this Title shall apply to EE’s in all establishments and undertakings whether for profit or not but to [GMS- FMDP] 1. Government EE’s [whether employed by the National Government or any of its political subdivisions, including those employed in GOCC’s with original charters. (Sec. 2, Rule I, Book III, IRR’s] 2. Managerial EE’s [refer to those who meet all of the following conditions, namely: a. Their primary duty consists of the management of the establishment in which they are employed or of a department or sub-division thereof; b. Customarily or regularly direct the work of 2 or more EE’s c. Has the authority to hire or fire other EE’s of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any change of status of other EE’s are given, particular weight. (d.)]  Mere designation to a position with a high-sounding title, does not make an EE a managerial EE where the exercise of the independent judgment is not present. (Sierra vs. NLRC) 3. Other officers or members of the managerial staff if they perform the following duties and responsibilities: a. Primary duty consists of the performance of work directly related to management policies of the ER;

41 b. Customarily and regularly, exercise discretion and independent judgment; c. Regularly directly assist a proprietor or managerial EE or execute under general supervision work along specialized or technical lines requiring special training, experience or knowledge; or execute under general supervision special assignment and tasks; and d. Do not devote more than 20% of their hours worked to activities which are not directly and closely related to the performance of the work described in the preceding paragraphs. (Id.) 4. Field personnel [Non-agricultural EE’s who regularly perform their duties away from the principal place of business or branch office of the ER and whose actual hours of work in the field cannot be determined with reasonable certainty. (Art. 82) 5. Members of the family of the ER who are dependent on him for support domestic helpers and persons in the personal service of another. Perform such service: a. In the ER’s home which are usually necessary or desirable for the maintenance or enjoyment thereof; b. Or minister to the personal comfort, convenience or safety of the ER as well as the members of his ER’s household. (sec. 2, Rule I, Book III, IRR’s)  However, house personnel hired by a ranking company official, but paid for the company itself, to maintain a staff house provided for the official, are not the latter’s domestic helpers but regular EE’s of the company. (Cadiz vs. Philippine Sinter)  The function of a managerial employee requires the use of discretion and independent judgment – (nature of his functions) 6. And workers who are paid by results. [Including those who are paid on piece-work, “takay”, “pakiao”, or task basis if their output rates are in accordance with the standards prescribed.] II. Give the reason for the exceptions? 1. Government EE’s – Terms and conditions of employment are governed by the Civil Service Law 2. Managerial EE’s – Employed by reason of their special training, expertise or knowledge and for positions requiring the exercise of discretion and independent judgment. Value of work cannot be measured in terms of hours. 3. Non-agricultural field personnel – These regularly perform their duties away from the principal or branch office or place of business of the ER; they are on their own in the field and the number of hours of actual work they render cannot be reasonably ascertained.

42 4. Members of the family dependent upon him for support – Amounts given by way of support may far exceed the benefits to which the EE’s are entitled under the laws on overtime. 5. Domestic helpers and persons in the personal service of another – They minister to the personal needs and comfort their ER and his family and terms and conditions of employment are governed in other parts of the Labor Code. 6. Workers paid by results – Compensation computed on the basis of work accomplished and not on time spent in accomplishing the work. (Alcantara) III. Determine whether exempted EE or not? 1. Foremen, inspectors and supervisors given the power to recommend hiring and firing of EE’s but where ultimate power to hire or fire rested with personnel manager? No. Where such recommendatory powers are subject to evaluation and review, the same are not effective and not an exercise of independent judgment as required by law. ( Franklin Baker Company vs. Trajano) 2. Supervisory EE’s are given the following duties and functions assist the department superintendent in various aspects of management such as in the planning of systems and procedures, recommends disciplinary action against erring subordinates or promotion of deserving personnel, train and guide subordinates; communicate and coordinate with other supervisors; recommend measures to improve work method; and other related tasks as may be assigned by his immediate superior. Yes. They discharge duties and responsibilities which qualify them as members of the managerial staff. (Alcantara) 3. Cutter in tailoring shop was assigned chore of distributing work to shop’s tailors when the shop’s manager were absent. He saw to it that work conformed with pattern he had prepared and if not, had them redone, repaired or sewn. No. He did not participate in policy-making. It is true that in the absence of the manager and assistant manager, he distributes and assigns work to EE’s but such duty though involving discretion is occasional and not regular and customary. (Villuga vs. NLRC) 9.3 Normal Hours * Art. 83 : The normal of hours of work of any EE shall not exceed 8 hours a day. ** Health personnel in cities and municipalities with a population of at least 1,000,000 or in hospitals and clinics with a bed capacity of at least 100 shall hold regular office hours for 8 hours a day, for 5 days a week, exclusive of time of meals, except where the exigencies of the service require that such personnel work for 6 days or 48 hours in which case they shall be entitled to an additional compensation at least 30% of their regular wage for work on the 6th day. [“Health personnel” – Includes resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians,

43 paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel…] * The 40-hour work week would not be applicable if there is a training agreement between the resident physician and the hospital and the training program is duly accredited or approved by appropriate government agency. (Azucena) 9.4 Hours Worked 1. Art. 84 : Hours worked shall include: A. all time during which an EE is required  to be on duty  to be at a prescribed workplace and B. all time during which an EE is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. 2. Sec. 4, Rule III, Book III, IRR’s : Principles in Determining Hours Worked 1. All hours are hours worked which the EE is required to give to his ER regardless of whether or not such hours are spent in productive labor or involve physical or mental exertion; 2. An EE need not leave the premises of the workplace in order that his rest period shall not be counted, it being enough that a. he stops working, b. may rest completely and c. may leave his workplace, to go elsewhere, whether within or outside the premises of the workplace; 3. If the work performed was necessary or it benefited the ER or the EE could not abandon his work at the end of the normal working hours because he had no replacement, all the time spent for such work shall be considered as hours worked, if the work was with the knowledge of his ER or immediate supervisor; 4. The time during which an EE is inactive by reasons of interruptions in his work beyond his control shall be considered working time either if the imminence of the resumption of the work requires the EE’s presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the EE’s own interest. 3. Jose works as a janitor. He continues sweeping the floors after 5:00 p.m… The manager is aware of this, but he does not stop Jose from doing work after 5:00 p.m. Is this hours of work? Yes. Although Jose was not instructed expressly to render work, he was impliedly allowed to do so by failure of the ER to warn him against rendering such work. Besides the work rendered by Jose benefited the ER. Waiting Time

44 1. Sec. 5, Rule I, Book III, IRR’s : Waiting time spent by an EE shall be considered as working time if waiting is an a. integral part of his work, or b. the EE is required to engage by an ER to wait The controlling factor is whether waiting time spent in idleness is so spent predominantly for the ER’s benefit or for the EE’s. (Azucena) 2. S, a company driver has the following work schedule: 8:30 a.m. fetches G.M.; 9:00 a.m. – 12:00 noon – does nothing on call for G.M. at the company premises ; 12 noon – 1:00 p.m. – lunch; 1:00 p.m. – 5:00 p.m. drives the G.M. to conferences; 5:00 p.m. goes home. The company refuses to pay him for the 9:00 a.m. to 12:00 noon period. Is this valid? No. S is not free to make use of the period effectively and gainfully for his own purposes. He must remain in the premises as at any time he may be called to drive for the G.M. (Alcantara) 3. 30 minutes prior to the start of the scheduled working hours, the workers of an enterprise assembled at a designated area to answer roll call. As their houses are situated right where the farms are located, the workers can go back in their houses after roll call to do some chores. Is the assembly time working time? No. The works are not subject to the absolute control of the company during the period. The workers were not deprived of the time to attend to other personal pursuits. (Aria vs. NLRC) Idle Time 1. 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 to work”, may rest completely and leave or may leave at his will the spot where he actually stays while working, or go somewhere else, whether within or without the factory, shop or boat. (Luzon Stevedoring vs. Luzon Marine Dept. Union) 2. A, an accountant in the manufacturing firm, has idle time in her work schedule, “waiting for company papers to work on. She dovotes this time working on papers of other firms for which she receives remuneration. Is the firm obligated to pay her for this time? Yes. Although she is working on the papers of other companies, she has no absolute control over her time. Her ER may at any time require her to do some work. She cannot furthermore leave the place of work during her work schedule. (Alcantara) 3. T, a machine operator was forced to stop operating his machine for 1 hour during a brownout. Is this working time? Yes. The interruption was not due to the fault of T. Besides 1 hour is too brief to be utilized effectively and gainfully for his own interest. Meal Time 1. Sec. 7, Rule I, Book III, IRR’s : Every ER shall give his EE’s not less than 1 hour time-off for regular meals, except in the following cases where a meal period of not less than 20 minutes may be given by the ER provided

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*(That such shorter meal period is credited as compensable hours worked hours worked of the EE But if it is the EE who requested for the shorter meal time, then such shortened meal period is not compensable. (Azucena): [N O P E]  Where work is Non-manual in nature or does not involve strenuous physical exertion;  Where the establishment regularly Operates less than 16 hours a day;  In cases of actual or impending Emergency or there is urgent work to be performed on machineries and equipment to avoid serious loss which the ER would otherwise suffer; and  Where the work is necessary to Prevent serious loss of perishable goods. * Rest periods or coffee breaks running from 5 to 20 minutes shall be considered as compensable working time. 2. Where during the so-called meal period, the laborers are required to stand by for emergency work, or where said meal hour is not one of complete rest, such period is considered overtime. (Pan Am vs. Pan Am EE’s Association) Working While Sleeping * Sleeping time may be considered working time if it is subject to serious interruption or takes place under conditions substantially less desirable than would be likely to exist at the EE home i.e. firemen permitted to sleep a portion of the time they are so on duty at the fire station. (Azucena) On Call 1. Sec. 5, Rule I, Book III, IRR’s : An EE while he is required to remain on call in the ER’s premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose shall be considered as working hours while on call. An EE who is not required to leave word at his own or with company officials where he may be reached is not working while on call. 2. If an EE is kept within reach through a cellular phone. Is it on call? No. (Azucena) Travel Time ***Principles which determine whether or not time spent in travel is working time:  Travel from Home to Work – Normal travel from home to work is no work time but an emergency call outside of regular working hours requiring him to go to his regular place of business is working time.

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 Travel that is all in the day’s work – Time spent by an EE in traveling from one job site to another, during the workday, must be counted as hours worked.  Travel away from home – Travel away from home is clearly worktime when it cuts across the EE’s workday, except during meal period or when EE is permitted to sleep in adequate facilities furnished by the ER. The time is not only hours worked on regular workdays but also during corresponding working hours on non-working days. Outside of these regular working hours, travel away from home is not considered working time. (Azucena) Lectures, Meetings, Training Programs * Sec. 6, Rule I, Book III, IRR’s : Attendance at lectures, meetings, training programs and other similar activities shall not be counted as working time if all of the following conditions are met: 1. Attendance is outside of the ER’s regular working hours; 2. Attendance is in fact voluntary; and 3. The EE does not perform any productive work during such attendance. Semestral Break * Regular full-time teachers are entitled to salary and COLA during semestral break. (U.Pang. Faculty Union vs. U. Pang.) 9.5 Overtime Work and Offsetting Prohibition 1. Art. 87 : Overtime Work –  regular work day – plus 25% basic hourly rate  Special days, holiday or rest day – plus 30% of the regular hourly rate on said days. 2. Art. 89 : Emergency Overtime Work - Any EE may be required by the ER to perform overtime work in any of the following cases: [WED-UPS] a. When the country is at war b. When any other national or local emergency has been declared c. When it is necessary to prevent loss of life or property or in case of imminent danger to the 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. d. When there is Urgent work to be performed on machines and installations in order to avoid serious loss or damage to the ER or some other cause of similar nature. e. When the work is necessary to prevent loss or damage to Perishable goods. f. Where the completion or continuation of the work started before the 8th hour is necessary to prevent Serious obstruction or prejudice to the business operations of the ER.

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The EE’s refusal to obey the order of the EE constitutes insubordination for which he may be subjected to disciplinary action. (Alcantara) 3. Art. 88 : Undertime work in any particular day shall not be offset by overtime work on another day BUT not on someday.  Permission given to the EE to go on leave on some other day of the week shall not exempt the ER from paying the additional compensation required. 4. Art. 90 : For purposes of computing overtime and other additional remuneration as required by this Chapter the “regular wage” of an EE shall include the cash wage only, without deduction on account of facilities provided by the ER. 5. Y, corporation, as a company policy, required its EE’s to render only 6 hours of work daily but pays them the minimum wage corresponding to 8 hours work. Later, the full 8-hours was required without any increase in wages. Are the EE’s entitled to overtime pay? Yes. Though voluntary practice or policy, the company has fixed the normal workday at 6 hours. It now constitute part of the terms and conditions of employment and cannot be unilaterally withdrawn by the ER. (Alcantara) 6. Distinguish overtime pay from premium pay : Overtime pay is additional compensation for work done beyond the normal work hours on ordinary working days. Premium pay is additional compensation for work rendered by the EE on days normally he should not be working. But additional compensation for work rendered in excess of 8 hours during these days is also considered overtime pay. 7. A was late for work on a particular day. To offset for the time he was late, A worked on additional period equivalent to the period he was late for work. The period was offset against A’ undertime. Is this valid? Yes. The prohibition to offset overtime against undertime applies to undertime incurred and overtime rendered on different days.  Provisions for overtime covers both profit and non-profit establishment or undertaking  For purposes of computing overtime  REGULAR WAGE – includes the cash wage only; without deduction of facilities provided. 8. May the right to overtime pay be waived? As a general rule, the right cannot be waived. (Cruz vs. Yes Sing) However, when the waiver is exchange for certain benefits and privileges, which may be more than what will accrue to them in overtime pay, the waiver may be permitted. (MERALCO Workers Union vs. MERALCO) Rationale – Overtime Pay * The reasons for overtime pay is that the worker is made to work longer than what is commensurate with the agreed compensation for the statutorily fixed or voluntary agreed hours of labor he is supposed

48 to do. When he thus spends additional time to his work, the effect upon him is multi-faceted; he puts in more effort, physical or mental; he is delayed in going home to his family to enjoy the comforts thereof; he might have no time for relaxation, amusement or sports; he might miss important pre-arranged arrangements. (PNB vs. PEMA) Compressed Week – voluntary basis * While as a general rule, the right to overtime pay cannot be waived under existing laws, the EE’s and ER can agree to a compressed workweek of 5 days of 9 hours each with no payment of overtime if this will redound to the benefit of the workers i.e. if the original workweek is reduced from Monday – Saturday to Monday – Friday. (Azuzena) However, Alcantara answered in a 1984 problem differently when he answered that overtime pay should be paid. In that problem, the workers were required to render 9.5 hours of work for 5 days. (What is the answer, I really do not know, ask the reviewer) Conditions for “Compressed Work Week” 1. voluntary – agreed upon 2. not to exceed 48 hours/ week 3. no diminution on take home pay or fringe benefits 4. waivers must be made 5. all hours exceeding 48 hours/week – considered overtime 6. must submit report to DOLE Retail Establishment - sale of goods for personal or household use ex. grocery Service Establishment - sale of services to individuals for their own or household use ex. T.V. repair shop No Formula Basic Contract * When the contract of employment requires work for more than 8 hours at specific wages per day, without providing for a fixed hourly rate or that the daily wages include overtime pay, said wages cannot be considered as including overtime compensation. (Manila Terminal vs. CIR) Built-In Compensation * The employment contract may provide for a “built-in” overtime pay. Because of this, non-payment of overtime pay by the ER is valid. (Engineering equipment vs. Minister of Labor) 9.6 Night Work 1. Art. 86 : Every EE shall be paid night shift differential of not less than 10% of his regular wage for each hour of work performed between 10:00 p.m. and 6:00 a.m.

49 2. Sec. 1, Rule II, Book III, IRR’s : This rule shall apply to all EE’s except: [G R S D M F] a. Those of the government and any of its political subdivisions, including GOCC’s. b. Retail and service establishments regularly employing not more than 5 workers. c. Domestic helpers and persons in the personal service of another. d. Managerial EE’s. e. Field personnel and other EE’s whose time and performance is unsupervised by the ER. f. Includes task and contract basis 3. X works at a gasoline station which has only 5 EE’s. Is he entitled to night shift differential? No. He works in a retail establishment employing not more than 5 workers. (Alcantara) 4. What if X works at King’s Minimarts, a retail store chain with 10 outlets of 2 EE’s each outlet. Is he entitled to night shift differential? Yes. The total number of EE’s of the ER exceeds 5. It is at least 20. (Id) Rationale – Prohibition * First, there are remotely injurious effects of permanent nightwork manifested in the later years of worker’s life. Of the more immediate importance is the disarrangement of his social life, including the recreational activities of his leisure hours and the ordinary associations of normal family relations. From an economic point of view, it is to be discouraged because of its adverse effect upon efficiency and output. A moral argument in the case of workers is that they go to and from the factory in the darkness. (Shell vs. NLU)  Exercise of a profession is neither a retail nor service Section 10 : Weekly Rest Periods * Art. 82 : The provisions of this Title shall apply to EE’s in all establishments and undertakings whether for profit or not, but not to [G M S F I – F D R] 1. Government EE’s [whether employed by the National Government or any of its political subdivisions, including those employed in GOCC’s with original charters. (Sec. 2, Rule I, Book III, IRR’s] 2. Managerial EE’s [refer to those who meet all of the following conditions, namely: a. Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; b. Customarily and regularly direct the work of 2 or more EE’s; c. Has the authority to hire or fire other EE’s of lower rank; or their suggestions and recommendations as to the

50 promotion or any other change of status of other EE’s are given particular weight. (Id) > Mere designation to a position with a high-sounding title, does not make an EE where the exercise of independent judgment is not present. (Sierra vs. NLRC) 3. Other officers or members of the managerial staff [if they perform the following duties and responsibilities: a. Primary duty consists of the performance of work directly related to management policies of the ER; b. Customarily and regularly exercise discretion and independent judgment; c. Regularly directly assist a proprietor or managerial EE or execute under general supervision work along specialized or technical lines requiring special training, experience or knowledge, or execute under general supervision special assignment and tasks; and d. Do not devote more than 20% of their hours worked to activities which are not directly and closely related to the performance of the work described in the preceding paragraphs. (Id) 4. Field personnel [Non-agricultural EE’s who regularly perform their duties away from the principal place of business or branch office of the ER whose actual hours of work in the field cannot be determined with reasonable certainty (Art. 82)] 5. Members of the family of the ER who are dependent on him for support 6. Domestic helpers and persons in the personal service of another. [Perform such services: a. In the ER’s home which are usually necessary or desirable for the maintenance or enjoyment thereof; b. Or minister to the personal comfort, convenience, or safety of the ER as well as the members of his ER’s household (Sec. 2, Rule I, Book III, IRR’s)  However, house personnel hired by a ranking company official, but paid for by the company itself, to maintain a staff house provided for the official, are not the latter’s domestic helpers but regular EE’s of the company. (Cadiz vs. Philippine Sinter) 7. And workers who are paid by results. [Including those who are paid on piece-work, “takay”, “pakiao”, or task basis if their output rates are in accordance with the standards prescribed.] Sec. 1, Rule III, Book III, IRR’s : This rule shall apply to all ER’s whether operating for profit pr not, including public utilities operated by private persons. 10.2 Scheduling of Rest Day; When Compulsory Work Allowed; and Compensation 1. Art. 91 : It shall be for the duty of every ER, whether operating for profit or not, to provide EE a rest period of not less than 24

51 consecutive hours after every 6 consecutive normal working days. * The ER shall determine and schedule the weekly rest day of his EE’s  However, the ER shall respect the preference of EE’s as to their weekly rest day when such preference is based on religion grounds. Sec. 4, Rule III, Book III, IRR’s : Where however the choice of the EE’s as to their rest day based on religious grounds will inevitably result in serious prejudice or obstruction to the operation of the undertaking, the ER may so schedule the weekday rest day of their choice at least 2 days in a month. 2. Art. 92 : “When ER may require Work on rest day” – [D U A - P N A] a. In case of actual or impending emergency caused by serious accident, fire, flood, typhoon, earthquake, epidemic, or other Disaster or calamity to prevent loss of life, or imminent danger to public safety. b. In case of Urgent work, to avoid serious loss which the ER would otherwise suffer; c. In the event of Abnormal pressure of work due to special circumstances, where the ER cannot ordinarily be expected to resort to other measures; d. To prevent or damage to Perishable goods; e. Where the Nature of work requires continuous operations and stoppage of the work may result in irreparable injury or loss to the ER; and f. Analogous (avail of favorable weather) or similar circumstances [PANADU] 3. How much is a worker entitled if he works on a rest day?  Scheduled rest day – additional compensation of at least 30% of his regular wage.  Scheduled rest day which is a non-working holiday – entitled to additional compensation of at least 50% of his regular wage.  Scheduled rest day which is a regular holiday – entitled to additional compensation of at least 30% of his regular holiday rate of 200% based on his regular wage rate. (Sec. 4, Rule III, Book I, IRR’s) 4. V works on board the M/V Starfish. Sometimes, the boat remains at sea for 2 weeks, while at other times, especially during bad weather, the vessel returns to port only after a few days. While the vessel is in port, V stays home with his family. Can V claim the additional compensation for work on rest day? V’s work is such that no regular workdays and no rest days can be scheduled. In such cases, the law provides that if he performs work on Sundays and holidays, he shall be paid an additional compensation of at least 30 % of his regular wage. [Art. 39 (b)]

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Rationale – Rest day * Ordinarily, Sundays and legal holidays are dedicated to reading and instruction so as to fill the mind with culture or some sort of advancement. On these days, the laborer spends longer hours in the company of his family. The deprivation of that opportunity to satisfy mental, moral and spiritual needs should not be ignored, and should be properly compensated. (MERALCO vs. Public Utilities EE’s Association) Section 11 : Conditions of Employment Holidays 11.1 Coverage 1. * Art. 94 : Every worker shall be paid his regular daily wage during holidays, except: [RSIO, G, DH, M, FP] a. in retail and service establishments regularly employing less than 10 workers; Sec. 1, Rule IV, Book III, IRR’s : b. Those of the government and any of its political subdivisions, including GOCC’s. c. Domestic helpers and persons in the personal service of another. d. Managerial EE’s. e. Field personnel and other EE’s whose time and performance is supervised by the ER. * If required to work on regular holidays,  regular rate x 2 Regular Holidays 1. New Years day 2. Maundy Thursday 3. Good Friday 4. Bataan Day 5. Labor day 6. Independence day 7. National heroes day 8. Bonifacio day 9. X-mas day 10. Rizal day Nationwide Special Holidays 1. Nov. 1 2. Dec. 31 2. Monthly paid EE’s are not excluded from the benefits of holiday pay. (Mantrade vs. Bacungan) 3. X is a manicurist in the D’Style Barbershop which has 20 barbers and manicurists. Is she entitled to holiday pay? Yes. X is an EE who is paid by results ad she works in a service establishment employing more than 10 persons. (Sec. 8, Rule IV, Book III, IRR’s) 12.2 Holiday Pay

53 1. Art. 94 : The ER may require an EE to work on a holiday but such EE shall be paid a compensation equivalent to twice his regular rate. 2. To receive holiday pay, the EE should not have been absent without pay on the working day preceding the regular holiday. (Azucena) 3. A legal holiday falling on a Sunday creates no legal obligation for the ER to pay extra to the EE who does not work on that day, aside from the usual holiday pay, to its monthly-paid EE’s. (Wellington vs. Trajano) 4. X was told by ER to work during a legal holiday which fell on a Sunday. How much is he entitled to? X will get 200% of his daily rate plus premium pay pf 30% of the holiday pay = regular daily rate * 230%. 5. If X works overtime during that day, how much will he earn? Holiday pay rate/8 plus overtime pay of 30% of the holiday hourly rate = holiday pay rate/8 * 130%. 6. R was absent without pay on December 24. Is he entitled to holiday pay for Christmas day? No. An EE may not be paid on holiday pay if he was absent on the day preceding holiday, or in the case of Maundy Thursday and Good Friday, if he was absent on the day preceding the first holiday. It would be different if the day preceding the legal holiday was the EE’s rest day. Then he is entitled to holiday pay. (Alcantara)  On leave with pay 7. Can monthly pay under employment contract already include pay for any unworked regular holiday within the month? Yes. This is management prerogative provided that the monthly pay comply with the least minimum rates prescribed under minimum wage laws.  What an employer has voluntarily given cannot be unilaterally withdrawn  If the employees are already paid for all non-working days, the divisor should be 365 and not 251 Vacation and sick leave – must be claimed otherwise waived - cannot be converted into cash unless allowed by employer Faculty Private School * Regular holidays specified by law are known to both school and faculty members as “no class days”. Thus, hourly paid faculty members are not entitled to their pay for unworked regular holidays. On the other hand, hourly paid faculty members are however entitled to their regular hourly rate on days declared as special holidays or when classes are called off or shortened since the faculty member, although forced to take a rest, does not earn what he should earn on that day. (JRC vs. NLRC)

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Divisor as Factor * The daily rate is a constant figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits, and this should also be the same basis for computing unpaid holidays. (Union of Filipro vs. Vivar) Section 12. Conditions of Employment – Service Incentive Leave Vacation and Sick leave - employer must still bind himself in CBA or grant it unilaterally - not granted by law 12.1 Coverage Coverage * Art. 95 : The provision on service incentive leave shall not apply to: [E,S, IO, E, G, D, M, F] 1. Those who are already enjoying the benefit. 2. Those enjoying vacation leave with pay of at least 5 days. 3. Those employed in establishments regularly employing less than 10 workers 4. Exempt establishments. Sec. 1, Rule V, Book III, IRR’s : 5. Those of the government and any of its political subdivisions including GOCC’s. 6. Domestic helpers and persons in the personal services of another. 7. Managerial EE’s. 8. Field personnel and other EE’s whose performance is unsupervised by the ER including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount of performing work irrespective of the time consumed in the performance thereof. * Teachers of private schools on contract basis are entitled to service incentive leave. (Cebu Institute of Technology vs. Ople) 12.2 Entitlement - can be converted to cash * Art. 95 : 5 days incentive leave with pay for at least 1 year of service. [The term ‘at least 1 year of service’ shall mean service within 12 months, whether continuous or broken, reckoned from the date the EE started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract are less than 12 months, in which case said period shall be considered as 1 year. (Sec. 3, Rule V, Book III, IRR’s)

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VACATION AND SICK LEAVE  employer must still bind himself in CBA or grant it unilaterally  not granted by law Section 13. Minimum Wages and Wage Fixing Machinery 13.1 Minimum Wages 1. Art. 99 : The minimum wages for agricultural and nonagricultural EE’s and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. 2. Explain the rule “a fair day’s wage for a fair day’s labor”? Unless specifically required by law, contract or established policy, the ER is not bound to pay wages to a worker who has not actually rendered any service. 3. Give 2 aspects of “agriculture” ? The primary aspect covers cultivation and tillage of the soil, growing and harvesting of any agricultural and horticultural commodities and raising of livestock and poultry. The secondary aspect covers any practices performed by a farmer on a farm as an incident to or in conjunction with the farming operations. 4. Farmers employed by B cultivate the soil and plant and harvest tobacco and they also cut big trees grown on the land which they used for fencing and repair of the owner’s house. They claim for minimum wages for non-agricultural workers. Is the claim valid? No. They are still agricultural workers. They perform activities which fall under the primary aspect of agriculture and the cutting of trees to be used for fencing is incidental to the farming operations and falls under the secondary aspect of agriculture. Coverage * Art. 98 :   

This Title shall not apply to farm tenancy or leasehold domestic services and persons working in their respective homes in needle or in any cottage industry duly registered in accordance with law.

Section 3, Rule VII, Book III, IRR’s : * Workers in duly registered cooperatives when so recommended by the bureau of Cooperative Development and upon approval of the Secretary of Labor . . .

Minimum Wage 1. Art. 97 (1) : “Wage” paid to * The remuneration or earnings, however designated, (LEGAL TENDER)

56  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 ER to an EE 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, of board, lodging or other facilities customarily furnished by the ER to EE. [“Fair and reasonable value” shall not include any profit to the ER or to any person affiliated with the ER. 2. Art. 61 : Apprentices : Wage rates shall in no case fall below 75 % of the applicable minimum wage. 3. Art. 75 : Learners : Wage rates shall begin at not less than 75% of the applicable minimum wage. 4. Art. 80 : Handicapped Workers : Wage rates shall not be less than 75% of the applicable minimum wage. 5. Art. 124 : All recognized learnership and apprentice agreements shall be considered automatically modified insofar as their wage clauses are concerned to reflect the prescribed wage rates [set by the Regional tripartite and Wages Productivity Board]. A. FACILITIES AND SUPPLEMENTS * The law guarantees the laborer a fair and just wage. The “minimum wage” can by no means imply only the actual minimum. Some margin or leeway must be provided, over and above the minimum, to take care of contingencies, such as increase in wants, and to provide means for a desirable improvement in his mode of living. (Atok-Big Wedge vs. Atok-Big-Wedge Mutual Benefit Association) B. SUPPLEMENTAL FACILITY 1. Distinguish between supplements and facilities? Supplements – Extra remuneration or special privileges or benefits given to or received by the worker over and above his ordinary earnings or wages. - granted for the convenience of the ER Facilities – Items of expense necessary for the laborer’s and his family’s existence and subsistence. They form part of the wage and when furnished by the ER are deductible therefrom since if they are not furnished, the laborer would spend and pay for them just the same i.e. meals; housing for dwelling purposes; fuel including electricity, gas, water for the non-commercial personal use of the EE; and other articles and services given primarily for the benefit of the worker or his family. - for the benefit of the worker and his family 2. The criterion in determining whether an item is a supplement or facility is not so much with the kind of benefit or item given, but its purpose. (State Marine vs. Cebu Seamen’s Association)

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3. CMC has 3 buses used to transport its workers, free of charge from Makati to its plat in Muntinlupa. The buses became dilapidated and the service was discontinued by the company. The EE’s demanded for their replacement. Decide with reasons. The company may be compelled to continue providing the transportation free of charge. This is considered a supplement given over and above the ordinary earnings or wages of the workers. Once given, a supplement cannot be eliminated or diminished. (Alcantara) -

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Test on whether or not items are facilities [C F, V A, F R] a. Are these items automatically furnished by the trade? b. Did the employee voluntarily accepted the same in writing? c. Is the value thereof fair and reasonable? If the employer fails to prove this: a. Then it is a supplement not a facility. b. Once given, a supplement cannot be eliminated or diminished. c. Grant of bonus may be unilaterally be reduced by the employer if it depends on profits acquired.

4. Because he lived 50 kilometers from its work, X requested his ER if he can sleep in the company premises. The latter agreed with the condition that he will deduct P5.00 per day as board charges from X. Is the deduction legal? No. Lodging is not customarily finished by the ER to his EE’s. The deduction, furthermore, is not with the written consent of X. C. CASH WAGE – legal tender 1. What is basic salary? In its common, generally accepted meaning, it is the rate of pay for a standard work period, exclusive of such additional payment as bonuses and overtime. (Boic-Takeda vs. Dela Serna) 2. Are emergency cost of living allowances considered part of regular wage? Yes. This is taken into account in determining overtime and premium pay , premium contributions, social security, maternity pay, etc. (EO 178) D. EFFECT - INABILITY TO PAY * If a company cannot pay a living wage, it has no business operating at the expense of the lives of the workers. (Phil. Apparel vs. NLRC) E. GRATUITY and WAGES

58 * Gratuity – That paid to the beneficiary for past services rendered purely out of the generosity of the giver or grantor. While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard law. (Plastic Town vs. NLRC) F. BENEFICIARY OF THE MINIMUM WAGE LAW * The minimum wage law directly benefits the lowly paid EE’s who receive inadequate wages on which they support themselves and their families. It benefits all wage earners indirectly by setting a floor below which their remuneration cannot fall. It increases the standard of competition among ER’s since it would protect the fair-minded ER who operates at lower costs by reason of paying his workers a wage below subsistence. (Pp vs. Gatchalian) G. BENEFITS 1. Art. 100 : Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other EE benefits being enjoyed at the time of promulgation of this Code. 2. Unless agreed otherwise, statutory benefits are apart from contractual benefits. (Meycauayan College vs. Drilon) Thus, EE’s are entitled to the full amounts of both a wage increase under a CBA and an increase in living allowances prescribed by law during the period when both increases are concurrently effective, for want of an agreement between the parties to treat the increase in living allowances as applicable to the wage increases. (Filipinas Golf vs. NLRC) 3. The work of batillos, cargadores of fish catch, were limited to days of arrival of fishing vessels. From 1976 to 1980, operators paid them a fixed monthly emergency allowance which included non-working days. Can the operators now discontinue the practice and pay the batillos only for actual days worked, following the principle of “no work, no pay” ? No. Benefits voluntarily given cannot be unilaterally withdrawn by the ER. Art. 100 prohibits the elimination or diminution of existing benefits. 4. Workers in a plastic manufacturing company are able to clean and inspect only 250 containers of 8 hours despite repeated appeals from management. They were paid a daily rate of P150.00. Through time and motion studies set by the DOLE, the ER was able to ascertain that an ordinary worker can clean and inspect 450 containers for 8 hours. The company then changed its mode of payment from time basis to piecework at P0.40 per container. Is this valid? Yes. The company has the right to change the basis of the payment of the wages of the workers. The workers would not suffer since it is within their capability to clean and inspect the number of containers to enable them to at least earn the rate they were receiving at the time the change was effected. They cannot however be deprived of

59 benefits they were already enjoying at the time of such change. (Alcantara) ** While normally discretionary, the grant of a gratuity or bonus, by reason of its long and regular concession, may become part of a regular compensation. * OR employer agreed to give its regularly without any condition imposed for its payment 13.2 Rationale for Wage Rationalization * Section 2, Wage Rationalization Act : It is hereby declared the policy of the State to rationalize the fixing of minimum wages and to promote productivity-improvement and gain-sharing measures: [J A D E] 1. To ensure Decent standard of living for the workers and their families; 2. To guarantee the rights to its Just share in the fruits of production; 3. To enhance Employment generation in the countryside through industry dispersal; and 4. To Allow business and industry reasonable returns on investment, expansion and growth. 13.3 Agencies for Wage Fixing Machinery Advisory agency – National Wages and Productivity Commission 1. Art. 120 : National Wages and Productivity Commission – attached to the DOLE the policy and program coordination. 2. Give at least 5 major powers and functions of the National Wages and Productivity Commission : a. To act as the national consultative and advisory body to the President 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 . 3. Art. 126 : No preliminary or permanent injunction or temporary restraining order may be issued by any court, tribunal or any entity against any proceedings before the Commission or the regional Boards. Wage Fixing Agency 1. Art. 122 : Regional Tripartite Wages and Productivity Boards – In all regions, including autonomous regions.

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2. Give at least 3 major powers and functions of the Regional Tripartite and Productivity Boards within their territorial jurisdiction: 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 region, provinces or industries therein and to issue the corresponding wage orders, subject to guidelines by the Commission. c. To receive, process and act on applications for exemption from prescribed wage rates as may be provided by law or any Wage Order. [Implementation of the plans shall be through the respective offices of the DOLE but the Regional Boards shall have technical supervision over the said DOLE offices.] 3. Art. 126 : 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.  The ECOLA now forms part regular wage  Employees paid by results should receive not less than the applicable wage rates provided for 8 hours workday 13.4 Area Minimum Wages and Criteria * Art. 124 : Standards/Criteria for Minimum Wage Fixing – Regional minimum wages shall be nearly as adequate as is economically feasible to maintain the minimum standards of living necessary for the health, efficiency and general well-being of the EE’s 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: 1. The demand of living wages; 2. Wage adjustment vis-à-vis the consumer price index; 3. The cost of living and changes and their families; 4. The need to induce industries to invest in the countryside; 5. Improvements in the standard of living 6. The prevailing wage levels 7. Fair return of the capital invested and capacity to pay of ER’s 8. Effects on employment generation and family income; and 9. The equitable distribution of income and wealth along the imperatives of economic and social development. These wages shall include wages varying within 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. 13.5 Wage Order * Art. 123 : Whenever conditions in the region so warrant, the Regional Board shall investigate and study pertinent facts and, based

61 on the standards and criteria herein prescribed, shall proceed to determine whether a Wage Order should be issued. In the performance of its wage-determining functions, the Regional Board shall conduct public hearings, consultations, giving notices to EE’s and ER’s 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 10 calendar days from the publication of such order. It shall be mandatory for the Commission to decide such appeal within 60 calendar days from the filing thereof. Methods of Fixing *The determination of wages has generally involved two methods, the “floor-wage” method and the “salary-ceiling” method. The 1st method involves the fixing of determinate amount that would be added to the prevailing statutory minimum wage. In the 2nd method, the wage adjustment is applied to EE’s receiving a certain denominated salary ceiling. (ECOP vs. NWPC) Wage Distortion * A severe contraction of the wage or salary differences is enough 1. Art. 24 : Wage Distortion - Distortion where an increase in the prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage salary rates between and among EE groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. 2. How is a wage distortion corrected? Any dispute arising from wage distortions shall be resolved through the grievance procedures under their CBA, and if it remains unresolved, through arbitrary arbitration. If there is no recognized labor union or there are no collective bargaining agreements, the dispute shall be settled through the National Conciliation and Mediation Board, or if unresolved after 10 days of conciliation, through the NLRC which shall decide the dispute within 20 calendar days. (Art. 24) The law recognizes the validity of negotiated wage increases to correct wage distortions. The legislative intent is to encourage the parties to seek solution to the problems of wage distortions through voluntary negotiation or arbitration, rather than strikes, lockouts, or other concerted activities of the EE’s or management. (ALU-TUCP vs. NLRC) In a case where a union went on strike over a salary distortion dispute, the Court held the strike illegal. (Ilaw at Buklod ng Manggagawa vs. NLRC) 13. 6 Wages and Productivity Measures Wage/Salary Differentiate wages from salary?

62 * “Wages” – Compensation for manual labor, skilled or unskilled paid at stated times, and measured by the day, week, month, or season. It indicates considerable pay for a lower and less responsive character of employment. * “Salary” – Denotes a higher degree of employment, or a superior grade of services, and implies a position of office; by contrast, the term “wages”, while “salary” is suggestive of a larger and more important service. (Gaa vs. CA) Wage Payment 1. Art. 102 : Forms of Payment : No ER shall pay the wages of an EE by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when expressly requested by the EE. [The laborer’s wage shall be paid in legal currency. (Art. 1705, NCC)] -

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Payment of wages by check or money order shall be allowed when : a. such manner of payment is customary on the date of the effectivity of this Code, or b. is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a CBA. CONDITIONS a. bank – 1 km b. written consent of EE c. ER does not receive any pecuniary benefit d. EE given time to withdraw from the bank – considered as compensable his work

2. Art. 103 : Time of Payment – * Generally : Once every two weeks or twice a month at intervals not exceeding 16 days. No ER shall make payment with less frequency than once a month. * Force Majeure : Immediately after the force majeure or the circumstances have ceased. * Task cannot be completed in 2 weeks in the absence of a CBA or arbitration award: a. The payments are made at intervals not exceeding 16 days, in proportion to the amount of work completed; b. That final settlement is made upon completion of work; 3. Art. 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 may prescribe under conditions to ensure greater protection of wages. 1. deterioration of peace and order conditions 2. actual or impending emergencies – calamity - ER must provide or reimburse transportation back and forth - Time spent collecting wages considered compensable his work

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4. Art. 105 : Direct Payment of Wages – * General Rule : Wages paid directly to workers. * Exceptions: 1. Force majeure rendering such payment impossible or under the special circumstances, in which case the worker may be paid through another person under written authority given by the worker for the purpose. 2. Where the worker has died, in case the ER may pay the wages of the deceased worker to the heirs of the latter without the necessity of intestate proceedings. A. DIRECT PAYMENT Payment of wages to leader of group not violation of direct payment since the contract to perform the services was made by the leader of the group, for and in behalf of the latter, not for each and everyone of them individually. (Bermiso vs. Escano) Wage Prohibition 1. Art. 112 : Non-Interference in Disposal of Wages – - No ER shall limit or otherwise interfere with the freedom of any EE to dispose of his wages. - He shall not in any manner force, compel or oblige his EE’s to purchase merchandise, commodities or other property from the ER or from any other person, or otherwise make use of any store or services of such ER or any other person. 2. A meat processing company gives a 25% discount to EE’s for purchase on credit of its product. However, said purchases on credit will be considered payment of his wages. An EE purchases 10 cans of the product but objects to the application of his purchases as part of his wages. Is the objections valid? Yes. The application of his purchases on credit as part of his wages the products in lieu of legal tender. (Alcantara) 3. May an ER make any deductions from the wages of EE’s? General Rule : No. His own behalf or in behalf of any person. Exceptions: [Allowable Deductions] 1. Deductions of SSS, Medicare and Pag-ibig Premiums (Alcantara) 2. Withholding tax (NLRC) 3. Deductions for reimbursement of insurance premium advanced by the ER where the worker is insured with his consent by the former. (Art. 113) 4. Deductions for unions dues where the right to check-off has been recognized by the ER or individual EE himself. (Id) 5. Deductions made with the written authorization of the EE for payment to a 3rd person and the ER agrees to do so, provided that the latter does not receive any pecuniary benefit, directly or indirectly, from the transaction. (Alcantara) 6. Deductions for reimbursement of loss or damage to tools, materials or equipment supplied by the ER to the EE, in trades, occupations or business where the practice of making such deductions is recognized. (Art. 114)

64 7. Deductions as a disciplinary measure for habitual tardiness (Alcantara) 8. Agency fees under Art. 248 (e) of the Code. 9. Deductions for debts due the ER from the EE, when such debts become due and demandable. (Art. 1706, NCC) 10. In court awards, wages may be the subject of execution or attachment, but only for debts incurred for food, shelter, clothing and medical attendance. (Art. 1708) 11. Deductions for value of meals and others. (Alcantara) 3. Art. 114 : Deposits for Loss or Damage : No ER shall require his worker to make deposits from which deductions shall be made for the reimbursement for loss or damage to tools, materials or equipment supplied by the ER except: a. When the ER is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or b. is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations. 4. J works as a dishwasher in a big restaurant. At the time of his employment, he was told that it was an industry practice that the value of plates broken by him while in the performance of his work will be deducted from his wages. May management deduct the said value from J’s wages? Yes, provided the following conditions are met: [PRO-F20] 1. The practice of making deductions is a recognized one or is necessary and desirable in the business of the ER. 2. J is clearly shown to be responsible 3. He is given reasonable opportunity to show cause why the deduction should not be made. 4. The amount of deductions is fair and reasonable and does not exceed the actual loss or damage. 5. The deduction does not exceed 20% of J’s wages in a week. (Sec. 14, Rule VIII, Book III, IRR’s) 5. Art. 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. 6. Art. 117 : Deduction to ensure employment - It shall be unlawful to make any deduction from wages of any EE for the benefit of the ER or his life representative or intermediary as consideration of a promise of employment or retention in employment. 7. Art. 222 - No attorneys fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusions of the CBA shall be imposed on any individual member of the contracting union: Provided, however that attorneys fees may be charged against union funds in an amount agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be null and void.

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8. 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. A. WAGE DEDUCTION 1. An obligation arising from non-payment of stock subscriptions to a corporation cannot be offset against a money claim of an EE against an ER. (Apodaca vs. NLRC) 2. The wife of an EE tells the manager that her husband has not been giving her support. Taking pity, the manager instructs the cashier to deduct 1/3 of the EE’s pay and give the same to the wife. Is this valid? No. The EE concerned did not give his written authorization for the deduction. (Alcantara) 3. Z borrowed P500.00 from his ER. When the loan became due and demandable, Z did not pay his ER. May the ER, without the written authorization of Z, deduct the loan from the latter’s wages? Yes. Compensation can take place under Art. 1706 of the NCC. (Alcantara) B. CHECK-OFF * An ER may be compelled to “check-off” union dues from the wages of his EE when the ER has been authorized to do so by the EE. This is upon the theory that it is necessary to promote the welfare and integrity of the union to which he belongs. (Manila Trading vs. Manila Trading Labor Association) C. GARNISHMENT/ATTACHMENT 1. Under Art. 1708 of the NCC, “laborers’ wages shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance” (Pacific Customs vs. InterIsland Dockmen and Labor Union) 2. Art 1708 which exempts laborers’ wage from attachment or execution does not apply to a responsibly placed EE, supervisory or managerial EE, but only to the rank-and-file. (Gaa vs. CA) D. DEPOSIT 1. A marketing firm retains 5% of the weekly salary of its collectors as a deposit to answer for any shortage in their collections. These are refunded at the end of the month, if no shortages are incurred. Is the practice legal? It depends. If it is a recognized practice of ER’s to require such deposits, then such is legal, since the sum retained is not excessive and is kept by the ER only for a reasonable period. (Alcantara)

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2. A taxicab company requires its drivers to make deposits to defray boundaries and to cover car wash payments. Is this legal? Art. 114 does not permit deposits for deficiency in the remittances of drivers’ “boundary” but the requirement for deposit for car wash payments is lawfull. (5-J Taxi vs. NLRC) Prohibited Acts 1. Art. 118 : It shall be unlawful for an ER to reuse to pay or reduce the wages and benefits, discharge or in any manner discriminate against any EE who has filed any complaint or instituted any proceedings under this Title or has testified or is about to testify in such proceedings. 2. Art. 119 : It shall be unlawful for any person to make any material false statement, report or record filed or kept pursuant to the provisions of this Code. A. RECORD KEEPING * The records shall be kept and maintained in or about the premises of workplace or in the branch where the EE is regularly assigned, the keeping of the records in any other place is prohibited. (South Motorists vs. Tosoc) 14. 7 Liability of ER and other Parties ER, Independent Contractor and Subcontractor and Labor-Only Contracting 1. The rules on the liability of Job contractors, Indirect ER’s and “Labor-only” contractors are the following: 1. General Rule : An ER who enters into a contract with a contractor to perform work for the ER, does not thereby create an ER-EE relationship between himself and the EE’s of the contractor. Thus the EE’s of the contractor remain the contractor’s EE’s and his alone. (PBC vs. NLRC) 2. Nonetheless : When a contractor fails to pay the wages of his EE’s in accordance with the Labor Code, the ER who contracted out the job to the contractor becomes jointly and severally liable with the contractor to the EE’s of the latter “to the extent of the work performed under the contract” as if such ER were the ER of the contractor’s EE. (Id) The law itself, established an ER-EE relationship between the ER and the job contractor’s EE’s for a limited purpose i.e. in order to ensure that the latter get paid for wages due them. 3. Indirect ER : These provisions shall likewise apply to any person, partnership , association or corporation which, not being an ER, contracts with an independent contractor for the performance of any work, task, job or project. (Art. 107)

67 4. Labor-Only Contractor : The conclusion is different where there is “labor-only” contracting. The “labor-only” contractor i.e. person or intermediary, is considered “merely as an agent of the ER.” The statute makes the ER directly responsible to the EE’s of the “labor-only” contractor as if such EE’s had been directly employed by the ER. The statute establishes an ER-EE relationship between the ER and the EE’s of the “labor-only” contractor, this time for a comprehensive purpose, to prevent any violation of this Code. (Broadway Motors vs. NLRC)  The legitimate job contractor provides services while the labor-only contractor only provides manpower.  Job contractor undertakes to perform a specific job while labor-only contractor merely provides personnel to work for the employer. 2. Art. 108 : An ER or indirect ER 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 EE’s should the contractor or subcontractor, as the case may be fail to pay the same. 3. C, a former EE of ABC entered into an agreement with the company wherein C will hire person to work in the painting department and the company will reimburse him for whatever wages he will pay plus 10% of this amount. If C fails to pay the wages, can the workers claim from the company? Yes. C is merely a “labor-only” contractor and is considered merely an agent of the ER who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (Alcantara) 4. X entered into a contract with R for the construction of X’s house. Some workers of R were not paid their wages. Is X liable? Yes. Under Art. 107, the person, though not an ER, who contracts with the independent contractor for the damages employed by the latter are indirect ER’s. (Alcantara) 5. A entered into a verbal agreement with S wherein A would be paid a commission for milled rice she sold or palay for the farmer. A would spend her own money for the undertaking, but to enable her to carry out the agreement more effectively, she was authorized to borrow from other persons, subject to reimbursement from S and either of them may terminate the business arrangement at will, with or without cause. May A be considered an independent contractor? Yes. A was contracted to do a piece of work according to her own method and without being subject to the control of the ER except as to the result of the work. (Sara vs. Agarrado) Extent of Liability

68 1. The direct ER and the indirect ER are jointly and severally liable to petitioners for the monetary claims. (Deferia vs. NLRC) For purposes of determining the extent of their civil liability, they shall be considered as direct ER’s. (Art. 109)  In legitimate job contracting, no ER-EE relationship exist between the principal and the job contractors employees.  Insolvency or unwillingness to pay by the contractor or direct ER is not a prerequisite for the joint and solidary liability of the principal or indirect ER. (DBP vs. NLRC)  2. If an independent service contractor fails to pay the wages of the janitors its supplies to XYZ, is XYZ liable for the unpaid wages? Yes. According to Art. 106, the ER shall be jointly and severally liable to the EE’s of the contractor or subcontractor to the extent of the work performed under the contract. (Alcantara) 3. Would your answer change if XYZ already paid the independent contractor the contract price? No, XYZ will still be liable for the unpaid wages of the janitor since the obligation is imposed by law. (Id) 4. PTS, a government agency, entered into a service agreement with ABC or the supply of janitors to PTS. ABS failed to pay the wages of the janitors. PTS refused to pay on the ground that it is a government agency. Is this claim valid? No. The janitors employed by ABC are considered indirect EE’s and not to indirect EE’s coming from the private sector. (Rabago vs. NLRC) 14. 8 Worker Preference-Bankruptcy 1. Art. 110. In the event of bankruptcy or liquidation of an ER’s business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid. * The right or preference has to be asserted in distribution proceedings such as insolvency where all the creditors convened, their claims ascertained and inventories and the preferences determined. 2. A declaration of bankruptcy or a judicial liquidation must be present before the worker’s preference may be enforced. The said article cannot be viewed in isolation; it must always be read in relation to the provisions of the Civil Code concerning the classification, concurrence and preference of the credits. (DBP vs. Santos) The aforesaid provisions of the Civil Code, including Art. 110 requires judicial proceedings in rem in adjudication of creditor’s claims against the debtor’s assets to become operative. (Alcantara)

69 3. TUCP obtained a judgment from the NLRC in an unfair labor case. Two days before the judgment, the PCIB, mortgage creditors of the company, foreclosed all mortgages in their favor. The union sought to garnish in its favor a portion of the purchase price. Is the bank subject to the claims of the union? Yes, under Art. 110 workers enjoy first preference as regards wages owed them for services rendered during the period prior to the bankruptcy or liquidation. (PCIB vs. National Mines and Allied Union) 4. Atlas Textile mortgaged its assets to DBP. DBP foreclosed the asset. The EE’s filed a complaint against Atlas and DBP for the wage differentials. The labor arbiter and the NLRC held that the worker’s preference under Art. 110 does not create a lien? No. Art. 110 does not create a lien in favor of the workers. (Alcantara) Art. 110  establishes merely a rule of preference and does not create a lien in favor of the workers  workers claim for unpaid wages and other monetary benefits cannot prevail over a mortgages lien 14. 9 Wage Recovery 1. Art. 217 (a) (2), (3), (4), (6) : Jurisdiction of Labor Arbiters and the Commission – The Labor Arbiters shall have exclusive and original jurisdiction, except as otherwise provided, the following cases involving all workers: a. Termination Disputes (qualified by Art. 261which grant voluntary arbitrators original and exclusive jurisdiction over all unresolved grievances arising from CBAS and company personnel policies); b. Cases involving terms and conditions and employment, if accompanied with a claim for reinstatement (including claims of an ER-EE relationship, including claims for actual, moral and exemplary damages, as provided in Sec. 10, Migrant Workers Act) c. Claims for actual, moral, exemplary and other damages arising from the ER-EE relations; d. Except claims for EE’s Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from the ER- EE relations, including  those of persons in domestic or household service, involving an amount exceeding P5,000.00 regardless of whether accompanied with a claim for reinstatement. 2. Art. 128 : Visitorial and Enforcement Power oft the Secretary of Labor or his duly authorized representative  Access to ER’s records and premises at anytime of the day or night whenever work is being undertaken therein and copy therefrom; question any EE; and investigate any fact,

70 condition or matter which may be necessary to determine violations of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto.  In cases where the relationship or ER-EE still exists, the power to issue Compliance Orders to give effect to the labor standard provisions of this Code and other social legislation. • Writ of execution to the appropriate authority shall be issued for the enforcement of the said orders, except in cases where the ER 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.  Order stoppage of work or suspension of operations of any unit of or department of an establishment when noncompliance poses grave and imminent danger to the health and safety of workers in the workplace. • Within 24 hours, a hearing shall be conducted to determine whether an order for the stoppage of work or suspension of operations shall be lifted or not. • In case the violation is attributable to the fault of the ER, he shall pay EE’s their salaries or wages during the said period.  It shall be unlawful for any person to Obstruct, impede, delay or otherwise render ineffective the order of the Secretary of Labor. * No inferior court shall issue a temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders in accordance with this Article.  Any government EE found guilty of violation, after appropriate administrative investigation, be subject to Summary dismissal from the service.  The Secretary of labor may require ER’s to keep and maintain employment records as may be necessary. (AS CONES) * Under what circumstances may the Regional Director be divested of his jurisdiction to issue compliance orders under Art. 128 (b)? a. ER contests the findings of the labor regulations officer and raises issue thereon; b. In order to resolve such issue, there is need to examine evidentiary matters; c. Such matters are not verifiable in the normal course of inspection. (Red V. Coconut vs. Leogrado) 3. Art. 129 : Recovery of wages, simple money claims and other benefits –

71  The Regional Director of the DOLE or any of the duly authorized hearing officers of the Department is empowered, through summary proceedings and after due notice, to hear and decide any monetary claims and benefits, including legal interest to a person employed in domestic or household service; Provided a. Such complaint does not include claim for reinstatement b. Aggregate money claims of each househelper does not exceed P5,000  The complaint shall be resolved within 30 days from the date of filing of the same. 4. Art. 111 :  In cases of unlawful withholding of wages the culpable party may be assessed attorney’s fees equivalent to 10% of the amount of wages recovered.  It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of the wages, attorney’s fees, which exceed 10% of the amount of wage recovered. Section 14: Service Charges 14. 1 Coverage 1. Section 1, Rule V, Book III, IRR’s : This rule shall apply only to establishments collecting service charges such as hotels, restaurants, lodging houses, night clubs, cocktail lounge, massage clinics, bars, casinos and gambling houses, and similar enterprises, including those entities operating primarily as private subsidiaries of the Government. 2. Section 2, Rule VI, Book III : This rule shall apply to all EE’s of covered ER’s except to managerial EE’s. Managerial EE – a. powers of prerogatives to lay down, and execute management to lay don and execute management policies and/or b. hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline EE’s or to effectively recommend such managerial actions.  Collection of service charges is a management decision and not a requirement of law 14. 2 Service Charges * Art. 96 : To be distributed at the rate of 85% for covered EE’s [distributed equally among them] and 15% for management. X a waiter at DC Diner was receiving a share in the restaurant’s service charges. Later, the restaurant discontinued the collection of service charges. The take-home pay of X was reduced by the value of the

72 discontinued service charges. May X ask his ER to continue paying the service charges? Yes. In case the service charge is abolished, the share or the covered EE’s shall be considered integrated in their wages. (Art. 96)  The employees share in the service charges is part of the other benefits to which he is entitled, in addition to full backwages Section 15: Thirteenth Month Pay 15.1 Law – Coverage Coverage 1. Section 2, Revised Guidelines on the 13th Month Pay Law : The following ER’s are still not covered by PD 851:  The government and any of its political subdivisions, including GOCC’s, except those corporations operating essentially as private subsidiaries of the government.  ER’s already paying their EE’s a 13th month pay or more in a calendar year or its equivalent at the time of this issuance.  [The term “its equivalent” … shall include Christmas bonus, mid-year bonus, cash bonuses and other payments but shall not include cash and stock dividends, cost of living allowances and other allowances regularly enjoyed by the EE, as well as non-monetary benefits. Where an ER pays less than required 1/12th of the EE’s basic salary, the ER shall pay the differences.]  ER’s of household helpers and persons in the personal service of another in relation to such workers, and  ER’s 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 ER shall grant the required 13th month pay to such workers.  A distressed ER may qualify for exemption for the 13th month pay if there is prior authorization from the DOLE. (Dentech vs. NLRC) 2. The CBA provides for the payment of Christmas bonuses to all regular EE’s in the bargaining unit with of at least 1 year of continuous service. Is this equivalent to the 13th month pay? No. The Christmas bonuses provided in the CBA accords a reward for loyalty to certain EE’s. This is evident from the stipulation granting the bonus in question to workers with at least 1 year of

73 continuous service. The bonus therefore is to be in addition to the legal requirement. (UCP vs. NLRC) 15.2 Amount and Payment Date 1. Sec

4 Revised Guidelines on the 13th Month Pay Law:  Amount : ½ of the total basic salary earned by an EE within a calendar year.  The 13th month pay is to be paid only to rank-and file employees regardless of the amount of their basic salary.  Time of Payment: Not later than December 24.

2. Define basic salary: For purposes of computing the 13th month pay, basic salary”  include remuneration or earnings paid by this ER 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 or unused vacation and sick leave credits, overtime, premium, night-differential and holiday pay, and cost-ofliving allowances. • However, these salary-related benefits should be included as part of the basic salary in the computation of the 13th month pay if the individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the EE’s. 3. From 191 to 1997, DFC included in the computation of this 13 th month pay, the EE’s sick, vacation and maternity leaves, In 1998, the company discontinued the inclusion of the aforementioned items in the 13th month pay. Is this valid? The considerable length of time the questioned items had been included by the company indicates a unilateral and voluntary action on its part, sufficient in itself to negate any claim of mistake. A company practice favorable to the EE’s had been established, and the payments made pursuant thereto ripened into benefits enjoyed by them. Any benefit and supplement being enjoyed by the EE’s cannot be reduced, diminished, discontinued or eliminated by the ER. (Alcantara) Basic Wage 1. Are the sales commission of a salesman paid a guaranteed wage plus commissions included in the computation of this 13 th month pay? It depends on what kind of commissions may properly be considered part of the basic salary, they should be included in computing the 13th month pay. If the commission are not an integral part of the basic salary, then they should be excluded. (Azucena) Sales commissions which comprised an automatic increment to the

74 monetary value assigned to each unit of work rendered by the salesman, or that of the wages-or sales-percentage type should be included in the 13th month pay computation. On the other hand, commission in the form of productivity bonuses which closely resembles profit-sharing payments and have no clear direct or necessary relation to the amount of work actually done by each individual EE, or the profit-sharing or bonus-type, should be excluded from the computation of the 13th month pay. (Philippine Duplicators vs. NLRC) Substitute Payment 1. Benefits in the form of food or free electricity not proper substitute for the 13th month pay. (Framanlis vs. Minister of Labor) 14th Month Pay 1. The grant of the 14th month pay is a management prerogative, gratuitous in nature and therefore it cannot be forced. (Kamaya Hotel vs. NLRC) 15. 3 Non-inclusion 1. Sec. 7, Revised Guidelines on the 13th Month Pay Law: The mandated 13th month pay need not be credited as part of the regular wage of EE’s for purposes of determining overtime and premium pays, fringe benefits as well as contributions to the state insurance fund, Social Security, Medicare and private retirement plans. Section 16 : Bonus 16. 1 Definition 1. A bonus is an amount is an amount granted and paid to an EE for his industry and loyalty which contributed to the success of the ER’s business and made possible the realization of profits. (Azucena) 16.2 When Demandable 1. From the legal point of view, a bonus is not a demandable and enforceable obligation. But it is so when it is made part of the wage or salary or compensation. In such case, the latter would be a fixed amount and the former would be a contingent one dependent upon the realization of profit. (Azucena) Furthermore, while normally discretionary, the grant if gratuity or bonus by reason of its long and regular concession, may become regarded as part of the regular compensation. (Liberation Steamship vs. CIR) Section 17. Working Conditions for Special Groups of Workers – Women 17.1 Women and the Constitution

75 1. Art. II, Sec. 14, Const. : The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. 17.2 Coverage 1. Section 1, Rule XII, Book III, IRR’s : This rule shall apply to all ER’s except to: a. government and GOCC’s and b. to ER’s of household helpers and persons in their personal service insofar as such workers are concerned 17.3 Prohibited Acts NIGHT WORK AND EXCEPTION 1. Art. 130 : No woman shall be employed or permitted or suffered to work, with or without compensation: a. Industrial undertaking : Between 10:00 pm and 6:00 am of the following day. b. Commercial undertaking : Between midnight and 6:00 am of the following day. c. Agricultural undertaking : Nighttime unless she is given a period of rest of not less than 9 consecutive hours. 2. Art. 131 : Exceptions to Nightwork prohibition [A, F, U, P – M, H, M, - FA] a. In cases of actual or impending emergencies caused by a serious accident, fire, flood, earthquake, epidemic or other Disasters or calamity, to prevent loss of life or property. b. Cases of force majeure or imminent danger to public safety. c. Cases of urgent work to be performed on machineries, equipment or installation, to avoid serious loss which the ER would otherwise suffer. d. Work is necessary to prevent serious loss of perishable goods e. Woman EE holds a responsible position of managerial or technical in nature. f. Woman EE has been engaged to provide health and welfare service. g. Where the nature of the work requires the manual skill and dexterity of women workers; h. Where the women EE’s are immediate members of the family operating the establishment or undertaking; and i. Analogous cases. (HUMMPS FAD) 3. LG, a manufacturer and exporter of jeans, has a 3-shift work schedule but maintains a policy of not assigning women in the 3rd shift from 10:00 pm to 6:00 am. Is this policy discriminatory to women? Yes. The women sewers, by reason of their sex, are denied the opportunity to earn additional pay. The nature of the work requires the manual skill and dexterity of women workers and cannot be

76 performed with equal efficiency to male workers. This is one of the exceptions to the night work prohibition. (Art. 131) B. DISCRIMINATION 1. Art. 135: It shall be unlawful for any ER to discriminate against woman EE with respect to terms and conditions of employment solely on account of her sex. The following are acts of discrimination [P, F] a. Payment of lesser compensation, as against a male EE, for work of equal value. b. Favoring a male EE over a female EE with respect to the promotion, training opportunities, study and scholarship grants solely on account of their sexes. Criminal liability for violations shall be penalized as provided in Art. 288 and 289 of this Code. The institution of any criminal action under this provision shall not bar the aggrieved EE 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. 2. C, a 45-year old teacher was dismissed by the school after she got married to Q, her 18-year old 4 th year high school student. Is the dismissal lawful? No, in the absence of substantial evidence to show that C took advantage of her position to court her student. There is nothing wrong if the two fell in love despite the disparity in their ages. (Chua-Qua vs. Clave) C. MARRIAGE 1. Art. 136 : Stipulation against marriage – It shall be unlawful for an ER to : [C, S, D] a. Require as a condition of employment or continuation of employment that a woman EE shall not get married; b. Stipulate expressly or tacitly that upon getting married a woman shall be deemed resigned or separated; c.

Actually dismiss, discharge, discriminate or otherwise prejudice a woman EE merely by reason of her marriage.

D. GENERAL 1. Art. 137 : It shall be unlawful for any ER to : [DB, DP, RA] a. Deny any woman EE 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; b. Discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy;

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c. Discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. 2. In L’s contract of employment with Club E, it was stipulated that her employment as a dancer would cease once she gets pregnant. When L got pregnant, L was no longer allowed to dance and since there were no other work available for which her talents were suitable, her employment was terminated. Is the action legal? Yes. It is both awkward and dangerous for her to dance during her pregnancy. Of course the ER has the obligation to give her another job, but as stated in the problem there is no other work for which her talents are suited. It is not fair to require the ER to continue employing her. (Alcantara) 3. A pharmaceutical company rejected the applications of 5 pregnant women as sales representatives for contraceptive pills and family planning devices. Is this valid? Yes. The company has the prerogative to select its EE’s. What is unlawful is for the ER to discriminate against or dismiss a woman by reason of their pregnancy. (Alcantara) 17. 4 Facilities 1. Art. 132 : The Secretary of Labor shall establish standards that will ensure the safety and health of women EE’s. In appropriate cases, he shall, by regulations, require ER to: a. Provide seats proper for women and permit them to use seats when they are free from work and during working hours, provided they can perform their duties in the position without detriment to efficiency. b. To establish a nursery in a workplace. c. To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like. 2. Art. 134 : (a) Establishments which are required by law to maintain clinic or infirmary shall provide free family planning services to their EE’s. 3. Is the ER required by law to give maternity benefits to its female workers? No. Maternity benefits are to be paid in appropriate instances by the SSS. The only obligation of the ER is to advance the benefit subject to reimbursement by the SSS. (Alcantara) 17.5 Special classification Special Women Workers 1. X works as a hostess in a nightclub, she is paid a percentage of the lady’s drink ordered by customers. There are nights when

78 she does not earn anything because there are no customers. Is X an EE of the nightclub? Yes. Any woman who is permitted or suffered to work, with or without compensation, in any nightclub, cocktail lounge, massage clinic, bar, or similar establishment, under the effective control or supervision of the ER for a substantial period of time as determined by the Secretary of Labor shall be considered an EE of such establishment for purposes of labor and social legislation. (Art. 138) Section 18. Working Conditions for Special group of Workers – Minors 18.1 Minors and the Constitution Art. II, Sec. 13, Const. : The State recognized the role of the youth in nation-building and shall promote and protect their physical, moral spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. 18.2 Coverage Section 1, Rule XII, Book III, IRR’s : This Rule shall apply to all ER’s except [G H] 1. to the Government and GOCC’s and 2. to ER’s of household helpers and persons in their personal service insofar as such workers are concerned. 18.3 Employable Age Section 12, RA 7610 as amended by RA 7658 : * General rule: Children below 15 years of age shall not be employed. * Exceptions: [P, E] 1. Child works directly under the sole responsibility of his parents or legal guardian and where only members of the ER family are employed, provided: a. his employment neither endangers his life, safety, health and morals, nor impairs his normal development: b. the parent or legal guardian shall provide the said minor child with the prescribed primary and/or secondary education. 2. Child is employed in entertainment or information through cinema, theater, radio or television, provided: c. Employment contract is concluded by the child’s parents or legal guardian, with the expressed agreement of the child concerned, if possible, and the approval of the DOLE. d. The ER shall ensure the protection, health, safety and morals of the child; e. The ER shall institute measures to prevent the child’s exploitation or discrimination. f. The ER shall formulate and implement, subject to the approval and supervision of competent authorities, a

79 continuing program for training and skills acquisition of the child. g. The ER shall first secure, a work permit from the DOLE which shall ensure observance of the above requirements. 2. Art. 139 : Any person, between 15 and 18 may be employed in any non-hazardous work. In any hazardous work, the employable age is 18 and up. 3. What are considered hazardous work places? [D C M P] a. Where the nature of work exposes the worker to Dangerous environmental elements, contaminations or work conditions. b. Stevedoring, construction work, logging, firefighting, mechanized farming and similar work. c. Manufacture or handling of Explosives and other pyrotechnic products. d. Where the workers are exposed to heavy or power-driven machinery or equipment or tools. 4. L, 10 years old, was hired as a singer in a carnival which stages shows wherever there is a town fiesta. She is paid P5,000.00 a month. L is therefore always on the road, traveling to different parts of the country. Is her employment lawful? No. Such employment will endanger her health and impair her normal development. She is also deprived of the opportunity to get primary education as she is always traveling to different parts of the country. (Alcantara) 18.4 Discrimination 1. Art. 140 : Prohibition against child discrimination – No ER shall discriminate against any person in respect to terms and conditions of employment on account of his age. 2. Would a company rule providing for lower wages for workers below 18 years who are inexperienced violate the prohibition? No. The payment of lower wages is by reason of the worker’s inexperience, not his age. There is no discrimination on account of the worker’s minority. (Alcantara) Section 19. Working Conditions for Special group of Workers – Househelpers 19.1 Coverage Art. 141 : This chapter shall apply to all persons rendering services in households for compensation 19.2 Househelpers 1. Define domestic or household service : Service in the ER’s home which is usually necessary or desirable for the maintenance and enjoyment thereof and includes ministering to

80 the personal comfort and convenience of the member’s of the ER’s household, including services of family drivers. (Art. 141) 2. C was employed by A company to work as a maid in the cottages of its Baguio mining site to attend to the needs of its executives or guests who now and then visit the site. Is S a househelper or domestic servant? No. The services of a househelper is rendered exclusively for the personal comfort and enjoyment of the family of the ER and are performed in the latter’s home. Services rendered in an executive cottage cannot be considered domestic. S must be considered a regular EE of the mining company. (Apex Mining vs. NLRC) 19.3 Non-Household Work Assignment T lives in a compound where he operates a modest candy business. Sometimes, when there is no work in his house, his maids help in the packing of the candies and his family driver delivers the candies to the outlets. How should the work rendered in connection with the candy business be compensated? For work rendered by the maids and the family driver, they should be paid at the rate prescribed by law for non-agricultural workers. (Alcantara) No household helper shall be assigned to work in a commercial industrial or agricultural enterprise at a wage or salary rates lower than that provided for agricultural or non-agricultural workers as prescribed therein. (Art. 145) 19. 4 Conditions for Employment 1. M, 15 years old, worked as a maid in the house of L. She was paid in advance for 3 years and she agreed that she will work for L for the said period. Is there any legal infirmity in the said agreement? Yes. The period contract exceeds the maximum set by the law. Art. 142 provides that the original contract of domestic service shall not last for more than 2 years, although it may be renewed for such periods as may be agreed upon by the parties. M’s contract will therefore be good for only 2 years. (Alcantara) 2. What are the minimum wages for househelpers? a. Metro Manila and highly urbanized cities : P800.00 b. Chartered cities and 1st class municipalities : P650.00 c. Other municipalities : P550  Househelpers receiving P1,000.00 shall be covered by the SSS. 3. Aside from the rights to minimum wage, what other rights are enjoyed by a househelper? [E J B - I F] a. Opportunity for elementary education if a househelper is less than 18 years old (Art. 146)

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b. Just and human treatment (Art. 147) c. Board, lodging and medical attendance (Art. 148) d. Indemnity for unjust termination of services of 15 days plus the compensation already earned. e. Funeral benefits if the househelper has no relatives with sufficient means in the place where the head of the family lives. (Art. 1696, NCC) [F I B E J] f. If househelper is unjustly dismissed,  pay wages already earned + 15 days wages (Indemnity) g. If househelper leaves without justifiable cause,  forfeits any unpaid salary not exceeding 15 days 4. M works as a live-in labandera in the house of T somewhere in Quezon City. She works for 11 hours a day. Based on their contract, she is paid P800.00. Is she entitled to additional compensation? Yes. Although she is merely a househelper, she should not be allowed to work more than 10 hours a day. (Art. 1695, NCC) Since she worked for 11 hours daily, she should be paid an additional compensation beyond the minimum wage of P800.00 set by the law. (Alcantara) 5. Art. 150 : If the duration of the household service is not determined either in the stipulation or by the nature of the service, the ER or the househelper may give notice to put an end to the relationship of the service. Section 20. Working Conditions for Special group of Workers – Homeworkers 20.1 ER 1. Art. 155 : “ER” 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 though any EE, agent, contractor, sub-contractor or any other person: a. Delivers or causes to be delivered, any goods, fabricated in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with his directions; or b. Sells any goods, articles or materials to be processed or fabricated in or about a home then rebuys them after such processing or fabrication, either himself or through some other person. 20.2 ER Liability

82 1. Section 8, Rule XIV, Book III, IRR’s : The ER shall be jointly and severally liable to the EE’s or homeworkers of the contractor or sub-contractor, in the same manner as if the EE’s or homeworkers were directly engaged by the ER. 2. S represents in the Philippines the Sears chain of department stores in the US. She sells wood and leather to housewives who makes these into wooden clogs according to the patterns and specifications of S. Is there an ER-EE relationship between S and the housewives? Yes. The housewives are considered homeweorkers and S is their ER. (Alcantara) 3. What is the liability of Sears? Sears is jointly and severally liable if S is not able to pay the wages of the homeworkers. (Sec. 8, Rule XIV, Book III, IRR’s) 4. Terms and conditions of employment involving money claims of homeworker shall be heard by the Regional Director of the DOLE. Beyond that, the case falls under the jurisdiction of the Labor Arbiter. (Azucena) Section 21, Medical, Dental and Conditional Safety 21.1 First Aid Treatment and ER Assistance 1. Art. 156. Every ER 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 DOLE shall prescribe. Section 1, Rule I, Book IV, IRR’s “ This rule shall apply to all ER’s whether operating for profit or not, including the Government ant GOCC’s, which employ in any workplace 1 or more workers. 2. Art. 161 : It shall be the duty of an ER to provide all the necessary assistance to ensure the adequate and immediate medical and dental attendance and treatment to an injured or sick EE in cases of emergency. 3. The ER is not obliged to provide and spend for the continued or follow-up treatment of the EE unless it has bound itself to do so by contract or established practice or policy. (Alcantara) 21.2 Emergency Medical and Dental Services When and What is Required 1. Describe briefly these free emergency medical, dental services and facilities required to be furnished by the ER?  10 to 50 workers : The services of a first-aider shall be provided who may be one of the workers in the workplace and who has immediate access to the first-aid medicines.

83  51 to 200 workers: Services of a full-time registered nurse shall be provided. However, if the work is nonhazardous, the services of a full-time first-aider may be provided if a nurse is not available.  201 to 300 workers : Services of a full-time registered nurse, a part-time emergency clinic shall be provided regardless of the nature of the undertaking therein. The physician and dentist engaged for such workers shall stay in the premises for at least 2 hours a day. • Where the establishment has more than 1 workshift a day, the required 2 hour stay shall be devoted to the workshift which has the biggest number of workers and they shall, in addition to the requirements under this Rule, be subject to call at anytime during the other workshifts to attend to emergency cases.  301 or more workers : Services of a full-time nurse, a full-time physician, a full-time dentist, a dental clinic, and an infirmary or emergency hospital with one bed capacity for every 100 workers shall be provided. The physician and dentist shall stay in the premises of the workplace for at least 8 hours a day. •

Where the workplace has more than 1 shift per day, they shall be at the workplace during the work-shift which has the biggest number of workers and they shall be subject to call at anytime during the other workshifts to attend to emergency cases.

 Where the undertaking in such workplace is nonhazardous, the ER may engage the services of a part-time physician and part-time dentist who shall have the same responsibilities ass those of the part-time physician and the part-time dentist in the preceding paragraph, and shall engage the services of a full-time nurse.  In all workplaces where there are more than 1 workshift in a day, the ER shall in addition to the requirements under this rule, provide the services of a full-time first-aider for teach workshift. (Sec. 4, Rule I, Book IV, IRR’s) What are considered hazardous work places? [D C M P]  Where the nature of the work exposes the worker to Dangerous environmental elements, contaminations or work conditions.  Stevedoring, construction work, logging, firefighting, mechanized farming and similar work.  Manufacture or handling of explosives and other pyrotechnic products  Where the workers are exposed to heavy or power-driven machinery or equipment or tools.

84  An auto repair shop has 8 EE’s. What medical and dental services or facilities must be furnished by the owner of the latter? Since the establishment employs less than 10 workers, the owner is only obliged to keep in the workplace first aid medicines. When not Required Art. 158 : 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 ER’s establishment and he makes arrangement for the reservation therein of the necessary beds and dental facilities for the use of his EE’s 5 km – urban 25 min – rural 21.3 Administration Art. 165 : (a) The DOLE 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.  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 DOLE and subject to national standards established by the latter. (b) The Secretary of Labor 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 expended exclusively for the administration and enforcement of safety and other labor laws administered by the DOLE. Section 22. EE Classification 22.1 Coverage Section 1, Rule I, Book VI, IRR’s : This Rule shall apply to all establishments and undertakings, whether operated for profit or not, including educational, medical, charitable and religious institutions and organizations, in cases of regular employment with the exception of the Government and its political subdivisions including GOCC’s. 22.2 EE Classification 1. Art. 280 a. Regular EE’s b. Project EE’s c. Casual EE’s

85 d. Seasonal EE’s 2. Art. 281  Probationary EE 3. Others  Contract-fixed period ER Determination 1. What determines whether a certain employment is regular or casual is not the will and words of the ER, much less the procedure of hiring the EE or the manner of paying his salary. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence. (De Leon vs. NLRC) 2. Tucor Industries, a company engaged in moving and storage of foods hired packers and drivers pursuant to employment contracts which provided that the workers were employed on “as-needed” basis and considered “daily-hired”. Are they considered regular EE’s? Yes. Packing and driving activities are usually necessary and desirable in Tucor’s usual business. They are entitled to security of tenure, the provisions of the written agreement to the contrary notwithstanding. (Tucor vs. NLRC) 22.3 Regular EE’s 1. Who are considered regular EE’s? a. Those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER, their employment not being fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement, or seasonal nature and the employment is for the duration of the season. (Art. 280) b. Casual EE’s who have rendered at least 1 year of service is continuous or broken; they are considered regular EE’s with respect to the activities in which they are employed; their employment shall continue while such activity exists. (Id.) c. A probationary EE who is allowed to work after the probationary period. (Art. 281) d. Learners who have been allowed or suffered work during the first 2 months if training is terminated by the ER before the end of the stipulated period through no fault of the learner. (Art. 75) 2. H applied for employment with Holiday Inn and was accepted for “On-the-job training” as telephone operator for 3 weeks. After the completion of the training she was employed on a “probationary basis” for 6 months. Four days before the said

86 period, she was dismissed by the hotel on the ground that she failed to meet the standards of the hotel. Is the dismissal valid? No. At the time of her dismissal, she was already a regular EE since the “on-the-job training” was already her “probationary period.” She was not dropped after that period. Even granting that the probation did not end with the training, there is no reason why that period should not be included in the stipulated 6-month period probation. (Holiday Inn vs. NLRC) 3. L was hired as a component mechanic by a manufacturing firm for a probationary period for 6 months. Management decided not to hire her after the probationary period. After a month, the company again hired L for another 6-month probationary period. After the 2nd 6-month probationary period, she was dismissed. Is L a regular EE? Yes. The nature of her job required her to perform activities which are necessary and desirable in the usual business of her ER. She was also rehired after the probationary employment extended to her. This fact of rehiring negates any claim that she failed to qualify as a regular EE. Successive hirings and firings cannot be resorted to by the ER to avoid obligations imposed by law for the protection and benefit of probationary EE’s. (Octaviano vs. NLRC) 4. J is employed on a probationary period for 3 months. Although the ER was not satisfied with his performance, he is allowed to work after the end of the 3-month period. Has J become a regular EE? Yes. An EE is allowed to work after a probationary period shall be considered a regular EE. (Alcantara) Nature of Work 1. What is the primary standard of determining regular employment? The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the EE in relation to the usual business or trade of the ER. (De Leon vs. NLRC) The connection can be determined by considering the nature of the work performed and its relation to the scheme of a particular business or trade in its entirety. Also, if the EE has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. (Id.) 2. B, was hired by a Buddhist Temple as secretary and interpreter. She also attended personally to some needs of the Head Monk. Is B a regular EE or a domestic helper? B is a regular EE. Her functions were essential and important to the operation and religious function of the temple; they could not be categorized as mere domestic work.

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3. Stevedores were employed by corporation engaged in deep-sea fishing to unload the tuna fish catch from latter’s vessels into refrigerated vans. Their work was intermittent depending on the arrival of fishing vessels. There were also times when the stevedores worked on vessels belonging to other companies. Are the stevedores regular EE’s? Yes. They were engaged to perform activities usually necessary or desirable in the usual business or trade of their ER’s. The activity of catching fish is a continuous process; it cannot be considered as a specific project or a seasonal activity. Their working on other vessels does not militate against the existence of the ER-EE relationship since it is but natural for the worker to seek other employment during the periods of temporary la-off. (RJL Martinez vs. NLRC) 4. An electric cooperative only extended permanent appointments to linemen, secretaries, clerks and electricians after 6 months from the date of their hiring. May the ER treat these workers as regular EE’s only from the date they were extended permanent appointments? No. Their services are usually necessary or desirable in the usual trade or business of the cooperative. (Central Negros Electric vs. NLRC) Hiring Extended Period 1. A company engaged in construction hired carpenters and issued them some notices of employment that they were hired for specific projects and their employment shall be deemed automatically terminated at the completion of the project. However, when the project to which they were assigned were completed, they would be immediately assigned to the next project. Considering that they have been working for a number of years, are they regular EE’s? Yes. They perform activities usually necessary or desirable in the usual business of the company. They are considered “non-project EE’s” of the construction company. (Fegurin vs. NLRC) 2. F, a skilled welder was hired by DM Consunji for several projects wherein he was assigned. There was also evidence that the worker was under obligations to be always available on call by the company and that he could not offer his services to other ER’s. Is he a regular EE? No. F is a project EE. (Fernandez vs. NLRC) Contract to Contract 1. P was hired by a textile firm as a machine operator. P’s employment contract stipulates that the company shall make an annual assessment of his performance and his continued employment shall depend on said evaluation. Is the stipulation valid?

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No. It determines the security of tenure enjoyed by P who is a regular EE. His continued employment is made to depend upon the whims of the ER. (Alcantara) 2. M Co., is engaged in the manufacture of furniture for export. It has regular customers but also receives special orders. It hires “temporary workers” for special orders. These are made to sign temporary contracts. Are these workers considered regular workers? Yes. They are engaged in activities which are usually necessary of desirable in the usual business or trade of the ER. Significantly, the special orders are not seasonal but more or less regular, requiring the continuous services of the “temporary workers.” The temporary employment contracts have little probative value. (Mehitabel Furniture vs. NLRC) 3. M was employed as a carpenter by a company engaged in the concrete structural business. His work involved the making of moulds for bridges. He was never assigned to work outside the plant of the ER. Every 3 months, he was made to fill up and sign an employment contract relating to a particular phase of a work in a specific project. Is M a regular EE? Yes. He was assigned to perform tasks which are usually necessary or desirable in the usual trade or business of the ER. Despite the signing of employment contracts, the work did not end on a project to project basis. He continued to perform the same kind of work throughout his period of employment. (Magante vs. NLRC) 22.4 Project EE’s Who are considered project EE’s?  A project EE is one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the EE or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. (Art. 280) Test of Project EE’s  What is the principal test to determine whether EE’s are “project EE’s” as distinguished from “regular EE’s”? The test is whether or not the project EE’s are assigned to carry out a specific project or undertaking the duration and scope of which are specified at the time the EE’s are engaged for that project. (ALU-TUCP vs. NLRC) Project EE’s 1. PPI, a company providing construction supervision of the Manila Expressway hired R for a term of 24 months. After the expiration of the period, he was hired for another term of 10 months, and then for 19 months. All these were entered during various stages prior to the completion of the construction project. Was R a regular EE of PPI?

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No. He was hired in a specific project or undertaking as a driver. He was a project EE whose employment terminated upon the expiration of his employment contract or upon the completion of the project. (Rada vs. NLRC) 2. A company engaged in the building and repair of vessels hired welders to work in the repair of a specified vessel. Is the employment of the workers considered regular? No. They are project EE’s whose work is co-terminus with the project for which they are hired. (Sandoval Shipyards vs. Leogardo) 3. Consumer Pulse hired field interviewers on specified project basis for a definite period of time. Many of the interviewers worked for several projects. Generally, the contractual employment is not continuous but intermittent, sporadic with long intervals of idle periods in between projects due to lack of work or job contracts. Are the filed interviewers considered regular EE’s? No. The interviewers were hired for specific projects the completion or termination of which are determined at the start of their employment. (Manansag vs. NLRC) 4. A construction firm hired as project EE’s several workers. Instead of being assigned solely to the job sites, they were also made to work as inventory clerk or warehouseman in the company’s central shop. Are they project EE’s? No. Their work did not end upon the completion of a project. They perform their jobs even after a job had been finished. Since they performed tasks vital and indispensable to the efficient administration and completion of the company’s various projects, they are considered regular EE’s. (Capitol Industrial vs. NLRC) Rationale 1. The rationale for this rule is that if a project has already been completed, it would be unjust to require the ER to maintain them in the payroll while they are doing absolutely nothing except waiting until another program begun, if at all. In effect, these stand-by workers would be enjoying the status of a privileged retainers, collecting payments for work not done, to be disbursed by the ER from profits not earned. This is not fair by any standards and can only be lead to a coddling of labor at the expense of management. (De Ocampo vs. NLRC) Implication Project EE’s are not entitled to separation pay as their work was coterminous with the completion of the project. (Sandoval Shipyards vs. Leogardo) 22.5 Casual EE’s

90 1. What is casual employment? An employment is casual when the EE is engaged to perform tasks or activities which are not usually necessary or desirable in the usual business or trade of the ER. (Art. 280) 2. Jai Alai Manila hired a mason and plumber to do renovation work on its building. The work lasted for 11 months. Are the mason and plumbers regular EE’s? No. They were engaged for a specific project or undertaking. They are casual EE’s and as such do not enjoy the security of tenure since they work for only 11 months. (Philippine Jai Alai vs. Clave) 22.6 Seasonal EE’s 1. Agricultural workers were hired by the owners of a rice and sugar land to perform particular phases of agricultural work necessary in rice production, after which they were free to render services. Considering that they rendered services for many years, in their employment, though seasonal, deemed regular? No. They are considered project or seasonal EE’s .their employment legally ends upon the completion of the project or the season. (Mercado vs. NLRC) 22.7 Contract-Fixed Period 1. A was engaged as athletic director by Brent School for a fixed term of 5 years. She was not rehired after that term. Is she a regular EE? No. A’s employment was for a fixed period, her employment ended. It does not necessarily follow that where the duties of the EE’s entail activities which are usually necessary or desirable in the usual trade or business of the ER, the parties should not be forbidden to stipulate any period of time for these activities. There is nothing essentially contradictory between a definite period of employment and the nature of the EE’s duties. (Brent vs. Zamora) 2. Give the criteria under the fixed period contracts of employment cannot be said to be in circumvention of the worker’s security of tenure.  The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the EE and absent any other circumstances vitiating his consent; or  It satisfactorily appears that the ER and EE dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. (Pantranco vs. NLRC)  When such stipulations were not designed to circumvent the laws on security of tenure. (Brent vs. Zamora) 3. C was engaged by a trucking company to work as a truck driver for a period of six months. It appears that all drivers of the company were hired on fixed contract basis. The company

91 merely filled in the blanks in a mimeographed form with the corresponding driver’s data. After the 6-month period, C’s services were terminated. Was this a valid termination? No. The contract for a fixed period was a clever scheme to prevent its EE’s from becoming regular EE’s. he should be considered a regular EE. (Cielo vs. NLRC) 4. 15 years after his dismissal for cause. A was re-hired as a driver for 1 month. Did such re-hiring result in his reacquisition of his former regular status? No. The contract specifically provided for a fixed term. (Pantranco vs. NLRC) 22.8 Probationary EE’s 1. What is a probationary employment? It is employment for a specified period generally no exceeding 6 months for the purpose of determining whether the EE can qualify for regular employment in accordance with reasonable standards prescribed by the ER. (Alcantara) 2. What is the probationary period for apprentices and learners?  Apprentices : The probationary period in the apprenticeship may not be under probationary employment in the company where he trained. In another company, however, the probationary period for him would be 6 months.  Learners : If the job is learnable – can be learned within 3 months – then the probationary period is 3 months or less. (Policy Instructions No.1) Purpose Justify the rights of the ER to fix a probationary period of employment? The ER has the right to select his EE’s that the ER may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. (Grand Motors vs. Minister of Labor) A probationary appointment is made to afford the ER the opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient EE. (International Catholic Migration Commission vs. NLRC) It is necessary for the probationary EE to undergo a period of probation to test his qualifications, skills and experience. (Grand Motors) Duration/Exception May a company impose a longer probationary period than 6 months? Yes. Generally, the probationary period of employment is limited to 6 months. The exception to this general rule is when the parties to an employment contract may agree otherwise, such as when the same is established by company policy or when the same is required by the nature of the work to be performed by the EE i.e. where a probationary period was set for 18 months, especially where the EE must learn a

92 particular kind of work such as selling or when the job requires certain qualifications, skills, experience or training. (Buiser or Leogardo) Extension Contract Effect EE’s D was hired on probation by Mariwasa. Upon expiration of the probationary period, he was informed by the ER that his work proved unsatisfactory. To give him a chance to improve his performance and to qualify for her regular employment, Mariwasa extended, with his written conformity, his probationary period for another 3 months. His performance did not improve, and his services was terminated. Did he become a regular EE? NO. By voluntary agreeing to the extension of the original probationary period, D, in effect, waived any benefit attaching to the completion of the said period. (Mariwasa vs. Leogardo) Absorbed EE’s Private respondents could not be considered probationary EE’s because they were already well-trained in their respective positions. (Cebu Stevedoring vs. Regional Director) Termination and Salary Award to the private respondent of the salary for the unexpired 3month portion of her 6-month probationary employment who was validly terminated during her probationary employment is unjust and oppressive to the ER. (International Catholic Immigration Commission vs. NLRC) Rule Private School Teacher 1. Give the legal requisites for a private school teacher to acquire permanent employment and security of tenure? These requisites are: a. The teacher is a full time teacher. b. The teacher must have rendered 3 consecutive years of service. c. Such service must have been satisfactory. (Cagayan Capitol College vs. NLRC) 2. At the time of her retirement, A has been employed as school teacher for 22 years. After 3 years from her retirement, she was rehired by the school teacher under contract which was renewable yearly. After 2 years of continuous satisfactory performance, her contract was not renewed. Was the nonrenewal violative of her security of tenure? Yes. When she was rehired, she did not have to undergo a probationary employment as her teaching competence had already been tried and tested during her 22 years of service. she could not be discharged solely on account of the expiration of her 2nd annual contract. She could not only be dismissed for cause and with due process. (St. Theresita’s Academy vs. NLRC)

93 3. A teacher was hired by a private school on a yearly basis. Before the expiration of the 2nd yearly contract, the school refused to renew her contract on the ground that her teaching performance was not satisfactory. Is the refusal justified? Yes. The positions were temporary in nature and her employment was for a definite period. Even assuming that she was on probationary employment, the probationary period for teachers is 3 years. (Biboso vs. Victoria Milling) Section 23: Termination and Employment 23.1 Introduction: EE’s Security of Tenure Coverage 1. Art. 278 : The provisions of this Title shall apply to all establishments or undertakings, whether for profit or not. 2. Confidential and managerial are also entitled to security of tenure, fair standards of employment and the protection of labor laws. (Inter-Orient Maritime vs. NLRC) Probationary and contractual EE’s enjoy security of tenure but only to a limited extent. That is, they remained secure in their employment during the period of time their respective contracts remained in effect. (Labajo vs. Alejandro) 3. Pakiao workers who by the nature of their work are considered regular workers enjoy security of tenure. (Dy Keh Beng vs. ILMU) However, if the circumstances indicate that they are in reality independent contractors, then they do not enjoy security of tenure. (Alcantara) Security of Tenure 1. What is meant by the “security of tenure’? of an EE? Security of tenure of an EE is his right against unjust and arbitrary dismissal. He cannot be deprived of his work, which is property in the constitutional sense, without a just cause and without the benefit of hearing. (Alcantara) 2. Is there an express constitutional guarantee of the security of tenure of an EE? Yes. Art. XIII, Sec. 3, Const. (Rance vs. NLRC) Nature of Rights Termination of employment is not anymore a mere cessation or severance of contractual relationship but an economic phenomenon affecting members of the family. This explains why under the board principles of social justice the dismissal of EE’s is adequately protected by the laws of the state. (Alhambra vs. NLRC) However, the worker’s right to security of tenure is not an absolute right for the law provides that he may be dismissed for cause. The law in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the ER. (MERALCO vs. NLRC)

94 Rationale Regulation The right of ER to freely select or discharge his EE’s is regulated by the State, because the preservation of the lives of citizens is a basic duty of the State, more vital than the preservation of the corporate profit. (Llosa-Tan vs. Silahis) 23.2 Management Rights and the Just Cause of Termination Art. 282 : An ER may terminate an employment for any of the following casues: 1. Serious misconduct or willful disobedience by the ER of the lawful orders of his ER or representative in connection with his work; 2. Gross and habitual Neglect by the EE of his duties; 3. Fraud or willful breach by the EE of the Trust reposed in him by his ER or duly authorized representative; 4. Commission of a crime or offense by the EE against a. the person of his ER or b. any immediate member of his family or c. his duly authorized representative and 5. Analogous cases. Management Rights  The following are management rights with respect to EE”s: 1. Right to manage people in general : Except as limited by special laws, an ER is free to regulate, according to his own discretion and judgment, all aspects of employment. (San Miguel vs. Ople) 2. Right to just share in the fruits of production : Every business enterprise endeavors to increase its profits. In the process it may adopt or devise means designed toward the goal. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. (Id.) 3. Right to discipline : The ER has the prerogative to instill discipline in his EE’s and to impose reasonable penalties, including dismissal, on erring EE’s pursuant to company rules and regulations. (San Miguel vs. NLRC) 4. Right to transfer EE’s : It is management prerogative to transfer an EE from one office to another within the business establishment, provided there is no demotion in rank or diminution of his salary, benefits and other privileges. (Yuco Chemical vs. Minisrty of Labor) An EE’s right to security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful. (PTTC vs. NLRC) The managerial prerogative, however, to transfer personnel, must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. It cannot be used as a subterfuge by the ER to rid himself of an undesirable worker. Nor where the real reason is to penalize an EE for his

95 union activities and thereby defeat his right to self-organization. (Id.) 5. The right to demote : It is management prerogative to tranfer, demote, discipline and even dismiss an EE to protect its business, provided it is not tainted with unfair labor practice (Petrophil vs. NLRC) 6. Right to dismiss : The right of the company to dismiss its EE’s is a measure of self-protection. (Reyes vs. Minister of Labor) An ER cannot legally be compelled to continue with the employment of a person who admittedly was guilty of malfeasance towards his ER, and whose continuance in the service of the latter is patently inimical to his interests. (Manila Trading vs. Zulueta) Just Causes of Termination May an ER dismiss an EE who enjoys security of tenure? Yes. Security of tenure does not guarantee perpetual employment. If there is a just or authorized cause the ER may terminate the services of an EE; the former cannot be legally compelled to have in its employ s person whose continued employment is patently inimical to its interest. (Alcantara) A. JUST CAUSE : SERIOUS MISCONDUCT 1. What is serious misconduct? Misconduct is improper or wrong conduct/ it is the transgression of some established and definitive rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious must be of such a grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the EE’s work to constitute just cause for its separation. 2. Examples of serious misconduct : a. EE utters obscene, insulting or offensive words against a superior (Asian Design vs. Deputy Minister of Labor) or challenging a superior officer to a fistfight. (Luzon Stevedoring vs. CIR) However, 2 other later cases ruled that the penalty of termination is extreme and excessive and is not commensurate with the acts committed. (Maranao Hotel vs. CA and Mary Johnston Hospital vs. NLRC) The controlling factor is the circumstances surrounding the willful misconduct. (Alcantara) b. Serious breach of company rules by allowing 2 security guards to come inside the Security Office, drinking and having sex with one of the guards, although both of them are married. (Stanford vs. NLRC) c. As a general rule, immorality does not justify a discharge. But when the EE holds a responsible position and has under him a good number of men, the EE must set a good example for his men to follow. Thus, when he got a young

96 concubine and drove away the members of his family from the conjugal home, such dismissal is justified. (Sanchez vs. Ang Tibay) d. Sleeping in post, gross insubordination, dereliction of duty and challenging superior officers to a fight committed by a security guard. (Luzon Stevedoring vs. CIR) e. Seaman’s assault with a knife of a member of the ship’s crew. (Haverton vs. NLRC) f. Intoxication is such a misconduct as will justify separation from employment, where such intoxication interferes with the employment. (Azucena) g. Sexual harassment by a managerial EE of one of his subordinates. (Villarama vs. NLRC) h. Authorship of a manifesto which ridiculed the officers of a school and demanded their removal, and which disrupted the good order and decorum in the school, when such charges in the manifesto are found to be not true. (St. Mary’s College vs. NLRC) i. Cheating a customer. (PLDT vs. NLRC) 3. What are examples of misconduct which does not warrant dismissal? a. Fistcuffs between two EE’s as a result of mere private matter between them. (Aris vs. NLRC) b. Vending, soliciting, and engaging in usurious activities. (Pacific Products) c. Borrowing money from a patient which the EE later paid back. (Makati Medical Center vs. NLRC) However, when there is use for a trust relationship as leverage for borrowing money, the act becomes serious misconduct. (Pearl S. Buck Foundation vs. NLRC) d. Teacher falling in love with student provided the teacher did not take advantage of her position to court her student. (Chua-Qua vs. Clave) B. JUST CAUSE : WILLFUL DISOBEDIENCE 1. What are the requisites in order that willful disobedience may constitute a just cause for terminating employment?  The orders, regulations, instructions of the ER or his representative must be: a. Reasonable and lawful – has reference not only to the kind and character of directions, but also the manner in which they are made. b. Sufficiently known to the EE. c. In connection with the duties which the EE has been engaged to discharge.

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 The ER’s conduct must have been willful or intentional, willfulness being characterized by a wrongful and perverse mental attitude rendering the EE’s act inconsistent with proper subordination. (Azucena) 2. Not every case of insubordination or willful disobedience by an EE of a lawful work-connected order of the ER or its representatives is reasonably penalized with dismissal. There must be a reasonable proportionality between the offense and the penalty imposed therefor. (Gold City vs. NLRC) Past infractions, to which the EE was already meted out disciplinary measures cannot be used as a justification for EE’s dismissal from service of the current infraction does not suffice as a ground for just termination. (Filipino vs. Ople) 3. M, an EE of Tritran was told by the personnel manager to see right away the president to apologize for his past misdeeds. He was dismissed because he failed to see the company president. Is the dismissal justified? No. The directive to see the company president was neither reasonable nor one connected with his duties. (Mancho vs. NLRC) 4. Examples of willful disobedience :  Violation of a rule which prohibits EE’s from using company vehicles for private purposes without authority from management and stubborn refusal to attend a grievance conference to discuss the violation. (Soco vs. Mercantile Corp.)  Willful violation of rules and regulations designed for the safety of laborers i. e. smoking by a painter in the painting booth. (Northern Motors vs. NLU)  Allowing a customer to pass thru the exit gate without paying for the work done on his car, despite clear instructions to the contrary, (Manila Trading vs. Zulueta)  Act of gambling if it is penalized under company rules with dismissal. (Dimalanta vs. Secretary of Labor)  Failure to comply with reportorial requirements in the sales policies. (GTE vs. Sanchez)  N, driver refused to drive EE’s to Makati head office to collect their profit shares despite repeated orders made by the vehicle supervisor and the officer-in-charge. (Nuez vs. NLRC) In this case, even if he was employed for 19 years, and this was his 1st offense, no separation pay, on the basis of compassion was given to the EE.  B was employed as Chief Dietician of a hospital. She refused to follow the instructions of the Board of Trustees of the hospital to buy from a food supplier who was willing

98 to give a discount on food purchases. Because of this, B was dismissed. Is the dismissal justified? Yes. Her acts constitute serious defiance of the lawful orders of her superiors with respect to matters involving her duties. They are also sufficient basis for her superiors to lose their trust and confidence in her. (St. Luke’s vs. Minister of Labor) 5. D, an EE of Northwest Airlines refused a promotion. Does such refusal constitute insubordination warranting dismissal? No. There is no law which compels an EE to accept a promotion. He was exercising a right and he cannot be punished for it as quijure suo utitor neminem laedit. He who uses his own legal right injures no one. (Dosch vs. NLRC) 6. G, a press-helper of a printing company drank beer outside company premises after his tour of duty. He later went to the company’s canteen to eat lunch. He was dismissed based on the company policy prohibiting “drinking in the company premises or coming to work under the influence of alcohol.” Is the dismissal justified? No. He did not drink beer in the company premises; neither did he report for work under the influence of liquor because it was not their tour of duty then. (Catalan vs. Genilo) C. JUST CAUSE : NEGLECT OF DUTIES 1. What is the rule on neglect of duties to constitute a just cause for termination? In order to constitute a just cause for EE’s dismissal, the neglect of duties must not only be gross but also habitual . Gross neglect means an absence of that diligence that an ordinarily prudent man would use in his own affairs, unless the contract of employment requires a higher degree of care. It is sufficient that the gross and habitual neglect by the EE tends to prejudice the ER’s interest since it would be unreasonable to require the ER to wait until he is materially injured before removing the cause of the impending evil. (DOLE Manual) 2. Examples of gross negligence :  Failure to properly estimate the fair market value of a property to be used for a loan by an appraiser. (Associated Bank vs. NLRC)  Abandonment. To constitute abandonment, two elements must concur: a. The failure to report for work or absence without valid or justifiable reason, and b. A clear intention to sever the ER-EE relationship, with the second element as the more determinative factor and being manifested by overt acts. (Labor vs. NLRC)  Habitual tardiness and absenteeism (Sajonas vs. NLRC)

99  Numerous unauthorized absences. (Cando vs. NLRC) 3. S, working as a lobby boy of a movie theater, was pursuant to standard management practice transferred from the day shift where he had been for quite some time to the night shift. He asked that the change be recalled but his request was denied. As he disliked the new assignment, he did not report for work. The company dismissed him due to abandonment. Is the dismissal jusitified? Yes. There was nothing unusual or discriminatory in his change of assignment because the rotation was standard company practice. (Castillo vs. CIR) 4. Due to unauthorized absences, M, employed with the company for 18 years, was transferred from the Fire Tender Section to the Pan Grinding Section. He however did not report to his new section, on the ground that the transfer was unreasonable and amounted to demotion. The company contends that his failure to work despite repeated notices constitutes abandonment and a ground for his dismissal. Is this valid? The penalty of dismissal is out of proportion to the offense committed considering the number of years of M’s employment. A 1 year suspension would be sufficient. (Meracap vs. International Ceramics) 5. A, met a work-connected accident. When he was completely recovered, he failed to report to work despite the certification of 5 doctors that he could resume his normal work. He was dismissed pursuant to company [policy that an EE who incurs without valid reason 6 or more absences is subject to dismissal. Is the dismissal valid? Yes. He was guilty of serious neglect of his duties. (Phil. Geothermal vs. NLRC) D. JUST CAUSE : DISHONESTY, LOSS OF CONFIDENCE 1. What kind of fraud justifies as just termination? Fraud has been defined as any act, omission, or concealment which involves a breach of a legal duty, trust or confidence justly reposed and is injurious to another. To constitute a just cause for terminating the EE’s services, the fraud must be committed against the ER, or representative and in connection with the EE’s work. Thus, fraud committed by an EE against 3 rd persons not in connection with his work and which does not in any way involve his ER not a ground for the dismissal of the EE. (DOLE, Manual) 2. Example of Dishonesty  Falsification of time cards. (SMC vs. NLRC)  Theft of company property. (Firestone vs. Lariosa) However, the penalty must be proportional to the offense committed i.e. EE should not be dismissed for theft of used motor oil of minimal quantity if the EE has no previous record. (Gelmart vs. NLRC); EE should not be dismissed for theft of

100 lead pipe to be used for personal use if the EE has no previous record. (PAL vs. PALEA); president of union should not be dismissed for leading an “unexpected strike” which lasted for 2 days and which resulted in a loss to the company of only P3,000.00 (Sampang vs. Inciong); counter – clerk of PLDT should not be dismissed for tampering with a phone bill where the worth of the tampering only amounted to P30.00 and it was the first offense in 7 years (PTTC vs. NLRC). Note that the length of time the EE is employed and the fact that it was the EE’s 1st offense is an important factor in many of these cases wherein the penalty of dismissal was deemed to harsh. Where a penalty less punitive would suffice, whatever missteps may be committed by the worker should not be visited with the supreme penalty of dismissal. (Almira vs. BF Goodrich)  Circulating fake tickets. (Ibarrientos vs. NLRC) 3. Explain loss of confidence as a ground for just termination : The basic premise for dismissal on the ground of loss of confidence is that the EE concerned holds a position of trust and confidence. (Quezon Electric vs. NLRC) Mere existence of basis for believing that the EE has breached the trust of ER is sufficient and does not require proof beyond reasonable doubt. (Kwikway vs. NLRC) However, to constitute as valid ground, it must be substantial and not arbitrary, and must be founded on clearly established facts sufficient to warrant the EE’s separation from work. (Labor vs. NLRC) 4. Examples of loss of confidence as ground for just termination :  GM of hotel found to have anti-Filipino tendencies, who did not perform his functions properly and who requisitioned wines for personal use. (Riker vs. Ople)  Director who represented to the company that machinery brought were brand-new when in fact they were secondhand. (Pepsico vs. NLRC)  Bank teller’s act allowing encashment of checks over the counter without verification of drawer’s signature. (Allied Bank vs. Castro)  Violation of the company sales policy of distributing its goods to as many customers as possible by a salesman who made it appear that they were sold to many customers. (Filipro vs. NLRC)  Engaging in business other than that of ER, if the activities tend to injure or endanger the business of the ER or the EE is unable to give time and attention to the discharge of his duties. (Azucena)  Competing with ER’s business. (Azucena)

101  Repeated shortages incurred by a bill collector, although resulting in no material damage as the amounts were returned. (Piedad vs. Lanao del Norte Electric Cooperative) 5. 5 EE’s of an electric cooperative were dismissed for loss of confidence when they were caught pilfering electric current through tampered meters in their houses. Considering that the EE’s held no position involving trust and confidence, is loss of confidence a ground to dismiss them? No. The offense they committed is not work-related. The pilferage could have been effected even if they were not EE’s of the cooperative. (Quezon Electric Cooperative vs. NLRC) Compare this with the case of Flores vs. NLRC, where the same act constituted a ground of serious misconduct and breach of trust. 6. J, a checker, was dismissed by San Miguel for breach of trust due to possible involvement in a burglary incident. The dismissal was effected despite J’s acquittal in a criminal case for the said offense. Is the dismissal lawful? No. The termination of rank and file EE’s due to breach of trust requires proof of actual involvement in the acts constituting the offense. (SMC vs. NLRC) E. JUST CAUSE : COMMISSION OF A CRIME OR OFFENSE 1. Another just cause of terminating an employment is the EE’s commission of a crime or offense against the person of his ER or against any immediate member of the ER’s family. The immediate members of the family referred to are limited to the spouse, ascendants, descendants, or legitimate, natural, or adopted brothers or sisters of the ER or of his relative by infinity in the same degrees, and those by consanguinity within the 4th degree. (Azucena) 2. Conviction or prosecution is not required, to warrant his dismissal by his ER and the fact that a criminal complaint against the EE has been dropped by the city fiscal as not binding and conclusive upon the tribunal. (Starlite vs. NLRC) F. ANALOGOUS CASES 1. To be considered analogous to the just cases enumerated, the cause must be due to the voluntary and/or willful act or omission of the EE. (Nedura vs. Benguet Consolidated) 2. Examples of Analogous Cases :  Unreasonable behavior and unpleasant deportment in dealing with the people she closely works with in the course of her employment, is analogous to the other “just causes” enumerated under the Labor Code. (Cathedral School vs. NLRC) G. OTHERS

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1. Other examples of just termination:  Courtesy resignation (Batongbacal vs. Associated Bank)  Faculty members of a school whose appointments as department heads are terminated. (La Sallette vs. NLRC) 23.3 Authorized Cases of Termination Art. 283 : The ER may also terminate the employment of the EE due to: 1. the Installation of labor saving device. 2. redundancy 3. retrenchment to prevent losses. 4. closing or cessation of operation of the establishment or undertaking. Art. 284: EE who has been found to be suffering from and Disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-EE’s. Introduction of Labor saving Devices Redundancy Redundancy exists where the services of an EE are in excess of what is reasonably demanded by the actual requirements of the enterprise; a position is redundant when it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors such as: 1. the overthrowing of workers 2. decreased volume of business or 3. the dropping of a particular product line or 4. service activity previously manufactured or undertaken by the enterprise. Redundancy is an ER’s personnel force, however does not necessarily or even ordinarily refer to duplication of work. That no other person was holding the same position which the dismissed EE held prior to the termination of his services does not show that his position had not become redundant. (Escareal vs. NLRC) Retrenchment What are the general standards to determine whether the retrenchment is valid? The general standards are the following: 1. The losses expected should be substantial and not merely de minimis in extent. 2. The substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the ER. 3. It must be reasonably necessary and likely to prevent the expected losses. 4. The ER should have taken other measures prior or parallel to the retrenchment to forestall losses. I. e. ; cut other costs other than labor costs.

103 5. Alleged losses if already realized, and the expected minimum losses sought to be forestalled, must be proved by sufficient and convincing evidence. (Lopez Sugar vs. FFW) Distinguish redundancy from retrenchment? Redundancy means that the position of the EE has become superfluous, an excess over what is actually needed, even if the business reduction or reverses. (Azucena) Closure of Business 1. The burden of proving that the termination was for a valid or authorized cause shall rest on the ER. (Indino vs. NLRC) 2. Is the ER required to pay separation pay for closure of business due to the serious business losses? No. The cases of State Investment House vs. CA, Mendoza vs. NLRC, and the Mindanao Terminal vs. Minister of Labor provide that the rule in Article 283 with respect to separation pay applies only to closure not due to business reverses. (Azucena) 3. What are the requirements for a valid cessation of business not due to business reverses?  Service of a written notice to the EE’s and to the DOLE at least 1 month before the intended date thereof.  Cessation or withdrawal from business operations must be bona fide in character.  Payment to the EE’s termination pay amounting to at least ½ month pay, for every year of service, or 1 month pay, whichever is higher. (ALU vs. NLRC) Ailment or Disease If the EE suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his coEE’s, the ER shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of 6 months even with proper medical treatment. (Sec. 8, Rule 1, Book VI, IRR’s) A medical certificate issued by the company’s own physician, is not a “competent public health authority.” 23.4 Procedure to Terminate Employment Two Facets of Valid Termination 1. The legality of the act of dismissal which constitutes discharge with just cause; and 2. The legality in the manner of dismissal with due process. (Shoemart vs. NLRC) Due Process : Notice The law requires that the ER must furnish the worker sought to be dismissed with two written notices before termination of employment can be legally effected:

104 1. Notice which apprises the EE of the particular acts or omissions for which his dismissal is sought; and 2. Subsequent notice which informs the EE of the ER’s decision to dismiss him. Failure to comply with the requirements taints the dismissal with illegality. (Pepsi-Cola vs. NLRC) Opportunity to be Heard 1. An EE must be given ample opportunity prior to his dismissal to adequately prepare for his defense. By “ample opportunity” is meant every kind of assistance that management must be accord to the EE to enable him to prepare adequately for his defense. Under the rules, indeed workers may be provided with a representative. (Ruffy vs. NLRC) The requirement of hearing affords the EE the opportunity to answer his ER’s charges against him and accordingly to defend himself therefrom before dismissal is effected. (Salaw vs. NLRC) 2. No hearing is required if the grounds for dismissal or termination of service does not relate to blameworthy act or omission on the part of the EE i.e. retrenchment or redundancy. (Witshire vs. NLRC). 3. W was called to the Office of the General Manager and was told that she was being charged with discourtesy and insubordination. During that time, she was also called to explain her side. As she could not give an explanation, she was dismissed. Is the dismissal valid? No. She was denied procedural due process. She was not given ample opportunity to be heard and to defend herself. 4. 36 conductors of a bus were dismissed after investigations conducted by the Jago and the fiscal found out that they defrauded the company. Is the dismissal violative of due process? No. For the company to conduct its own investigation is a duplication of the JAGO and the city fiscal’s investigation. (BLTB vs. NLRC) 5. D was dismissed by his ER based on the preliminary investigation of the city fiscal which relied on an affidavit of an accused-turned state witness. Is this violative of due process? Yes. As compared to the BLTB case, the findings of the city fiscal were based solely on the affidavit of the accused-turned state witness. The substantial evidence requirement is not present. (China City Restaurant vs. NLRC) 6. S was dismissed by his ER due to his well documented involvement in pilferage. Prior to dismissal, he was called to a meeting of all delivery personnel to discuss pilferage incidents. He denied involvement therein. Later he was dismissed. Is the dismissal violative of due process? Yes. The meeting called by the ER does not qualify as the hearing required by law. (Segismundo vs. Montalvo)

105

Right to Counsel The right to counsel is a basic requirement of substantive due process. The right to counsel cannot be waived except in writing and in the presence of counsel. (Salaw vs. NLRC) Burden of Proof Art. 277 : The burden of proving that the termination was for a valid or authorized cause shall rest on the ER. Degree of Proof In administrative or quasi-judicial proceedings, proof beyond reasonable doubt is not required as basis for a judgment of the legality of an ER’s dismissal of an EE, nor even preponderance of evidenced, substantial evidence being sufficient. (MERALCO vs. NLRC) Condonation Having condoned the misconduct of the EE and pardoned the latter, he is deemed to have lost or waived his right to insist on the ER’s acts as a ground for dismissal. (Azucena) Dismissal for Cause but Without Due Process A sanction, in the form of damages, must be imposed upon the ER for failure to give a formal notice and conduct an investigation as required by law before dismissing the EE from employment. (Wenphil vs. NLRC) Rules – Managerial EE’s and Rank and File EE’s As a general rule, ER’s are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those who, while not of similar rank, perform functions which by their nature require the ER’s full trust and confidence. This must be distinguished from the case of ordinary rank-and-file EE’s whose termination on the basis of these same grounds require a higher proof of involvement in the events in question; mere uncorroborated assertions and accusations by the ER will not suffice. (Coca-Cola vs. NLRC) Offer to Reinstate The fact that his ER latter made an offer to re-employ him did not cure the vice of his earlier arbitrary dismissal. (Ranara vs. NLRC) Prescription A complaint founded on illegal dismissal is not an ordinary money claim but for reinstatement. The action may be brought within 4 years from dismissal pursuant to Art. 1146 of the NCC. (New Imus Lumber vs. NLRC) 23.5 Consequences of Termination

106 Separation Pay A. General Rule If there is valid cause to terminate an employment, no separation pay need be paid. (Sec. 7, Rule I, Book VI, IRR’s) B. Exceptions 1. Art. 283 :  Installation of labor saving devices and redundancy : 1 month or 1 month pay for every year of service, whichever is higher.  Retrenchment to prevent losses and closure or cessation of operation or establishment or undertaking not due to serious business losses or financial reverses : 1 month pay or ½ month pay for every year of service, which ever is higher. 2. Art. 284 :  Disease : 1 month salary or ½ month salary for every year of service, whichever is higher. 3. Even if an EE resigns, he shall be given a separation pay if there is a company policy to that effect. (Philoil vs. Ministry of Labor) 4. Discerning compassion Doctrine: Separation pay shall be allowed as a measure of social justice for instances where the EE is validly dismissed for causes other than serious misconduct or those reflecting on his moral character i.e. A was found to have demanded and received money in consideration for promise to facilitate approval of telephone line application. (Nasipit Lumber vs. NLRC) 5. Antipathy and Antagonism Reinstatement is no Longer Possible : Strained relations in order that it may justify award of separation pay in lieu of reinstatement with backwages, should be such, that they are so compelling and so serious in character, that the continued employment has become inconsistent with peace and tranquility which is an ideal atmosphere in every workplace. (Sibal vs. Notre Dame) This is particularly true when the position the EE is occupying is a position involving trust and confidence. (Alcantara) C. COMPUTATION of SEPARATION PAY Includes not just the basic salary but also the regular allowances the EE has been receiving. (Planters Products vs. NLRC) However, commissions are not included in such base figure. (Soriano vs. NLRC) D. EFFECT- RECEIPT EE’s who received their separation pay are not barred from contesting the legality of their dismissal. The acceptance of those would not amount to estoppel. (San Miguel vs. Javate) Backwages

107 1. Backwages in general are granted on grounds of equity which a worker has lost due to his illegal dismissal. (Torillo vs. Leogrardo) As a general rule, an EE is entitled to backwages only where his dismissal is due to the unlawful act of the ER or to the latter’s bad faith. (Reyes vs. Minister of Labor) While generally an order of reinstatement carries with it an award of backwages, the court may not only mitigate, but also absolve the ER from liability fro backwages where good faith is evident. (Durabilt vs. NLRC) 2. Differentiate backwages from separation pay? Separation pay is the amount that an EE receives at the time of his severance from the service and is designed to provide the EE with the “wherewithal during the period that he is looking for another employment.” (Torillo vs. Leogardo) Backwages represent compensation that should be earned but not controlled because of the unjust dismissal. (Lim vs. NLRC) The basis of computing the two are different, the 1st being usually the length of the EE’s service and the 2nd the actual period when he was lawfully prevented from working. (Id.) A. COMPUTATION OF BACKWAGES 1. Art. 279 : An EE who is unjustly dismissed from work shall be entitled to full backwages, inclusive of allowances, and to his other benefits or their monetary equivalents computed from the time his compensation was withheld from him up to the time of his actual reinstatement. 2. The effects of extraordinary inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities. (Lantion vs. GAUF) Reinstatement 1. Reinstatement is a restoration to a state which one has been removed or separated. It is the turn to the position from which he was removed and assuming again the functions of the office already held. Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position more or less of a similar nature as the one previously occupied by EE’ (NATU vs. Secretary of Labor) 2. An ER has 2 options in order for him to comply with an order of reinstatement, which is immediately executory, even pending appeal, firstly, he can admit the dismissed EE back worth under the same terms and conditions prevailing prior to his dismissal or separation or to a substantially equivalent position if the former position is already filled up. Secondly, he can reinstate the EE merely in the payroll. (Medina vs. CBS) 3. The decision of the labor arbiter reinstating a dismissed EE is immediately executory even while the case is brought up on appeal. (Art. 223) In authorizing this, the law itself has laid down a compassionate policy which once more vivifies and enhances the provisions of the Constitution. (Aria vs. NLRC)

108 4. Reinstatement is not self-executing. Payroll reinstatement or actual reinstatement needs the issuance of a writ of execution. (Maranao Hotel vs. NLRC) 5. What if reinstatement is not prayed for in the case before the labor arbiter. Is the labor arbiter allowed to grant reinstatement? No. The EE will not be reinstated if he did not pray for reinstatement. (Labor vs. NLRC) But an earlier case, (General Baptist Colloge vs. NLRC) says that EE is entitled to reinstatement although he failed to specifically pray for the same. The Labor case is a later case. 6. After a finding that the dismissal of G, the manager of Dunkin Donuts violated procedural due process. G asked that he be reinstated. The company refused on the ground of loss of confidence of G. Is the refusal valid? Yes. G held a sensitive position. The case left both parties with less than full trust and faith in each other. He should be paid severance compensation in lieu of reinstatement. (Golden Donuts vs. NLRC) 23.6 Termination by EE and Suspension of Operation Termination by EE – Just Causes Art. 285 : An EE may put an end to the relationship without serving any notice on the ER for any of the following just causes: 1. Serious insults by the ER and or his representative on the honor and person of the EE; 2. Ihuman and unbreakable Treatment accorded the EE by the ER or his representative; 3. Commission of a crime or offense or his representative against • the person of the EE • or any immediate members of his family, and • Analogous cases. Without Just Cause – Requisites Art. 285(a) : An EE may terminate without just cause the ER-EE relationship by serving a written notice on the ER at least 1 month in advance. The ER upon whom no such notice has been served may hold the EE liable for damages. A. RESIGNATION Resignation is a voluntary act of an EE who “finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, then he has no other choice but to disassociate himself from his employment.” The ER has no control over resignation and so, in order to ensure that no disruption of work would be involved by reason of resignation. This practice has been recognized because “every business enterprise endeavors to increase its profits by adopting a device or means designed towards that goal. Resignation once accepted and being the sole act of the EE may not be withdrawn without the consent of the ER. ( Intertrod Maritime vs. NLRC)

109 B. CONSTRUCTIVE DISCHARGE 1. A constructive discharge is a quitting because continued employment is rendered impossible, unreasonable or unlikely; as, an offer involving a demotion in rank and diminution in pay. (Philippine Japan Active Carbon vs. NLRC) This is not a case of voluntary resignation. It is in the nature of a contrivance to effect to dismissal without cause. (Rizal Memorial vs. NLRC) 2. Z was hired as a production recorder by a tobacco company. After 14 years of occupying the position, she was demoted to picker by reason of inefficiency due to alleged frequent mistakes in her report. Z refused to report for work and filed a complaint for illegal dismissal. Was the dismissal justified? No. The management based its action merely on communications between officers of the company. She was not notified in advance of the company’s actions. The demotion done in bad faith constitute constructive dismissal. Suspension of Operations 1. Art. 286 : The bona fide suspension of the operation of a business or undertaking for a period not exceeding 6 months, or the fulfillment by the EE of a military or civic duty shall not terminate employment. In all such cases, the ER shall reinstate the EE to his former position without loss of seniority rights if he indicates his desire to resume his work not later than 1 month from the resumption of operations of his ER or from his relief from the military or civic duty. 2. It is settled that when the bona fide suspension of operations of a business undertaking exceed 6 months, then the worker’s employment shall be deemed terminated. (Lucky Textile vs. NLRC) Section 24. Retirement Art. 287 : Any EE may be retired upon reaching the retirement age established in the CBA or other applicable employment contract. In case of retirement, the EE shall be entitled to receive such retirement benefits as he may have earned under existing laws and any CBA agreement and other agreements: Provided, however, That an EE’s retirement benefits under any CBA and other agreements shall not be less than those provided therein. In the absence of a retirement plan or agreement providing for retirement benefits of EE’s in the establishment, an EE upon reaching the age of 60 years or more, but not beyond 65 years which is hereby declared the compulsory retirement age, who has served at least 5 years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least ½ month salary for every year of service, a fraction of at least 6 months being considered as 1 whole year. Unless the parties provide for broader inclusions, the term ½ month salary shall mean 15 days plus 1/12th of the 13th month pay and

110 the cash equivalent of not more than 5 days of service incentive leaves. Retail, service and agricultural establishments or operations employing not more than 10 EE’s or workers are exempted from the coverage of this provision. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Art. 288 of this Code. Obligation 1. The law does not impose any obligation upon ER’s to set up a retirement scheme for their EE’s over and above that already established under existing laws. (Llora Motors vs. Drilon) 2. Entitlement of EE’s to retirement benefits must be specifically granted under existing laws, a CBA or employment contract or an established EE policy. (GVM vs. NLRC) Benefit 1. Retirement benefits are intended to help the EE enjoy the remaining years of his life, lessening the burden of worrying for his financial support, and are a form of reward for his loyalty and service to the ER. (Aquino vs. NLRC) 2. The CBA between a university and its faculty members provided that in case of unusual circumstances, faculty members whose services are terminated shall be granted retirement benefits. Are faculty members affected by an unusual circumstance, such a phase-out, and who are given separation pay pursuant to law also entitled to retirement benefits? Yes. There is no provision in the CBA to the effect that termination benefits received under the law shall preclude the EE from receiving other benefits under the agreement. Separation arising from a forced termination of employment and benefits given as a contractual right due to many years of faithful service and are not necessarily antagonistic to each other. (UE vs. Minister of Labor)

PART II SOCIAL SECURITY 25. 1 Social Security Law (SSL) RA 1161 (as amended by RA 8282) Section 1, SSL : The Act shall be known as the Social Security Act of 1997. 25.2 Policy of the State 1. Section 2, SSL : It is a policy of the State to establish, develop, promote and perfect a  promote social justice and  provide meaningful protection to members and their beneficiaries against the hazardous of disability, sickness,

111 maternity, old age, death, and other contingencies resulting in loss of income or financial burden. 2. The law imposes upon ER’s and EE’s the obligation to become members of and make contributions to the Social Security System. Is such a legal imposition valid and constitutional? Membership in the SSS is not the result of a bilateral, consensual agreement where the rights and obligations of the parties are defined by and the subject to their will. The law requires compulsory coverage of ER’s and EE’s, designed to provide security to the working men. Membership in the SSS is, therefore, in compliance with a lawful exercise of the police power of the State, to which the principle of non-impairment of the obligation of contract is not a proper defense. (PBM vs. SSS) 25.3 Definitions ER 1. Section 8, SSL : “ER” – any person, natural or juridical, domestic or foreign, who carries on in the Philippines any trade, business industry, undertaking or activity of any kind and uses the services of another person who is under his orders as regards the employment. Self –employed – is both ER and EE at the same time. 2. What ER’s are exempted from the SSS Law? Government and any of its political subdivisions, branches or instrumentalities, including GOCC’s controlled by the government. EE Section 8, SSL : “EE” – Any person who performs services for an ER – where either mental and physical efforts are used and who receives compensation for such services and where there is an ER-EE relationship. Dependent 1. Section 8, SSL : Legal spouse entitled by law to from member to receive support. Child :  legitimate  legitimated  legally adopted  illegitimate  who is unmarried, and not gainfully employed and not reached 21 or over 21 is congenitally or while still minor permanently incapacitated and incapable of self-support, physically or mentally. Parent: Who is receiving regular support from member. Beneficiaries A. PRIMARY 1. Sec. 8, SSL :

112  Dependent spouse – until remarriage  Dependent legitimate, legitimated or legally adopted and illegitimate children – provided that the illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated and legally adopted children. 2. After 4 years of marriage, the spouses Salmonte broke up. The wife left the conjugal home. Thereafter, the husband V lived with another woman. When V died, who is entitled to his death benefits? Any legitimate children of V and illegitimate children (50% of the share of the legitimate children). The wife of V is not entitled since she does not qualify anymore as beneficiary since she is not dependent upon the husband. (Salmonte vs. Salmonte) B. SECONDARY Sec. 8  Dependent parents C. OTHERS 1. Sec. 8 : Absent primary and secondary beneficiaries any other person designated be members as secondary beneficiary. 2. S, a bachelor dies. His death benefits are claimed by L, his girlfriend whom he designated as beneficiary. The claim is contested by V, S’ brother. Who is preferred? L, V is not among the primary and secondary beneficiaries provided under the law. Thus, L, the designated beneficiary is preferred. (Alcantara) 3. E. a widower, designated M as his beneficiary. The unemployed married children of E contests the payment of death benefits to M. Is the contention valid? No. Eddie’s legitimate children are not considered dependents since they are already married. (Alcantara) 25.4 Coverage A. COMPULSORY I. Enumerate the kinds of employment under compulsory coverage under the SSL: 1. All EE’s not over 60 years of age on date of employment and ER’s on 1st day of operation. (Sec. 9 and 10, SSL) 2. Self-employed as determined by the commission but not limited to self-employed professionals; partners and single proprietors of businesses, actors, actresses, directors, scriptwriters, news correspondents who are not EE’s; professional athletes, coaches,

113 trainers, and jockeys and individual farmers and fisherman. (Sec. 9, SSL) II. Enumerate the kinds of employment which are excepted from compulsory coverage under the SSL? 1. Employment purely casual and not for the purpose of occupation or business of the ER. (Sec. 8, SSL) 2. Service performed on or in connection with alien vessel if EE employed when such vessel is outside of the Philippines. (Id.) 3. EE’s of the Philippine government, instrumentality or agency thereof. (Id.) 4. Service performed in the employ of a foreign government, or international organizations or wholly-owned instrumentality. (Id.) 5. Services performed regulation. (Id.)

by

temporary

EE’s

excluded

by

SSS

6. Domestic helpers who are 60 years of age and below with a monthly income of not less than P1,000.00 on the date of their employment. (Sec. 9) 7. Individual farmers regulations. (Id.)

and

fishermen

under

SSS

rules

and

III. As sacristan in the Catholic Church, B cleaned the premises of the church, tolled its bells, and assisted the priests in the masses and other church services. In consideration of these services, he received 5% of the monthly income of the church. Is B subject to compulsory coverage? Yes. He is considered an EE. The Archbishop as corporation sole, to whom a share of the income or collection is sent, is considered his ER. (Bascuna vs. Roman Catholic Archbishop) B. VOLUNTARY Enumerate the kinds of employment under the SSL? 1. Filipinos recruited by foreign ER’s for employment abroad. (Section 9, SSL) 2. EE separated from employment (Sec. 11, SSL) 3. Spouse who devote full time managing household and family affairs unless specifically mandatorily covered. (Sec. 9, SSL) C. BY ARRANGEMENT When can coverage be by arrangement? Any foreign government, international organization or wholly owned instrumentality employing workers in the Philippines or employing Filipinos outside of the Philippines may enter into an agreement with the Philippines for the inclusion of such EE’s in the SSS except those already covered by their respective civil service retirement system. (Sec. 8, SSL)

114

25.5 Effect of Separation from Employment or Interruption of Business of Professional Income I. What are the effects of separation from employment of an EE compulsorily covered? 1. ER contribution shall cease at the end of the month of separation an EE not required to pay contributions. 2. EE credited with all contributions paid and entitled benefits according to SSL. 3. EE may continue to pay total contribution to maintain right to full benefit. (Sec. 11, SSL) II. What are the effects if self-employed realizes no professional or business income? 1. He shall not be required to pay contributions. 2. He may be allowed to continue to pay contributions under the same rules as a separated EE. (Sec. 11, SSL) III. After working for 5 years, J was fired without cause. His dismissal effected him so much that 2 months after he suffered a stroke. Is he entitled to disability benefits at the time of his stroke? Yes. Although an EE is separated from service and has ceased to pay premiums, he shall be entitled to contributions and to benefits available under the law. As J was a member of SSS, he remained an SSS member. (Alcantara) 25.6 Reporting Requirements 1. Sec. 24, SSL : Each ER shall immediately report EE’s names, ages, civil status, occupations, salaries and dependents. 2. Sec. 24-A : Each covered self-employed shall within 30 days from the 1st day he started practice register and report to the SSS his name, age, civil status, occupation, average monthly net income and his dependents. 25.7 Funding I. What are the different sources of funding for the SSS? 1. EE’ s contribution : The ER shall deduct and withhold from such EE’s monthly salary, wage, compensation or earnings, the EE’s contribution. (Sec. 18) [“Compensation” – an actual remuneration as well as cash value of any remuneration paid in any medium other than cash. (Sec. 8)] 2. ER’s contribution : ER shall pay, with respect to such covered EE, the ER’s contribution in accordance with the schedule indicated in Section 18 of this Act. 3. Government contributions : Appropriation of necessary sums to meet the estimated expenses of the SSS for each ensuing year. 4. Contributions from those voluntarily covered by the SSS.

115

II. The funds contributed to the System belong to the members who will receive benefits, as a matter of right, whenever the hazards provided by the law occur. (CMS Estate vs. SSS) Effects of Non-remittance Sec. 22, SSL : Failure of refusal of the ER to pay or remit contributions shall not prejudice the right of the covered EE to the benefits of coverage. 25. 8 Benefits I. What are the different types of benefits under the SSL? 1. Monthly pension. (Sec. 12, SSL)  Minimum pension of P1,200.00 for members with at least 10 credited years of service and P2,400.00 for those with 20 credited years of service. 2. Dependents pension (Sec. 12-A, SSL) 3. Retirement (Sec. 12-B, SSL)  paid at least 120 monthly contributions  monthly pension for as long as he lives 4. Death (Sec. 13, SSL)  paid at least 36 monthly contributions  lump sum of 36 monthly pensions 5. Permanent disability (Sec. 13-A, SSL) 6. Funeral (Sec. 13-B, SSL) 7. Sickness (Sec. 14, SSL)  payment of at least 3 monthly contributions in the 12month period immediately preceding the sickness.  Confinement for more than 3 days  Notice to ER within 5 calendar days of sickness  Exhaustion of sick leaves with full pay. 8. Maternity (Sec. 14-A, SSL)  A female member who has paid at least 3 monthly contributions in the 12-month period immediately preceding the semester of her childbirth or miscarriage shall be paid a daily maternity benefit equivalent to 100% of her average daily salary credited for 60 days or 78 in case of caesarian delivery for the 1st 4 deliveries or miscarriages.  These are all tax-exempt. II. Section 2, Paternity Leave Act of 1995: Notwithstanding any law, rules and regulations on the contrary, every male EE in the private and public sectors shall be entitled to a paternity leave of 7 days with a full pay for the 1st four deliveries of the legitimate spouse with whom he is cohabiting. The male EE applying for paternity leave shall notify

116 his ER of the pregnancy of his legitimate spouse and the expected date of such delivery. III. On his way home from work, R went to a movie house to watch. He is stabbed by an unknown assailant while watching. The SSS denied his claims on the ground that the injury is not work-connected. Is the denial valid? No. It is not necessary for the enjoyment of benefits that there be casual connection between the injury and the work of the EE. What is required is membership in the SSS. Prescription Periods Art. 1144 : 10 years from the time the right of action accrues since this is an obligation created by law. Benefit Protection 1. Sec. 15, SSL : Benefits are not transferable. No power of attorney or other documents executed as beneficiary in favor of any agent, attorney or other person for the collection of their behalf shall be recognized except which beneficiary is physically unable to collect. 2. Sec. 15, SSL : When Beneficiary is a national of a foreign country which does not extend benefits to Filipino beneficiary residing in the Philippines or which is not recognized by the Philippines.  General Rule : He is not entitled to benefit.  Exception: Social Security Commission may authorize payment where the best interest of the SSS will be served. 3. Sec. 16, SSL : All benefit payments made by SSS shall be exempt from all kinds of taxes, fees or charges and shall not be liable to attachment, garnishments, levy or seizures by or under any legal or equitable process whatsoever, either before or after receipt except to pay any debt of member to SSS. 4. Sec. 17, SSL : No fees shall be payable to agent, attorney, other person-in-charge of preparation, filing or pursuing any claim and any stipulation to the contrary is void. Members of the Bar who appear as counsel in any case heard by the Commission shall be entitled to attorney’s fees not exceeding 10% of the amount collected, any stipulation of the contrary shall be null and void. 25.9 Dispute Settlement Jurisdiction and Period of Dispute Settlement Sec. 5 : Disputes involving coverage, benefits, contribution, penalties and any related matter shall be decided by the Social Security Commission or duly designated member, or duly authorized hearing officers and should be decided within the mandatory period of 20 calendar days from submission. Decision shall be final 15 days after date of notification.

117 Execution of Decisions Sec. 5, : The Commission motu proprio or on motion of any interest party may issue order of execution of decision after same is final and executory. Appeal Sec. 5 : Appeal to CA on law and facts. Appeal to the SC on pure questions of law. Section 26. Workmen’s Compensation – EE’s Compensation and State Insurance Fund (ECSIF) 26.1 Law Policy Objective Art. 166 : To promote and develop a tax exempt EE’s compensation program whereby EE’s and their dependents, in the event of workconnected disability or death, may secure adequate income benefit, and medical or related benefit. Rationale The primary purpose of a workmen’s compensation act is to provide compensation for disability or death resulting from occupational injuries or diseases or accidental injury; the statute is a remedial one, to compensate reasonably those who are injured while in the employment of others, as part of the natural, necessary cost of production. (Azucena) Nature of the State Insurance Fund 1. The law establishes a state insurance fund built by the contribution of ER’s based on the salaries of their EE’s. The injured worker does not have to litigate his right to compensation. The worker simply files a claim with the ECC. The payment of benefits is more prompt. The cost of administration low. (Sarmiento vs. ECC) 2. Give the characteristics of the EE’s Compensation Program  Tax exempt.  Designed to ensure promptitude in cases of workconnected disability or death in the award of benefits.  Funded by monthly contributions of all covered ER’s.  Compulsory on all ER’s and their EE’s not over 60 years of age.  Benefits are exclusive and in place of all other liabilities of the ER to the EE.  Has its own adjudicative machinery with original exclusive jurisdiction on any matter related thereto, independent of other tribunals except the SC. (SMC vs. NLRC) Interpretation

118 As agent charged by the law to implement social justice guaranteed and secured by the Constitution, the ECC should adopt a liberal attitude in favor of the EE in deciding claims for compensability, especially where there is some basis in the facts inferring a work connection to the accident. (Lazo vs. ECC) 26.2 Definitions ER Art. 266 : Any person, natural or juridical, employing the services of an EE. Dependent What are the dependents under the ECSIF? 1. Legitimate 2. Legitimated 3. Acknowledged natural child  who is unmarried, and not gainfully employed, and not over 21 years of age, or over 21 provided he is incapable of self-support due to physical or mental defect which is congenital or acquired during minority. 4. Spouse : Legitimate and living with the EE. 5. Parents : of EE wholly dependent upon EE for regular support. (Art. 166) Beneficiaries Who are the beneficiaries under the ECSIF? 1. Primary a. Spouse – dependent spouse until remarriage b. Children – dependent; provided dependent acknowledged natural children shall be considered as primary beneficiary when there are no other dependent children who are not eligible and qualified for monthly income benefit. 2. Secondary a. Parents – dependent subject to restrictions imposed on dependent children. b. Children – illegitimate subject to restrictions imposed on dependent children c. Legitimate descendants. 26.3 Compensability 1. What is an injury? Harmful change in the human organism from any accident arising out of and in the course of the employment. (Art. 167) 2. If a soldier is killed by an accidental discharge of his companion’s rifle while an overnight pass to a rebel infested area, is the death of a soldier compensable? Yes. The death arose out of and in the course of the employment since the soldier was not on vacation leave and he had lawful permission to go to the place and the other soldier was authorized to carry a firearm. (Hinoguin vs. ECC)

119

3. What are the requisites for an injury to be considered as work-related? The injury must be the result of an employment accident satisfying all of the following grounds: a. The EE must have been injured at the place where his work requires him to be. b. The EE must have been performing his official functions. c. If the injury is sustained elsewhere, the EE must have been executing an order for the ER. (Sec. 1, Rule III, Book I, IRR’s) Proximate Cause The right to compensation extends to disability due to disease supervening upon and proximately and naturally resulting from a compensable injury. Where the primary injury is shown to have arisen in the course of employment, unless it is the result of an independent intervening cause attributable to claimant’s own negligence or misconduct i.e. condition of classroom floor caused Belarmino to slip and fall and suffer injury as a result, hence all medical consequences flowing from it, the premature delivery of her baby, and her death are compensable. (Belarmino vs. ECC) Going to or Coming from Work Rule 1. What is the “going and coming rule”? In the absence of special circumstances, an EE injured while going to or coming from his place of work is excluded from the benefits of workmen’s compensation acts, except: a. Where the EE is proceeding to or from his work on the premises of the ER. b. Where the EE is about to enter or about to leave the premises of his ER by way of the exclusive or customary means of ingress and egress. c. Where the EE is charged, while on his way to or from his place of employment or at his home, or during his employment with some duty or special errand connected with his employment. d. Where the ER as an incident of the employment provides the means of transportation to and from the place of employment. 2. What is the ingress or egress/proximity rule? Employment includes not only the actual doing of the work, but a reasonable margin of time and space necessary to be used in passing to and from the place where the work is to be done. As a general rule, employment may be said to begin when the EE reaches the entrance to the ER’s premises where the work is to be

120 done; but it is clear that in some cases the rule extends to include adjacent premises used by the EE as a means of ingress and egress with the express or implied consent of the ER. (Iloilo Dock vs. WCC) Incidents of Employment It is settled that injuries sustained in connection with acts which are reasonably incidental to the employment are deemed arising out of such employment. Generally, such incidents of work include: 1. Acts of personal ministration for the comfort and convenience of the EE i.e. answering a call of nature. 2. Acts for the personal benefit of the ER i.e. special errand rule. 3. Acts done to further the goodwill of the business. 4. Slight deviations from work, from curiosity or otherwise. 5. Acts in emergencies i.e. death of an EE while attempting to rescue a co-EE (Azucena) Living, Boarding, Lodging on Premises of ER, or at Working Place Compensable if living on the ER’s premises or at the place of work is an express or implied requirement of the contract of hiring and when the injury results from a risk or danger which is reasonably incidental to the employment. (Azucena) While Travelling Compensation depends upon whether the injury results from a risk inherent in the nature of the employment, or reasonably incidental incidental thereto, and upon whether the EE was engaged in the exercise of some functions or duties reasonably necessary or incidental in the performance of the contract of employment, or whether he was authorized or required by such contract to be. (Azucena) Assault If there is a causal relation between the assault and the employment, the assault is compensable. (Iloilo Dock vs. WCC) Sickness Defined; Occupation or Compensable Disease 1. Define sickness? Any illness a. definitely accepted as an occupational disease listed by the Commission, or b. any illness caused by employment subject to proof that the risk of contracting the same is increased by working conditions. (Art. 167)

121 If the illness are not occupational diseases, the claimant must present proof that he contracted them in the course of his employment. (Galanida vs. ECC) 2. What is occupational disease? Disease due wholly to causes and conditions which are normal and constantly present and characteristic of the particular conditions which are normal and constantly present and characteristic of the particular occupation. (Menez vs. ECC) A. THEORY OF THE INCREASED RISK If an ailment is not included in the list of occupational diseases as drawn up by the Commission, the claimant has the burden of proving that the nature of the work increased the risk of contracting the disease. (Dabatian vs. GSIS) To establish compensability under the increased risk theory, the claimant must show proof of reasonable work-connection, not necessarily direct causal relation. The degree of proof is merely substantial evidence as will support a decision, or clear and convincing evidence. (Narazo vs. ECC) A.1 Specific Illnesses Give examples of diseases which are not listed as occupational diseases: 1. Peptic ulcer 2. Cancer. But in some cases, it is 3. Bangungot 4. Incomplete abortion 5. Schistomiasis 6. Rheumatoid Arthritis 7. Adenocarcinoma 8. Cirrhosis of the liver 9. Prolapsed uterus. 26.4 Coverage and Liability Compulsory Coverage Art. 168 : All ER’s and their EE’s not over 60 years of age, provided, an EE who is over 60 and paying contribution to qualify for retirement or life insurance benefits shall be subject to compulsory coverage. Foreign Employment Art. 170 : The Commission shall ensure adequate coverage of Filipino EE’s employed abroad. Compulsory coverage of the ER shall take effect on the 1st day of operation, and that of the EE on the date of employment. Exclusions 1. Art. 172 : The State Insurance Fund shall be liable for compensation to the EE or his dependents, except when the disability or death was occasioned by the:

122 a. b. c. d.

EE’s intoxication, Willful intention to injure or kill himself or another, Notorious negligence, or Otherwise provided under this Title.

2. What defenses may be interposed by the ECSIF against a claim for compensation made by a covered EE? a. The injury is not work-connected or the sickness is not occupational. b. The disability or death was occasioned by the EE’s intoxication, willful intention to injure or kill himself or another, or his notorious negligence. (Art. 172) c. No notice of sickness, injury or death was given by ER. (Art. 206) d. The claim was filed beyond 3 years from time of cause of action. (Art. 201) A. INTOXICATION OR DRUNKENNESS It has been held that even if it could be shown that a person drank intoxicating liquor it is incumbent upon the person invoking drunkenness as a defense to show that said person was extremely drunk. Thus, intoxication which does not incapacitate the EE from following his occupation is not sufficient to defeat the recovery of compensation, although intoxication may be a contributory cause to his injury. It must be shown that the intoxication was the proximate cause of death or injury and the burden of proof lies on him who raises drunkenness as a defense. (Nitura vs. ECC) B. SELF-INFLICTED INJURIES According to American authorities, suicide is compensable in the following cases: 1. When it results from insanity from compensable work injury or disease. 2. When it occurs during a delirium resulting from compensable disease. (NAESS Shipping vs. NLRC) C. NOTORIOUS NEGLIGENCE Notorious negligence has been defined as something more than mere or simple negligence or contributory negligence; it signifies a deliberate act of the EE to disregard his own personal safety. Disobedience to rules, orders, and/or prohibition does not in itself constitute notorious negligence, if no intention can be attributed to the injured to end his life. (Nitura vs. ECC) 26.5 Funding What are the sources of funding of the ECSIF? Contribution shall be paid in their entirety by the ER and any contract or device for the deductions of any portion thereof from the wages or salaries of the

123 EE’s shall be null and void. (Art. 183) EE’s do not have any contribution. The government accepts general responsibility for the solvency of the ECSIF. Any deficiency will be covered by the supplemental appropriations from the National Government. (Art. 184) Effects of Non-Remittance Art. 196 : Failure or refusal of the ER to pay or remit the contributions shall not prejudice the right of the EE or dependent to benefits. 26.6 Benefits What are the different types of benefits under the 1. Medical benefits – consisting of medical rehabilitation services. (Art. 185) 2. Disability – a. Temporary total (Art. 191) b. Temporary permanent (Art. 192) c. Partial permanent (Art. 193) 3. Death and Funeral – minimum death benefit 000.00 and funeral benefit shall be P8,000.00 (Art.

ECSIF? services

and

shall be P15, 194)

All the benefits are tax-exempt. Benefit Protection Art. 175 : Except as otherwise provided under this Title, no contract ,regulation or device whatsoever shall operate to deprive the EE 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 ER shall be maintained and continued to be enjoyed by their EE’s. Prescriptive Periods Art. 201 : 3 years from the time the cause of action accrued. Exclusivity of Benefits 1. Art. 173 : Liability of the ECSIF shall be exclusive and in place of other liabilities of ER to EE, dependents or anyone otherwise entitled to receive damages on their behalf. The payment of compensation shall not bar the recovery of benefit provided in other laws i.e. payment bars recovery for damages arising from the death of the member. 2. As a result of a cave-in, several miners were buried alive. The heirs filed an action with the RTC for damages against the company on grounds of breach of contract. The company moved to dismiss the suit on grounds of exclusive liability of the ECSIF. Is the motion meritorious? No. The EE or his heirs has the right of selection or choice of action. He cannot however pursue both courses of action simultaneously. (Floresca vs. Philex)

124 Liability of Third Parties Art. 174 : When disability or death is caused by circumstances creating a legal liability against a 3rd party, the system shall still pay for the benefits. However, the system shall be subrogated to the rights of the disabled EE or dependents in case of death in accordance with the general law. Where the system recovers damages in excess shall be delivered to the disabled EE or other persons entitled, after deducting the costs of the proceedings and expenses of the system. Benefit Protection 1. Art. 198 : As a general rule, no claim for compensation is transferable or liable to tax, attachment, garnishment, levy or seizure by or under any process whatsoever, either before or after receipt, except if it is to pay any debt of the EE to the system. 2. Art. 203 : No agent, attorney, or other person pursuing or incharge of preparation of filing any claim shall demand or charge any fee and any stipulation to the contrary shall be null and void. The retention or deduction of any amount from any benefit for the payment of such fee or such services is prohibited. 26.7 Dispute Settlement Art. 180 : Government service insurance system or the social security system shall have original and exclusive jurisdiction to settle any dispute with respect to coverage, entitlement of benefits, collection of contributions and penalties and other related matters. Appeal Art. 181 : Decisions or orders shall be reviewable by the SC on question of law. Section 27: Government Service Insurance System 27. 1 Revised Government Service Insurance Act of 1997 27.2 Definitions ER Sec. 2, GSIS Act of 1997 : The ER includes : 1. The national government, its political subdivisions, branches, agencies or instrumentalities. 2. GOCC’s. 3. Financial institutions with original charters. 4. Constitutional commissions and the judiciary. EE Sec. 2, GSIS Act of 1997 : EE shall include : 1. Any person receiving compensation while in the service of ER whether by election, or appointment, irrespective of the status of appointment. 2. Barangay officials.

125 3. Sanggunian officials. Dependents Who are considered dependents under the GSIS Law? 1. Child a. Legitimate. b. Legitimated. c. Legally adopted. d. Illegitimate.  who is unmarried, not gainfully employed, and not over the age of majority, or is over the age of majority but is incapacitated and incapable of selfsupport due to mental or physical defect, acquired prior to age of majority. 2. Spouse – legitimate and dependent for support upon member or pensioner. 3. Parents – legitimate parent dependent upon member for support. (Sec. 2, GSIS Act of 1997) Beneficiaries Who are the beneficiaries under the GSIS Law? 1. Primary : a. Legal dependent spouse until remarriage. b. Dependent children. 2. Secondary : a. Dependent parents. b. Legitimate descendants subject to restrictions dependent children. 27.3 Compulsory Coverage

of

Sec. 3, GSIS Act of 1997 : Coverage shall be compulsory for all EE’s receiving compensation who have not reached compulsory retirement age, irrespective of the employment status. 27.4 Effect of Separation of Employment Sec. 4, GSIS Act of 1997 : A member separated from the service shall continue to be a member and entitled to whatever benefits he has qualified, in event of any contingency compensable under this Act. 27.5 Reporting Requirements Sec. 6, GSIS Act of 1997 : The ER shall report to the GSIS the names of all EE’s, corresponding employment status, positions, salaries and other pertinent information. 27.6 Funding What are the different sources of funding of the GSIS? 1. ER and member contributions. (Sec. 5, GSIS Act of 1997) 2. Government guarantees the fulfillment of the obligations of the GSIS to members. (Sec. 8, GSIS Act of 1997) 27.7 Benefits

126 What are the benefits provided by the GSIS? 1. All members a. Lifetime insurance. b. Retirement – at least 60 years of age, and 15 years of service.  however, EE is allowed to continue to work to complete the 15-year service requirement. (Cana vs. CSC) 2. Disability – Provided :  he has paid at least 36 monthly contributions within the 5-year period immediately preceding his disability, or he has paid a total of at least 180 monthly contributions prior to his disability; and his disability is not compensable under any other law. a.

Survivorship - dependent spouse shall be entitled to survivorship benefits for life or until she remarries. Dependent children are entitled to benefit while still minors and unmarried.

b.

Separation

c.

Unemployment.

3. Judiciary – Life insurance only. (Sec. 3, GSIS Act of 1997) *** All are tax exempt. Prescriptive Period Sec. 28, GSIS Act of 1997 : All claims, except for life and retirement benefits shall prescribed within 4 years from date of contingency. Benefit Protection Sec. 39, GSIS Act of 1997 : 1. All benefits paid shall be exempt from taxes. 2. All benefits shall be exempt from attachment, garnishment, executions, levy or other processes, issued by courts, quasijudicial agencies or administrative bodies including COA disallowances and all forms of financial obligations of members, including pecuniary accountability arising from or caused or occasioned by exercise of performance or official functions or duties, or incurred relative to or in connection with his position or work except when monetary liability, contractual or otherwise, is in favor of the GSIS. 27.8 Dispute Settlement Sec. 30, GSIS Act of 1997 : Government Service Insurance System shall have original and exclusive jurisdiction to settle any dispute arising under act or any laws administered by the GSIS. The Board may designate any member of the Board or official of the GSIS who is a lawyer as hearing officer to receive evidence, make findings of fact and submit recommendations.

127

Appeals Sec. 31, GSIS Act of 1997 : Appeals of decisions/awards of the Board shall be governed by Rules 43 and 45 of the 1997 Rules of Civil Procedure. Appeal shall not stay orders unless stayed by orders of the Board, CA or the SC.

Section 28. National Health Insurance Act of 1995 28.1 Law – National Health Insurance Act of 1995 – RA 7875 28.2 Purposes/Objectives 1. Section 2, National Health Insurance Act : The State shall adopt an integrated and comprehensive approach to health development which shall endeavor to make essential goods, health and other social services available to all the people at affordable cost. (b) Universality – The National Health Insurance Program shall give the highest priority to achieving coverage of the entire population with at least at a basic minimum package of health insurance benefits. 2. Section 3, National Health Insurance Act : This Act seeks to : a. Provide all citizens of the Philippines with the mechanism to gain financial access to health services; b. Create the National Health Insurance Program, hereinafter referred to as the Program to serve as the means to help the people pay for health care services; and c. Establish the Philippine Health Insurance Corporation, that will administer the Program at central and local levels. 3. Section 5, National Health Insurance Act : There is hereby created the National Health Insurance Program which shall provide health insurance coverage and ensure affordable, acceptable, available and accessible health care services for all the citizens of the Philippines, in accordance with the policies and specific provisions of this Act. This social insurance program shall serve as the means for the healthy to pay for the care of the sick and those who can afford medical care to subsidize those who cannot. It shall initially consist of Programs I and II of Medicare and be expanded progressively to constitute one universal health insurance program for the entire population. The Program shall include a sustainable system of the funds constitution, collection, management and disbursement for financing of the availment of a basic minimum package and other supplementary packages of health insurance benefits by a progressively expanding proportion of the population. 4. The Program shall be limited to: a. paying for the utilization of health services by covered beneficiaries or

128 b. to purchasing beneficiaries.

health

services

in

behalf

of

such

It shall be prohibited from: c. providing health care directly d. from buying and dispensing drugs and pharmaceuticals, e. from employing physicians and other professionals for the purpose of directly rendering care, and from f. owning or investing in health care facilities. 28.3 Coverage 1. Section 7, National Health Insurance Act : All citizens of the Philippines shall be covered, provided, the Program shall not be made compulsory in certain provinces and cites until the Corporation shall be able to ensure the members in such localities shall have reasonable access to adequate and acceptable health care services. 2. Who are the legal dependents of a member? a. Legitimate spouse who is not a member. b. Unmarried and unemployed legitimate, legitimated, illegitimate, acknowledged children, legally adopted or stepchildren  below 21 years of age or 2 years old and above but suffering from congenital disability, either physical or mental, or any disability acquired that renders them totally dependent on member for support. c. Parents who are over 60 years of age whose monthly income is below an amount to be determined by the Corporation. (Sec. 4, National Health Insurance Act) 28.4 Funding What are the sources of funding of the NHIF? 1. Members contributions. 2. Current balance of the Health Insurance Funds of the SSS and the GSIS 3. Other appropriations earmarked by the national and local governments purposely for the implementation of the Program. 4. Subsequent appropriations. 5. Donations and grant-in-aid. 6. Accruals. 7. Contributions by LGU’s for indigent members. 28.5 Health Care Providers I. What are the minimum accreditation requirements of health care providers 1. Human resource, equipment and physical structure in conformity with the standards of the relevant facility, as determined by the Dept. of Health. 2. Acceptance of formal program of quality assurance and utilization review. 3. Acceptance of the payment mechanisms specified in the following section. 4. Adoption of referral protocols and health resources sharing arrangements.

129 5. Recognition of the right of patients. 6. Acceptance of information system requirements and regular transfer of information. II. Give the categories of personal health services to be granted under the NHIP : 1. Inpatient hospital care i.e. room and board services of health care professionals. 2. Outpatient care i.e. diagnostic, laboratory and other medical examinations services and personal preventive services. 3. Emergency and transfer services. 4. Such other health services – that the Corporation shall determine to be appropriate and cost-effective. III. Give the services that are excluded : 1. Non-prescription drugs and devices. 2. Outpatient psychotherapy and counseling for mental disorders. 3. Drug and alcohol abuse or dependency treatment. 4. Cosmetic surgery. 5. Home and rehabilitation services. 6. Optometric Services. 7. Normal Obstetrical delivery. (Sec. 11, National Health Insurance Act) 28.6 Grievance and Appeal I. Section 40, National Health Insurance Act : The following acts shall constitute valid grounds for grievance action: 1. Violation of the rights of patients. 2. Willful Neglect of duties of program implementers that results in the loss or non-enjoyment of benefits by members or their dependents. 3. Unjustifiable delay in actions or claims. 4. Delay in the processing of claims that extends beyond the period agreed upon. 5. Any other Act or neglect that tends to undermine or defeat the purposes of this Act. (VANUD) II. Section 41, National Health Insurance Act : A member, his dependent, or a health care provider may file a complaint for grievance based on any of the above grounds, in accordance with the following procedure : 1. A complaint for grievance must be filed with the Office which shall rule on the complaint within 90 calendar days from receipt thereof. 2. Appeals from Office decisions must be filed with the Board within 30 days from receipt of notice of dismissal or disallowance by the Office. 3. The Office shall have no jurisdiction over any issue involving the suspension or revocation of accreditation, the imposition of fines, or the imposition of charges on members or their dependents in case of revocation of their entitlement.

130 4. All decisions by the Board as to entitlement of benefits of members or to payments of health care providers shall be considered final and executory. Section 29. CARL, RA 6657 1. Give the provisions of the 1987 Constitution of agrarian reform?  The State shall promote comprehensive rural development and agrarian reform. (Sec. 21, Art. II, Const.)  The State shall by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental and equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall provide incentives of voluntary land-sharing. (Sec. 4, Art. XIII, Const.) 2. Define agrarian reform. Agrarian reform means the redistribution of lands regardless of crops or fruits produced to farmers and regular farmworkers who are landless, irrespective of tenurial arrangement, to include the totality of factors and support services designed to life the economic status of the beneficiaries and all other arrangements alternative to the physical redistribution of lands, such as production or profit sharing, labor administration and distribution of shares of stock, which will allow the beneficiaries to receive a just share of the fruits of the lands they work. (Sec. 3, CARL) 3. Lands covered by the CARL.  All alienable and disposable lands of the public domain devoted to or suitable for agriculture. No reclassification of forest or mineral lands to agriculture lands shall be undertaken after the approval of this Act until Congress, taking into account ecological, developmental and equity considerations, shall have determined by law, the specific limits of the public domain.  All lands of the public domain in excess of the specific limits as determined by Congress in the preceding paragraphs.  All other lands owned by the Government devoted to or suitable for agriculture; and  All private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that can be raised thereon. (Sec. 4, CARL)

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>9/30/02<

132