Downloaded 114 times
![LABOR LAW AND SOCIAL LEGISLATIONS
265 UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
business. Be that as it may, the prerogative of the
management to transfer its Ees must be exercised
without grave abuse of discretion. The exercise of
the prerogative should not defeat an Ees's right to
security of tenure. The Er’s privilege to transfer its
Ees to different workstations cannot be used as a
subterfuge to rid itself of an undesirable worker.
(Veterans Security Agency v. Vargas, G.R. No. 159293,
16 Dec. 2005)
The Ee’s right to security of tenure takes
precedence over the Er’s management prerogative.
Thus, an Er’s management prerogative includes the
right to terminate the services of an Ee, but this
management prerogative is limited by the Labor
Code, which provides that the Er can terminate an
employee only for a just cause or when authorized
by law. This limitation on management prerogative
is because no less than the Constitution recognizes
and guarantees an employee’s right to security of
tenure. (Art. 279 [now 294], LC; Sec. 3, Art. XIII, 1987
Constitution)
Management prerogative is circumscribed by
limitations found in:
1. Law;
2. CBA;
3. Employment contract;
4. Employer policy or practice; and
5. General principles of fair play and justice.
Management Prerogative is Inferior to the
State’s Police Power
Management prerogatives are inferior to the State
police power. Such prerogatives and the exercise
thereof should be:
1. Without abuse of discretion; and
2. Done in good faith and with due regard to the
rights of labor.
The Er’s inherent right to discipline is, however,
subject to reasonable regulation by the State in the
exercise of its police power. (ALU-TUCP v. NLRC, G. R.
No. 120450, 10 Feb. 1999)
Ineluctably, the exercise of management
prerogatives is not absolute. The prerogatives
accorded to management cannot defeat the very
purpose for which labor laws exist – to balance the
conflicting interests of labor and management, not
to tilt the scale in favor of one over the other, but to
guarantee that labor and management stand on
equal footing when bargaining in good faith with
each other.
A line must be drawn between management
prerogatives regarding business operations per se
and those which affect the rights of Ees. In treating
the latter, management should see to it that its Ees
are at least properly informed of its decisions and
modes of actions. Such management prerogative
may be availed of without fear of any liability so long
as it is exercised in good faith for the advancement
of the Er’s interest and not for the purpose of
defeating or circumventing the rights of Ees under
special laws or valid agreement and are not
exercised in a malicious, harsh, oppressive,
vindictive or wanton manner or out of malice or
spite. (PAL v. NLRC, G.R. No. 85985, 13 Aug. 1993)
NOTE: It must be established that the prerogative
being invoked is clearly a managerial one.
Criterion in the Exercise of Management
Prerogative
The only criterion to guide the exercise of
management prerogative is that the policies, rules,
and regulations on work-related activities of the
Ee’s must always be fair and reasonable and the
corresponding penalties, when prescribed,
commensurate to the offense involved and to the
degree of the infraction.
The company's management prerogative shall be
exercised in good faith for the advancement of the
employer's interest and not for the purpose of
defeating or circumventing the rights of the
employees under special laws or under valid
agreements.](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/85/2024-golden-notes-labor-law-and-social-legislations-279-320.jpg)
![LABOR LAW AND SOCIAL LEGISLATIONS
281 UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
threatened bodily harm to his superior Mr.
Andres. Is the utterance of the obscene words
and threats of bodily harm gross and willful
misconduct?
A: YES. The repeated utterances by Escando of
obscene, insulting, or offensive words against a
superior were not only destructive of the morals of
his co-Ees and a violation of the company rules and
regulations, but also constitute gross misconduct,
which is one of the grounds provided by law to
terminate the services of an Ee. (Autobus Workers
Union v. NLRC, G.R. No. 117453, 26 June 1998)
Q: Samson made insulting and obscene
utterances towards the General Manager saying,
“Si EDT bullshit yan, sabihin mo kay EDT yan”
among others during the Christmas party. Are
the utterances towards the General Manager
gross misconduct?
A: The alleged misconduct of Samson when viewed
in its context is not of such serious and grave
character as to warrant his dismissal. Samson made
the utterances and obscene gestures at an informal
Christmas gathering and it is to be expected during
this kind of gatherings, where tongues are often
loosened by liquor of other alcoholic beverages, that
Ees freely express their grievances and gripes
against their Ers. Ees should be allowed wider
latitude to freely express their sentiments during
these kinds of occasions, which are beyond the
disciplinary authority of the Er. (Samson v. NLRC,
G.R. No. 121035, 12 Apr. 2000)
Q: Cheryll Leus was a non-teaching personnel
employed in St. Scholastica’s College Westgrove
(SSCW). Cheryll and her boyfriend conceived a
child out of wedlock. SSCW dismissed her on the
ground that her pregnancy out of wedlock
constitutes disgraceful and immoral conduct
and ran counter to the moral principles that
SSCW stands for and teaches its students. Does
pregnancy out of wedlock (without a legal
impediment to marry) constitute immoral
conduct as a ground for dismissal contemplated
by law?
A: NO. It is an immoral conduct if such does not
conform to what society generally views as
respectable or moral. Substantial evidence must be
presented to prove that such conduct is considered
immoral. The two-step process to determine
whether the conduct is immoral:
1. Consideration of the totality of the
circumstances surrounding it; and
2. Assessment of said circumstances based on the
prevailing norms of conduct.
Pre-marital sexual relations between two
consenting adults who have no impediment to
marry each other, and, consequently, conceiving a
child out of wedlock, does not amount to a
disgraceful or immoral conduct.
The SC further held that “when the law refers to
morality, it necessarily pertains to public and
secular morality and not religious morality. And
[F]or a conduct to be considered disgraceful or
immoral, it must be ‘detrimental to those conditions
upon which depends the existence and progress of
human society’ and not because the conduct is
prescribed by the beliefs of one religion or the
other.” (Leus v. SSCW, G.R. No. 187226, 28 Jan. 2015)
A teacher engaging in an extra-marital affair with
another married person is a serious misconduct, if
not an immoral act. But a teacher falling in love with
her pupil and, subsequently, contracting a lawful
marriage with him, though there is a disparity in
their ages and academic level cannot be considered
as a defiance of contemporary social mores. (Chua-
Qua v. Clave. G.R. No. 49549, 30 Aug. 1990)
Q: Jose and Erica, former sweethearts, both
worked as sales representatives for Magna, a
multinational firm engaged in the manufacture
and sale of pharmaceutical products. Although
the couple had already broken off their
relationship, Jose continued to have special
feelings for Erica. One afternoon, Jose chanced
upon Erica riding in the car of Paolo, a co-Ee and
Erica's ardent suitor; the two were on their way
back to the office from a sales call on Silver Drug,
a major drug retailer. In a fit of extreme jealousy,
Jose rammed Paolo's car, causing severe injuries
to Paolo and Erica. Jose's flare up also caused
heavy damage to the two company-owned cars
they were driving. As lawyer for Magna, advise](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/85/2024-golden-notes-labor-law-and-social-legislations-295-320.jpg)
![LABOR LAW AND SOCIAL LEGISLATIONS
293 UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
proof.
Under the law, proof beyond reasonable doubt is
required to sustain a criminal conviction, an
inapplicable requirement in a labor complaint. In
fact, and as correctly ruled by the NLRC, the
judgment in a criminal case has no binding or
conclusive effect in a labor case. Conviction of an
employee in a criminal case is not indispensible to
warrant an employees dismissal. Thus, we feel that
the Labor Arbiter erred in basing his decision
exclusively on the outcome of the criminal case.
The Labor Arbiter is duly bound to make his findings
of facts after the presentation and due consideration
of all the pertinent circumstances and evidence of
the case. And this is precisely what Rule V, Sec. 16 of
the NLRC Rules of Procedures requires. We thus find
the NLRC's order remanding the case to the
Arbitration Branch of origin to thresh out pertinent
factual matter no usually renewable in a special civil
action for certiorari, as in this case, to be untainted
with grave abuse of discretion. (Nicolas v. NLRC, G.R.
No. 113948, 05 July 1996)
Analogous Causes
For an act to be included in analogous cases of just
causes of termination, it must be due to the
voluntary and/or willful act or omission of the Ee.
(Nadura v. Benguet Consolidated, G.R. No. L-17780,
24 Aug. 1962)
Requisites of Analogous Cases
1. There must be an act or omission similar to
those specified just causes; and
2. The act or omission was voluntary and/or
willful on the part of the Ees. (Sec. 5.2 [g], D.O.
No. 147-15)
NOTE: No act or omission shall be considered as
analogous cause unless expressly specified in the
company rules and regulations or policies. (Sec. 5.2
[g], D.O. No. 147-15)
Examples of Analogous Cases
1. Violation of company rules and regulations;
2. Immorality, Drunkenness or Fighting inside
the premise;
3. Gross inefficiency;
4. Illegally diverting Er’s products;
5. Failure to heed an order not to join an illegal
picket;
6. Violation of safety rules and code of discipline;
7. Theft of company property;
8. Theft of property owned by co-Ee;
9. Failure to attain work quota; and
10. Attitude problem. (Chan, 2019)
NOTE: To fall within the ambit of “analogous cases”
the act or omission must have an element like those
found in the specific just causes enumerated under
Art. 297. (International Rice Research Institute v.
NLRC, G.R. No. 97239, 12 May 1993)
Past Offenses
Previous offenses may be used as a valid
justification for dismissal from work only if the
infractions are related to the subsequent offense
upon which the basis the termination of
employment is decreed. (Stellar Industrial Service
Inc. v. NLRC, G.R. No. 117418. 24 Jan. 1996)
Doctrine of Incompatibility
Where the Ee has done something that is contrary
or incompatible with the faithful performance of his
duties, his Er has a just cause for terminating his
employment. (Manila Chauffeur’s League v.
Bachrach Motor Co., G.R. No. L-47071, 29 June 1940)
Doctrine of Commensurate Penalty or
“Proportionality Rule”
In this regard, it is a hornbook doctrine that
infractions committed by an Ee should merit only
the corresponding penalty demanded by the
circumstance. The penalty must be commensurate
with the act, conduct or omission imputed to the Ee
and must be imposed in connection with the
disciplinary authority of the Er. (Sagales v. Rustans
Commercial Corporation, G.R. No. 166554, 27 Nov.
2008)](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/85/2024-golden-notes-labor-law-and-social-legislations-307-320.jpg)
![2024 GOLDEN NOTES
296
UNIVERSITY OF SANTO TOMAS
2024 GOLDEN NOTES
Q: Matiere SAS hired Acosta as Technical
Assistant. Uner the Employment Agreement
Acosta was tasked to: (1) Prepare reports
regarding Woodfields Consultants, Inc. (WCI)
consultants; (2) Be the intermediary between
the operators in WCI and the management; (3)
Attend coordination meetings; (4) Evaluate
billings; (5) Follow the SIT and prepare reports;
and (7) Site visits.
Later, Matiere SAS sent a letter to Acosta
informing him that his employment contract
will end on 31 July 2013 due to the cessation of
the company’s delivery operations and the
diminution of activities and that it cannot find
any reinstatement at the office. He also received
a calculation of his separation pay. On 26 June
2013, Matiere SAS informed DOLE that it would
have to terminate five (5) of its workers which
includes Acosta. Matiere SAS also filed an
Establishment Employment Report, citing
redundancy and the completion of delivery of
supplies as its reasons for dismissing its Ees.
Acosta filed a complaint to NLRC for illegal
dismissal alleging that the declaration of
redundancy of his position was not based on fair
and reasonable criteria pointing out that he, the
most senior engineer, was dismissed while the
other engineers remained. Was Acosta validly
dismissed on the ground of redundancy?
A: NO. Redundancy is recognized as one of the
authorized causes for dismissing an Ee under the LC
as provided under Art. 298.
For the implementation of a redundancy program to
be valid, the Er must comply with the following
requisites: (1) written notice served on both the Ees
and the Department of Labor and Employment at
least one month prior to the intended date of
retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one
month pay for every year of service, whichever is
higher; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared
redundant and accordingly abolished.
Matiere SAS complied with the first and second
requisites; notifying both Acosta and DOLE at least
a month prior planned redundancy and providing
Acosta computation of his separation pay. However,
the third and fourth requisites are wanting. To
establish good faith, the company must provide
substantial proof that the services of the Ees are in
excess of what is required of the company, and that
fair and reasonable criteria were used to determine
the redundant positions. Here, Matiere SAS' only
basis for declaring Acosta's position redundant was
that his function, which was to monitor the delivery
of supplies, became unnecessary upon completion
of the shipments.
However, upon scrutiny, the Employment
Agreement itself contradicts Matiere SAS'
allegation. Under Acosta's job description listed in
his tasks as a technical assistant, there was no
mention of monitoring shipments. If his work
pertains mainly to the delivery of supplies, it should
have been specifically stated in his job description.
There was no basis for respondents to consider his
position irrelevant when the shipments had been
completed.
Matiere SAS also failed to show that they used fair
and reasonable criteria in determining what
positions should be declared redundant. Although
Acosta was among the five (5) Ees dismissed, he
cannot be similarly situated with the other Ees since
his duty is not limited to the monitoring of
deliveries. Accordingly, this Court declares
petitioner to have been illegally dismissed. (Acosta
v. Matiere SAS and Philippe Gouvary, G.R. No. 232870,
03 June 2019)
Redundancy in Bad Faith
The Ee was terminated on the ground of
redundancy. But it was found out that the Er had
been hiring new Ees while it was firing the old ones,
negating the claim of redundancy. (General Milling
Corp., v. V.L. Viajar, G.R. No. 181738, 30 Jan. 2013)
NOTE: Jurisprudence provides that “basic is the
principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same.” By
imputing bad faith to the actuations of [the Er], [the
Ee] has the burden of proof to present substantial](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/85/2024-golden-notes-labor-law-and-social-legislations-310-320.jpg)
![LABOR LAW AND SOCIAL LEGISLATIONS
265 UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
business. Be that as it may, the prerogative of the
management to transfer its Ees must be exercised
without grave abuse of discretion. The exercise of
the prerogative should not defeat an Ees's right to
security of tenure. The Er’s privilege to transfer its
Ees to different workstations cannot be used as a
subterfuge to rid itself of an undesirable worker.
(Veterans Security Agency v. Vargas, G.R. No. 159293,
16 Dec. 2005)
The Ee’s right to security of tenure takes
precedence over the Er’s management prerogative.
Thus, an Er’s management prerogative includes the
right to terminate the services of an Ee, but this
management prerogative is limited by the Labor
Code, which provides that the Er can terminate an
employee only for a just cause or when authorized
by law. This limitation on management prerogative
is because no less than the Constitution recognizes
and guarantees an employee’s right to security of
tenure. (Art. 279 [now 294], LC; Sec. 3, Art. XIII, 1987
Constitution)
Management prerogative is circumscribed by
limitations found in:
1. Law;
2. CBA;
3. Employment contract;
4. Employer policy or practice; and
5. General principles of fair play and justice.
Management Prerogative is Inferior to the
State’s Police Power
Management prerogatives are inferior to the State
police power. Such prerogatives and the exercise
thereof should be:
1. Without abuse of discretion; and
2. Done in good faith and with due regard to the
rights of labor.
The Er’s inherent right to discipline is, however,
subject to reasonable regulation by the State in the
exercise of its police power. (ALU-TUCP v. NLRC, G. R.
No. 120450, 10 Feb. 1999)
Ineluctably, the exercise of management
prerogatives is not absolute. The prerogatives
accorded to management cannot defeat the very
purpose for which labor laws exist – to balance the
conflicting interests of labor and management, not
to tilt the scale in favor of one over the other, but to
guarantee that labor and management stand on
equal footing when bargaining in good faith with
each other.
A line must be drawn between management
prerogatives regarding business operations per se
and those which affect the rights of Ees. In treating
the latter, management should see to it that its Ees
are at least properly informed of its decisions and
modes of actions. Such management prerogative
may be availed of without fear of any liability so long
as it is exercised in good faith for the advancement
of the Er’s interest and not for the purpose of
defeating or circumventing the rights of Ees under
special laws or valid agreement and are not
exercised in a malicious, harsh, oppressive,
vindictive or wanton manner or out of malice or
spite. (PAL v. NLRC, G.R. No. 85985, 13 Aug. 1993)
NOTE: It must be established that the prerogative
being invoked is clearly a managerial one.
Criterion in the Exercise of Management
Prerogative
The only criterion to guide the exercise of
management prerogative is that the policies, rules,
and regulations on work-related activities of the
Ee’s must always be fair and reasonable and the
corresponding penalties, when prescribed,
commensurate to the offense involved and to the
degree of the infraction.
The company's management prerogative shall be
exercised in good faith for the advancement of the
employer's interest and not for the purpose of
defeating or circumventing the rights of the
employees under special laws or under valid
agreements.](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/75/2024-golden-notes-labor-law-and-social-legislations-279-2048.jpg)
![LABOR LAW AND SOCIAL LEGISLATIONS
281 UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
threatened bodily harm to his superior Mr.
Andres. Is the utterance of the obscene words
and threats of bodily harm gross and willful
misconduct?
A: YES. The repeated utterances by Escando of
obscene, insulting, or offensive words against a
superior were not only destructive of the morals of
his co-Ees and a violation of the company rules and
regulations, but also constitute gross misconduct,
which is one of the grounds provided by law to
terminate the services of an Ee. (Autobus Workers
Union v. NLRC, G.R. No. 117453, 26 June 1998)
Q: Samson made insulting and obscene
utterances towards the General Manager saying,
“Si EDT bullshit yan, sabihin mo kay EDT yan”
among others during the Christmas party. Are
the utterances towards the General Manager
gross misconduct?
A: The alleged misconduct of Samson when viewed
in its context is not of such serious and grave
character as to warrant his dismissal. Samson made
the utterances and obscene gestures at an informal
Christmas gathering and it is to be expected during
this kind of gatherings, where tongues are often
loosened by liquor of other alcoholic beverages, that
Ees freely express their grievances and gripes
against their Ers. Ees should be allowed wider
latitude to freely express their sentiments during
these kinds of occasions, which are beyond the
disciplinary authority of the Er. (Samson v. NLRC,
G.R. No. 121035, 12 Apr. 2000)
Q: Cheryll Leus was a non-teaching personnel
employed in St. Scholastica’s College Westgrove
(SSCW). Cheryll and her boyfriend conceived a
child out of wedlock. SSCW dismissed her on the
ground that her pregnancy out of wedlock
constitutes disgraceful and immoral conduct
and ran counter to the moral principles that
SSCW stands for and teaches its students. Does
pregnancy out of wedlock (without a legal
impediment to marry) constitute immoral
conduct as a ground for dismissal contemplated
by law?
A: NO. It is an immoral conduct if such does not
conform to what society generally views as
respectable or moral. Substantial evidence must be
presented to prove that such conduct is considered
immoral. The two-step process to determine
whether the conduct is immoral:
1. Consideration of the totality of the
circumstances surrounding it; and
2. Assessment of said circumstances based on the
prevailing norms of conduct.
Pre-marital sexual relations between two
consenting adults who have no impediment to
marry each other, and, consequently, conceiving a
child out of wedlock, does not amount to a
disgraceful or immoral conduct.
The SC further held that “when the law refers to
morality, it necessarily pertains to public and
secular morality and not religious morality. And
[F]or a conduct to be considered disgraceful or
immoral, it must be ‘detrimental to those conditions
upon which depends the existence and progress of
human society’ and not because the conduct is
prescribed by the beliefs of one religion or the
other.” (Leus v. SSCW, G.R. No. 187226, 28 Jan. 2015)
A teacher engaging in an extra-marital affair with
another married person is a serious misconduct, if
not an immoral act. But a teacher falling in love with
her pupil and, subsequently, contracting a lawful
marriage with him, though there is a disparity in
their ages and academic level cannot be considered
as a defiance of contemporary social mores. (Chua-
Qua v. Clave. G.R. No. 49549, 30 Aug. 1990)
Q: Jose and Erica, former sweethearts, both
worked as sales representatives for Magna, a
multinational firm engaged in the manufacture
and sale of pharmaceutical products. Although
the couple had already broken off their
relationship, Jose continued to have special
feelings for Erica. One afternoon, Jose chanced
upon Erica riding in the car of Paolo, a co-Ee and
Erica's ardent suitor; the two were on their way
back to the office from a sales call on Silver Drug,
a major drug retailer. In a fit of extreme jealousy,
Jose rammed Paolo's car, causing severe injuries
to Paolo and Erica. Jose's flare up also caused
heavy damage to the two company-owned cars
they were driving. As lawyer for Magna, advise](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/75/2024-golden-notes-labor-law-and-social-legislations-295-2048.jpg)
![LABOR LAW AND SOCIAL LEGISLATIONS
293 UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
proof.
Under the law, proof beyond reasonable doubt is
required to sustain a criminal conviction, an
inapplicable requirement in a labor complaint. In
fact, and as correctly ruled by the NLRC, the
judgment in a criminal case has no binding or
conclusive effect in a labor case. Conviction of an
employee in a criminal case is not indispensible to
warrant an employees dismissal. Thus, we feel that
the Labor Arbiter erred in basing his decision
exclusively on the outcome of the criminal case.
The Labor Arbiter is duly bound to make his findings
of facts after the presentation and due consideration
of all the pertinent circumstances and evidence of
the case. And this is precisely what Rule V, Sec. 16 of
the NLRC Rules of Procedures requires. We thus find
the NLRC's order remanding the case to the
Arbitration Branch of origin to thresh out pertinent
factual matter no usually renewable in a special civil
action for certiorari, as in this case, to be untainted
with grave abuse of discretion. (Nicolas v. NLRC, G.R.
No. 113948, 05 July 1996)
Analogous Causes
For an act to be included in analogous cases of just
causes of termination, it must be due to the
voluntary and/or willful act or omission of the Ee.
(Nadura v. Benguet Consolidated, G.R. No. L-17780,
24 Aug. 1962)
Requisites of Analogous Cases
1. There must be an act or omission similar to
those specified just causes; and
2. The act or omission was voluntary and/or
willful on the part of the Ees. (Sec. 5.2 [g], D.O.
No. 147-15)
NOTE: No act or omission shall be considered as
analogous cause unless expressly specified in the
company rules and regulations or policies. (Sec. 5.2
[g], D.O. No. 147-15)
Examples of Analogous Cases
1. Violation of company rules and regulations;
2. Immorality, Drunkenness or Fighting inside
the premise;
3. Gross inefficiency;
4. Illegally diverting Er’s products;
5. Failure to heed an order not to join an illegal
picket;
6. Violation of safety rules and code of discipline;
7. Theft of company property;
8. Theft of property owned by co-Ee;
9. Failure to attain work quota; and
10. Attitude problem. (Chan, 2019)
NOTE: To fall within the ambit of “analogous cases”
the act or omission must have an element like those
found in the specific just causes enumerated under
Art. 297. (International Rice Research Institute v.
NLRC, G.R. No. 97239, 12 May 1993)
Past Offenses
Previous offenses may be used as a valid
justification for dismissal from work only if the
infractions are related to the subsequent offense
upon which the basis the termination of
employment is decreed. (Stellar Industrial Service
Inc. v. NLRC, G.R. No. 117418. 24 Jan. 1996)
Doctrine of Incompatibility
Where the Ee has done something that is contrary
or incompatible with the faithful performance of his
duties, his Er has a just cause for terminating his
employment. (Manila Chauffeur’s League v.
Bachrach Motor Co., G.R. No. L-47071, 29 June 1940)
Doctrine of Commensurate Penalty or
“Proportionality Rule”
In this regard, it is a hornbook doctrine that
infractions committed by an Ee should merit only
the corresponding penalty demanded by the
circumstance. The penalty must be commensurate
with the act, conduct or omission imputed to the Ee
and must be imposed in connection with the
disciplinary authority of the Er. (Sagales v. Rustans
Commercial Corporation, G.R. No. 166554, 27 Nov.
2008)](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/75/2024-golden-notes-labor-law-and-social-legislations-307-2048.jpg)
![2024 GOLDEN NOTES
296
UNIVERSITY OF SANTO TOMAS
2024 GOLDEN NOTES
Q: Matiere SAS hired Acosta as Technical
Assistant. Uner the Employment Agreement
Acosta was tasked to: (1) Prepare reports
regarding Woodfields Consultants, Inc. (WCI)
consultants; (2) Be the intermediary between
the operators in WCI and the management; (3)
Attend coordination meetings; (4) Evaluate
billings; (5) Follow the SIT and prepare reports;
and (7) Site visits.
Later, Matiere SAS sent a letter to Acosta
informing him that his employment contract
will end on 31 July 2013 due to the cessation of
the company’s delivery operations and the
diminution of activities and that it cannot find
any reinstatement at the office. He also received
a calculation of his separation pay. On 26 June
2013, Matiere SAS informed DOLE that it would
have to terminate five (5) of its workers which
includes Acosta. Matiere SAS also filed an
Establishment Employment Report, citing
redundancy and the completion of delivery of
supplies as its reasons for dismissing its Ees.
Acosta filed a complaint to NLRC for illegal
dismissal alleging that the declaration of
redundancy of his position was not based on fair
and reasonable criteria pointing out that he, the
most senior engineer, was dismissed while the
other engineers remained. Was Acosta validly
dismissed on the ground of redundancy?
A: NO. Redundancy is recognized as one of the
authorized causes for dismissing an Ee under the LC
as provided under Art. 298.
For the implementation of a redundancy program to
be valid, the Er must comply with the following
requisites: (1) written notice served on both the Ees
and the Department of Labor and Employment at
least one month prior to the intended date of
retrenchment; (2) payment of separation pay
equivalent to at least one month pay or at least one
month pay for every year of service, whichever is
higher; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in
ascertaining what positions are to be declared
redundant and accordingly abolished.
Matiere SAS complied with the first and second
requisites; notifying both Acosta and DOLE at least
a month prior planned redundancy and providing
Acosta computation of his separation pay. However,
the third and fourth requisites are wanting. To
establish good faith, the company must provide
substantial proof that the services of the Ees are in
excess of what is required of the company, and that
fair and reasonable criteria were used to determine
the redundant positions. Here, Matiere SAS' only
basis for declaring Acosta's position redundant was
that his function, which was to monitor the delivery
of supplies, became unnecessary upon completion
of the shipments.
However, upon scrutiny, the Employment
Agreement itself contradicts Matiere SAS'
allegation. Under Acosta's job description listed in
his tasks as a technical assistant, there was no
mention of monitoring shipments. If his work
pertains mainly to the delivery of supplies, it should
have been specifically stated in his job description.
There was no basis for respondents to consider his
position irrelevant when the shipments had been
completed.
Matiere SAS also failed to show that they used fair
and reasonable criteria in determining what
positions should be declared redundant. Although
Acosta was among the five (5) Ees dismissed, he
cannot be similarly situated with the other Ees since
his duty is not limited to the monitoring of
deliveries. Accordingly, this Court declares
petitioner to have been illegally dismissed. (Acosta
v. Matiere SAS and Philippe Gouvary, G.R. No. 232870,
03 June 2019)
Redundancy in Bad Faith
The Ee was terminated on the ground of
redundancy. But it was found out that the Er had
been hiring new Ees while it was firing the old ones,
negating the claim of redundancy. (General Milling
Corp., v. V.L. Viajar, G.R. No. 181738, 30 Jan. 2013)
NOTE: Jurisprudence provides that “basic is the
principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same.” By
imputing bad faith to the actuations of [the Er], [the
Ee] has the burden of proof to present substantial](https://image.slidesharecdn.com/ilide-250208234126-27ae730f/75/2024-golden-notes-labor-law-and-social-legislations-310-2048.jpg)
![Schools of Hindu law [mitakshara and dayabhaga] .pptx](https://cdn.slidesharecdn.com/ss_thumbnails/schoolsofhindulawanishajoshi-250922171532-9a5d7eec-thumbnail.jpg?width=560&fit=bounds)
-2024-golden-notes-labor-law-and-social-legislations
- 1. University of SantoTomas FACULTY OF CIVIL LAW (1734) LABOR LAW AND SOCIAL LEGISLATIONS 2024 GOLDEN NOTES FACULTY OF CIVIL LAW UNIVERSITY OF SANTO TOMAS MANILA
- 2. Academics Committee Faculty ofCivil Law University of Santo Tomas Espana, Manila 1008 All rights reserved by the Academics Committee of the Faculty of Civil Law of the Pontifical and Royal University of Santo Tomas, the Catholic University of the Philippines. 2024 Edition. No portion of this material may be copied or reproduced in books, pamphlets, outlines or notes, whether Px rinted, mimeographed, typewritten, copied in different electronic devises or in any other form, for distribution or sale, without a written permission. A copy of this material without the corresponding code either proceeds from an illegal source or is in possession of one who has no authority to dispose the same. Released in the Philippines, 2024. The UST GOLDEN NOTES is the annual student-edited bar review material of the University of Santo Tomas, Faculty of Civil Law. Communications regarding the Notes should be addressed to the Academics Committee of the Team: Bar- Ops. Address: Academics Committee UST Bar Operations Faculty of Civil Law University of Santo Tomas España, Manila 1008 Tel. No: (02) 8731-4027 (02) 8406-1611 loc. 8578
- 3. 2024 UST BAROPERATIONS GABRIEL C. LAPID CHAIRPERSON ANNE ARNET YSABEL C. PAGUIRIGAN VICE CHAIRPERSON BEA V. BRINGAS HEAD, SECRETARIAT COMMITTEE ANNE FRANCES B. GRANDE HEAD, PUBLIC RELATIONS COMMITTEE ANGELO RAFAEL V. CO HEAD, FINANCE COMMITTEE DAVE FIEL A. RELLESIVA HEAD, HOTEL COMMITTEE FRITZ N. CANTERO HEAD, LOGISTICS COMMITTEE ALONDRA MARIE F. STO. DOMINGO HEAD, CREATIVES COMMITTEE JUSTINE RENEE GERVACIO SENIOR MEMBER KATHERINE S. POLICARPIO SENIOR MEMBER PAULINNE STEPHANY G. SANTIAGO SENIOR MEMBER RALPH DOMINIC V. MARTINEZ SENIOR MEMBER RON-SOPHIA NICOLE C. ANTONIO SENIOR MEMBER HERLENE MAE D. CALILUNG SENIOR MEMBER HANNAH JOY C. IBARRA SENIOR MEMBER JEDIDIAH R. PADUA SENIOR MEMBER DIANNE MICHA ANGELA D. YUMANG SENIOR MEMBER RAUL GABRIEL M. MANALO SENIOR MEMBER ASTRID A. SOLIS SENIOR MEMBER NORIEL C. BERNABE SENIOR MEMBER MIKKAH F. FACTOR SENIOR MEMBER JENELYN D. GALVEZ SENIOR MEMBER 2024 UST LAW REVIEW RAUL GABRIEL MANALO EDITOR-IN-CHIEF BIANCA MAY LINGAT DORADO MANAGING EDITOR ORLHEE MAR S MEGARBIO EXECUTIVE EDITOR AXELE ESCANER BAYOMBONG ASSOCIATE MANAGING EDITOR MICHAEL JOHN D. NATABLA JURISPRUDENCE EDITOR CINDEL JOY S.Y. ONG ARTICLES EDITOR DANICA ELLA C. NAGORITE RESEARCH EDITOR IVAN VERNA S. RAMOS SENIOR ASSOCIATE ARTICLES EDITOR JOHN ANNDREW S. TENACIO ASSOCIATE JURISPRUDENCE EDITOR
- 4. ACADEMICS COMMITTEE 2024 ANGELABEATRICE S. PEÑA PATRISHA LOUISE E. DUMANIL SECRETARIES-GENERAL RAIAH CASSANDRA O. GUITAN ASST. SECRETARY-GENERAL ANGELA BEATRICE S. PEÑA CIVIL LAW MICHAELA THELMA B. BRAVO TAXATION LAW CAMILLE RAZEN D. SUMERA CRIMINAL LAW PAULINNE STEPHANY G. SANTIAGO LABOR LAW AND SOCIAL LEGISLATION PHILLINE KATE M. DUGAYO LEGAL AND JUDICIAL ETHICS SARAH MAY D. MEDALLE POLITICAL LAW AND PUBLIC INTERNATIONAL LAW DIANNE TRICIA M. INIEGO COMMERCIAL LAW MARY GENELLE S. CLEOFAS REMEDIAL LAW EXECUTIVE COMMITTEE ALEA CHAIRMANE A. LOQUINARIO COVER DESIGN ARTIST
- 5. ADVISERS DEAN SALVADOR A.POQUIZ COMMISSIONER LEONARD VINZ O. IGNACIO LABOR LAW AND SOCIAL LEGISLATIONS COMMITTEE 2024 JOHN EZEQUIEL S. LONGUI LABOR LAW SUBJECT HEAD MEMBERS RANJILL JAMBEE U. SY MARIA ISABEL GALLEGO LORRAINE MARIE D. TUMOLVA LLYRA M. SEMANA STEPHEN NICOLE R. ARAN MARY CLAIRE G. LABANGCO JOHN MARK M. ANCERO AUDRICE C. SERRANO
- 6. ATTY. ARTHUR B.CAPILI FACULTY SECRETARY ATTY. ELGIN MICHAEL C. PEREZ LEGAL COUNSEL UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC JUDGE PHILIP A. AGUINALDO SWDB COORDINATOR LENY G. GADIANA, R.G.C. GUIDANCE COUNSELOR FACULTY OF CIVIL LAW UNIVERSITY OF SANTO TOMAS ACADEMIC OFFICIALS ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAÑO, O.P. DEAN REGENT
- 7. Dean Jacqueline O.Lopez-Kaw, DCL Dean Salvador A. Poquiz Commissioner Leonard Vinz Ochoa Ignacio Labor Arbiter Benedict G. Kato Atty. Arnold E. Cacho Atty. Irvin Joseph Fabella Atty. Ian Jerny E. De Leon Atty. Roland L. Marquez Atty. Alwyn Faye B. Mendoza Atty. Cesar E. Santamaria, Jr. For being our guideposts in understanding the intricate sphere of Labor Law and Social Legislations. -Academics Committee 2024 OUR DEEPEST APPRECIATION TO OUR MENTORS AND INSPIRATION
- 8. DISCLAIMER THE RISK OFUSE OF THIS BAR REVIEW MATERIAL SHALL BE BORNE BY THE USER
- 9. LABOR LAW ANDSOCIAL LEGISLATIONS Table of Contents I. FUNDAMENTAL PRINCIPLES AND CONCEPTS.................................................................................................................1 A. SOURCES OF LABOR LAWS...............................................................................................................................................1 1. 1987 CONSTITUTION....................................................................................................................................................1 2. CIVIL CODE........................................................................................................................................................................4 3. LABOR CODE ....................................................................................................................................................................5 4. DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) ISSUANCES ..............................................................7 5. JURISPRUDENCE .............................................................................................................................................................7 B. STATE POLICIES ...................................................................................................................................................................8 1. LABOR AS PRIMARY SOCIAL ECONOMIC FORCE (Sec. 18, Art. II, 1987 Constitution)............................8 2. FULL PROTECTION TO LABOR (Sec. 3, Art. XIII, 1987 Constitution)...........................................................8 3. SECURITY OF TENURE (Sec. 3, Art. XIII, 1987 Constitution) .........................................................................9 4. SOCIAL JUSTICE (Sec. 10, Art. II, 1987 Constitution; Art. 218, LC, as renumbered by DOLE D.A. No. 01-2015) ................................................................................................................................................................................9 5. EQUAL WORK OPPORTUNITIES (Sec. 3, Art. XIII, 1987 Constitution; Art. 3, LC) ...................................9 6. RIGHT TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING (Sec. 3, Art. XIII, 1987 Constitution; Arts. 3 and 253, LC).............................................................................................................................. 10 7. CONSTRUCTION IN FAVOR OF LABOR (Art. 4, LC; Art. 1702, NCC)............................................................. 17 II. RECRUITMENT AND PLACEMENT OF WORKERS........................................................................................................20 A. RECRUITMENT AND PLACEMENT OF LOCAL AND MIGRANT WORKERS (Art. 13, LC) ............................ 20 1. REGULATORY AUTHORITIES................................................................................................................................... 21 a. DEPARTMENT OF MIGRANT WORKERS (Secs. 4-6, R.A. No. 11641)..................................................... 21 The POEA created under E.O. No. 247, as amended, and all the entities, agencies and units are consolidated and merged, and hereby constituted as the Department of Migrant Workers (DMW). (Sec. 4, R.A. No. 11641)............................................................................................................................ 21 b. DOLE SECRETARY; REGULATORY AND VISITORIAL POWERS (Arts. 33, 36, and 37, LC) ............... 25 2. REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES................................................................ 25 a. BAN ON DIRECT HIRING; EXCEPTIONS (Art. 18, LC) ................................................................................. 25 b. ENTITIES AND PERSONS PROHIBITED FROM RECRUITING (Art. 26, LC; Sec. 6(j), R.A. No. 8042, as amended by R.A. No. 10022; Sec. 3, Rule 1, Part II, Revised POEA Rules 2016 for Land-Based Workers)........................................................................................................................................................................ 26 c. NON-TRANSFERABILITY OF LICENSE OR AUTHORITY (Art. 29, LC) .................................................... 28 d. SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY (Art. 35, LC; Secs. 101 and 104, Rule I, Part III, Revised POEA Rules 2016 for Land-Based Workers)....................................................... 29 e. PROHIBITED PRACTICES – (Art. 34, R.A. No. 8042, as amended by Sec. 6, R.A. No. 10022; Sec. 76, Rule X, Part I, POEA Rules 2016 for Land-Based Workers).................................................................. 35 f. ILLEGAL RECRUITMENT........................................................................................................................................ 38 i. ELEMENTS AND TYPES (Art. 38, LC; Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022) .... 41 ii. ILLEGAL RECRUITMENT VS. ESTAFA (Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022; Art. 315(2)(a), RPC).............................................................................................................................................. 42 g. SOLIDARY LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER (Sec. 10, R.A. No. 8042, as amended by R.A. No. 10022; Theory of Imputed Knowledge) .......................................... 43 h. TERMINATION OF CONTRACT OF MIGRANT WORKERS (Sec. 10, R.A. No. 8042, as amended by R.A. 10022).................................................................................................................................................................... 46 B. EMPLOYMENT OF NON-RESIDENT ALIENS (Arts. 40-42, LC; Secs. 1-3 and 12-14, as amended by DOLE D.O. No. 221-21; Secs. 1-3 and 7-8, DOLE D.O. No. 205-19)........................................................................ 49
- 10. 2024 GOLDEN NOTES III.EMPLOYER-EMPLOYEE RELATIONSHIP.......................................................................................................................56 A. EMPLOYER-EMPLOYEE RELATIONSHIP....................................................................................................................56 1. TESTS TO DETERMINE EMPLOYER-EMPLOYEE RELATIONSHIP (Sec. 3, Rule I-A, DOLE D.O. No. 147-15).................................................................................................................................................................................58 2. KINDS OF EMPLOYMENT (Arts. 295-296, LC) ...................................................................................................63 a. REGULAR ....................................................................................................................................................................63 b. CASUAL........................................................................................................................................................................69 c. PROBATIONARY........................................................................................................................................................70 d. PROJECT .....................................................................................................................................................................78 e. SEASONAL...................................................................................................................................................................81 f. FIXED-TERM ...............................................................................................................................................................82 3. RELATED CONCEPTS ...................................................................................................................................................85 a. FLOATING STATUS (Art. 301, LC; DOLE D.O. No. 215-20)..........................................................................85 b. EMPLOYMENT SUBJECT TO A SUSPENSIVE CONDITION ...........................................................................88 IV. LABOR STANDARDS .............................................................................................................................................................95 A. CONDITIONS OF EMPLOYMENT...................................................................................................................................95 1. COVERED EMPLOYEES; EXCEPTIONS (Art. 82, LC; Secs. 1-2, Rule I, Book III, Omnibus Rules Implementing the Labor Code) ...................................................................................................................................95 2. HOURS OF WORK .........................................................................................................................................................98 a. NORMAL HOURS OF WORK (Arts. 83-84, LC; Secs. 3-4, Rule I, Book III, Omnibus Rules Implementing the Labor Code) ..............................................................................................................................98 b. MEAL PERIODS (Art. 85, LC; Sec. 7, Rule I, Book III, Omnibus Rules Implementing the Labor Code) .............................................................................................................................................................................105 c. NIGHT-SHIFT (Art. 86, LC; Secs. 1-6, Rule II, Book III, Omnibus Rules Implementing the Labor Code) .............................................................................................................................................................................106 d. OVERTIME WORK (Arts. 87-90, LC; Secs. 8-10, Rule I, Book III, Omnibus Rules Implementing the Labor Code).........................................................................................................................................................107 e. COMPRESSED WORK WEEK, FLEXIBLE WORK ARRANGEMENT, ALTERNATIVE WORK ARRANGEMENTS, TELECOMMUTING PROGRAM (DOLE D.A. No. 02-04; DOLE D.A. No. 02-09; DOLE D.A. No. 04-10; Secs. 3-5, R.A. No. 11165) ........................................................................................................113 f. NON-COMPENSABLE HOURS..............................................................................................................................116 3. REST PERIODS (Arts. 91-93, LC; Secs. 1-9, Rule III, Book III, Omnibus Rules Implementing the Labor Code) .....................................................................................................................................................................116 4. HOLIDAYS (Art. 94, LC; Secs. 1-11, Rule IV, Book III, Omnibus Rules Implementing the Labor Code)..................................................................................................................................................................................118 5. SERVICE CHARGES (Art. 96, LC; Secs. 1-7, Rule VI, Book III, Omnibus Rules Implementing the Labor Code; R.A. No. 11360; DOLE D.O. No. 206-19; DOLE L.A. No. 14-19)...............................................120 6. OCCUPATIONAL SAFETY AND HEALTH STANDARDS LAW (Secs. 4-6, 8 and 12, R.A. No. 11058) ..121 B. WAGES................................................................................................................................................................................124 1. COMPONENTS AND EXCLUSIONS.........................................................................................................................124 a. WAGES (Art. 97(f), LC).......................................................................................................................................124 b. FACILITIES ..............................................................................................................................................................125 c. SUPPLEMENTS .......................................................................................................................................................126 d. BONUS ......................................................................................................................................................................127
- 11. LABOR LAW ANDSOCIAL LEGISLATIONS e. 13TH MONTH PAY (P.D. No. 851; Revised Guidelines on The Implementation of the 13th Month Pay Law) .......................................................................................................................................................................127 f. HOLIDAY PAY (Art. 94, LC; Secs. 1-7, Rule IV, Book III, Omnibus Rules Implementing the Labor Code) .............................................................................................................................................................................134 2. PRINCIPLES .................................................................................................................................................................139 a. NO WORK, NO PAY ................................................................................................................................................139 b. EQUAL PAY FOR EQUAL WORK.........................................................................................................................140 c. FAIR WAGE FOR FAIR WORK .............................................................................................................................140 d. NON-DIMINUTION OF BENEFITS (Art. 100, LC).........................................................................................141 3. PAYMENT OF WAGES ................................................................................................................................................143 4. PROHIBITIONS REGARDING WAGES...................................................................................................................145 5. WAGE DISTORTION (Art. 124, LC) .......................................................................................................................148 6. MINIMUM WAGE (Art. 99, LC; Secs. 7, 9 and 15, Rule VII, Book III, Omnibus Rules Implementing the Labor Code)..............................................................................................................................................................152 C. LEAVES ...............................................................................................................................................................................153 1. SERVICE INCENTIVE LEAVES (Art. 95, LC; Secs. 1-6, Rule V, Book III, Omnibus Rules Implementing the Labor Code)..............................................................................................................................................................153 2. LEAVES UNDER SPECIAL LAWS.............................................................................................................................155 a. EXPANDED MATERNITY LEAVE (R.A. No. 11210)......................................................................................156 b. PATERNITY LEAVE (R.A. No. 8187, as amended by R.A. No. 11210)...................................................164 c. SOLO PARENT LEAVE (R.A. No. 8972, as amended by R.A. No. 11861) ..............................................165 d. GYNECOLOGICAL LEAVE (R.A. No. 9710)......................................................................................................168 e. BATTERED WOMAN LEAVE (R.A. No. 9262) ................................................................................................170 D. SPECIAL GROUPS OF EMPLOYEES............................................................................................................................171 1. WOMEN (Arts. 130 and 132-136, LC).................................................................................................................171 2. MINORS (R.A. No. 7610, as amended by R.A. No. 9231) ..............................................................................175 3. KASAMBAHAYS (R.A. No. 10361).........................................................................................................................182 4. HOMEWORKERS (Arts. 151-153, LC) .................................................................................................................190 5. NIGHT WORKERS (Arts. 154-161, LC)................................................................................................................192 6. APPRENTICES AND LEARNERS (Arts. 58-60 and 73-74, LC)......................................................................194 7. PERSONS WITH DISABILITIES (R.A. No. 7277, as amended by R.A. No. 9442, R.A. No. 10070, and R.A. No. 10524)...............................................................................................................................................................196 E. SEXUAL HARASSMENT IN THE WORK ENVIRONMENT (R.A. No. 7877); SAFE SPACES ACT (R.A. No. 11313, Art IV) ......................................................................................................................................................................199 F. DISCRIMINATORY PRACTICES....................................................................................................................................206 1. AGE (R.A. No. 10911)................................................................................................................................................206 2. GENDER AND MARITAL STATUS (R.A. No. 9710)............................................................................................207 3. PREGNANCY (Sec. 23(c), R.A. No. 10354) .........................................................................................................209 4. ILLNESS (DOLE D.A. No. 05-10; DOLE D.O. No. 73-05)..................................................................................209 5. SOLO PARENTS (Sec. 7, R.A. No. 8972, as amended by R.A. No. 11861).................................................209 6. PERSONS WITH DISABILITY (R.A. No. 7277, as amended) ........................................................................210 V. SOCIAL WELFARE BENEFITS ...........................................................................................................................................213 A. SSS LAW (R.A. No. 8282, as amended by R.A. No. 11199)...............................................................................213 1. BENEFITS; COVERAGE AND EXCLUSIONS..........................................................................................................214 2. DEPENDENTS AND BENEFICIARIES ....................................................................................................................225 B. GSIS LAW (R.A. No. 8291)...........................................................................................................................................228 1. BENEFITS; COVERAGE AND EXCLUSIONS..........................................................................................................228
- 12. 2024 GOLDEN NOTES 2.DEPENDENTS AND BENEFICIARIES....................................................................................................................236 C. LIMITED PORTABILITY LAW (R.A. No. 7699).......................................................................................................237 D. DISABILITY AND DEATH BENEFITS; LABOR CODE AND CIVIL CODE ..........................................................238 E. CLAIMS OF SEAFARERS; 2010 STANDARD TERMS AND CONDITIONS GOVERNING THE OVERSEAS EMPLOYMENT OF FILIPINO SEAFARERS ON-BOARD OCEAN-GOING SHIPS (Secs. 20, 32 and 32-A)....246 VI. MANAGEMENT PREROGATIVE .....................................................................................................................................264 A. OCCUPATIONAL QUALIFICATIONS ...........................................................................................................................267 B. PRODUCTIVITY STANDARDS .....................................................................................................................................268 C. CHANGE OF WORKING HOURS ..................................................................................................................................269 D. TRANSFER OF EMPLOYEES ........................................................................................................................................271 E. DISCIPLINE OF EMPLOYEES .......................................................................................................................................272 F. GRANT OF BONUSES AND OTHER BENEFITS........................................................................................................273 G. CLEARANCE PROCESS...................................................................................................................................................275 H. POST-EMPLOYMENT RESTRICTIONS......................................................................................................................275 VII. POST-EMPLOYMENT.......................................................................................................................................................277 A. TERMINATION OF EMPLOYMENT BY EMPLOYER...............................................................................................277 1. JUST CAUSES (Art. 297, LC; DOLE D.O. No. 147-15).......................................................................................279 2. AUTHORIZED CAUSES (Arts. 298-299, LC; DOLE D.O. No. 147-15)..........................................................294 3. DUE PROCESS REQUIREMENTS (Art. 292 (b), LC; DOLE D.O. No. 147-15)............................................306 B. TERMINATION OF EMPLOYMENT BY EMPLOYEE...............................................................................................310 A. RESIGNATION VS. CONSTRUCTIVE DISMISSAL (Art. 300, LC) ...................................................................311 B. ABANDONMENT ........................................................................................................................................................317 C. PREVENTIVE SUSPENSION (Secs. 3-4, Rule XIV, Book V, Omnibus Rules Implementing the Labor Code).......................................................................................................................................................................................317 D. RELIEFS FROM ILLEGAL DISMISSAL (Art. 294, LC)............................................................................................318 E. RETIREMENT (Art. 302, LC).......................................................................................................................................333 VIII. LABOR RELATIONS........................................................................................................................................................340 A. RIGHT TO SELF-ORGANIZATION...............................................................................................................................340 1. COVERAGE AND ELIGIBILITY FOR MEMBERSHIP; EXCEPTIONS (Arts. 253-255, LC; Secs. 1-2, Rule II, DOLE D.O. No. 40-03)...............................................................................................................................................340 2. DOCTRINE OF NECESSARY IMPLICATION (CONFIDENTIAL EMPLOYEES).............................................341 3. BARGAINING UNIT (Sec. 1(e), Rule I, DOLE D.O. No. 40-03) ......................................................................341 a. COMMINGLING OR MIXED MEMBERSHIP ....................................................................................................345 b. INCLUSION AS MEMBERS OF EMPLOYEES OUTSIDE THE BARGAINING UNIT (Art. 256, LC).....346 4. REGISTRATION OF UNIONS, CHARTERING, CANCELLATION OF REGISTRATION (Arts. 240, 241, 245 and 247, LC).....................................................................................................................................................................347 5. SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA) (Sec. 1(u), Rule I, DOLE D.O. No. 40-03); MODES TO ACQUIRE STATUS (DOLE D.O. No. 40-I-15) .....................................................................................348 a. SEBA CERTIFICATION (Sec. 1, Rule I, DOLE D.O. No. 40-03, as amended by DOLE D.O. No. 40-J- 22)..................................................................................................................................................................................349 b. CERTIFICATION AND CONSENT ELECTION (Rules VII and VIII, DOLE D.O. No. 40-03, as amended) ....................................................................................................................................................................350 c. BARS TO HOLDING OF CERTIFICATION ELECTION ...................................................................................354
- 13. LABOR LAW ANDSOCIAL LEGISLATIONS (Sec. 14, Rule VIII and Sec. 7, Rule XVII, , DOLE D.O. No. 40-03, as amended; Sec. 14(e), Rule III, Book V, Omnibus Rules Implementing the Labor Code).............................................................................354 d. FAILURE OF ELECTION, RUN-OF ELECTION, RE-RUN ELECTION (Secs. 17-19, Rule IX, DOLE D.O. No. 40-03, as amended)..........................................................................................................................................359 6. EMPLOYER AS A MERE BYSTANDER RULE (Sec. 1, Rule IX, DOLE D.O. No. 40-03, as amended) ...360 B. RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS ............................................................................................360 1. CHECK OFF, ASSESSMENT, AND AGENCY FEES (Arts. 250 (n), (o) and 259 (e), LC; Sec. 1, Rule XIII, DOLE D.O. No. 40-03)....................................................................................................................................................367 2. COLLECTIVE BARGAINING .....................................................................................................................................369 a. PROCEDURE IN BARGAINING (Art. 261, LC)................................................................................................370 b. DUTY TO BARGAIN COLLECTIVELY (Arts. 262-264, LC) .........................................................................371 c. ECONOMIC PROVISIONS AND CONDITIONS.................................................................................................372 d. NON-ECONOMIC PROVISIONS AND CONDITIONS......................................................................................373 e. MANDATORY PROVISIONS IN A COLLECTIVE BARGAINING AGREEMENT ........................................375 f. FREEDOM PERIOD.................................................................................................................................................375 g. UNION SECURITY CLAUSE..................................................................................................................................376 C. UNFAIR LABOR PRACTICES ........................................................................................................................................376 1. BY EMPLOYERS (Art. 259, LC)...............................................................................................................................377 2. BY LABOR ORGANIZATIONS (Art. 260, LC).......................................................................................................383 D. PEACEFUL CONCERTED ACTIVITIES .......................................................................................................................386 1. STRIKES, PICKETING, AND LOCKOUTS (Art. 278, LC; Rule XIII, Book V, Omnibus Rules Implementing the Labor Code) ................................................................................................................................387 2. ASSUMPTION OF JURISDICTION BY SECRETARY OF LABOR AND EMPLOYMENT (Art. 278 (g), LC; DOLE D.O. No. 40-H-13) ...............................................................................................................................................406 IX. JURISDICTION AND REMEDIES.....................................................................................................................................410 A. LABOR ARBITER.............................................................................................................................................................410 1. JURISDICTION (Arts. 124 and 224, LC; Sec. 10, R.A. No. 8042, as amended by R.A. No. 10022; Sec. 1, Rule V, 2011 NLRC Rules of Procedure, as amended) ..................................................................................410 2. MODE OF APPEAL TO THE NLRC (Rule VI, 2011 NLRC Rules of Procedure, as amended)..............415 3. REINSTATEMENT AND/OR EXECUTION PENDING APPEAL (Art. 229, LC; Sec. 12, Rule IX, 2011 NLRC Rules of Procedure, as amended) ................................................................................................................419 B. NATIONAL LABOR RELATIONS COMMISSION.......................................................................................................424 1. JURISDICTION.............................................................................................................................................................429 a. ORIGINAL (Arts. 225 (d), (e) and 278 (g), LC; Sec. 1, Rule XII, 2011 NLRC Rules of Procedure, as amended).....................................................................................................................................................................429 b. APPELLATE (Art. 129, LC; Sec. 1, Rule VI, 2011 NLRC Rules of Procedure, as amended)...........429 2. MODE OF APPEAL AND REQUISITES ..................................................................................................................429 C. COURT OF APPEALS; REQUISITES (Rule 65, ROC).............................................................................................430 D. SUPREME COURT; REQUISITES (Rule 45, ROC)..................................................................................................431 E. BUREAU OF LABOR RELATIONS; JURISDICTION AND PROCEDURE (Rule XI, DOLE D.O. No. 40- 03) ...................................................................................................................................................................................................432 F. NATIONAL CONCILIATION AND MEDIATION BOARD (E.O. No. 126, as amended by E.O. No. 251); CONCILIATION V. MEDIATION ........................................................................................................................................435 G. DOLE REGIONAL DIRECTORS; JURISDICTION (Arts. 128-129, LC; Secs. 2 and 3(a), Rule X, Book III, Omnibus Rules Implementing the Labor Code)......................................................................................................440 H. DOLE SECRETARY ..........................................................................................................................................................443 1. VISITORIAL AND ENFORCEMENT POWERS (Arts. 128 and 289, LC).......................................................445
- 14. 2024 GOLDEN NOTES 2.POWER TO SUSPEND EFFECTS OF TERMINATION (Art. 292 (b), LC)......................................................447 I. VOLUNTARY ARBITRATOR; JURISDICTION AND PROCEDURE (Arts. 274-277, LC; Revised Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings)..................................................................449 J. PRESCRIPTION OF ACTIONS .......................................................................................................................................455 1. MONEY CLAIMS (Art. 306, LC) ..............................................................................................................................455 2. ILLEGAL DISMISSAL (Art. 1146, NCC) ................................................................................................................455 3. UNFAIR LABOR PRACTICES (Art. 305, LC)........................................................................................................457 4. ILLEGAL RECRUITMENT (Sec. 12, R.A. No. 8042, as amended) ................................................................457 SUMMARY OF PRESCRIPTION OF ACTIONS ...................................................................................................................457 SUMMARY OF JURISDICTIONS ............................................................................................................................................458
- 15. LABOR LAW ANDSOCIAL LEGISLATIONS 1 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW LEGEND BFOQ - Bona Fide Occupational Qualification BLR - Bureau of Labor Relations CB - Collective Bargaining CBA - Collective Bargaining Agreement CBN - Collective Bargaining Negotiation CE - Certification Election DOLE - Department of Labor and Employment DMW - Department of Migrant Workers Ee - Employee Er - Employer GBOSH - Gender-Based Online Harrassment GBSH - Gender-Based Harrassment IRR - Implementing Rules and Regulations LA - Labor Arbiter LC - Labor Code LLO - Legitimate Labor Organization LOA - Leave of Absence MH - Muslim Holiday NCC - New Civil Code NCMB - National Conciliation and Mediation Board NLRC - National Labor Relations Commission NSD - Night Shift Differential OFW - Overseas Filipino Worker OT - Overtime PCE - Petition for Certification Election PEME - Pre-Employment Medical Examination POEA - Philippine Overseas Employment Administration PPD - Permanent Partial Disability PTD - Permanent Total Disability RD - Regional Director RH - Regular Holiday RTWPB - Regional Tripartite Wages and Productivity Boards RW - Regular Wage RWD - Regular Working Day SEBA - Sole and Exclusive Bargaining Agent SEnA - Single Entry Approach SLB - Special Leave Benefit SIL - Service Incentive Leave SOLE - Secretary of Labor and Employment ULP - Unfair Labor Practice UT - Undertime VA - Voluntary Arbitrator VR - Voluntary Recognition WD - Wage Distortion WRD - Weekly Rest Day I. FUNDAMENTAL PRINCIPLES AND CONCEPTS A. SOURCES OF LABOR LAWS 1. 1987 CONSTITUTION Declaration of Principles and State Policies 1. Sec. 9, Art. II – 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. Sec. 10, Art. II – The State shall promote social justice in all phases of national development. 3. Sec. 14, Art. II - The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. Law: R.A. No. 9710 – Magna Carta of Women 4. Sec. 18, Art. II – The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. 5. Sec. 20, Art. II – The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investments.
- 16. 2024 GOLDEN NOTES 2 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Bill of Rights 1. Sec. 1, Art. III - No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws. 2. Sec. 4, Art. III – No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. 3. Sec. 8, Art. III – The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. Law: E.O. No. 180 s. 1987 providing guidelines for the exercise of the right to organize of government Ees, creating a Public Sector Labor Management Council and for other purposes. 4. Sec. 10, Art. III – No law impairing the obligation of contracts shall be passed. 5. Sec. 16, Art. III – All persons shall have the right to a speedy disposition of their cases before all judicial, quasi-judicial, or administrative bodies. 6. Sec. 18(2), Art. III – No involuntary servitude in any form shall exist except as a punishment for a crime whereof the party shall have been duly convicted. Social Justice and Human Rights 1. Sec. 2, Art. XIII – The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. 2. Sec. 3, Art. XIII – 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 self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and Ers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and Ers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns to investments, and to expansion and growth. 3. Sec. 13, Art. XIII – The State shall establish a special agency for disabled persons for their rehabilitation, self-development and self- reliance and their integration into the mainstream of society. Law: R.A. No. 7277 – Magna Carta for Disabled Person 4. Sec. 14, Art. XIII – The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation. Law: R.A. No. 9710 – Magna Carta of Women Q: Are the constitutional provisions on labor self-executing? A: The constitutional mandates of protection to labor and security of tenure may be deemed as self- executing in the sense that these are automatically acknowledged and observed without need for any enabling legislation. However, to declare that the constitutional provisions are enough to guarantee
- 17. LABOR LAW ANDSOCIAL LEGISLATIONS 3 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW the full exercise of the rights embodied therein, and the realization of ideals therein expressed, would be impractical, if not unrealistic. The espousal of such view presents the dangerous tendency of being overbroad and exaggerated. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) Basic Rights of Workers Guaranteed by the Constitution 1. Security of tenure; 2. Living wage; 3. Share in the fruits of production; 4. Just and humane working conditions; 5. Self-organization; 6. Collective bargaining; 7. Collective negotiations; 8. Engage in peaceful concerted activities, including the right to strike; and 9. Participate in policy and decision-making processes. (Sec. 3, Art. XIII, 1987 Constitution) Rights of Management It should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which are entitled to respect and enforcement in the interest of simple fair play. (Sosito v. Aguinaldo Development Corp., G.R. No. 48926, 24 Dec. 1987) NOTE: The Secretary of Labor (SOLE) is duly mandated to equally protect and respect not only the laborer, but also the management. Fundamental Management Rights (S-P-I-T) 1. Right to Select Ees; 2. Right to Prescribe rules; 3. Right to reasonable return on Investments; and 4. Right to Transfer or discharge Ees. Management has the right to regulate all aspects of employment which include, among others, work assignment, working methods and place, and manner of work. (Marsman & Co., Inc. v. Sta. Rita, G.R. No. 194765, 23 Apr. 2018) Restrictions to Management Rights Management rights are never absolute. Under the Constitution, the right to own and operate economic enterprises is subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. Management rights are subject to limitations provided by: 1. Law; 2. Contract, whether individual or collective; and 3. General principles of fair play and justice. Balancing of Rights between Labor and Capital 1. It should not be deduced that the basic policy is in favor of labor to prejudice capital. The basic policy is to balance or to coordinate the rights and interests of both workers and Ers. (Azucena, 2016) Arts. 3 and 4 of the Labor Code (LC) explicitly recognize shared responsibility of the Ers and workers and the right of enterprise to reasonable returns on investment and to expansion and growth. (Ibid.) 2. In employment bargaining, there is no doubt that the Er stands on higher footing than the Ee. 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 or her from abuses brought about by the necessity for survival. (Sanchez v. Harry Lyons Construction Inc., G.R. No. L-2779, 18 Oct. 1950) 3. Yet, the Constitution has not overlooked the rights of capital. The State is mandated to regulate the relations between workers and Ers. While labor is entitled to a just share in the fruits of production, the enterprise has the right not only to reasonable returns on investments, but also to expansion and growth. (Sec. 3, Art. XIII, 1987 Constitution)
- 18. 2024 GOLDEN NOTES 4 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Q: What are the salient features of the protection to labor provision of the Constitution? (1998 BAR) A: The salient features of the Protection to Labor provision of the Constitution are as follows: 1) Extent of Protection – Full protection to labor; 2) Coverage of Protection – Local and overseas, organized and unorganized; 3) Employment Policy – Full employment and equality of employment opportunities for all; Guarantees: 4) Unionism and Method of Determination of Conditions of Employment – Right of all workers to self-organization, CBNs; 5) Concerted Activities – Right to engage in peaceful concerted activities, including the right to strike in accordance with law; 6) Working Conditions – Right to security of tenure, humane conditions of work, and a living wage; 7) Decision Making Processes – Right to participate in policy and decision-making processes affecting their rights and benefits as may be provided by law; and 8) Share in Fruits of Production – Recognition of right of labor to its just share in fruits of production. (Sec. 3, Art. XIII, 1987 Constitution) Q: In her State of the Nation Address (SONA), the President stressed the need to provide an investor-friendly business environment so that the country can compete in the global economy that now suffers from a crisis bordering on recession. Responding to the call, Congress passed two innovative legislative measures, namely: (1) a law abolishing the security of tenure clause in the Labor Code; and (2) a law allowing contractualization in all areas needed in the employer’s business operations. However, to soften the impact of these new measures, the law requires that all employers shall obtain mandatory unemployment insurance coverage for all their employees. The constitutionality of the two (2) laws is challenged in court. As Judge, how will you rule? (2009 BAR) A: If I were the Judge, I would rule against the constitutionality of the first law and rule in favor of the constitutionality of the second law. As to the first innovative measure, which abolishes the security of tenure clause in the LC, is unconstitutional as it goes against the constitutional provision granting workers the right to security of tenure under Sec. 3, Art. XIII, of the 1987 Constitution. As to the second innovative measure, which allows contractualization in all areas needed in the employer’s business operations, is constitutional. There is no constitutional prohibition against contractualization. However, the new law cannot prejudice employees who have acquired security of tenure. 2. CIVIL CODE 1. Art. 19 – Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This is known as the “Principle of Abuse of Rights.” 2. Art. 1700 – The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lock outs, closed-shop, wages, working conditions, hours of labor, and similar subjects.
- 19. LABOR LAW ANDSOCIAL LEGISLATIONS 5 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 3. Art. 1701 – Neither capital nor labor shall act oppressively against the other or impair the interest or convenience of the public. This is known as the “Principle of Non- Oppression.” 4. Art. 1702 – In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. 5. Art. 1703 – No contract which practically amounts to involuntary servitude, under any guise whatsoever, shall be valid. 6. Art. 1704 – In collective bargaining, the labor union or members of the board or committee signing the contract shall be liable for non- fulfillment thereof. 7. Art. 1705 – The laborer’s wages shall be paid in legal currency. 8. Art. 1706 – Withholding of the wages, except for a debt due, shall not be made by the employer. 9. Art. 1707 – The laborer’s wages shall be a lien on the goods manufactured or the work done. 10. 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. 11. Art. 1709 – The employer shall neither seize nor retain any tool or other articles belonging to the laborer. 12. Art. 1710 – Dismissal of laborers shall be subject to the supervision of the Government, under special laws. 13. Art. 1711 – Owners of enterprises and other employers are obliged to pay compensation for the death of or injuries to their laborers, workmen, mechanics, or other employees, even though the event may have been purely accidental or entirely due to a fortuitous cause, if the death or personal injury arose out of and in the course of the employment. The employer is also liable for compensation if the employee contracts any illness or disease caused by such employment or as the result of the nature of the employment. If the mishap was due to the employee's own notorious negligence, or voluntary act, or drunkenness, the employer shall not be liable for compensation. When the employee's lack of due care contributed to his death or injury, the compensation shall be equitably reduced. 14. Art. 1712 – If the death or injury is due to the negligence of a fellow worker, the latter and the employer shall be solidarily liable for compensation. If a fellow worker's intentional or malicious act is the only cause of the death or injury, the employer shall not be answerable, unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the plaintiff's fellow worker. 3. LABOR CODE Presidential Decree (P.D.) No. 442, otherwise known as the “Labor Code of the Philippines”, is a decree instituting a Labor Code, thereby revising and consolidating labor and social laws to afford protection to labor, promote employment and human resources development, and ensure industrial peace based on social justice. It is a charter of human rights and a bill of obligations for every working man. Date of Effectivity P.D. No. 442 was signed into law on 01 May 1974 and took effect on 01 Nov. 1974, six (6) months after its promulgation. Declaration of Basic Policy The State shall: 1. Afford full protection to labor; 2. Promote full employment; 3. Ensure equal work opportunities regardless of sex, race, or creed;
- 20. 2024 GOLDEN NOTES 6 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 4. Regulate the relations between workers and Ers; and 5. Assure the rights of workers to self- organization, collective bargaining, security of tenure, and just and humane conditions of work. (Art. 3, LC) Rule-Making Power Granted by the Labor Code The Department of Labor and Employment (DOLE) through the SOLE and other Government agencies charged with the administration and enforcement of the LC or any of its parts shall promulgate the necessary IRRs. (Art. 5, LC) Limitations to the Rule-Making Power Granted by the Labor Code 1. It must be issued under the authority of law; 2. It must not be contrary to law and the Constitution; and 3. It must not go beyond the law itself. A rule or regulation promulgated by an administrative body to implement a law in excess of its rule-making power is void. (Azucena, 2016) An administrative interpretation which takes away a benefit granted in the law is ultra vires, that is, beyond one’s power. (CBTC Employees Union v. Clave, G.R. No. L-49582, 07 Jan. 1986) Applicability of Labor Code GR: All rights and benefits granted to workers under the LC shall apply alike to all workers, whether agricultural or non-agricultural. (Art. 6, LC) XPNs: 1. Government Ees; 2. Ees of government-owned and controlled corporations (GOCCs) created by special or original charter; 3. Foreign governments; 4. International agencies; NOTE: International organizations and intergovernmental bodies are not covered by the Philippine Labor Laws. The remedy of the aggrieved Ee is to file a complaint before the Department of Foreign Affairs (DFA). (Duka, 2016) 5. Corporate officers/intra-corporate disputes under P.D. No. 902-A and now falls under the jurisdiction of the regular courts pursuant to the Securities Regulation Code (SRC); 6. Local water district, except where the NLRC’s jurisdiction is invoked; and 7. As may otherwise be provided by the LC. Test to Determine the Applicability of the LC to GOCCs When a GOCC is created by a special charter, it is subject to the provisions of the Civil Service Law. while those incorporated under the general corporation law are subject to the provisions of the LC. (PNOC-EDC v. Leogardo, G.R. No. 58494, 05 July 1989) Labor Dispute between Government Ees It is the Public Sector Labor-Management Council, not the DOLE, which shall hear the dispute. (Sec. 15, E.O. No. 180, 01 June 1987) Applicability without Er-Ee Relationship The LC may apply even if the parties are not Ers and Ees of each other. It is not correct to say that employment relationship is a pre-condition to the applicability of the Code (e.g., illegal recruitment, misuse of POEA license). (Azucena, 2016) Likewise, in legitimate independent job- contracting arrangements under Art. 106 of the LC, in case of non-payment of the wages of the agency Ees and other monetary benefits under the Service Contract, said monetary claims shall be the joint and solidary liability of the principal and the job contractor. So too, in security of tenure cases where the agency Ees are claiming that they are regular Ees already of the principal where they occupy core positions and performing functions which are necessary and desirable in the usual business or trade of the principal who likewise gets to exercise control and supervision over them. (Cacho, 2022)
- 21. LABOR LAW ANDSOCIAL LEGISLATIONS 7 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Extraterritorial Application of LC Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and Ers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. (PNB v. Cabansag, G.R. No. 157010, 21 June 2005) GR: The general rule is that Philippine laws apply even to overseas employment contracts. (IPAMS v. De Vera, G.R. No. 205703, 07 Mar 2016) Rationale: This rule is rooted in the constitutional provision of Sec. 3, Art. XIII that the State shall afford full protection to labor, whether local or overseas. Hence, even if the OFW has his employment abroad, it does not strip him of his rights to security of tenure, humane conditions of work and a living wage under our Constitution. (Ibid.) XPN: The parties may agree that a foreign law shall govern the employment contract, provided that: 1. It is expressly stipulated in the overseas employment contract that a specific foreign law shall govern; 2. The foreign law invoked must be proven before the courts pursuant to the Philippine rules on evidence; 3. The foreign law stipulated in the overseas employment contract must not be contrary to law, morals, good customs, public order, or public policy of the Philippines; and 4. The overseas employment contract must be processed through the POEA. (Ibid.) Q: One of Pacific Airline's policies was to hire only single applicants as flight attendants, and considered as automatically resigned the flight attendants at the moment they got married. Is the policy valid? Explain your answer. (2017 Bar) A: The policy is NOT VALID. It violates the provision on stipulations against marriage under Art. 136 (now Art. 134) of the LC, which provides that: “It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate, or otherwise prejudice a woman employee merely by reason of her marriage." 4. DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) ISSUANCES Power to Promulgate Rules and Regulations The DOLE and other government agencies charged with the administration and enforcement of the LC or any of its parts shall promulgate the necessary implementing rules and regulations. (Art. 5, LC) Date of Effectivity Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation. (Ibid.) Examples of DOLE Issuances 1. Joint Circulars, 2. Department Orders, 3. Guidelines, 4. Implementing Rules and Regulations, 5. Labor Advisory, 6. Memorandum Circulars, 7. Joint Advisories, and 8. Joint Memorandums.
- 22. 2024 GOLDEN NOTES 8 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. JURISPRUDENCE Judicial decisions applying to or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines. (Art. 8, NCC) B. STATE POLICIES 1. LABOR AS PRIMARY SOCIAL ECONOMIC FORCE (Sec. 18, Art. II, 1987 Constitution) The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. (Sec. 18, Art. II, 1987 Constitution) Labor It is the exertion by human beings of physical or mental efforts, or both, towards the production of goods and services. (Poquiz, 2012) Labor Law as Social Legislation Labor laws, foremost of which is the LC, are pieces of social legislation. They are means for effecting social justice, pursuant to the constitutional recognition of labor as a primary social economic force, and to the constitutional mandates for the State to protect the rights of workers and promote their welfare, and for Congress to give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, and reduce social, economic, and political inequalities. (Rivera v. Genesis Transport Service, Inc., G.R. No. 215568, 03 Aug. 2015) Social Legislation It refers to all laws passed by the State to promote public welfare. Social legislation involves laws that provide specific type of protection or benefits to society or segments thereof in furtherance of social justice. It includes statutes intended to enhance the welfare of the people even where there is no Er-Ee relationship. (e.g., GSIS Law, SSS Law, PhilHealth, Agrarian Laws) Labor Legislation vs. Social Legislation Labor Legislation Social Legislation Directly affects employment (e.g. wages) Governs effects of employment (e.g. compensation for injuries) Refers to labor statutes like Labor Relations Law and Labor Standards Law Refers to Social Security Laws Focuses on the rights of the worker in the workplace Focuses on the particular part of the society or segment thereof. NOTE: All labor laws are social legislation, but not all social legislation is labor law. Social legislation as a concept is broader while labor laws are narrower. (Duka, 2016) 2. FULL PROTECTION TO LABOR (Sec. 3, Art. XIII, 1987 Constitution) 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. (Sec. 3(1), Art. XIII, 1987 Constitution) Due to labor’s economic dependence upon the capital, it is considered the weaker factor of production and therefore needs protection from the State. (Poquiz, 2018) Limitation of Protection The Constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of the Court to the cause of labor does not prevent it from sustaining the employer when it is in the right. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the
- 23. LABOR LAW ANDSOCIAL LEGISLATIONS 9 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW employer. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) 3. SECURITY OF TENURE (Sec. 3, Art. XIII, 1987 Constitution) They shall be entitled to security of tenure, humane conditions of work, and a living wage. (Sec. 3(2), Art. XIII, 1987 Constitution) No worker shall be dismissed except for a just or authorized cause provided by law and after due process. (Art. 294, LC) Security of Tenure is the right not to be removed from one’s job without valid cause and valid procedure. It extends to regular as well as non- regular employment. (Kiamco v. NLRC, G.R. No. 129449, 29 June 1999) Right to Labor as a Property Right One's employment, profession, trade, or calling is a property right, of which a worker may be deprived only upon compliance with due process requirements. (Rance v. NLRC, G.R. No. 68147, 30 June 1988) The Constitutional guarantee of security of tenure is an act of social justice. When a person has no property, his job may possibly be his only possession or means of livelihood. Therefore, he should be protected against any arbitrary deprivation of his job. (Ibid.) A profession, trade or calling is a property right within the meaning of our constitutional guarantees. One cannot be deprived of the right to work and the right to make a living because these rights are property rights, the arbitrary and unwarranted deprivation of which normally constitutes an actionable wrong. To Filipino workers, the rights guaranteed under the foregoing constitutional provision translate to economic security and parity85 that inevitably determine their quality of life. While the right to life under Art. III, Sec. 1 guarantees essentially the right to be alive — upon which the enjoyment of all other rights is preconditioned, it does not refer to mere existence but to a secure quality of life, which is inextricably woven to a person's right to work and right to earn a living. (Lagamayo v. Cullinan Group, Inc., G.R. No. 227718, 11 Nov. 2021) 4. SOCIAL JUSTICE (Sec. 10, Art. II, 1987 Constitution; Art. 218, LC, as renumbered by DOLE D.A. No. 01-2015) The State shall promote social justice in all phases of national development. (Sec. 10, Art. II, 1987 Constitution) It is the policy of the State to promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development. (Art. 218, LC) Social Justice It is "neither communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. (Calalang v. Williams, G.R. No. 47800, 02 Dec. 1940) Social justice means the promotion of the welfare of all the people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through the adoption of measures legally justifiable, or extra- constitutionally, through the exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema lex. (Ibid.) 5. EQUAL WORK OPPORTUNITIES (Sec. 3, Art. XIII, 1987 Constitution; Art. 3, LC) The State shall afford full protection to labor, local and overseas, organized, and unorganized, and promote full employment and equality of
- 24. 2024 GOLDEN NOTES 10 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES employment opportunities for all. (Sec. 3(1), Art. XIII, 1987 Constitution) The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and Ers. (Art. 3, LC) Prohibition on Discrimination on Account of Sex It shall be unlawful for any employer to discriminate against any woman employee with respect to terms and conditions of employment solely on account of her sex. The following are acts of discrimination: a. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female employee as against a male employee, for work of equal value; and b. Favoring a male employee over a female employee with respect to promotion, training opportunities, study, and scholarship grants solely on account of their sexes. (Art. 133, LC) Magna Carta for Disabled Persons No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives, or allowances as a qualified able-bodied person. (Sec. 5, R.A. No. 7277) Equal Work Opportunities vs. Equal Protection Clause Under the Constitution of the United States, the assurance of equality in employment and work opportunities regardless of sex, race, or creed is also given by the equal protection clause of the Bill of Rights. (Shauf v. Court of Appeals, G.R. No. 90314, 27 Nov. 1990) 6. RIGHT TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING (Sec. 3, Art. XIII, 1987 Constitution; Arts. 3 and 253, LC) The State shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. (Sec. 3(2), Art. XIII, 1987 Constitution) The State shall assure the right of workers to self- organization, collective bargaining, security of tenure, and just and humane conditions of work. (Art. 3, LC) All persons employed in commercial, industrial, and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent, and itinerant workers, self-employed people, rural workers, and those without any definite employers may form labor organizations for their mutual aid and protection. (Art. 253, LC) Right to Self-Organization It refers to the right of workers and Ees to form, join, or assist unions, organizations, or associations for purposes of collective bargaining and/or for mutual aid and protection, including the right to engage in peaceful concerted activities and participate in policy-decision making processes affecting their rights and benefits. NOTE: Contracting and subcontracting arrangements are expressly allowed by law and are subject to regulation for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization, and collective bargaining. Labor-only contracting shall be prohibited. (Sec. 1, D.O. No. 18-02 s. 2002)
- 25. LABOR LAW ANDSOCIAL LEGISLATIONS 11 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Extent of the Right to Self-Organization It includes at least two (2) rights: 1. The right to form, join, or assist labor organizations; and 2. The right to engage in lawful concerted activities. (Art. 257, LC) Purpose of Exercise of Right to Self-Organization 1. Collective bargaining; and 2. Mutual aid and protection. (Ibid.) NOTE: Workers organize for self-advancement and the desire for job security, substituting “rule of law” for the arbitrary power by the boss, and sense of participation in the business enterprise. (Azucena, 2016) Non-Abridgment of Right to Self-Organization The right to form, join, or assist a union is specifically protected by the Constitution and such right shall not be abridged. Art. 257 of the LC empathically relates to the policy of the State to promote and emphasize the primacy of free collective bargaining and negotiations, free trade unionism, and free and voluntary organization of a strong and united labor movement. (Chan, 2019) Who May Form a Labor Organization 1. All persons employed in Commercial, Industrial, and Agricultural enterprises and in Religious, Charitable, Medical, or Educational institutions, whether operating for profit or not; (Art. 253, LC) (CIA-CREM) 2. Ambulant, Intermittent, and Itinerant workers, Self-employed people, Rural workers and those Without any definite Ers may form labor organizations for their mutual aid and protection; (Ibid.) (AI2R-WiSe) 3. Aliens working in the country with valid permits issued by the DOLE may exercise the right to self-organization and join or assist labor organizations of their own choosing for purposes of collective bargaining: Provided, that said aliens are nationals of a country which grants the same or similar rights to Filipino workers; (Art. 284, LC) (Principle of Reciprocity) 4. Ees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective Ers. All other Ees in the civil service shall have the right to form associations for purposes not contrary to law. (Art. 254, LC) Q: Is the formation of workers’ association for mutual aid and protection (instead of a union for purposes of collective bargaining) limited only to ambulant, intermittent, and itinerant workers, self-employed people, rural workers, and those without any definite Ers? A: NO. The right to self-organization includes the right to form a union, workers' association, and labor management councils. More often than not, the right to self-organization connotes unionism. Workers, however, can also form and join a workers' association as well as Labor Management Councils (LMC). The right to form a union or association or to self- organization comprehends two notions, to wit: (a) the liberty or freedom, that is, the absence of restraint which guarantees that the Ee may act for himself without being prevented by law; and (b) the power, by virtue of which an Ee may, as he pleases, join or refrain from joining an association. (Samahan ng Manggagawa sa Hanjin Shipyard v. BLR, G.R. No. 211145, 14 Oct. 2015)
- 26. 2024 GOLDEN NOTES 12 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Collective Bargaining vs. Dealing with Employer COLLECTIVE BARGAINING DEALING WITH ER A right that may be acquired by a labor organization after registering itself with the DOLE and after being recognized or certified by DOLE as the exclusive bargaining representative of the Ees. (Azucena, 2013) A generic description of interaction between Er and Ees concerning grievances, wages, work hours, and other terms and conditions of employment, even if the Ees’ group is not registered with the DOLE. (Azucena, 2013) Prohibitions on Collective Bargaining 1. No labor organization or employer shall declare a strike or lockout without first having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the preceding Art. or without the necessary strike or lockout vote first having been obtained and reported to the Ministry. No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. 2. No person shall obstruct, impede, or interfere with by force, violence, coercion, threats or intimidation, any peaceful picketing by employees during any labor controversy or in the exercise of the right to self-organization or collective bargaining, or shall aid or abet such obstruction or interference. 3. No employer shall use or employ any strike breaker, nor shall any person be employed as a strike-breaker. 4. No public official or employee, including officers and personnel of the New Armed Forces of the Philippines or the Integrated National Police, or armed person, shall bring in, introduce, or escort in any manner, any individual who seeks to replace strikers in entering or leaving the premises of a strike area, or work in place of the strikers. The police force shall keep out of the picket lines unless actual violence or other criminal acts occur therein: Provided, That nothing herein shall be interpreted to prevent any public officer from taking any measure necessary to maintain peace and order, protect life and property, and/or enforce the law and legal orders. 5. No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public thoroughfares. (Art. 279, LC) Q: Juicy Bar and Night Club allowed by tolerance 50 Guest Relations Officers (GROs) to work without compensation in its establishment under the direct supervision of its Manager from 8:00 P.M. To 4:00 A.M. everyday, including Sundays and holidays. The GROs, however, were free to ply their trade elsewhere at anytime, but once they enter the premises of the night club, they were required to stay up to closing time. The GROs earned their keep exclusively from commissions for food and drinks, and tips from generous customers. In time, the GROs formed the Solar Ugnayan ng mga Kababaihang lnaapi (SUKI), a labor union duly registered with DOLE. Subsequently, SUKI filed a petition for Certification Election in order to be recognized
- 27. LABOR LAW ANDSOCIAL LEGISLATIONS 13 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW as the exclusive bargaining agent of its members. Juicy Bar and Night Club opposed the petition for Certification Election on the singular ground of absence of employer-employee relationship between the GROs on one hand and the night club on the other hand. May the GROs form SUKI as a labor organization for purposes of collective bargaining? Explain briefly. (2012 BAR) A: YES. The GROs worked under the direct supervision of the Night Club Manager for a substantial period of time. Pursuant to Art. 138, with or without compensation, the GROs are deemed as employees. As such, they are entitled to all the rights and benefits granted to employees/workers under the Constitution and other labor legislation including the right to form labor organizations for purposes of collective bargaining. (Sec. 3, Art. XIII, 1987 Constitution; Art. 243, LC) NOTE: All persons employed in commercial, industrial, and agricultural enterprises and in religious, charitable, medical, or educational institutions, whether operating for profit or not, shall have the right to self-organization and to form, join, or assist labor organizations of their own choosing for purposes of collective bargaining. Ambulant, intermittent, and itinerant workers, self- employed people, rural workers, and those without any definite employers may form labor organizations for their mutual aid and protection. (Art. 253, LC) Employee for Purposes of Union Membership Any Ee, whether employed for a definite period or not, shall, beginning on his first day of service, be considered as an Ee for purposes of membership in any labor union. (Art. 292(c), LC) Employees Restricted to Form, Join, or Assist Labor Organizations 1. Managerial Ees, 2. Supervisory Ees, 3. Confidential Ees (in the field of labor relations), 4. Ee-members of a cooperative, 5. Government Ees, 6. Ees of international organizations, 7. Foreign workers, and 8. Religious objectors. Managerial Employee One who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline Ees. (Art. 219(m), LC) Types of Managers 1. First line managers (supervisors) – direct operations of Ees and not supervise other managers (e.g., foreman); 2. Middle managers – direct activities of other managers (e.g., plant managers); and 3. Top management – overall management of organization (e.g., SVP, President). (United Pepsi Cola Supervisory Union v. Laguesma, G.R. No. 122226, 25 Mar. 1998) Ineligibility of Managerial Employees Managerial Ees are not eligible to join, assist or form any labor organization. (Art. 255, LC) The mere fact that an Ee is designated as “manager” does not ipso facto make him one. Designation should be reconciled with the actual job description of the Ee for it is the job description that determines the nature of employment. Thus, if the Ee does not participate in policy making but are given ready policies to execute and standard oractices to observe, thus having little freedom of action, they are not managerial Ees. (NWSA v. NWSA, 11 SCRA 766) NOTE: The rationale for the inhibition is that if managerial Ees would belong to or be affiliated with a union, the latter might not be assured of their loyalty to the union in view of evident conflict of interests. The union can become company- dominated with the presence of managerial Ees in the union membership. (Bulleting Publishing Co., Inc. v. Hon. Sanchez, G.R. No. 74425, 07 Oct. 1986)
- 28. 2024 GOLDEN NOTES 14 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Managerial Ees cannot be allowed to share in the concessions obtained by the labor union through collective negotiation. Otherwise, they would be exposed to the temptation of colluding with the union during the negotiations to the detriment of the Er. (Azucena, 2016) Supervisory Employee One who, in the interest of the Er, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. (Art. 219(m), LC) NOTE: Supervisory Ees are allowed to organize, but they cannot form, join, or assist a rank-and-file union. (Azucena, 2016) Security guards are not included in the disqualification. (Sec. 6, D.O. 150-16, s. 2016) Confidential Employees in the Field of Labor Relations One who assists and acts in a confidential capacity to, or has access to confidential matters of, persons who exercise managerial functions in the field of labor relations. (Philips Industrial Development v. NLRC, G.R. No. 88957, 25 June 1992) NOTE: The phrase “in the field of labor relations” is important because it stresses the labor nexus, that is, the confidentiality of the position should relate to labor relations matters. Doctrine of Necessary Implication The reason for ineligibility of managerial Ees to form, assist, or join a labor union equally applies to confidential Ees. While the Labor Code singles out managerial Ees as ineligible to join, under the doctrine of necessary implication, confidential Ees are similarly disqualified. (NATU - Republic Planters Bank Supervisors Chapter v. Hon. Torres, G.R. No. 93468, 29 Dec. 1994) Examples of confidential Ees who could not unionize: 1. Bank cashiers 2. Accounting personnel 3. Radio and telegraph operators who have access to confidential information 4. Personnel staff Human Resource Assistants and Personnel Assistants are Considered Confidential Employees As a Human Resource Assistant, the scope of one’s work necessarily involves labor relations, recruitment and selection of Ees, access to Ees' personal files and compensation package, and human resource management. (San Miguel Foods Inc. v. San Miguel Corporation Supervisors and Exempt Union, G.R. No. 146206, 01 Aug. 2011) As regards a Personnel Assistant, one's work includes the recording of minutes for management during CB negotiations, assistance to management during grievance meetings and administrative investigations, and securing legal advice for labor issues from the petitioner’s team of lawyers, and implementation of company programs. (Ibid.) Therefore, in the discharge of their functions, both gain access to vital labor relations information which outrightly disqualifies them from union membership. (Ibid.) Payroll Masters are Not Confidential Employees A confidential Ee is one entrusted with confidence on delicate, or with the custody, handling or care and protection of the Er’s property. Confidential Ees, such as accounting personnel, should be excluded from the bargaining unit, as their access to confidential information may become the source of undue advantage. (Ibid.) However, such fact does not apply to the position of Payroll Master and the whole gamut of Ees who has access to salary and compensation data. The position of Payroll Master does not involve dealing with confidential labor relations information in the course of the performance of his functions. Since
- 29. LABOR LAW ANDSOCIAL LEGISLATIONS 15 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW the nature of his work does not pertain to company rules and regulations and confidential labor relations, it follows that he cannot be excluded from the subject bargaining unit. (Ibid.) Employee-Member of a Cooperative An Ee of a cooperative who is also a member and co- owner thereof cannot invoke the right to collective bargaining, for an owner cannot bargain with himself or his co-owners. (San Jose Electric Service Cooperative, Inc. v. Ministry of Labor, G.R. No. 77231, 31 May 1989) NOTE: Even if Ee-members of a cooperative cannot form a union, they may, however, form an association for their mutual aid and protection as Ees. (Azucena, 2016) Q: A, an Ee of XYZ Cooperative, owns 500 shares in the cooperative. He has been asked to join the XYZ Cooperative Ees Association. He seeks your advice on whether he can join the association. What advice will you give him? (2010 BAR) A: A cannot join XYZ Cooperative Ees Association because owning shares makes him a co-owner thereof. An Ee-member of a cooperative cannot join a union and bargain collectively with his cooperative for an owner cannot bargain with himself and his co- owners. (Cooperative Rural Bank of Davao City v. Calleja, G.R. No. 143616, 09 May 2001) Government Employees Ees of government corporations established under the Corporation Code shall have the right to organize and to bargain collectively with their respective Ers. All other Ees in the civil service shall have the right to form associations for purposes not contrary to law. (Art. 254, LC) Government Employees have the Right to Self- Organization The highest law of the land guarantees to government Ees the right to organize and to negotiate, but not the right to strike. (Azucena, 2016) The right to self-organization of government Ees pertains to all branches, subdivisions, instrumentalities, and agencies of the Government, including GOCCs with original charters. (Sec. 1, E.O. No. 180) Government Ees’ Right to Organize is for a Limited Purpose The right of government Ees to “form, join, or assist Ees’ organizations of their own choosing” under E.O. No. 180 is not regarded as existing or available “for purposes of collective bargaining,” but simply “for the furtherance and protection of their interests.” (Arizala v. CA, G.R. No. L-43633-34, 14 Sept. 1990) Only terms and conditions not fixed by law may be the subject of negotiation by the duly recognized Ees’ organization of government Ees and the appropriate government authorities. Terms and conditions of employment that are fixed by law are excluded from negotiation. (Sec. 13, E.O. No. 180) Matters that are declared to be “not negotiable” are matters “that require appropriation of funds” and “those that involve the exercise of management prerogatives.” Considered negotiable are such matters as schedule of vacation, leaves, etc. (Azucena, 2016) Q: Royal Savings Bank (RSB), organized and incorporated as a thrift bank entered into a Memorandum of Agreement with Commercial Bank of Manila to rehabilitate and infuse capital into RSB. RSB was renamed ComSavings Bank (CB). In 1987, the GSIS transferred its holdings from Commercial Bank of Manila to Boston Bank. CB was not included in the transfer. Due to Boston Bank’s acquisition of Commercial Bank of Manila, the GSIS took over the control and management of CB. Sometime in 2001, CB changed its name to GSIS Family Bank. On 06 June 2011, President Aquino signed into law R.A. No. 10149, or the GOCC Governance Act of 2011. The law created the Governance Commission for Government- Owned or Controlled Corporations (Governance Commission). On 20 Dec. 2013, counsel for the GSIS Union sent GSIS Family Bank a demand
- 30. 2024 GOLDEN NOTES 16 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES letter for the payment of Christmas bonus to its members, as stipulated in their CBA. The GSIS Family Bank's refused to negotiate a new CBA. Thus, the GSIS Union filed a Complaint before the NCMB. They aimed to compel GSIS Family Bank to abide by the provisions of their existing CBA. Can the GSIS Family Bank, a non-chartered government-owned or controlled corporation, enter into a CBA with its Ees? A: NO. R.A. No. 10149 directed the Governance Commission to develop a Compensation and Position Classification System, to be submitted for the President's approval, which shall apply to all officers and Ees of government-owned or controlled corporations, whether chartered or non-chartered. On 22 Mar. 2016, President Aquino issued E.O. No. 203, which approved the compensation and classification standards and the Index of Occupational Services Framework developed and submitted by the Governance Commission. When it comes to collective bargaining agreements and collective negotiation agreements in GOCCs, E.O. No. 203 unequivocally stated that while it recognized the right of workers to organize, bargain, and negotiate with their Ers, the Governing Boards of all covered GOCCs, whether Chartered or non- chartered, may not negotiate with their officers and Ees the economic terms of their CBAs. (GSIS Family Bank Ees Union v. Secretary Villanueva, G.R. No. 210773, Jan. 23, 2019) Members of AFP, Police Officers, Policemen, Firemen, and Jail Guards Sec. 4 of E.O. No. 180 excludes members of AFP, police officers, policemen, firemen, and jail guards from unionizing for reasons of security and safety. High-Level Government Employees One whose functions are normally considered policy determining, managerial, or one whose duties are highly confidential in nature. They cannot join the organization of rank-and-file government Ees. (Sec. 3, E.O. No. 180) NOTE: In the public sector, there are only two levels of position: high level and rank-and-file. Q: How does the government employees’ right to self-organization differ from that of the employees in the private sector? (1996 BAR) A: In the public sector, E.O. No. 180, the purpose of self-organization is stated as for the furtherance and protection of their interest. In the private sector, Art. 243 (now 253) of the LC states, for the purpose of collective bargaining, and for the purpose of enhancing and defending their interests and for their mutual aid and protection. Furthermore, no less than the Constitution itself guarantees that all workers have the right to self- organization. (Sec. 3, Art. XIII, 1987 Constitution) Employees of International Organizations GR: International organizations are immune from Philippine jurisdiction. (i.e., ICMC, IRRI, ADB) Thus, a certification election cannot be conducted in an international organization which has been granted immunity from local jurisdiction. (ICMC v. Hon. Pura Calleja, G.R. No. 89331, 28 Sept. 1990) XPN: However, the international organization has the discretion to waive its immunity. Without such express waiver, the NLRC or its labor arbiters have no jurisdiction over international organizations, even in cases of alleged illegal dismissal of any of its Ees. (Callado v. IRRI, G.R. No. 106483, 22 May 1995) Foreign Workers GR: Foreigners are prohibited from engaging in all forms of trade union activities. XPN: However, an alien working in the country with a valid working permit may exercise the right to self- organization if they are nationals of a country which grants the same or similar right to Filipino workers. Q: Do the following workers have the right to self-organization? Reasons/basis. a. Employees of non-stock, non-profit organizations?
- 31. LABOR LAW ANDSOCIAL LEGISLATIONS 17 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW A: Even employees of non-stock non-profit organizations have the right to self-organization. This is explicitly provided for in Art. 243 (now 253) of the LC. A possible exception, however, are employee members of non-stock, non-profit cooperatives. b. Alien employees? A: Alien employees with valid work permits may exercise the right to self-organization on the basis of parity or reciprocity, that is, if Filipino workers in the aliens' country are given the same right. (Art. 269 (now Art. 284), LC) Religious Objectors; Iglesia Ni Cristo Members Members of religious sects cannot be compelled or coerced to join labor unions even when said unions have closed-shop agreements with the Ers. Free exercise of religious belief is superior to contract rights. In case of conflict, the latter must yield to the former. (Victoriano v. Elizalde Rope Worker’s Union, G.R. No. L-25246, 12 Sept. 1974) Religious Objectors can Form and Join their Own Union Recognition of the tenets of a sect should not infringe on the basic right to self-organization granted by the Constitution to workers, regardless of religious affiliation. (Kapatiran sa Meat and Canning Division v. Hon. Pura Calleja, G.R. No. L- 82914, 20 June 1988) NOTE: Religious objectors also have the right to vote in a certification election. (Reyes v. Trajano, G.R. No. 84433, 02 June 1992) Q: Do workers have a right not to join a labor organization? (2000 BAR) A: YES. The constitutional right to self-organization has two aspects, the right to join or form labor organizations and the right not to join said organization. (Victoriano v. Elizalde Rope Worker’s Union, G.R. No. L-25246, 12 Sept. 1974) Moreover, if they are members of a religious group whose doctrine forbids union membership, their right not to be compelled to become union members has been upheld. However, if the worker is not a "religious objector" and there is a union security clause, he may be required to join the union if he belongs to the bargaining unit. (Reyes v. Trajano, G.R. No. 84433, 2 June 1992) NOTE: The right to join a union includes the right to abstain from joining any union. (Victoriano v. Elizalde Rope Worker’s Union, G.R. No. L-25246, 12 Sept. 1974) The right of self-organization embraces not only the right to form, join or assist labor organizations, but the concomitant, converse right not to form, join or assist any labor union. (Reyes v. Trajano, G.R. No. 84433, 02 June 1992) 7. CONSTRUCTION IN FAVOR OF LABOR (Art. 4, LC; Art. 1702, NCC) All doubts in the implementation and interpretation of the provisions of the LC, including its IRRs, shall be resolved in favor of labor. (Art. 4, LC) In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. (Art. 1702, NCC) In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. (Art. 10, NCC) NOTE: The rule of construction in favor of labor applies only in case there is doubt. If the contractual provision is clear, then it must be applied in accordance with its expressed terms. (Poquiz, 2018) Protection to Labor When the conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of the latter must be counter- balanced by sympathy and compassion the law must accord the underprivileged worker. This is in line with the express mandate of the LC and the principle that those with less in life should have more in law. (Eastern Shipping Lines v. POEA, G.R. No. 76633, 18 Oct. 1998)
- 32. 2024 GOLDEN NOTES 18 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former’s favor. The policy is to extend the doctrine to a greater number of Ees who can avail themselves of the benefits under the law, which is in consonance with the policy of the State to give maximum aid and protection to labor. (Lepanto Consolidated Mining Co. v. Dumapis, G.R. No. 163210, 13 Aug. 2008) We need to protect labor because there is no doubt that the Er stands on higher footing than the Ee. First, there is greater supply than demand for labor. Secondly, the need for employment by labor comes from vital and even desperate necessity. Consequently, 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. (Sanchez v. Harry Lyons Construction, Inc., G.R. No. L-2779, 18 Oct. 1950) Q: Several Ees of Novo Jeans filed a case of illegal dismissal against Novo Jeans. However, Novo Jeans argued that they were able to present the First Notice of Termination of Employment sent to Ees, asking them to explain their sudden absence from work without proper authorization. In contrast, the Ees alleged that there were only sample letters of the Notices, and there was no evidence to prove that the Notices were sent to them at their last known addresses. They insist that if doubt exists between the evidence presented by the Er and the evidence presented by the Ees, the doubt must be resolved in favor of the Ees, consistent with the LC's policy to afford protection to labor. Are the Ees correct? A: YES. Under the law, where both parties in a labor case have not presented substantial evidence to prove their allegations, evidence will be considered in equipoise. In such a case, the scales of justice are tilted in favor of labor. (Hubilla v. HSY Marketing Ltd., Co., G.R. No. 207354, 10 Jan. 2018) Q: What is the concept of liberal approach in interpreting the Labor Code and its IRRs in favor of labor? (2006 BAR) A: The State is bound under the Constitution to afford full protection to Labor and when conflicting interests collide, they are to be weighed on the scales of social justice. The law should accord more sympathy and compassion to the less privileged workingman. (Fuentes v. NLRC, G.R. No. 110017, 02 Jan. 1997) However, it should be borne in mind that social justice ceases to be an effective instrument for the “equalization of the social and economic forces” by the State when it is used to shield wrongdoing. (Corazon Jamer v. NLRC, G.R. No. 112630, 05 Sept. 1997) Q: Clarito, an employee of Juan, was dismissed for allegedly stealing Juan’s wristwatch. In the illegal dismissal case instituted by Clarito, the Labor Arbiter, citing Art. 4 of the Labor Code, ruled in favor of Clarito upon finding Juan’s testimony doubtful. On appeal, the NLRC reversed the Labor Arbiter holding that Art. 4 applies only when the doubt involves “implementation and interpretation” of the Labor Code provisions. The NLRC explained that the doubt may not necessarily be resolved in favor of labor since this case involves the application of the Rules on Evidence, not the Labor Code. Is the NLRC correct? Reasons. (2017, 2009 BAR) A: NO. The NLRC is not correct. It is a well-settled doctrine that if doubts exist between the evidence presented by the employer and the employee, the scale of justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between laborer and master, doubts necessarily arising from the evidence, or in the implementation of the agreement and writing should be resolved in favor of the laborer. (Nicario v. NLRC, G.R. No. 125340, 17 Sept. 1998)
- 33. LABOR LAW ANDSOCIAL LEGISLATIONS 19 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Compassionate Justice The social justice policy mandates a compassionate attitude towards the working class in its relation to management. In calling for protection to labor, the Constitution does not condone wrongdoing by the Ee. However, it urges moderation of the sanctions that maybe applied to him or her in the light of the many disadvantages that weigh heavily on him or her like an albatross on his neck. It is disregarding rigid rules and giving due weight to all equities of the case. (Gandara Mill Supply v. NLRC, G.R. No. 126703, 29 Dec. 1998) Labor law determinations are not only secundum rationem (according to reason) but also secundum caritatem (according to charity). (Paz v. Northern Tobacco Redrying Co., Inc., G.R. No. 199554, 18 Feb. 2015) 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 or her from abuses brought about by the necessity for survival. (Azucena, 2016)
- 34. 2024 GOLDEN NOTES 20 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES II. RECRUITMENT AND PLACEMENT OF WORKERS A. RECRUITMENT AND PLACEMENT OF LOCAL AND MIGRANT WORKERS (Art. 13, LC) Recruitment and Placement It refers to: (C-E-T-C-H-U-P-C-R-A-P) 1. Any act of Canvassing, Enlisting, Transporting, Contracting, Hiring, Utilizing, or Procuring workers; and 2. Includes Contract services, Referrals, Advertising, or Promising for employment, locally or abroad, whether for profit or not. (Art. 13(b), LC) Persons Deemed Engaged in Recruitment and Placement Any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment This proviso was intended neither to impose a condition on the basic rule nor to provide an exception thereto but merely to create a presumption. The presumption is that the individual or entity is engaged in recruitment and placement whenever he or it is dealing with two or more persons to whom, in consideration of a fee, an offer or promise of employment is made in the course of the canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring of workers. (People v. Panis, G.R. L-58674-77, 11 July 1986) The definition of “recruitment and placement” under Art. 13(b) of the LC includes promising or advertising for employment, locally or abroad, whether for profit or not, provided, that any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement. (People v. Racho, G.R. No. 227505, 02 Oct. 2017) NOTE: Regardless of the number of persons dealt with, recruitment and placement are still constituted. The proviso merely lays down a rule of evidence that where a fee is collected in consideration of a promise or offer of employment to two (2) or more prospective workers, the individual or entity dealing with them shall be deemed to be engaged in the act of recruitment and placement. The words “shall be deemed” create that Thus, the Code applies to any recruitment or placement, whether for profit or not. The reference in the Code that any person who offers employment to “two or more persons” as being engaged in recruitment and placement does not mean that there must be at least two persons involved as this reference is merely evidentiary. Any person may be charged with illegal recruitment if they already charged fees even if they have not yet obtained employment for the applicant. (People v. Peredo, G.R. No. 211197, 28 Sept. 2016) Registration of Private Employment Agency 1. Citizenship Requirement a. For single proprietorship – the applicant must be a resident Filipino Citizen. b. For partnership or domestic corporation – at least 75% of the authorized capital stock must be owned and controlled by resident Filipino citizens; 2. Capital Requirement a. For single proprietorship – the applicant must have a minimum net worth of one million pesos (P1,000,000.00).
- 35. LABOR LAW ANDSOCIAL LEGISLATIONS 21 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW b. For partnership or domestic corporation – the applicant must have a minimum paid- up capital of one million pesos (P1,000,000.00), 75% of which must be owned by resident Filipinos as evidenced by the Articles of Partnership or Incorporation. (Sec. 1, Art. II, DOLE D.O. 217 s. 2020) Overseas Filipino Worker (OFW)/Migrant Worker A Filipino who is to be engaged, is engaged, or has been engaged in remunerated activity in a country of which he or she is not an immigrant, citizen, or permanent resident or is not awaiting naturalization, recognition, or admission, whether land-based or sea-based regardless of status; excluding a Filipino engaged under a government- recognized exchange visitor program for cultural and educational purposes. For purposes of this provision, a person engaged in remunerated activity covers a person who has been contracted for overseas employment but has yet to leave the Philippines, regardless of status, and includes “Overseas Contract Workers.” The term “OFW” is synonymous to “Migrant Worker.” (Sec. 3(f), R.A. No. 11641) Balik-Manggagawa 1. An OFW who is returning to the same employer; 2. An OFW who changed employer in the same jobsite provided he/she can show proof of his/her new employment contract duly verified by POLO; 3. Undocumented/Irregular workers like tourists, dependents, students, businessmen who became OFWs and have partially served their duly verified employment contracts; 4. An OFW who will transfer to another jobsite/country with the same employer, provided that the worker shall subsequently have another contract to be verified by the POLO in the receiving post. (Sec. 29, DOLE A.O. 168-13) Seafarer An OFW who is engaged in employment in any capacity on board a merchant marine vessel plying international waters or other sea-based craft of similar category. For purposes of this Act, it shall include fishers onboard commercial fishing vessels on international waters or as defined under relevant maritime conventions, cruise ship personnel, yacht crew, those serving on mobile offshore and drilling units in the high seas, and other persons similarly situated. (Sec. 3(j), R.A. No. 11641) NOTE: Those employed in non-mobile vessels or fixed structures, even if the said vessels/structures are located offshore or in the middle of the sea, cannot be considered as seafarers under the law. (V People Manpower Phils., Inc. v. Buquid, G.R. No. 222311, 10 Feb. 2021) Ethical Recruitment It refers to the lawful hiring of workers in a fair and transparent manner that respects and protects their dignity and human rights. (Sec. 3(b), R.A. No. 11641) 1. REGULATORY AUTHORITIES a. DEPARTMENT OF MIGRANT WORKERS (Secs. 4-6, R.A. No. 11641) The POEA created under E.O. No. 247, as amended, and all the entities, agencies and units are consolidated and merged, and hereby constituted as the Department of Migrant Workers (DMW). (Sec. 4, R.A. No. 11641) Consolidation and Merger of Agencies and Functions The following agencies are hereby consolidated and merged into and constituted as the Department, and their powers and functions subsumed to the Department which shall assume and perform all their powers and functions: 1. The POEA, as created under the E.O. No. 247 and R.A. No. 8042, as amended;
- 36. 2024 GOLDEN NOTES 22 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2. The Office of the Undersecretary for Migrant Workers' Affairs (OUMWA) of the DFA as provided under R.A. No. 8042, as amended; 3. All Philippine Overseas Labor Offices (POLO) under the DOLE; 4. The International Labor Affairs Bureau (ILAB) under the DOLE; 5. The National Reintegration Center for OFWs (NRCO) under the OWWA; 6. The National Maritime Polytechnic (NMP) under the DOLE; and 7. The Office of the Social Welfare Attaché (OSWA) under the DSWD. (Sec. 19, R.A. No. 11641) Mandate of the DMW 1. It shall absorb all the powers, functions and mandate of the POEA and all the entities enumerated in Sec. 19 hereof. 2. It shall be the primary agency under the Executive Branch of the government tasked to protect the rights and promote the welfare of OFWs, regardless of status and of the means of entry into the country of destination. 3. It shall formulate, plan, coordinate, promote, administer, and implement policies, and undertake systems for regulating, managing, and monitoring the overseas employment of Filipino workers and reintegration of OFWs, while taking into consideration the national development programs formulated by the National Economic and Development Authority (NEDA). 4. It shall also promote the empowerment and protection of Filipinos working overseas by empowering and training them to gain appropriate skills and by ensuring access to continuous training and knowledge development. (Sec. 5, R.A. No. 11641) Powers and Functions of the DMW 1. Formulate, recommend, and implement national policies, plans, programs, and guidelines that will ensure the protection of OFWs, including their safe, orderly and regular migration, then promotion of their interests, the timely and effective resolution of their problems and concerns, and their effective reintegration into Philippine society; 2. Regulate the recruitment, employment, and deployment of OFWs; 3. Investigate, initiate, sue, pursue, and help prosecute, in cooperation with the Department of Justice (DOJ) and the Inter- Agency Council Against Trafficking (IACAT), illegal recruitment and human trafficking cases as defined under Republic Act No. 8042, as amended by Republic Act No. 10022, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995, as amended, and as provided under Republic Act No. 9208, as amended by Republic Act No. 10364, otherwise known as the Anti-Trafficking in Persons Act, and other existing laws and other issuances. In the performance of its functions, the Department Secretary and his or her authorized deputy shall have the power: a. to issue subpoena or subpoena duces tecum to any person for investigation for illegal recruitment or trafficking in persons cases as defined under Republic Act No. 9208, as amended, and other existing laws and other issuances; and hold or cite any person in contempt as may be provided by the implementing rules and regulations; b. to administer oaths upon cases under investigation; and c. to have access to all public records and to records of private parties and concerns, in accordance with law; 4. Protect and promote the welfare, well-being, and interests of the families of OFWs in
- 37. LABOR LAW ANDSOCIAL LEGISLATIONS 23 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW accordance with this Act, consistent with the constitutional policy of upholding the sanctity of the family as a basic autonomous social institution and of valuing the vital role of youth in nation-building; 5. Support and assist the Department of Foreign Affairs (DFA) and relevant government agencies in building strong and harmonious partnerships with counterpart and relevant agencies in foreign countries in order to facilitate the implementation of strategies and programs for the protection and promotion of the rights and well-being of OFWs and their families, and to continuously monitor economic, political and labor developments therein; 6. Support and assist the DFA in the negotiation of bilateral and multilateral agreements, initiatives and programs, including intergovernmental processes, which primarily concern labor migration; 7. Represent, in coordination with and under the guidance of the DFA, interests pertaining to OFWs in bilateral, regional, and multilateral fora and international bodies. A written authorization shall be secured by the Department from the President, through the Secretary of Foreign Affairs, prior to any international meeting or negotiation of a treaty or executive agreement on any subject matter within its mandate; 8. Provide, in cooperation with the Department of Education (DepEd), the Department of Trade and Industry (DTI), the Commission on Higher Education (CHED), the Technical Education and Skills Development Authority (TESDAT), the Maritime Industry Authority (MARINA), and other government agencies, civil society organizations, nongovernmental organizations and the private sector, trainings aimed at promoting the global competitiveness of OFWs, as well as job matching services to persons desiring to become OFWs; 9. Encourage and enhance information and resource sharing among related agencies, and develop an electric database to improve services for OFWs in accordance with Sec. 18 of this Act; 10. Regulate the operations of private recruitment and manning agencies involved in the deployment of OFWs abroad to protect the interests and well-being of these workers; 11. Foster the professionalization, promote ethical recruitment practices, and ensure compliance with legal and ethical standards, training, and capacity-building of private recruitment and manning agencies; 12. Establish a 24/7 Emergency Response and Action Center Unit and media and social media monitoring center to respond to the emergency needs of OFWs and their families; 13. Perform all the powers, functions, and responsibilities assigned to all agencies, offices, or units to be transferred to, or absorbed by, the Department pursuant to the consolidation mandated by this Act; 14. Require private recruitment and manning agencies to provide comprehensive insurance to the OFWs they deploy in accordance with the law: Provided, That with respect to OFWs deployed through other arrangements, a substantially similar benefit shall be provided to the concerned OFW; 15. Develop and create a training institute that will provide substantive, analytical and strategic leadership training programs meant to equip employees of the Department, especially those who will be working overseas, with necessary knowledge and skills, such as, but not limited to, the language, customs, traditions, and laws of the host countries where OFWs are located, with due regard to the training services being provided by the Foreign Service Institute of the DFA. The training shall also include effective means and methods in handling the concerns of OFWs;
- 38. 2024 GOLDEN NOTES 24 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 16. Develop and create an institute for advanced and strategic studies on migration and development, which shall, among others, conduct advanced, strategic and up-to-date studies and research on global migration and development trends; 17. In coordination with the DFA, conduct regular, timely and relevant political and security risk assessment of the conditions in the receiving country, including adequate evacuation plans that will be communicated with all migrant workers thereat, not only for deployment purposes but more especially in cases of emergencies which will require swift actions including, but not limited to, possible evacuation of our migrant workers; 18. Create a system for the blacklisting of persons, both natural and juridical, including local and foreign recruitment agencies, their agents, and employers, who are involved in trafficking as defined in Sec. 16(h), second paragraph of Republic Act No. 9208, as amended. The Department shall create and update a database of blacklisted persons which will be shared within the concerned agencies of the Department and with the IACAT. It shall also establish a monitoring system for cases involving trafficking and illegal recruitment of OFWs; and 19. Perform such other functions as may be necessary to achieve the objectives of this Act. The exercise of the powers and functions of the Department shall in no way limit, restrict, or diminish the pursuit of an independent foreign policy or the conduct of foreign relations and treaty negotiations by the DFA. Protection of the rights and promotion of the welfare of overseas Filipinos is a pillar of Philippine foreign policy. The DFA shall continue providing assistance to other Filipino nationals not covered under this Act. (Sec. 6, R.A. No. 11641) Jurisdiction of the POEA The POEA shall exercise original and exclusive jurisdiction over: 1. All administrative pre-employment/ recruitment violation cases which are administrative in character, involving or arising out of violations of Rules and Regulations relating to licensing and registration, including refund of fees collected from the workers or violation of the conditions for issuance of license or authority to recruit workers; and 2. Administrative disciplinary action cases involving Ers, principals, contracting partners, and OFWs processed by the POEA. (Sec. 6, Rule X, Omnibus Rules and Regulations Implementing R.A. No. 8042, as amended by R.A. No. 10022) NOTE: Petitioners’ adamant insistence that the NLRC should have appellate authority over the POEA’s decision in the disciplinary action because their complaint against respondents was filed in 1993 was unwarranted. Although Sec. 10 of R.A. No. 8042, transferred the original and exclusive jurisdiction to hear and decide money claims involving overseas Filipino workers from the POEA to the Labor Arbiters, the law did not remove from the POEA the original and exclusive jurisdiction to hear and decide all disciplinary action cases and other special cases administrative in character involving such workers. It is that the NLRC had no appellate jurisdiction to review the decision of the POEA in disciplinary cases involving overseas contract workers. In conclusion, we hold that petitioners should have appealed the adverse decision of the POEA to the SOLE instead of to the NLRC (Eastern Mediterranean Maritime Ltd. v. Surio, G.R. 154213, 23 Aug. 2012) The obvious intent of R.A. No. 8042 was to have POEA focus its efforts in resolving all administrative matters affecting and involving such workers. This intent was even expressly recognized in the Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995 promulgated on 29 Feb. 1996. (Ibid.)
- 39. LABOR LAW ANDSOCIAL LEGISLATIONS 25 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Q: A seafarer was prevented from leaving the port of Manila and refused deployment without valid reason, but whose POEA-approved employment contract provides that the employer-employee relationship shall commence only upon the seafarer's actual departure from the port in the point of hire. Is he entitled to relief? A: NO. A distinction must be made between the perfection of the employment contract and the commencement of the employer-employee relationship. The perfection of the contract, which in this case coincided with the date of execution thereof, occurred when the seafarer and the shipping company agreed on the object and the cause, as well as the rest of the terms and conditions therein. The commencement of the employer- employee relationship would have taken place had the seafarer been actually deployed from the point of hire. Thus, even before the start of any employer- employee relationship, contemporaneous with the perfection of the employment contract was the birth of certain rights and obligations, the breach of which may give rise to a cause of action against the erring party. Thus, if the reverse had happened, that is the seafarer failed or refused to be deployed as agreed upon, he would be liable for damages. (Santiago v. C.F. Sharp Crew Management, Inc., G.R. No. 162419, 10 July 2007) b. DOLE SECRETARY; REGULATORY AND VISITORIAL POWERS (Arts. 33, 36, and 37, LC) Reports on Employment Status Whenever the public interest requires, the Secretary of Labor may direct all persons or entities within the coverage of Title II to submit a report on the status of employment, including job vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other employment data. (Art. 33, LC) Regulatory Power The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of Title III and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of Title III. (Art. 36, LC) Visitorial Power The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by Title III, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of Title III. Power to Terminate, Suspend, or Impose Total Ban on Deployment of Migrant Workers The Secretary of DMW, may, at any time, terminate, suspend, or impose a total ban on the deployment of migrant workers, when upon his or her assessment, after consultation with the advisory board on migration and development and the Secretary of the DFA in consonance with Republic Act No. 8042, as amended, the conditions in the receiving country or region are inimical and not protective of the best interest, welfare, and safety of migrant workers. (Sec. 8(k), R.A. No. 11641) 2. REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES a. BAN ON DIRECT HIRING; EXCEPTIONS (Art. 18, LC) Direct Hiring It occurs when an Er hires a Filipino worker for overseas employment without going through the POEA or entities authorized by the SOLE.
- 40. 2024 GOLDEN NOTES 26 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Ban on Direct Hiring GR: No Er may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the SOL (Art. 18, LC) XPNs: Direct hiring by: (M-I-H-O) 1. Members of the diplomatic corps; 2. International organizations; 3. Heads of state and government officials with the rank of at least deputy minister; or 4. Other Ers as may be allowed by the SOLE, such as: a. Those provided in (a), (b), and (c) who bear a lesser rank, if endorsed by the POLO or Head of Mission in the absence of the POLO; b. Professionals and skilled workers with duly executed/authenticated contracts containing terms and conditions over and above the standards set by the POEA. The number of professional and skilled OFWs hired for the first time by the Er shall not exceed five (5). For the purpose of determining the number, workers hired as a group shall be counted as one; or c. Workers hired by a relative/family member who is a permanent resident of the host country. (Sec. 124, Rule II, Part III, Revised POEA Rules And Regulations Governing the Recruitment and Employment of Land-Based OFWs of 2016) Purposes of the Prohibition on Direct Hiring 1. To ensure the best possible terms and conditions of employment for the worker; 2. To assure the foreign Er that he hires only qualified Filipino workers; and 3. To ensure full regulation of employment to avoid exploitation. Q: TRUE or FALSE. As a general rule, direct hiring of OFWs is not allowed. (2010 BAR) A: TRUE. Art. 15 of the LC provides that no employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the DOLE except direct-hiring by members of the diplomatic corps, international organizations and such other employers as may be allowed by the DOLE. Another exception is ‘‘Name Hire,” which refers to a worker who is able to secure an overseas employment opportunity with an employer without the assistance or participation of any agency. (2009- 2017 UST FCL Bar Q&A) NOTE: The obligation to register its personnel with the POEA belongs to the officers of the agency not its employees. (People v. Chowdury, G.R. No. 129577-80, 15 Feb. 2000) b. ENTITIES AND PERSONS PROHIBITED FROM RECRUITING (Art. 26, LC; Sec. 6(j), R.A. No. 8042, as amended by R.A. No. 10022; Sec. 3, Rule 1, Part II, Revised POEA Rules 2016 for Land-Based Workers) Land-Based Overseas Workers 1. Travel agencies and sales agencies of airline companies; 2. Officers or members of the board of any corporation or members in a partnership engaged in the business of a travel agency; 3. Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, member of the board, or partner of a corporation or partnership engaged in the business of a travel agency; 4. Persons, partnerships, or corporations which have derogatory records, such as but not limited to those:
- 41. LABOR LAW ANDSOCIAL LEGISLATIONS 27 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW a. Certified to have derogatory record or information by the NBI or by the Anti- Illegal Recruitment Branch of the POEA; b. Against whom probable cause or prima facie finding of guilt for illegal recruitment or other related cases exists; c. Convicted for illegal recruitment or other related cases and/or crimes involving moral turpitude; and d. Agencies whose licenses have been previously revoked or cancelled by the POEA for violation of R.A. No. 8042, as amended by R.A. No. 10022, P.D. 442 as amended, and their IRRs. 4. Any official or Ee of the DOLE, POEA, OWWA, DFA, and other government agencies directly involved in the implementation of R.A. 8042 and/or any of his/her relatives within the fourth civil degree of consanguinity or affinity; and 5. Persons or partners, officers, and directors of corporations whose licenses have been previously cancelled or revoked for violation of recruitment laws. (Sec. 2, Rule I, Part II, POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers) Sea-Based Overseas Workers 1. Travel agencies and sales agencies of airline companies; 2. Officers or members of the board of any corporation or members in a partnership engaged in the business of a travel agency; 3. The applicant is presently an incorporator, director or key officer of at least five (5) licensed manning agencies; 4. Corporations and partnerships, when any of its officers, members of the board or partners, is also an officer, member of the board, or partner of a corporation or partnership engaged in the business of a travel agency; 5. Individuals, partners, officers or directors of an insurance company who make, propose or provide an insurance contract under the compulsory insurance coverage for agency- hired OFW; 6. Sole proprietors, partners or officers and members of the board with derogatory records, such as, but not limited to the following: a. Those convicted, or against whom probable cause or prima facie finding of guilt is determined by a competent authority, for illegal recruitment, or for other related crimes or offenses committed in the course of, related to, or resulting from, illegal recruitment, or for crimes involving moral turpitude; b. Those agencies whose licenses have been revoked for violation of R.A. No. 8042, as amended, P.D. 442 (LC), as amended, and R.A. No. 9208 (Trafficking in Persons Act of 2003), as amended, and their IRRs; c. Those agencies whose licenses have been cancelled, or those who, pursuant to the Order of the Administrator, were included in the list of persons with derogatory record for violation of recruitment laws and regulations; and 7. Any official or Ee of the DOLE, POEA, OWWA, DFA, DOJ, DOH, BI, IC, NLRC, TESDA, CFO, NBI, PNP, Civil Aviation Authority of the Philippines (CAAP), international airport authorities, and other government agencies directly involved in the implementation of R.A. No. 8042, as amended, and/or any of his/her relatives within the 4th civil degree of consanguinity or affinity. (Sec. 3, Rule I, Part II, 2016 Revised POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers)
- 42. 2024 GOLDEN NOTES 28 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Illegal Recruitment It shall likewise include, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority, for an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of travel agency. (Sec. 6(j), R.A. No. 8042, as amended by R.A. No. 10022) Prohibition on Travel Agencies and Sales Agencies of Airline Companies to Recruit They are prohibited from engaging in the business of recruitment and placement of workers for overseas employment, whether for profit or not, due to conflict of interest. (Art. 26, LC) Purpose for Prohibiting Travel Agencies This is because travel agencies are under the supervisory powers of the Department of Tourism (DOT), not the DOLE. Otherwise, confusion may arise to the detriment and disadvantage of an overseas applicant-worker or may lead to exploitation of the applicant-worker who will be at the economic mercy of the travel agency or sales agencies of airline company from the time his papers are processed to the time he departs. It cannot be discounted that travel agencies can facilitate with the airlines the issuance of the worker's plane ticket. (Poquiz, 2018) Moreover, illegal recruitment activities can be traced to travel agencies that facilitate papers of job- seekers for overseas. They could do a dirty job of legalizing the travel on tourist-visas with the assurance that the same could be converted into work-visas in the country of employment. (Ibid.) Q: WTTA is a well-known travel agency and an authorized sales agent of PAL. Since majority of its passengers are overseas workers, WTTA applied for a license for recruitment and placement activities. It stated in its application that its purpose is not for profit but to help Filipinos find employment abroad. Should the application be approved? (2006 BAR) A: NO. The application should be disapproved, because it is prohibited by Art. 26 of the LC, which provides that 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. Sec. 3, Rule I, Part II POEA Rules and Regulations Governing the Recruitment and Employment of Land- Based Workers also disqualifies any entity having a common director or owner of travel agencies and sales agencies of airlines, including any business entity, from the recruitment and placement of Filipino workers overseas, whether they derive profit or not. c. NON-TRANSFERABILITY OF LICENSE OR AUTHORITY (Art. 29, LC) The grant of a license is a governmental act by the DOLE based on personal qualifications, and citizenship and capitalization requirements. (Arts. 27-28, LC) No license to engage in recruitment and placement shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the DOLE. (Art. 29, LC)
- 43. LABOR LAW ANDSOCIAL LEGISLATIONS 29 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW d. SUSPENSION OR CANCELLATION OF LICENSE OR AUTHORITY (Art. 35, LC; Secs. 101 and 104, Rule I, Part III, Revised POEA Rules 2016 for Land-Based Workers) License vs. Authority LICENSE AUTHORITY It means a document issued by DOLE authorizing a person or entity to operate a private employment agency. (Art. 13(d), LC) It means a document issued by DOLE authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. (Art. 13(f), LC) NOTE: In other words, “license” is issued to a person, partnership or corporation operating a private employment agency. Whereas “authority” is issued to the employees, officers, agents or representatives of said private employment agency. Two Kinds of Illegal Recruiter 1. Licensee – performs any of the prohibited practices enumerated under Sec. 6 of R.A. 8042, as amended by R.A. No. 10022. 2. Non-licensee – any person, corporation, or entity: a. Which has not been issued a valid license or authority to engage in recruitment and placement by the SOLE; or b. Whose license or authority has been suspended, revoked, or cancelled by the POEA or the SOLE. Jurisdiction of SOLE and POEA Administrator The SOLE and the POEA Administrator are vested with power to suspend or cancel any license or authority to recruit Ees for overseas employment. (Art. 35, LC) The SOLE has the power under Art. 35 of the LC to apply the penalties of suspension and cancellation of license and authority. The SOLE also has the authority, under Art. 36 of the LC, not only to restrict and regulate the recruitment and placement activities of all agencies, but also to promulgate rules and regulations to carry out the objectives and implement the provisions governing said activities. Pursuant to this rule-making power, the SOLE authorized the POEA to conduct the necessary proceedings for the suspension or cancellation of license or authority of any agency or entity for certain enumerated offenses. (Trans Action Overseas Corp. v. Secretary of Labor, G.R. No. 109583, 05 Sept. 1997) Thus, the Court concludes that the power to suspend or cancel any license or authority to recruit Ees for overseas employment is concurrently vested with the POEA and the SOLE. (Ibid.) Suspension of Accreditation by the POLO The POLO may suspend accreditation based on any of the following grounds: 1. Unjustified refusal to assist/repatriate distressed Overseas Filipino Worker/s; 2. Deliberate violation/non-compliance of the principal/employer with its contractual obligations to its hired Overseas Filipino Worker/s; 3. Continued processing and deployment of the Overseas Filipino Workers for the principal/employer will lead to the further exploitation of any or all of its applicants and Overseas Filipino Workers or pose imminent danger to the lives and safety of its Overseas Filipino Worker/s; or 4. When found to have hired and employed an Overseas Filipino Worker who is either a minor or below the prescribed minimum age requirement. (Sec. 101, Rule I, Part III, Revised POEA Rules 2016 for Land-based Workers)
- 44. 2024 GOLDEN NOTES 30 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Revocation of Accreditation and Registration The POLO or the Administration shall automatically revoke the accreditation of a principal/employer on any of the following grounds: 1. Expiration of the principal’s/employer’s business license or cessation of business or recruitment activity, after a period of one (1) year from expiration or cessation; 2. Upon written mutual agreement by the principal/employer and the licensed recruitment agency to terminate the agreement; 3. When the principal/employer is meted the penalty of disqualification from participation in the overseas employment program; and 4. Failure to comply with the undertaking submitted as requirement for accreditation. (Sec. 104, Rule I, Part III, Revised POEA Rules 2016 for Land-based Workers) Q: Concerned Filipino contract workers in the Middle East reported to the DFA that XYZ, a private recruitment and placement agency, is covertly transporting extremists to terrorist training camps abroad. Intelligence agencies of the government allegedly confirmed the report. Upon being alerted by the DFA, the DOLE issued orders cancelling the licenses of XYZ, and imposing an immediate travel ban on its recruits for the Middle East. XYZ appealed to the Office of the President to reverse and set aside the DOLE orders, citing damages from loss of employment of its recruits, and violations of due process including lack of notice and hearing by the DOLE. The DOLE, in its answer, claimed the existence of an emergency in the Middle East which required prompt measures to protect the life and limb of OFWs from a clear and present danger posed by the ongoing war against terrorism. Should the DOLE orders be upheld or set aside? (2004 BAR) A: The DOLE order cancelling the licenses of XYZ should be set aside. A report that an agency is covertly transporting extremists is not a valid ground for cancellation of a Certificate of Registration (Art. 247, LC). There was also failure of due process as no hearing was conducted prior to the cancellation. (Art. 245, LC) As to the DOLE order imposing the travel ban, it should be upheld because it is a valid exercise of police power to protect the national interest (Sec. 3, Art. XIII, 1987 Constitution) and on the rule making authority of the SOLE. (Art. 5, LC; Phil. Association. of Service Exporters v. Drilon, G.R. No. 81958, 30 June 1988)
- 45. LABOR LAW ANDSOCIAL LEGISLATIONS 31 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Grounds for Suspension or Cancellation of License LAND-BASED OVERSEAS WORKERS SEA-BASED OVERSEAS WORKERS Serious offenses – Cancellation of license Deploying underage workers; Attempting to deploy or deploying a seafarer who is below 18 years old or below the minimum age requirement; Engaging in acts of misrepresentation for the purpose of securing a license or renewal thereof, such as giving false information or documents; Engaging in acts of misrepresentation for the purpose of securing a license or renewal thereof, such as giving false information or documents; Engaging in the recruitment or placement of workers in jobs harmful to public health or morality or to dignity of the Republic of the Philippines; Engaging 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; Transfer or change of ownership of a single proprietorship licensed to engage in overseas employment; Transfer or change of ownership, directly or indirectly, of a single proprietorship licensed to engage in overseas employment; Charging or accepting directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary, or making a worker pay any amount greater than that actually received by him as a loan or advance. Charging or accepting directly or indirectly any amount of money, goods or services, or any fee or bond for any purpose from an applicant seafarer; Charging or collecting placement fee for deployment to countries where the prevailing system, either by law, policy or practice do not allow the charging or collection of placement and recruitment fees; and Charging, imposing or accepting, directly or indirectly, under any guise whatsoever, any amount of money as payment for the insurance premium for compulsory insurance coverage; __ Allowing a non-Filipino citizen to head or manage a licensed manning agency; __ Collecting any amount as payment for processing, or documentation costs not prescribed by the rules, or an amount greater than the actual documentation costs, as covered by official receipts issued by entities where payments were made; and
- 46. 2024 GOLDEN NOTES 32 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES __ Falsifying or altering travel documents of an applicant seafarer in relation to recruitment and deployment. __ Engaging in acts of misrepresentation for the purpose of processing workers through a job order that pertains to non-existent work, work different from the actual overseas work, or work with a different Er whether accredited or not with the POEA; __ Engaging in any acts of misrepresentation in connection with recruitment and placement of workers, such as furnishing or publishing any false notice, information or document in relation to recruitment or employment; Less serious offenses – Suspension or cancellation Failure to comply with the undertaking to provide Pre-Departure Orientation Seminar to workers Failure to comply with any of the undertakings submitted to the Administration. Non-compliance with any other undertaking in connection with the issuance or renewal of the license Default on contractual obligations to the principal/Er. Withholding of workers' salaries or remittances without justifiable reasons or shortchanging of remittances Withholding of seafarer's salaries or remittances, SSS contributions and loan amortization or shortchanging/reduction thereof without justifiable reasons. Obstructing or attempting to obstruct inspection by the Secretary, the Administrator or their duly authorized representatives Obstructing or attempting to obstruct inspection by the Secretary, the Administrator or their duly authorized representatives. Appointing or designating agents, representatives or Ees without prior approval from the Administration Appointing or designating agents, representatives or Ees without notice to the Administration within the period prescribed under the Rules.
- 47. LABOR LAW ANDSOCIAL LEGISLATIONS 33 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Substituting or altering to the prejudice of the worker, employment contracts approved and verified by the Department from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department Substituting or altering to the prejudice of the seafarer, employment contracts approved and verified by the Administration, 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 Administration. Withholding or denying travel or other pertinent documents from workers for reasons other than those authorized under existing laws and regulations. Withholding or denying travel or other pertinent documents from an applicant seafarer for monetary or financial considerations, or for any other reasons, other than those authorized under the LC and its implementing Rules and Regulations. Allowing persons who are otherwise disqualified to participate in the overseas employment program under existing laws, rules and regulations to participate in the management and operation of the agency Allowing persons who are otherwise disqualified from participating in the overseas employment program under existing laws, rules and regulations to participate in the management and operation of the agency. Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, where deployment does not take place without the worker's fault Failure to reimburse expenses incurred by the seafarer in connection with his documentation and processing for purposes of deployment, where deployment does not take place without the seafarer's fault. Deploying workers whose employment and travel documents were not processed by the Administration or those agencies authorized by it. Impose a compulsory and exclusive arrangement whereby a seafarer is required to undergo health examinations (PEME), training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities, or clinics, as the case may be, unless the cost is shouldered by the principal/Er or licensed manning agency. Deploying workers to principals not accredited or registered by the Administration. Impose a compulsory and exclusive arrangement whereby a seafarer is required to avail of a loan from a specifically designated institution, entity, or person.
- 48. 2024 GOLDEN NOTES 34 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Charging, imposing or accepting directly or indirectly, any amount of money goods or services, or any fee or bond for any purpose whatsoever before employment is obtained for an applicant worker. Granting a loan to a seafarer with interest exceeding eight percent (8%) per annum which will be used for payment of legal and allowable fees and making the seafarer issue, either personally or through a guarantor or accommodation party, post-dated checks in relation to the said loan. Collecting any fee from a worker without issuing the appropriate receipt clearly showing the amount paid and the purpose for which payment was made Refuse to condone or renegotiate a loan incurred by the seafarer after the latter's employment contract has been prematurely terminated through no fault of his/her own. Engaging in acts of misrepresentation in connection with recruitment and placement of workers, such as furnishing or publishing any false notice, information or document in relation to recruitment or employment Failure to submit reports on serious incidents involving piracy, death, missing seafarer, serious illness and injury requiring repatriation. Falsifying or altering travel documents of applicant worker in relation to recruitment activities Engaging in recruitment activities in places other than that specified in the license without previous authorization from the Administration. Light offenses – Reprimand/suspension/cancellation Light offenses – Reprimand/suspension For the owner, partner, or officer/s of any licensed agency to become an officer or member of the Board of any corporation or partnership engaged directly or indirectly in the management of a travel agency For the owner, partner, or officer/s of any licensed manning agency to become an officer or member of the Board of any corporation or partnership engaged directly or indirectly in the management of a travel agency. Inducing or attempting to induce an already employed worker to transfer from or leave his employment for another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment Inducing or attempting to induce an already contracted seafarer to transfer from or leave his/her employment for another unless the transfer is designed to liberate a seafarer from oppressive terms and conditions of employment. Influencing or attempting to influence any person or entity not to employ any worker who has not applied for employment through his agency Influencing or attempting to influence any person or entity not to employ any seafarer who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or seafarer's organization.
- 49. LABOR LAW ANDSOCIAL LEGISLATIONS 35 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Failure to deploy a worker within the prescribed period without valid reason Failure to actually deploy a contracted seafarer within the prescribed period without valid reason. Coercing workers to accept prejudicial arrangements in exchange for certain benefits that rightfully belong to the workers Coercing a seafarer to accept prejudicial arrangements in exchange for certain benefits that rightfully belong to them. Disregard of orders, notices and other legal processes issued by the Administration Disregard of orders, notices and other legal processes issued by the Administration. Failure to submit reports related to overseas recruitment and employment within the specified time as may be required by the Secretary or the Administration Violation of other pertinent provisions of the Code and other relevant laws, rules and regulations, guidelines and other issuances on recruitment and placement of workers for overseas employment and the protection of their welfare. (Sec. 1, Rule IV, Part VI, POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers; R.A. No. 8042, as amended by R.A. No. 10022) Failure to submit reports on the status of the employment of seafarers, placement vacancies, remittance of foreign exchange earnings, departures, and such other matters or information as may be required by the Secretary or the Administration, such as resignation and separation from jobs of office staff members. __ Violation of other pertinent provisions of the Code and other relevant laws, rules and regulations, guidelines and other issuances on recruitment and placement of seafarer for overseas employment and the protection of their welfare. (Sec. 123, Rule III, Part V, Revised POEA Rules and Regulations 2016 Governing the Recruitment and Employment of Seafarers) e. PROHIBITED PRACTICES – (Art. 34, R.A. No. 8042, as amended by Sec. 6, R.A. No. 10022; Sec. 76, Rule X, Part I, POEA Rules 2016 for Land-Based Workers) Illegal recruitment is not limited to performing acts of recruitment without a license. It may also be perpetrated by a non-licensee by committing any of the prohibited acts provided in Art. 34 of the LC. Prohibited Practices It shall be unlawful for any individual, entity, licensee, or holder of authority: 1. Charging or accepting, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the SOLE, or to make a worker pay any amount greater than that actually received by him as a loan or advance;
- 50. 2024 GOLDEN NOTES 36 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2. Furnishing or publishing any false notice or information or document in relation to recruitment or employment; 3. Giving any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the LC; 4. Inducing or attempting to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; 5. Influencing or attempting to influence any person or entity not to employ any worker who has not applied for employment through his agency; 6. Engaging 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. Obstructing or attempting to obstruct inspection by the SOLE or by his duly authorized representatives; 8. Failing to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the SOLE; 9. Substituting or altering employment contracts approved and verified by the DOLE from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the SOLE; 10. Becoming an officer or member of the board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and 11. Withholding or denying travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under the LC and its IRRs. (Art. 34, LC) Illegal Recruitment 1. It shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or non- holder of authority contemplated under Art. 13(f) of the LC of the Philippines: 2. Provided, that any such non-licensee or non- holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. 3. It shall likewise include the following acts, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority: a. To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance; b. To furnish or publish any false notice or information or document in relation to recruitment or employment; c. To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the Labor Code, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the actual overseas work, or work with a different employer whether registered or not with the POEA;
- 51. LABOR LAW ANDSOCIAL LEGISLATIONS 37 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW d. To include or attempt to induce a worker already employed to quit his employment in order to offer him another unless the transfer is designed to liberate a worker from oppressive terms and conditions of employment; e. To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization; f. To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; g. To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor and Employment; h. To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment; i. For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of travel agency; j. To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the Labor Code and its implementing rules and regulations; k. Failure to actually deploy a contracted worker without valid reason as determined by the Department of Labor and Employment; l. Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker's fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage; and m. To allow a non-Filipino citizen to head or manage a licensed recruitment/manning agency. n. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three (3) or more persons individually or as a group. In addition to the acts enumerated above, it shall also be unlawful for any person or entity to commit the following prohibited acts: a. Grant a loan to an overseas Filipino worker with interest exceeding eight percent (8%) per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan; b. Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to avail of a loan only from specifically designated institutions, entities or persons; c. Refuse to condone or renegotiate a loan incurred by an overseas Filipino worker after the latter's employment contract has
- 52. 2024 GOLDEN NOTES 38 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES been prematurely terminated through no fault of his or her own; d. Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a seafarer whose medical examination cost is shouldered by the principal/shipowner; e. Impose a compulsory and exclusive arrangement whereby an overseas Filipino worker is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except fpr recommendatory trainings mandated by principals/shipowners where the latter shoulder the cost of such trainings; f. For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and g. For a recruitment/manning agency or a foreign principal/employer to pass on the overseas Filipino worker or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage. (Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022; Sec. 76, Rule X, Part I, Revised POEA Rules 2016 for Land-based Workers) f. ILLEGAL RECRUITMENT Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by non-licensee or non-holder of authority. (Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022) Any recruitment activities, including the prohibited practices enumerated under Art. 34 of the Labor Code, to be undertaken by non-licensed or non- holders of authority, shall be deemed illegal and punishable. (Art. 38(a), LC) Persons Liable for Illegal Recruitment The persons criminally liable for illegal recruitment are the principals, accomplices and accessories. In case of juridical persons, the officers having ownership, control, management or direction of their business who are responsible for the commission of the offense and the responsible employees/agents thereof shall be liable. The following are examples of employees held liable as principal in Illegal Recruitment: 1. Clerk; 2. Secretary; 3. Cashier; 4. Operations Manager; 5. Crewing Manager; 6. General Manager; 7. Overseas Marketing Director or Manager; and 8. Vice-President or Treasurer or Assistant General Manager Prohibited Acts in Recruitment and Placement 1. Overcharging – To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the SOLE, or to make a worker pay or acknowledge any amount greater than that actually received by him as a loan or advance; 2. False Notice – To furnish or publish any false notice or information or document in relation to recruitment or employment; 3. Misrepresentation to Secure License – To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under the LC, or for the purpose of documenting hired workers with the POEA, which include the act of reprocessing workers through a job order that pertains to nonexistent work, work different from the
- 53. LABOR LAW ANDSOCIAL LEGISLATIONS 39 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW actual overseas work, or work with a different Er whether registered or not with the POEA; 4. Inducing Worker to Quit – To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another, unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; 5. Inducement Not to Employ – To influence or attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency or who has formed, joined or supported, or has contacted or is supported by any union or workers' organization; 6. Recruitment for Harmful Jobs – 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. Failure to submit reports - To fail to submit reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the SOLE; 8. Contract Substitution – To substitute or alter to the prejudice of the worker, employment contracts prescribed by the Department from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the DOLE; 9. Involvement in Travel Agency – For an officer or agent of a recruitment or placement agency to become an officer or member of the Board of any corporation engaged in travel agency or insurance or to be engaged directly or indirectly in the management of a travel agency or insurance agency; 10. Withholding of Documents – To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations, or for any other reasons, other than those authorized under the LC and its IRR; 11. Failure to Deploy – To fail to actually deploy a contracted worker without valid reason as determined by the DOLE; 12. Failure to Reimburse – To fail to reimburse expenses incurred by the worker in connection with his/her documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault; 13. Non-Filipino Manager – To allow a non- Filipino citizen to head or manage a recruitment agency; 14. Imposition of Excessive Interest – To grant a loan to an OFW with interest exceeding 8% per annum, which will be used for payment of legal and allowable placement fees and make the migrant worker issue, either personally or through a guarantor or accommodation party, postdated checks in relation to the said loan; 15. Specifying a Loan Entity – To impose a compulsory and exclusive arrangement whereby an OFW is required to avail of a loan only from specifically designated institutions, entities, or persons; 16. Non-Renegotiation of Loan – To refuse to condone or renegotiate a loan incurred by an OFW after his employment contract has been prematurely terminated through no fault of his or her own; 17. Specifying a Medical Entity – To impose a compulsory and exclusive arrangement whereby an OFW is required to undergo health examinations only from specifically designated medical clinics, institutions, entities or persons, except in the case of a worker whose medical examination cost is shouldered by the principal; 18. Specifying a Training Entity – To impose a compulsory and exclusive arrangement whereby an OFW is required to undergo training, seminar, instruction or schooling of any kind only from specifically designated institutions, entities or persons, except for
- 54. 2024 GOLDEN NOTES 40 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES recommendatory trainings mandated by principals where the latter shoulder the cost of such trainings; 19. Violation of Suspension – For a suspended recruitment/manning agency to engage in any kind of recruitment activity including the processing of pending workers' applications; and 20. Collection of Insurance Premium – For a recruitment/manning agency or a foreign principal/ Er to pass on the OFW or deduct from his or her salary the payment of the cost of insurance fees, premium or other insurance related charges, as provided under the compulsory worker's insurance coverage. (Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022) Q: Juan informed Pedro that the former’s aunt in the U.S. was hiring a data encoder. Due to Juan’s representations, Pedro forwarded his resume. Juan requested Pedro to make referrals in which the latter recommended five Filipinos. Despite the applicants' repeated inquiries, and the lapse of a considerable length of time, appellant failed to secure overseas employment for them as promised. Are the elements of Illegal Recruitment in Large Scale present? A: YES. R.A. No. 8042, a non-licensee or non-holder of authority is liable for Illegal Recruitment when the following elements concur: (1) the offender has no valid license or authority required by law to enable him to lawfully engage in recruitment and placement of workers; and (2) the offender undertakes any of the activities within the meaning of “recruitment and placement” under Art. 13(b) of the LC or any of the prohibited practices enumerated under Art. 34 of the LC (now Sec. 6 of R.A. No 8042). In the case of Illegal Recruitment in Large Scale, a third element is added: that the offender commits any of the acts of recruitment and placement against three or more persons, individually or as a group. Here, Juan is a non-licensee or non-holder of authority. And five complainants who corroborated each other on material points, all positively identified Juan as the person who promised them overseas employment. Juan gave them the distinct impression that appellant had the ability to facilitate their applications and, eventually, deploy them for employment abroad. (People of the Philippines V. Oliver Imperio Y Antonio, G.R. No. 232623, 05 Oct. 2020) Q: A crew agreement was entered into by Nerry Balatongan and Philimare Shipping and Equipment Supply for the employment of the former as a seaman on board the vessel "Santa Cruz” which was approved by the National Seaman's Board (NSB). While on board vessel, the parties entered into a supplementary contract of employment providing for accident and death benefits. Balatongan met an accident in Egypt, and subsequently at the Makati Medical Center. The medical certificate was issued describing his disability as "permanent in nature." He demanded payment for his claim for total disability, as provided for in the contract of employment, but his claim was denied. Can the second contract of employment be enforced against Philimare despite the absence of NSB verification or approval? A: YES. The supplementary contract of employment was entered into between petitioner and private respondent to modify the original contract of employment. The reason why the law requires that the POEA should approve and verify a contract under Art. 34(i) of the LC is to ensure that the Ee shall not be placed in a disadvantageous position and that the same are within the minimum standards of the terms and conditions of such employment contract set by the POEA. However, there is no prohibition against stipulating in a contract more benefits to the Ee than those required by law. Thus, in this case wherein a “supplementary contract” was entered into affording greater benefits to the Ee than the previous one, and although the same was not submitted for the approval of the POEA, the same should still be considered to be valid and enforceable. (Seagull Maritime Corp. v. Balatongan, G.R. No. 82252, 28 Feb. 1989)
- 55. LABOR LAW ANDSOCIAL LEGISLATIONS 41 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW i. ELEMENTS AND TYPES (Art. 38, LC; Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022) Elements of Illegal Recruitment 1. The offender undertakes any of the activities within the meaning of “recruitment and placement” under Art. 13(b) of the LC, or any of the prohibited practices enumerated under Art. 34 of the LC; and 2. The offender has no valid license or authority required by law to enable him to lawfully engage in recruitment and placement of workers. (People v Chua, G.R. No. 187052, 13 Sept. 2012) Types of Illegal Recruitment 1. Simple – It is committed where a licensee/non- licensee or holder/non-holder of authority undertakes either any recruitment activities defined under Art. 13(b), or any prohibited practices enumerated under Sec. 6 of R.A. No. 8042, as amended by R.A. No. 10022. Prescription of action: 5 years. (Sec. 12, R.A. No. 8042, as amended by R.A. No. 10022) NOTE: Where illegal recruitment is proved, but the elements of large scale and syndicate are absent, the accused can be only convicted of simple illegal recruitment. (People v. Segun, G.R. No. 119076, 25 Mar. 2002) 2. Illegal Recruitment as Economic Sabotage – It is economic sabotage when complex illegal recruitment is committed. a. Syndicated – committed by a syndicate if carried out by a group of three (3) or more persons in conspiracy or confederation with one another; b. Large Scale or qualified – committed against three (3) or more persons individually or as a group despite the lack of necessary license from POEA. (People v. Alzona, G.R. No. 132029, 30 July 2004) Prescription of action: 20 years. (Sec. 12, R.A. No. 8042, as amended by R.A. No. 10022) NOTE: “Illegal recruitment in large scale” pertains to the number of victims, while “syndicated illegal recruitment” pertains to the number of recruiters. Illegal Recruitment as Economic Sabotage Illegal recruitment, when committed by a syndicate or in large scale, shall be considered an offense involving economic sabotage. (Art. 38(b), LC) Illegal Recruitment in Large Scale In People v. Calonzo (G.R. Nos. 115150-55, 27 Sept. 1996), illegal recruitment in large scale is committed when a person: (a) undertakes any recruitment activity defined under Art. 13(b) or any prohibited practice enumerated under Art. 34 of the LC; (b) does not have a license or authority to lawfully engage in the recruitment and placement of workers; and (c) commits the same against three (3) or more persons, individually or as a group. NOTE: Illegal Recruitment in Large Scale must be understood as referring to the number of complainants in each case. Not complaints. Illegal Recruitment Committed by a Syndicate It is carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme. (People v. Agustin, G.R. No. 113161, 29 Aug. 1995.)
- 56. 2024 GOLDEN NOTES 42 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Non-Licensee or Non-Holder of Authority Any person, corporation or entity which has not been issued a valid license or authority to engage in recruitment and placement by the SOLE, or whose license or authority has been suspended, revoked or cancelled by the POEA or the Secretary. There is no need to show that the accused represented himself as a licensed recruiter. (People v. Ballesteros, G.R. Nos. 116905-908, 06 Aug. 2002) Liability of the Officers In case of juridical persons, the officers having ownership, control, management or direction of their businesses who are responsible for the commission of the offense shall be criminally liable therefor. Failure to reimburse the expenses incurred by the worker in connection with his documentation and processing for purposes of deployment, in cases where the deployment does not actually take place without the worker’s fault, amounts to illegal recruitment under Sec. 6(m) of the law. (Sec. 6, R.A. No. 8042) Liability of the Employee An employee of a company or corporation engaged in illegal recruitment may be held liable as principal, together with his employer, if it is shown that he or she actively and consciously participated in illegal recruitment. Thus, in cases of non-registration of agents or representatives appointed by a licensed recruitment agency, it must be proved that such agents or representatives were aware of failure to register their names with the POEA and that they actively engaged in recruitment despite this knowledge. As a rule, the obligation to register its personnel with the POEA belongs to the officers of the agency. A mere employee of the agency cannot be expected to know the legal requirements for its operation. (People v. Chowdury, G.R. No. 129577-80, 15 Feb. 2000) NOTE: Good faith is not a defense in illegal recruitment. (Sec. 6, R.A. 8042) Illegal recruitment is malum prohibitum. An affidavit of desistance does not extinguish criminal liability. The Code applies to any recruitment or placement, whether or not for profit. The reference in the Code that any person who offers employment to “two or more persons” as being engaged in recruitment and placement does not mean that there must be at least two persons involved as this reference is merely evidentiary. Any person may be charged with illegal recruitment if they already charged fees even if they have not yet obtained employment for the applicant. Distinct Impression Rule When the offender was engaged in recruitment activities as to commit the crime of illegal recruitment, it must be shown that the distinct impression that offender had the power or ability to send the offender party abroad for work such that the latter was convinced to part with her money in order to be so employed. (Darvin v. CA, G.R No. 125044, 13 Jul. 1998) ii. ILLEGAL RECRUITMENT VS. ESTAFA (Sec. 6, R.A. No. 8042, as amended by R.A. No. 10022; Art. 315(2)(a), RPC) A person may be charged and convicted separately of Illegal Recruitment under the Labor Code and Estafa under the RPC. (People v. Turda, G.R. Nos. 97044-46, 06 July 1994) Elements of Estafa 1. Accused defrauded another by abuse of confidence or by means of deceit; and 2. Damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.
- 57. LABOR LAW ANDSOCIAL LEGISLATIONS 43 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Illegal Recruitment vs. Estafa ILLEGAL RECRUITMENT ESTAFA Malum prohibitum Malum in se It is not required that it be shown that the recruiter wrongfully represented himself as a licensed recruiter. NOTE: It is enough that the victims were deceived as they relied on the misrepresentation and scheme that caused them to entrust their money in exchange of what they later discovered was a vain hope of obtaining employment abroad. Accused defrauded another by abuse of confidence or by means of deceit. NOTE: It is essential that the false statement or fraudulent representation constitutes the very cause or the only motive which induces the complainant to part with the thing of value. Q: Bugo, by means of false pretenses and fraudulent representation, convinced Dado to give the amount of P120,000.00 for processing the latter’s papers so that he can be deployed to Japan. Dado later on found out that Bugo had misappropriated, misapplied and converted the money for her own personal use and benefit. Can Dado file the cases of illegal recruitment and estafa simultaneously? A: YES. Illegal recruitment and estafa cases may be filed simultaneously or separately. The filing of charges for illegal recruitment does not bar the filing of estafa, and vice versa. Bugo’s acquittal in the illegal recruitment case does not prove that she is not guilty of estafa. Illegal recruitment and estafa are entirely different offenses and neither one necessarily includes or is necessarily included in the other. A person who is convicted of illegal recruitment may, in addition, be convicted of estafa under Art. 315(2) of the RPC. In the same manner, a person acquitted of illegal recruitment may be held liable for estafa. Double jeopardy will not set in because illegal recruitment is malum prohibitum, in which there is no necessity to prove criminal intent, whereas estafa is malum in se, in the prosecution of which, proof of criminal intent is necessary. (Sy v. People, G.R. No. 183879, 14 Apr. 2010) Q: Toston was charged with illegal recruitment and estafa. Records reveal that Mary Ann dealt with Toston in the latter's capacity as an Ee of Steadfast. The records reveal that Mary Ann was found to be medically unfit for overseas deployment, contrary to the representations made to Mary Ann by Gutierrez. However, the prosecution did not present proof that Toston knew about the result of Mary Ann's medical examination or that he was privy to Gutierrez' concealment of this fact from Mary Ann. Will the charges prosper? A: NO. The charges will not prosper. As to the charge of illegal recruitment, Toston did not personally represent himself as a licensee or holder of authority but only as an Ee. As to the charge of estafa, the element of fraud by abuse of confidence or deceit with respect to Toston is negated by the fact that, at the time of the act complained of, Toston was an Ee of a validly licensed recruitment agency. (Toston y Hular v. People, G.R. No. 232049, 03 Mar. 2021) g. SOLIDARY LIABILITY OF LOCAL RECRUITMENT AGENCY AND FOREIGN EMPLOYER (Sec. 10, R.A. No. 8042, as amended by R.A. No. 10022; Theory of Imputed Knowledge) Solidary Liability It refers to the liability of the principal/employer and the recruitment/manning agency, for any and all claims arising out of the implementation of the employment contract involving Filipino workers for overseas deployment. If the recruitment/manning agency is a juridical being, the corporate officers and directors and partners, as the case may be, shall themselves be jointly and severally liable with the corporation or partnership for the aforesaid claims and damages.
- 58. 2024 GOLDEN NOTES 44 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES In overseas employment, either the local agency or the foreign employer may be sued by the OFW. This way, the OFW is assured that someone — the foreign employer's local agent — may be made to answer for violations that the foreign employer may have committed. (Sameer Overseas Placement Agency, Inc. v. Cabiles, G.R. No. 170139, 05 Aug. 2014.) Liability of the Principal and Recruitment Agency The liability of the principal/employer and the recruitment/placement agency for any and all claims under this Sec. shall be joint and several. (Sec. 10, R.A. No. 8042, as amended by R.A. No. 10022) The agency which deployed that employees whose employment contracts were adjudged illegally terminated, is jointly and solidarily liable with the principal for the money claims awarded to the employees which consist of payment of the salaries due to the OFWs corresponding to the unexpired portion of their contract as well as the reimbursement for their placement fees. (Poquiz, 2018) This joint and solidary liability imposed by law against recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient payment of what is due him. (Becmen Service Exporter and Promotion v. Sps. Cuaresma, G.R. Nos. 182978-79 & 184298-99, 07 Apr. 2009) The solidary liability of the principal and the recruitment agency exists for the whole duration of the employment contract and shall not be affected by any substitution, amendment or modification made locally or in a foreign country. (Sec. 10, R.A. No. 8042, as amended) NOTE: Severance of relations between the local agent and foreign principal does not affect the liability of the foreign principal. The obligations covenanted in the recruitment agreement entered into by and between the local agent and its foreign principal are not coterminous with the term of such agreement so that if either or both of the parties decide to end the agreement, the responsibilities of such parties towards the contracted employees under the agreement, do not at all end, but the same extends up to and until the expiration of the employment contracts of the employees. (Catan v. NLRC, G.R. No. 77279, 15 Apr. 1988) Q: Mr. A signed a one-year contract with XYZ Recruitment Co. for deployment as welding supervisor for DEF, Inc. located in Dubai. The employment contract, which the POEA approved, stipulated a salary of $600.00 a month. Mr. A had only been in his job in Dubai for six (6) months when DEF, Inc. announced that it was suffering from severe financial losses, thus, intended to retrench some of its workers, among them Mr. A. DEF, Inc. hinted, however, that employees who would accept a lower salary could be retained. Together with some other Filipino workers, Mr. A agreed to a reduced salary of $400.00 a month, thus, continued with his employment. Assuming that the reduction was invalid, may Mr. A hold XYZ recruitment Co. liable for underpayment of wages? Explain. (2019 BAR) A: YES, Mr. A. may hold XYZ Recruitment Co. liable for the payment of his wages under the rule that a recruiter is solidarily liable for breach of the terms and conditions of the POEA-approved employment contract. (Sec.1(f), Rule II, Book 11, POEA Rules and Regulations; Datuman v. First Cosmopolitan Manpower and Promotion Services, Inc., G.R. 156029, 14 Nov. 2008) Liability of the Local Recruitment Agency GR: A local recruitment agency shall be jointly and solidarily liable with its principal or foreign-based employer for any violation of the recruitment agreement and violation of contracts of employment. (Sec. 10(a)(2), Rule V, Book I, IRR) In applying for a license to operate a private employment agency for overseas recruitment and placement, an applicant is required to submit a verified undertaking. In that document, the agency assumed all responsibilities for the proper use of its license and the proper implementation of the employment contracts with the workers it recruited
- 59. LABOR LAW ANDSOCIAL LEGISLATIONS 45 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW and deployed for overseas employment. (Royal Crown Internationale v. NLRC, G.R. No. 78085, 16 Oct. 1989) XPN: Where the workers themselves insisted for the recruitment agency to send them back to their foreign employer despite their knowledge of its inability to pay their wages, the agency is absolved from liability. (Feagle Construction Corp. v. Gayda, G.R. No. 82310, 18 June 1990) Q: Santosa Datuman was deployed to Bahrain after paying the required placement fee. However, her Er took her passport and instead of working as a saleslady, she was forced to work as a domestic helper contrary to the agreed salary approved by POEA. She worked without compensation for two years because of her Ers’ continued failure and refusal to pay her salary despite demand. When she finally returned to the Philippines, she filed a complaint against the local agency that recruited her. Should the suit prosper? A: YES. Under Sec. 1(f), Rule II, Book II of the 1991 POEA Rules and Regulations, the local agency shall assume joint and solidary liability with the employer for all claims and liabilities which may arise in connection with the implementation of the contract, including but not limited to payment of wages, health and disability compensation, and repatriation. Private employment agencies are held jointly and severally liable with the foreign-based employer for any violation of the recruitment agreement or contract of employment, to assure the aggrieved worker of immediate and sufficient payment of what is due him. This is in line with the policy of the state to protect and alleviate the plight of the working class. (Datuman v. First Cosmopolitan Manpower, G.R. No. 156029, 14 Nov. 2008) Liability if the Recruitment Agency is a Juridical Being If the recruitment or placement agency is a juridical being, the corporate officers, directors or partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the claims and damages. (Becmen Service Exporter and Promotion v. Sps. Cuaresma, G.R. Nos. 182978-79 & 184298-99, 07 Apr. 2009) Liability of the Foreign Employer A foreign corporation which, though unlicensed agents, recruits workers in the country, may be sued in and found liable by Philippine courts (e.g., direct hiring by a foreign firm without participation of POEA). (Azucena, 2016) Theory of Imputed Knowledge A rule in insurance law that any information material to the transaction, either possessed by the agent at the time of the transaction or acquired by him before its completion, is deemed to be the knowledge of the principal, at least so far as the transaction is concerned, even though in fact, the knowledge is not communicated to the principal at all. (Leonor v. Filipinas Compania, 48 O.G. 243, 10 Jan. 1950; Rovels Enterprises, Inc. v. Ocampo, G.R. No. 136821, 17 Oct. 2002) The Theory of Imputed Knowledge teaches that the knowledge of the agent is knowledge of the principal, employer, not the other way around. There being no substantial proof that the previous agent knew of and consented to be bound under the employment contract extension, it cannot be said to be privy thereto. (Sunace International Management Services, Inc. v. NLRC, et al., G.R. No. 161757, 25 Jan. 2006) Q: Sunace International Management Services (Sunace), deployed to Taiwan Montehermozo as a domestic helper under a 12-month contract effective 01 Feb. 1997. The deployment was with the assistance of a Taiwanese broker, Edmund Wang, President of Jet Crown International Co., Ltd. After her 12-month contract expired on 01 Feb. 1998, Montehermozo continued working for her Taiwanese Er for two more years, after which she returned to the Philippines on 04 Feb. 2000. Shortly after her return she filed a complaint before the NLRC against Sunace, one Perez, the Taiwanese broker, and the Er-foreign principal alleging that she was jailed for three months and that she was underpaid. Should Sunace be held
- 60. 2024 GOLDEN NOTES 46 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES liable for the underpayment for the additional two years that she worked for her Taiwanese Er under the theory of imputed knowledge? A: NO. The Theory of Imputed Knowledge ascribes the knowledge of the agent, Sunace, to the principal Taiwanese Er, not the other way around. The knowledge of the principal-foreign Er cannot, therefore, be imputed to its agent Sunace. There being no substantial proof that Sunace knew of and consented to be bound under the two-year employment contract extension, it cannot be said to be privy thereto. As such, it and its owner cannot be held solidarily liable for and of Montehermozo’s claims arising from the two-year employment extension. (Sunace International Management Services, Inc. v. NLRC, G.R. No. 161757, 25 Jan. 2006) h. TERMINATION OF CONTRACT OF MIGRANT WORKERS (Sec. 10, R.A. No. 8042, as amended by R.A. 10022) Governing Law R.A. No. 8042, as amended by R.A. No. 10022 governs the money claims of OFWs, not the Labor Code. Jurisdiction It is the LA or the NLRC which has jurisdiction over illegal dismissal or money claims cases of OFWs. Reliefs such as reinstatement with full backwages or separation pay are not applicable to OFWs because of the contractual nature of their employment. An OFW may, however, claim placement fee, salaries he would have earned had he not been illegally dismissed, moral and exemplary damages, and attorney’s fees. Q: XYZ Corp. (XYZ) hired Skus T. Klee (Klee), Baby K. Calma (Calma), and Ree Zal D. Park (Park), as construction workers for three years in Pontianak, Indonesia for its principal, The Kween Construction (TKC). Upon arrival in Indonesia, the workers' passports were confiscated by a broker, and they were housed in unsafe living conditions with crowded and poorly ventilated quarters, leading to frequent illnesses and the spread of communicable diseases. Noteworthy is that the workers were compelled to work overtime without receiving compensation. Subsequently, they discovered that they only had tourist visas, and that TKC was hiding them from the authorities because they did not have work permits. They reported their living and working conditions to their broker, but their grievances were unheeded. Hence, Calma sent an email to the editorial of the Manila Sumbungan Daily in asking for assistance. Later on, the TKC's human relations officer summoned them and questioned them about the email sent to the Manila Sumbungan Daily. As a result of such events, their supervisor informed them that they were terminated and being processed for repatriation. With that said, XYZ Corp assured them that they would be sent home, however they were only sent home after two months while their food supply was cut-off. This prompted Klee et al. to file a complaint for illegal dismissal and money claims against XYZ Corp. and Johnny Juan, as administrators. As the case reached the Labor Arbiter (LA), its decision found that the Klee et al. were constructively dismissed due to the unbearable and unfavorable working conditions set by the employer. However, records show that before the filing of the complaint with the LA, a complaint with Philippine Overseas Employment Administration (POEA) was filed by Klee et al., against XYZ Corp. having the same set of facts that was filed in the LA. The POEA complaint was dismissed, and the dismissal was affirmed by the Department of Labor and Employment (DOLE) upon appeal. With the simultaneous filing of cases by the petitioners, will such an act cause a conflict of jurisdiction between the LA and POEA?
- 61. LABOR LAW ANDSOCIAL LEGISLATIONS 47 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW A: NO. There is no conflict between the jurisdiction of the LA and POEA in trying, hearing, and deciding the case brought by Klee et al. The Migrant Workers and Overseas Filipinos Act of 1995, as amended by Republic Act (RA) No. 10022, provides that the LA shall have original and exclusive jurisdiction to hear and decide the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary, and other forms of damage. On the other hand, Rule X of the Implementing Rules and Regulations of RA No. 10022 provides that the POEA exercises administrative jurisdiction arising out of violations of rules and regulations and administrative disciplinary jurisdiction over employers, principals, contracting partners, and overseas Filipino workers. The jurisdiction of these administrative bodies does not in any way intersect as to warrant the application of the doctrine of primary jurisdiction. In the case at bar, while Klee et al. alleged the same set of facts and the same affidavits were submitted before the LA and the POEA, the complaints raised different causes of action. The LA complaint involved the issue of illegal dismissal and various money claims, while the POEA complaint involved administrative disciplinary liability for violation of the 2002 POEA Rules and Regulations Governing the Recruitment and Employment of Land Based Overseas Workers. Thus, the doctrine of primary jurisdiction does not apply. Moreover, a review of the respective jurisdictions of the POEA and the LA reveals that these administrative bodies do not have concurrent jurisdiction. (U.R Employed International Corporation and Pamela T. Miguel v. Mike A. Pinmiliw, Murphy P. Pacya, Simon M. Bastog, G.R. No. 225263, 16 Mar. 2022, as penned by J. M.V. Lopez) Entitlement to Salary for the Unexpired Portion In case of termination of overseas employment without just, valid, or authorized cause as defined by law or contract, the worker shall be entitled to all his salaries for the entire unexpired portion of the employment contract regardless of the duration of his employment. Q: Terry was a seafarer engaged by ABC Corp. for and in behalf of its foreign principal, DEF Corp. as an Able Seaman on board the vessel MV Geest Trader for a contract period of 10 months. Terry later on felt severe abdominal pain, backache, chest pain and coughs. Due to the absence of medical facilities at the port clinic, he did not receive the proper medical assistance and did not undergo any laboratory test. He was then repatriated to the Philippines due to his medical condition. Terry was referred to the company- designated physician and company specialists and was advised to return for further treatment. However, Terry went home to Aklan and was confined twice in a clinic and was diagnosed with functional dyspepsia and then with pancreatic cancer. After his discharge, Terry was bedridden at home until his death in April 2013. His death certificate indicated that he died due to cardio-respiratory failure with filed a complaint for death benefits, payment for burial expenses, reimbursement of medical expenses, airfare expense, damages and attorney's fees, against DEF Corp. on the ground that the cause of his death, pancreatic cancer, is a work-related illness. Is the death of Terry compensable? A: NO. To be entitled to benefits under Sec. 20-A, the seafarer must show that (1) he suffered an illness; (2) during the term of his or her employment contract; (3) he or she complied with the procedures prescribed under Sec. 20-A of the applicable POEA-SEC; (4) his or her illness is one of the enumerated occupational diseases or that his illness or injury is otherwise work-related; and (5) he or she complied with the four conditions enumerated under Sec. 32-A of the POEA-SEC for an occupational disease or a disputably-presumed work-related disease to be compensable: 1) The seafarer's work must involve the risks described herein; 2) The disease was contracted as a result of the seafarer's exposure to the described risks; 3) The disease was contracted within a period of exposure and under such other factors necessary to contract it; and 4) There was no notorious negligence on the part of the seafarer. In this case, the heirs established that Terry suffered an illness during the term of his employment contract. However, he failed to comply with the
- 62. 2024 GOLDEN NOTES 48 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES procedures prescribed under the POEA-SEC, particularly Sec. 20-B(2), which requires the seafarer must submit himself to a post-employment medical examination within three days upon his return. Pancreatic cancer is not an occupational disease. Case law has held that for a disease not included in the list of compensable diseases to be compensable, the seafarer still has to establish, by substantial evidence that his illness is or was work-related. Terry’s pancreatic cancer is not work-related and therefore, not compensable because he or his heirs failed to prove, by substantial evidence, its work- relatedness, and his compliance with the parameters that the law has set out with regard to claims for disability and death benefits. (Marlow Navigation Phils. V. Heirs of Antonio Beato, G.R. No. 233897, 09 Mar. 2022) NOTE: An OFW, having been illegally dismissed, is entitled to her salary for the unexpired portion of the employment contract. (Sameer Overseas Placement v. Cabilles GR 170139, 05 Aug. 2014) Relief of a Worker When Terminated Without Valid Cause 1. Full reimbursement of his placement fee with 12% interest per annum; and 2. Salaries for the unexpired portion of his employment contract. (R.A. No. 8042, as amended by R.A. No. 10022) NOTE: The three-month option is declared unconstitutional for violating the equal protection clause and the substantive due process rule in the Constitution. (Serrano v. Gallant Maritime Services Inc. and Marlow Navigation Company, Inc., G.R. No. 167614, 24 Mar. 2009) This shall be given retroactive effect, because an unconstitutional clause in the law confers no rights, imposes no duties, and affords no protection. The unconstitutional provision is inoperative, as if it were not passed into law at all. (Skippers United Pacific, Inc. v. Doza, G.R. No. 175558, 08 Feb. 2012) However, Sec. 7 of RA 10022 amended Sec. 10 of the Migrant Workers Act, and once again reiterated the provision as above quoted. Nonetheless, the Court in the en banc case of Sameer Overseas Placement Agency, Inc. v. Joy C. Cabiles still declared such as unconstitutional despite its replication. (G.R. No. 170139, 05 Aug. 2014) Q: Serrano, a seafarer, was hired by Gallant Maritime and Marlow Navigation Co. for 12 months as Chief Officer. On the date of his departure, he was constrained to accept a downgraded employment contract for the position of Second Officer, upon the assurance that he would be made Chief Officer after a month. It was not done; hence, he refused to stay on as Second Officer and was repatriated to the Phils. He had served only 2 months & 7 days of his contract, leaving an unexpired portion of 9 months & 23 days. Serrano filed with the LA a Complaint against Gallant Maritime and Marlow for constructive dismissal and for payment of his money claims. The LA rendered a favorable decision to Serrano awarding him $8,770.00, representing his salary for 3 months of the unexpired portion of his contract of employment applying R.A. No. 8042, Sec 10(5): Money Claims. - In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of 12% per annum, plus his salaries for the unexpired portion of his employment contract or for 3 months for every year of the unexpired term, whichever is less. Is the subject clause constitutional? A: NO. The subject clause contains a “suspect classification” in that, in the computation of the monetary benefits of fixed-term Ees who are illegally discharged, it imposes a three-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-
- 63. LABOR LAW ANDSOCIAL LEGISLATIONS 49 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. The clause is a violation of the right of Serrano to equal protection and right to substantive due process, for it deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose. Thus, Serrano is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042. (Serrano v. Gallant Maritime Services & Marlow Navigation Co., Inc., G.R. No. 167614, 24 Mar. 2009) Q: Joy was deployed to work for Taiwan Wacoal, Co. Ltd. on 26 June 1997 for 1 year. She alleged that Sameer Overseas Agency required her to pay a placement fee of P70,000.00. On 14 July 1997, Mr. Huwang of Wacoal informed Joy, without prior notice, that she was terminated and was given a salary from 26 June to 14 July 1997 only. Joy filed a complaint for illegal dismissal with the NLRC. She asked for the return of her placement fee, the withheld amount for repatriation costs, payment of her salary for 23 months as well as moral and exemplary damages. The NLRC ruled that Joy was illegally dismissed and awarded her three months’ worth of salary, the reimbursement of the cost of her repatriation, and attorney’s fees. Should Joy be awarded three months’ worth of salary and reimbursement of the cost of her repatriation? A: NO. Joy is entitled to her salary for the unexpired portion of her contract, in accordance with Sec. 10 of R.A. No. 8042. Since she started working on 26 June 1997 and was terminated from employment on 14 July 1997, Joy is entitled to her salary from 15 July 1997 to 25 June 1998. Furthermore, there is an implied stipulation in contracts between the placement agency and the overseas worker that in case the overseas worker is adjudged as entitled to reimbursement of his or her placement fees, the amount shall be subject to a 12% interest per annum. This implied stipulation has the effect of removing awards for reimbursement of placement fees from Circular No. 799’s coverage. However, if judgment did not become final and executory before 01 July 2013 and there was no stipulation in the contract providing for a different interest rate, other money claims under Sec. 10 of R.A. No. 8042 shall be subject to the six percent (6%) interest per annum in accordance with Circular No. 799. (Sameer Overseas Placement Agency v. Cabiles, G.R. No. 170139, 05 Aug. 2014) B. EMPLOYMENT OF NON-RESIDENT ALIENS (Arts. 40-42, LC; Secs. 1-3 and 12-14, as amended by DOLE D.O. No. 221-21; Secs. 1-3 and 7-8, DOLE D.O. No. 205-19) Employment Permit of Non-resident Aliens Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from DOLE. An employment permit may be issued to: 1. A non-resident alien; or 2. The applicant employer, after a determination of the non-availability of a person in the Philippines who is competent and able and willing at the time of application to perform the services for which the alien is desired. (Art. 40, LC) NOTE: For an enterprise registered in preferred areas of investments, said permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. (Ibid.)
- 64. 2024 GOLDEN NOTES 50 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Prohibition and Penal Sanctions After the issuance of employment permit, the alien shall not transfer to another job or change his or her employer without prior approval of the SOLE. Any non-resident alien who shall take up employment in violation of the Art. 41 of the LC and its IRRs shall be punished in accordance with the provision of Arts. 289 and 290 of the LC. In addition, the alien worker shall be subject to deportation after service of his sentence. (Art. 41, LC) Submission of List Any employer employing non-resident foreign nationals on the effective date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days after such date indicating their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an employment permit. (Sec. 42, LC) Certificate of No Objection (CNO) The following categories of foreign nationals shall secure CNO from DOLE before they are issued with work-related visas, permits and authorities by concerned agencies: 1. Personnel, participants, trainees, professors, technicians, and fellows entitled to 47(a)(2) visa under certain entities and programs of the Codified Visa Rules and Regulations of 2002 of the DFA. 2. Foreign nationals employed and/or seconded in a foreign enterprise that has existing agreement, understanding or document of similar nature with the Philippine government agency/ies. (Sec. 2, DOLE D.O. No. 205-19) Persons Exempted from Securing CNO from DOLE 1. Scholars, students, volunteers and personnel of International Organizations entitled to 47 (a) (2) visa under certain entities and programs of the Codified Visa Rules and Regulations of 2002 of the DFA; 2. Foreign nationals exempted under Sec. 7 of the JMC No. 001, series of 2019; and 3. Foreign nationals required to secure AEP. (Sec. 3, DOLE D.O. No. 2015-19) The Alien Employment Permit (AEP) It is not an exclusive authority for a foreign national to work in the Philippines. It is just one of the requirements in the issuance of a work visa to legally engage in gainful employment in the country. The foreign national must obtain the required Special Temporary Permit (STP) from the Professional Regulation Commission (PRC) in case the employment involves practice of profession and Authority to Employ Alien from the DOJ where the employment is in a nationalized or partially nationalized industry and Department of Environment and Natural Resources (DENR) in case of mining. (DOLE D.O. No. 186-17) Persons Required to Obtain Alien Employment Permit GR: All foreign nationals who intend to engage in gainful employment in the Philippine shall apply for Alien Employment Permit (AEP). (Sec. 1, DOLE D.O. No. 186-17) NOTE: Gainful employment shall refer to a state or condition that creates an Er-Ee relationship between the Philippine-based employer and the foreign national where the former has the power to hire or dismiss the foreign national from employment, pays the salaries or wages thereof and has authority to control the performance or conduct of the tasks and duties. (Ibid.) XPNs: The following categories of foreign nationals are exempt from securing an employment permit: 1. All members of the diplomatic service and foreign government officials accredited by and with reciprocity arrangement with the Philippine government;
- 65. LABOR LAW ANDSOCIAL LEGISLATIONS 51 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 2. Officers and staff of international organizations of which the Philippine government is a member, and their legitimate spouses desiring to work in the Philippines; 3. Owners and representatives of foreign principals whose companies are accredited by the POEA, who come to the Philippines for a limited period and solely for the purpose of interviewing Filipino applicants for employment abroad; 4. Foreign nationals who come to the Philippines to teach, present and/or conduct research studies in universities and colleges as visiting, exchange or adjunct professors under formal agreements between the universities and colleges in the Philippines and foreign universities or colleges; or between the Philippine government and foreign government, provided that the exemption is on a reciprocal basis; 5. Permanent resident foreign nationals and probationary or temporary resident visa holders under Sec. 13(a-f) of the Philippine Immigration Act of 1940 (C.A. 613) and Sec. 3 of the Alien Social Integration Act of 1995 (R.A. No. 7919); 6. Refugees and stateless persons recognized by the Department of Justice (DOJ) pursuant to Art. 17 of the UN Convention and Protocol Relating to status of Refugees and Stateless Persons; and 7. All foreign nationals granted exemption by law. (Sec. 2, DOLE D.O. No. 186-17) Persons Excluded from Securing an AEP The following are excluded from securing an AEP: 1. Members of the governing board with voting rights only and do not intervene in the management of the corporation or in the day to day operation of the enterprise; 2. President and treasurer, who are part-owner of the company; 3. Those providing consultancy services who do not have Ers in the Philippines; 4. Intra-corporate transferee who is a manager, executive or specialist as defined below in accordance wih Trade Agreements and an employee of the foreign service supplier for at least (1) year continuous employment prior to deployment to a branch, subsidiary, affiliate or representative office in the Philipppines: a. Executive - a natural person within the organisation who primarily directs the management of the organisation and exercises wide latitude in decision making and receives only general supervision or direction from higher level executives, the board of directors, or stockholders of the business; an executive would not directly perform tasks related to the actual provision of the service or services of the organisation; b. Manager - a natural person within the organisation who primarily directs the organization or department or subdivision and exercises supervisory and control functions over other supervisory, managerial or professional staff; does not include first line supervisors unless employees supervised are professionals; does not include employees who primarily perform tasks necessary for the provision of the service; or c. Specialist - a natural person within the organisation who possesses knowledge at an advanced level of expertise essential to the establishment or provision of the service and/or possesses proprietary knowledge of the organisation's service, research equipment, techniques or management; may include, but is not limited to, members of a licensed profession. NOTE: All other intra-corporate transferees not within these categories as defined above are required to secure an AEP prior to their employment in the Philippines.
- 66. 2024 GOLDEN NOTES 52 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. Contractual service supplier who is a manager, executive or specialist and an Ee of a foreign service supplier which has no commercial presence in the Philippines; and a. One who enters the Philippines temporarily to supply a service pursuant to a contract between his/her employer and a service consumer in the Philippines; b. must possess the appropriate educational and professional qualifications; and c. must be employed by the foreign service supplier for at least one (1) year prior to the supply of service in the Philippines. 6. Representative of the Foreign Principal/Er assigned in the Office of Licensed Manning Agency (OLMA) in accordance with the POEA law, rules and regulations. (Sec. 3, DOLE D.O. No. 186-17) NOTE: All foreign nationals excluded from securing AEP shall secure a Certificate of Exclusion from the Regional Office. (Sec. 4, DOLE D.O. No. 186-17) Validity of AEP GR: The AEP shall be valid for the position and the company for which it was issued for a period of one (1) year. XPN: The employment contract, or other modes of engagement provide otherwise, which in no case shall exceed three (3) years. (Sec. 10, D.O. 186-17) Renewal of AEP An application for renewal of AEP shall be filed not earlier than 60 days before its expiration. In case the foreign national needs to leave the country or in other similar circumstances that will hinder the filing of renewal within this prescribed period, the application may be filed earlier. (Sec. 11, D.O. 186- 17) Procedure in the Processing of Applications for AEP 1. All applications for AEP shall be filed and processed at the DOLE Regional Office or Field Office having jurisdiction over the intended place of work. 2. In the case of foreign nationals to be assigned in related companies, applications may be filed in the Regional Office or Field Office having jurisdiction over any of the applicant's intended places of work. 3. Additional position of the foreign national in the same company or subsequent assignment in related companies during the validity or renewal of the AEP will be subject for publication requirement. A change of position or Er shall require an application for new AEP. 4. At any given time, only one AEP shall be issued to a foreign national. (Sec. 5, D.O. 186-17) Documentary Requirements A duly accomplished application form with the following complete documentary requirements must be submitted: 1. Photocopy of Passport with valid visa, except for temporary visitor's visa in case of renewal or Certificate of Recognition for Refugees or Stateless Persons; 2. Original copy of notarized appointment or contract of Employment enumerating the duties and responsibilities, annual salary, and other benefits of the foreign national; 3. Photocopy of Mayor's Permit to operate business, in case of locators in economic zones, Certification from the PEZA or the Ecozone Authority that the company is located and operating within the ecozone, while in case of a construction company, photocopy of license from PCAB or D.O. 174-17 Registration should be submitted in lieu of Mayor's Permit; and
- 67. LABOR LAW ANDSOCIAL LEGISLATIONS 53 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 4. Business Name Registration and Application Form with DTI or SEC Registration and GIS; 5. If the position title of the foreign national is included in the list of regulated professions, a Special Temporary Permit (STP) from the PRC; and 6. If the Er is covered by the Anti-Dummy Law, an Authority to Employ Foreign National (ATEFN) from the DOJ or from the DENR in case of mining. Processing Periods 1. Applications for new AEP - within three (3) working days after publication and payment of required fees and fines, if there are any. 2. Applications for renewal of AEP – within one (1) day after receipt. (Sec. 8, D.O. 186- 17) Publication Requirement The DOLE Regional Office shall publish in a newspaper of general circulation all applications for new AEPs, change or additional position in the same company, or subsequent assignment in related companies within two (2) working days from receipt of application. The same shall be published on the DOLE website and posted in the PESO. Such publication and posting shall be for a period of thirty (30) days and shall contain the name, position, Er and address, a brief description of the functions to be performed by the foreign national, qualifications, monthly salary range, and other benefits, if there are any. It shall also indicate in the same notice of publication that any person in the Philippines who is competent, able and willing at the time of application to perform the services for which the foreign national is desired may file an objection at the DOLE Regional Office. (Sec. 7, D.O. 186-17) Objection Any objection or information against the employment of the foreign national relative to labor market test must be filed with the Regional Office within thirty (30) days after publication. The DOLE Regional Office shall refer to the DOLE's Philjobnet and PESO Employment Information System (PEIS), the PRC Registry of Professionals, and the Technical Education and Skills Development Authority (TESDA) Registry of Certified Workers to establish availability or non availability of able and qualified Filipino worker. Grounds for Denial of Application for New or Renewal of AEP An application for AEP or the renewal thereof may be denied by the Regional Director (RD) based on any of the following grounds: 1. Misrepresentation of facts in the application including fraudulent misrepresentation (i.e., false statement that has a negative effect in the evaluation of the application made knowingly, or without belief in its truth, or recklessly whether it is true or false); 2. Submission of falsified documents; 3. Conviction to a criminal offense or a fugitive from justice in the country or abroad; 4. Grave misconduct in dealing with or ill treatment of workers; 5. Availability of a Filipino who is competent, able and willing to do the job intended for or being performed by the foreign national based on data in the PEIS, PRC Registry of Professional and TESDA Registry of Certified Workers; 6. Worked without valid AEP for more than a year; or 7. Application for renewal with an expired visa or with a temporary visitor's visa. (Sec. 12, DOLE D.O. No. 186-17)
- 68. 2024 GOLDEN NOTES 54 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES NOTE: The RD shall issue an Order denying the application for new or renewal of AEP which shall have the effect of forfeiture of the fees paid by the applicant. Grounds for Cancellation or Revocation of AEP 1. Non-compliance with any of the requirements or conditions for which the AEP was issued; 2. Misrepresentation of facts in the application including fraudulent misrepresentation (i.e., false statement that has a negative effect in the evaluation of the application made knowingly, or without belief in its truth, or recklessly whether it is true or false); 3. Submission of falsified or tampered documents; 4. Meritorious objection or information against the employment of the foreign national; 5. Foreign national has been convicted of a criminal offense or a fugitive from justice; 6. Er terminated the employment of foreign national; and 7. Grave misconduct in dealing with or ill treatment of workers. (Sec. 13, DOLE D.O. No. 186-17) NOTE: In such cases, the RD shall issue an Order cancelling or revoking the AEP. Q: What is the effect of denial, cancellation, or revocation of AEP? A: A foreign national whose AEP has been denied or cancelled is disqualified to reapply within a period of ten (10) years in case the grounds for denial or cancellation is any of the following: a. Conviction of criminal offense or fugitive from justice in the country or abroad; or b. Grave misconduct in dealing with or ill treatment of workers. A foreign national whose AEP has been denied or cancelled due to misrepresentation of facts or submission of falsified documents with the intent to deceive, conceal or omit to state material facts and, by reason of such omission or concealment, the Department was prompted to approve/issue the AEP that would not otherwise have been approved/issued, shall be disqualified to reapply within a period of five (5) years. (Sec. 14, D.O. 186- 17) Er’s or foreign national's representatives, and/or agents acting in behalf of the applicant found to have filed fraudulent application for AEP for three (3) counts shall be barred from filing application for a period of five (5) years after due process. (Sec. 15, D.O. 186-17) Appeal The aggrieved foreign national or his authorized representative may file an appeal with the SOLE within ten (10) days after receipt of the copy of denial/cancellation/revocation order. The decision of the SOLE shall be final and executory unless a motion for reconsideration is filed within ten (10) days after receipt of the decision. No second motion for reconsideration shall be allowed. (Sec. 16, DOLE D.O. No. 186-17) Q: The DOLE issued an alien employment permit for Earl Cone, a U.S. citizen, as sports consultant and assistant coach for GMC. Later, the Board of Special Inquiry of the Commission on Immigration and Deportation approved Cone’s application for a change of admission status from temporary visitor to pre-arranged Ee. A month later, GMC requested that it be allowed to employ Cone as full-fledged coach. The DOLE Regional Director granted the request. The Basketball Association of the Phils. appealed the issuance of said permit to the SOLE who cancelled Cone’s employment permit because GMC failed to show that there is no person in the Philippines who is competent and willing to do the services nor that the hiring of Cone would redound to the national interest. Is the act of the SOLE valid?
- 69. LABOR LAW ANDSOCIAL LEGISLATIONS 55 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW A: YES. GMC’s claim that hiring a foreign coach is an Er’s prerogative has no legal basis. Under Art. 40 of the LC, an Er seeking employment of an alien must first obtain an employment permit from the DOLE. GMC’s right to choose who to employ is limited by the statutory requirement of an employment permit. (GMC v. Torres, G.R. No. 93666, 22 Apr. 1991)
- 70. 2024 GOLDEN NOTES 56UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW III. EMPLOYER-EMPLOYEE RELATIONSHIP A. EMPLOYER-EMPLOYEE RELATIONSHIP Employer 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, except the Government and any of its political subdivisions, branches or instrumentalities, including GOCCs. The Er may be a natural or juridical person. It may be a single proprietor, a partnership or a corporation. Er includes any person acting in the interest of an Er, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as Er. (Art. 219(e), LC) Employee Any person who performs services for an Er in which either or both mental and physical efforts are used and who receives compensation for such services, where there is an Er-Ee relationship. (R.A. No. 8282, Social Security Law) Only a natural person can qualify as an Ee. Natural persons may include Filipino citizens and foreigners. Ee includes any person in the employ of an Er. The term shall not be limited to the Ees of a particular Er, unless the Code so explicitly states. It shall include any individual whose work has ceased as a result of or in connection with any current labor dispute or because of any unfair labor practice if he has not obtained any other substantially equivalent and regular employment. (Art. 219(f), LC) NOTE: A self-employed person shall be both an Ee and Er at the same time. Existence of an Employment Relationship Employment relationship is determined by law and not by contract. (Insular Life Assurance Co. Ltd. v. NLRC, G.R. No. 119930, 12 Mar. 1998) NOTE: Taxi or jeepney drivers under the “boundary” system are Ees of the taxi or jeepney owners/operators, as well as passenger bus drivers and conductors are Ees. (Jardin v. NLRC and Goodman Taxi, G.R. No. 119268, Feb. 23, 2000) Er-Ee Relation as a Question of Law (Stipulation that No Er-Ee Relationship Exists) The existence of an Er-Ees relation is a question of law and being such, it cannot be made the subject of agreement. (Tabas v. California Manufacturing Co., Inc., G.R. No. 80680, 26 Jan. 1989) It is axiomatic that the existence of an Er-Ee relationship cannot be negated by expressly repudiating it in the management contract and providing therein that the Ee is an independent contractor when the terms of the agreement clearly show otherwise. For, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. In determining the status of the management contract, the Four-Fold Test on employment has to be applied. (Insular Life Assurance Co. Ltd. v. NLRC, G.R. No. 119930, 12 Mar. 1998) Er-Ee Relation as a Question of Fact The existence of an Er-Ee relationship depends upon the facts of each case. (Social Security System v. CA, G.R. No. 100388, 14 Dec. 2000) Q: Romel is working as a pianist in the restaurant of a hotel for almost 7 years. During his employment, he was given a time for his performance fixed at 7-10pm for 3-6x a week; the manager requires him to conform with the venue’s motif and is subjected to the rules and regulations of the Ees of the hotel. His salary was given every night. His services were terminated
- 71. LABOR LAW ANDSOCIAL LEGISLATIONS 57 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW as a cost-cutting measure. He filed for illegal dismissal. As a defense, the hotel management alleged that there can be no illegal dismissal as Er-Ee relationship is absent. Is the defense of the hotel tenable? A: NO. Romel is an Ee of the hotel. The issue of whether or not an Er-Ee relationship existed between petitioner and respondent is essentially a question of fact. The factors that determine the issue include who has the power to select the Ee, who pays the Ee’s wages, who has the power to dismiss the Ee, and who exercises control of the methods and results by which the work of the Ee is accomplished. (Legend Hotel v. Realuyo, G.R. No. 153511, 18 July 2012) Q: ASIA executed a one (1)-year contract with the Baron Hotel for the former to provide the latter with 20 security guards to safeguard the persons and belongings of hotel guests, among others. The security guards filled up Baron application form and submitted the executed forms directly to the Security Department of Baron. The pay slips of the security guards bore Baron's logo and showed that Baron deducted the amounts for SSS premiums, medicare contributions and withholding taxes from the wages of the security guards. The assignments of security guards, who should be on duty or on call, promotions, suspensions, dismissals and award citations for meritorious services were all done upon approval by Baron's chief security officer. After the expiration of the contract with ASIA, Baron did not renew the same and instead executed another contract for security services with another agency. ASIA placed the affected security guards on "floating status" on "no work no pay" basis. Having been displaced from work, the ASIA security guards filed a case against Baron for illegal dismissal, OT pay, minimum wage differentials, vacation leave and sick leave benefits, and 13th month pay. Baron denied liability alleging that ASIA is the Er of the security guards and therefore, their complaint for illegal dismissal and payment of money claims should be directed against ASIA. Nevertheless, Baron filed a Third-Party Complaint against ASIA. Is there an Er-Ee relationship between the Baron, on one hand, and the ASIA security guards, on the other hand? Explain briefly. (1999 BAR) A: YES. As a general rule, the security guards of a private security guard agency are the Ees of the latter and not of the establishment that has entered into a contract with the private security guard agency for security services. But under the facts in the question, Baron Hotel appears to have hired the security guards, paid their wages, had the power to promote, suspend or dismiss the security guards and the power of control over them. In other words, the security guards were under orders of Baron Hotel as regard to their employment. Thus, Baron Hotel is the Er of the security guards. Q: Assuming that ASIA is the Er, is the act of ASIA in placing the security guards on "floating status" lawful? Why? A: YES. It is lawful for a private security guard agency to place its security guard on a "floating status" if it has no assignment to give to said security guards. But if the security guards are placed on a "floating status" for more than six (6) months, the security guards may consider themselves as having been dismissed. Q: What property right is conferred upon an Ee once there is an Er-Ee relationship? Discuss briefly. (2006 BAR) A: Once an Er-Ee relationship is established, such employment is treated, under our constitutional framework, as a property right. When a person has no property, his job may possibly be his only possession or means of livelihood and those of his dependents. When a person loses his job, his dependents suffer as well. The worker should, therefore, be protected and insulated against any arbitrary deprivation of his job. (Philips Semiconductors, Inc. v. Fadriquela, G.R. No. 141717, 14 Apr. 2004)
- 72. 2024 GOLDEN NOTES 58 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 1. TESTS TO DETERMINE EMPLOYER- EMPLOYEE RELATIONSHIP (Sec. 3, Rule I-A, DOLE D.O. No. 147-15) Four-Fold Test (Select(a)-Wag-Dis-Co) Factors determining the existence of an Er-Ee relationship: 1. Selection and engagement of the Ee; 2. Payment of Wages; 3. Power of Dismissal; and 4. Power of Control, or the Control Test. (Azucena, 2016) NOTE: It is the so-called “control test” that is the most important element. Absent the power to control the Ee with respect to the means and methods by which his work was to be accomplished, there is no Er-Ee relationship between the parties. (Continental Marble Corp., et.al v. NLRC, G.R. No. 43825, 09 May 1988) Control Test The control test assumes primacy in the overall consideration. There is an Er-Ee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end. (Television and Production Exponents, Inc. v. Servaña, G.R. No. 167648, 28 Jan. 2008) The power of control refers to the existence of power and not necessarily to the actual exercise thereof. It is not essential for the Er to actually supervise the performance of duties of the Ee; it is enough that the Er has the right to wield that power. (Republic v. Asiapro Cooperative, G.R. No. 172,101, 23 Nov. 2007) Exclusivity of service, control of assignments and removal of agents under private respondents’ unit, collection of premiums, furnishing of company facilities and materials as well as capital described as Unit Development Fund are but hallmarks of the management system where there can be no escaping the conclusion that one is an Ee of the insurance company. (Insular Assurance Co., Ltd., v. NLRC, G.R. No. 119930, 12 Mar. 1998) The control test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. (Zanotte Shoes v. NLRC, G.R. No. 100665, 13 Feb. 1995) Kinds of Control Exercised by an Employer Not every form of control will have the effect of establishing an Er-Ee relationship. Thus, a line should be drawn between: a. Rules that merely serve as guidelines, which aims only to promote the result. In such case, no Er-Ee relationship exists; and b. Rules that fix the methodology and bind or restrict the party hired to the use of such means or methods. These addresses both the result and the means employed to achieve it and hence, Er-Ee relationship exists. (Insular Life Assurance Co. v. NLRC, G.R. 84484, 15 Nov. 1989) The main determinant therefore is whether the rules set by the Er are meant to control not just the results but also the means and methods. (Orozco v. CA, G.R. 155207, 13 Aug. 2008) NOTE: However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. The better approach is to adopt the two-tiered test. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006) Q: Peter started working as the caretaker of Uno Beach in 1993. Peter worked from 5 a.m. to 9 p.m. every day and received a weekly allowance. In 2001, Peter married Mariel. Later Peter work in the fishpond business owned by the parents of Owner. Peter and Mariel worked for Uno Beach until July 2008 when they were notified that their services were no longer needed. Peter and Mariel filed a complaint for illegal dismissal, underpayment of benefits, claim for damages, and attorney's fees against Owner. However, Owner claimed that Peter and Mariel were not employees but are industrial partners and thus,
- 73. LABOR LAW ANDSOCIAL LEGISLATIONS 59 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW there was no employer-employee relationship. Are Peter and Mariel was illegally dismissed? A: YES. Based on record, there is no proof that a partnership existed between Peter or Mariel, and Owner in relation to the beach resort. No documentary evidence was submitted by Dos to even suggest a partnership. The records also show that all the elements of an employer-employee relationship are present. Uno Beach engaged the services of Pedro as caretaker and Maricel as a storekeeper. While Owner did not personally engage the services of Peter, he nonetheless retained his services. Owner paid their wages in the form of allowances and commissions. Finally, and most importantly, Owner had the power to control their conduct in the performance of their duties. The existence of control is manifestly shown by Owner express admission that he left the entire business operation of the Resort to Peter and Mariel. While Peter and Mariel are to a large extent allowed to carry out their respective duties as caretaker and storekeeper on their own, this does not negate the existence of control. It was Owner himself, who gave Peter and Mariel immense flexibility in the performance of their duties. This, alone, clearly shows that Dos had control over the conduct of Peter and Mariel in performing their duties. (Dusol v. Lazo G.R. No. 200555, 20 Jan 2021, as penned by J. M.V. Lopez) Q: Esperanza Restaurant employed A and the other Ee's for various years. However, the management began harassing them after they formed a union. Later, F one of the owner of the restaurant, informed the employees regarding the last day of their employment as the business was closing due to bankruptcy. However, E denied employment relationship and claimed that F and G were the owners of Esperanza and he was merely the lessor of the building where the business operates. Among others, he presented contracts of lease as evidence. Was A and the other employees was validly dismissed? A: YES. In a case for Illegal Dismissal cannot prosper absent an employment relationship between the parties. Applying the four-fold test of employment relationship, namely: (1) the selection and engagement of the employee or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee. In the case at bar, it was not shown that the Ee's directly received their premiums and salaries from E. In fact, Ee's did not submit their pay slips and related documents. The Ee's also admitted that it was one of the employer who terminated their services. There was no evidence that Ee wielded such authority. Lastly, concerning the power of control, there was no proof that E issued orders and instructions to Simbajon, et al. or that he supervised and monitored the proper performance of their work. E further substantiated his claim that he was a mere lessor of the restaurant with Contracts of Lease and Tax Returns showing his income solely on building rentals. He likewise presented the Certificate of Registration of the Business Name, Mayor’s Permit, and Certificate of Registration with the Bureau of Internal Revenue which were all issued in the other owner's name. These certifications were executed in the performance of official duty of the government agencies concerned and can be relied upon as evidence of the facts stated therein. Thus, they are validly dismissed. (Salazar v. Simbajon, G.R. No. 202374, 30 June 2021, as penned by J. M.V. Lopez) Resident Physicians as Ees of Hospital Under the "control test", an employment relationship exists between a physician and a hospital if the hospital controls both the means and the details of the process by which the physician is to accomplish his task. Where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, the element of control is absent. (Calamba Medical Center, Inc. v. NLRC, et al., G.R. No. 176484, 25 Nov. 2008)
- 74. 2024 GOLDEN NOTES 60 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES XPNS: A resident physician is not an Ee of the hospital if: 1. There is a training agreement between the doctor and hospital; and 2. The training program is duly accredited by the DOH whose training program is also accredited by the PRC. Q: Dr. Crisostomo entered into a retainer agreement with AB Hotel and Resort whereby he would provide medical services to the guests and employees of AB Hotel and Resort, which, in turn, would provide the clinic premises and medical supplies. He received a monthly retainer fee of ₱60,000.00, plus a 70% share in the service charges from AB Hotel and Resort's guests availing themselves of the clinic's services. The clinic employed nurses and allied staff, whose salaries, SSS contributions and other benefits he undertook to pay. AB Hotel and Resort issued directives giving instructions to him on the replenishment of emergency kits and forbidding the clinic staff from receiving cash payments from the guests. In time, the nurses and the clinic staff claimed entitlement to rights as regular employees of AB Hotel and Resort, but the latter refused on the ground that Dr. Crisostomo, who was their employer, was an independent contractor. Rule, with reasons. (2017 BAR) A: I will rule in favor of AB Hotel and Resort. Dr. Crisostomo was an independent contractor and the nurses and clinic staff are his employees. Dr. Crisostomo had the power of selection and engagement of the nurses and clinic staff; he also paid their wages and SSS contributions. Most importantly, he exercises control over the nurses and clinical staffs’ conduct in dispensing medical services to the guests and personnel of the resort. The fact that AB Hotel and Resort gave instructions to Dr. Crisostomo regarding replenishment of emergency kits and forbidding his staff from receiving cash payments from guests is of no consequence. They are nothing more but guidelines which will not create an employer-employee relationship (Insular Life Co., Ltd. v. NLRC, G.R. No. 84484, 15 Nov. 1989) Q: Genesis entered into a Career’s Agent Agreement with EmoLife Insurance Company, a domestic corporation engaged in insurance business. The Agreement provides that the agent is an independent contractor and nothing therein shall be construed or interpreted as creating an Er-Ee relationship. It further provides that the agent must comply with three requirements: (1) compliance with the regulations and requirements of the company; (2) maintenance of a level of knowledge of the company's products that is satisfactory to the company; and (3) compliance with a quota of new businesses. However, EmoLife insurance company terminated Genesis’ services. Genesis filed an illegal dismissal complaint alleging therein that an Er-Ee relationship exists and that he was illegally dismissed. Is he an Ee of the Insurance Company? A: NO. Genesis is not an Ee of EmoLife Insurance Company. Generally, the determinative element is the control exercised over the one rendering the service. The concept of “control” in LC has to be compared and distinguished with “control” that must necessarily exist in a principal-agent relationship. The Er controls the Ee both in the results and in the means and manner of achieving this result. The principal in an agency relationship, e.g., insurance agent, on the other hand, also has the prerogative to exercise control over the agent in undertaking the assigned task based on the parameters outlined in the pertinent laws. In the present case, the Agreement fully serves as grant of authority to Genesis as EmoLife’s insurance agent. This agreement is supplemented by the company’s agency practices and usages, duly accepted by the agent in carrying out the agency. Foremost among these are the directives that the principal may impose on the agent to complete the assigned tasks, to the extent that they do not involve the means and manner of undertaking these tasks. The law likewise obligates the agent to render an account; in this sense, the principal may impose on the agent specific instructions on how an account shall be made, particularly on the matter of expenses and reimbursements. To these extents, control can be imposed through rules and
- 75. LABOR LAW ANDSOCIAL LEGISLATIONS 61 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW regulations without intruding into the labor law concept of control for purposes of employment. (Gregorio Tongko v. ManuLife Insurance Company, G.R. No. 167622, 29 June 2010) Economic Dependence (Two-Tiered Test) This two-tiered test provides us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latter’s employment. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006) Elements 1. The putative Er’s power to control the Ee with respect to the means and methods by which the work is to be accomplished (Four-fold Test); and 2. The underlying economic realities of the activity or relationship. (Economic Reality Test). Proper Standard for Economic Dependence The proper standard is whether the worker is dependent on the alleged Er for his continued employment in that line of business. The determination of the nature of the relationship between Er and Ee depends upon the circumstances of the whole economic activity, such as: 1. The extent to which the services performed are an integral part of the Er’s business; 2. The extent of the worker’s investment in equipment and facilities; 3. The nature and degree of control exercised by the Er; 4. The worker’s opportunity for profit and loss; 5. The amount of initiative, skill, judgment, or foresight required for the success of the claimed independent enterprise; 6. The permanency and duration of the relationship between the worker and Er; and 7. The degree of dependency of the worker upon the Er for his continued employment in that line of business. Evidence of Employment No particular form of evidence (e.g., ID, Voucher, SSS Registration, Memorandum) is required to prove the existence of such relationship. Any competent and relevant evidence to prove the relationship may be admitted. (Domasig v. NLRC, G.R. No. 118101, 16 Sept. 1996) Absence of Name in the Payroll In Opulencia Ice Plant v. NLRC (G.R. No. 98368, 15 Dec. 1993), the Supreme Court disagreed with the Er’s argument that the absence of the complainant’s name in the payroll disapproved his being an Ee. It held that, “if only documentary evidence would be required to show that relationship, no scheming Er would ever be brought before the bar of justice, as no Er would wish to come out with any trace of illegality he has authored considering that it should take much weightier proof to invalidate a written instrument.” Thus, since the Er-Ee relationship in this case was sufficiently proven by testimonial evidence, the absence of time sheet, time record or payroll became inconsequential. (Azucena, 2016) Mode of Compensation is Not Determinative of Er-Ee Relationship The presence or absence of Er-Ee relationship is not determined by the basis of the Ee’s compensation. The compensation, whether called wage, salary, commission or other name, may be computed on the basis of time spent on the job or it may be based on the quality and/or quantity of the work done. It may
- 76. 2024 GOLDEN NOTES 62 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES further be dependent on skills possessed, seniority earned, or performance and initiative shown by the Ee. Payment by result is a method of compensation and does not define the essence of the relation. It is a method of computing compensation, not a basis for determining the existence or absence of employer- employee relationship. (Tan v. Lagrama, G.R. No. 151228, 15 Aug. 2002) Piece-rate, boundary, and pakyaw are merely methods of pay computation and do not prove whether the payee is an Ee or not. (Azucena, 2016) Q: Africa, et al. are engaged as garbage truck drivers to collect garbage from different cities and transport the same to the designated dumping site. They filed separate cases against Expedition for illegal dismissal for having been prevented from entering the premises of Expedition without cause or due process. They claimed that they were regular Ees and were required to work a minimum of 12 hours a day, seven days a week, even on holidays, and were not paid the minimum wage, holiday or premium pay, overtime pay, SIL pay and 13th month pay. Expedition denied that respondents were its Ees claiming that respondents were not part of the company’s payroll but were being paid on a per- trip basis. They claimed that respondents were not under their direct control and supervision as they worked on their own. Are the respondents Ees of Expedition? A: YES. Applying the four-fold test, Africa, et al. were engaged/hired by Expedition as garbage truck drivers. It is undeniable that they receive compensation from Expedition for the services that they rendered to the latter. The fact that they were paid on a per trip basis is irrelevant because this was merely the method of computing the proper compensation due to them. Also, Expedition’s power to dismiss was apparent when work was withheld from the respondent. Finally, Expedition has the power of control over respondents in the performance of their work. (Expedition Construction Corp. v. Africa, G.R. No. 228671, 14 Dec. 2017) Boundary-Hulog System Under the boundary-hulog scheme, a dual juridical relationship was created: that of Er-Ee and vendor- vendee. The boundary system is a scheme by an owner or operator engaged in transporting passengers as a common carrier to primarily govern the compensation of the driver, that is, the latter’s daily earnings are remitted to the owner/operator less the excess of the boundary which represents the driver’s compensation. Under this system, the owner or operator exercises control and supervision over the driver. (Villamaria v. CA and Bustamante, G.R. No. 165881, 19 Apr. 2006) The boundary-hulog contract between the jeepney owner and the jeepney driver does not negate the Er-Ee relationship between them. (Azucena, 2016) Q: To ensure road safety and address the risk- taking behavior of bus drivers, the LTFRB issued Memorandum Circular 2012-001 requiring all Public Utility Bus (PUB) operators to secure Labor Standards Compliance Certificates under pain of revocation of their existing certificates of public convenience or denial of an application for a new certificate. The DOLE likewise issued Department Order (D.O.) No. 118-12 elaborating on the part-fixed-part-performance-based compensation system referred to in the said memorandum circular. Petitioners assail the constitutionality of the department order and memorandum circular, arguing that these issuances violate petitioners' rights to non- impairment of obligation of contracts, due process of law, and equal protection of the laws. Respondents counter that the department order and memorandum circular are valid issuances promulgated by the DOLE and the LTFRB in the exercise of their quasi-legislative powers. Are the department order and memorandum circular constitutional? A: YES. D.O. 118-12 and M.C. 2012-001 are in the nature of social legislations to enhance the economic status of bus drivers and conductors, and to promote the general welfare of the riding public. D.O. 118-12 was issued to grant bus drivers and conductors minimum wages and social welfare benefits. Further, petitioners repeatedly admitted
- 77. LABOR LAW ANDSOCIAL LEGISLATIONS 63 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW that in paying their bus drivers and conductors, they employ the boundary system or commission basis, payment schemes which cause drivers to drive recklessly. Not only does D.O. 118-12 aim to uplift the economic status of bus drivers and conductors; it also promotes road and traffic safety. (Provincial Bus Operators Association of the Philippines v. DOLE and LTFRB, G.R. No. 202275, 17 July 2018) Labor Union and Unregistered Association as Employer The mere fact that the respondent is a labor union does not mean that it cannot be considered as an Er of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor organization. (Bautista v. Inciong, G.R. No. L-52824, 16 Mar. 1988) Application of the Four-Fold Test and the Two- Tiered Test Present Philippine law recognizes a two-tiered test. The first tier of the test is the Four-Fold Test. The second tier is the Economics of the Relationship Test. But the latter test is used if and only if there is going to be harshness in the results because of the strict application of the four-fold test. (Francisco v. NLRC, G.R. No. 170087, 31 Aug. 2006) Art. 295 Presupposes Employment Relationship Art. 295 applies where the existence of Er-Ee relationship is not the issue of the dispute. If the issue is whether or not the claimant is an Ee, the tests of employment relationship shall be resorted to. Art. 295 limits itself to differentiating four kinds of employment arrangement: regular, project, seasonal, and casual. The article presupposes that employment relationship exists between the parties. (Azucena, 2016) 2. KINDS OF EMPLOYMENT (Arts. 295-296, LC) 1. As to the Labor Code Book VI a. Regular b. Project c. Seasonal d. Casual e. Probationary f. Fixed-term 2. On the basis of salary component a. Monthly-paid – Where the salary covers all the days of the month including the rest days and holidays; b. Daily-paid – Where the salary only covers the day or days worked. NOTE: Daily-paid or monthly-paid refers to the inclusiveness of the salary, not the frequency or intervals of payments. a. REGULAR Those who are hired for activities which are necessary or desirable in the usual business of the Er. (Abad, Jr., 2015) Types of Regular Employment 1. As to nature of work – An employment shall be deemed to be regular where the Ee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the Er, the provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties. (Sec. 5(a), Rule I, Book VI, IRR) 2. As to length of service – Any Ee who has rendered at least one (1) year of service, whether such service is continuous or broken, shall be considered a regular Ee with respect to the activity in which he is employed, and his employment shall continue
- 78. 2024 GOLDEN NOTES 64 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES while such activity exists. (Sec. 5(b), Rule I, Book VI, IRR) NOTE: Regularization is not a management prerogative; rather, it is the nature of employment that determines it. It is a mandate of the law. (PAL v. Pascua, G.R. No. 143258, 15 Aug. 2003) What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. (Policy Instruction No. 2) The practice of entering employment contracts which would prevent the workers from becoming regular should be struck down as contrary to public policy and morals. (Universal Robina Corp. v. Catapang, G.R. No. 164736, 14 Oct. 2005) Tests to Determine Regular Employment 1. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the Ee to the usual trade or business of the Er. The test is whether the former is usually necessary or desirable in the usual business or trade of the Er. (De Leon v. NLRC, G.R. No. 70705, 21 Aug. 1989) NOTE: The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. (Highway Copra Traders v. NLRC, G.R. No. 108889, 30 July 1988) 2. Also, the performance of a job for at least a year is sufficient evidence of the job’s necessity if not indispensability to the business. This is the rule even if its performance is not continuous and merely intermittent. The employment is considered regular, but only with respect to such activity and while such activity exists. (Universal Robina Corp. v. Catapang, G.R. No. 164736, 14 Oct. 2005) NOTE: The status of regular employment attaches to the casual Ee on the day immediately after the end of his first year of service. The law does not provide the qualification that the Ee must first be issued a regular appointment or must first be formally declared as such before he can acquire a regular status. (Aurora Land Projects Corp. v. NLRC, G.R. No. 114733, 02 Jan. 1997) Repeated rehiring and the continuing need for the Ee’s services are sufficient evidence of the necessity and indispensability of his services to the Er’s business or trade. (Baguio Country Club Corporation v. NLRC, G.R. No. 102397, 04 Sept. 1992) 3. When the terms of employment contract were not dealt with on equal terms, Ee’s left no choice but to affix signature of conformity on each renewal of her contract as already prepared by her employer. Moreover, the practice of repeatedly extending Ee's 3-month contract for four years is a circumvention of the acquisition of regular status. It is indicative of the necessity and desirability of Ee’s work in Er’s business. (Dumpit-Murillo v. Court of Appeals G.R No 164652, 08 June 2007) Riders of E-Commerce Platform Considered Regular Employees They are not merely a platform where parties can transact; they also offer the delivery of the items from the sellers to the buyers. Delivery eases the transaction between the sellers and buyers and is an integral part of Er’s business. The Er has different route managers to supervise the delivery of the products from the sellers to the buyers. Thus, it has taken steps to facilitate not only the transaction of the seller and buyer in the online platform but also the delivery of the items. (Ditiangkin v. Lazada e-Services Philippines Inc, G.R. No. 246892, 21 Sept. 2022) Q: A was hired in a sugar plantation performing such tasks as weeding, cutting and loading canes, planting cane points, fertilizing and cleaning the drainage. Because his daily presence in the field was not required, A also worked as a houseboy at the house of the plantation owner. For the next planting season, the owner decided not to hire A as a plantation
- 79. LABOR LAW ANDSOCIAL LEGISLATIONS 65 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW worker but as a houseboy instead. Furious, A filed a case for illegal dismissal against the plantation owner. Decide with reason. (2010 BAR) A: A is a regular seasonal employee. Therefore, he cannot be dismissed without just or valid cause. The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer (Pier 8 Arrastre & Stevedoring Services, Inc., et al. v. Jeff B. Boclot, G.R. No. 173849, 28 Sept. 2007). Considering that A, as plantation worker, performs work that is necessary and desirable to the usual business of the plantation owner, he is therefore a regular seasonal employee and is entitled to reinstatement upon onset of the next season unless he was hired for the duration of only one season. (Hacienda Bino v. Cuenca, G.R. No. 150478, 15 Apr. 2005) Converting A to a mere houseboy at the house of the plantation owner amounts to an act of severing his employment relations as its plantation worker (Angeles v. Fernandez, G.R. No. 160213, 30 Jan. 2007) NOTE: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. (Pier 8 Arrastre & Stevedoring Services, Inc., et al. v. Jeff B. Boclot, G.R. No. 173849, 28 Sept. 2007) Q: A was employed as “Electrician 3” on a per project basis during the NYK Project. A memorandum was issued in lieu of the completion of the project which effectively terminated his employment contract. Despite executions of quitclaim instruments, A still filed a case of illegal dismissal and regularization. He contends that he attained regular status due to his repeated employment and he was illegally dismissed because his employer terminated his employment despite the availability of projects after the completion of the NYK Project. Is A illegally dismissed? A: YES. There are several principles to be considered in this case. First, a worker is presumed a regular employee, unless the employer establishes that (1) the employee was hired under a contract specifying that the employment will last only for a specific undertaking, the termination of which is determined at the time of engagement; (2) there was indeed a project undertaken; and (3) the parties bargained on equal terms, with no vices of consent. Second, if considered a regular employee, security of tenure already attaches, and the subsequent execution of project employment contracts will simply be considered a continuation in their regular engagement. Third, even if initially engaged as a project employee, such nature of employment may ripen into regular status if (1) there is a continuous rehiring of project employees even after the cessation of a project; and (2) the tasks performed by the alleged "project employee'; are vital, necessary and indispensable to the usual business or trade of the employer. Fourth, regularized construction workers are subject to the "no work, no pay" principle, such that the employer is not obligated to pay them a salary when "on leave." And finally, submission of termination reports to the DOLE Field Office "may be considered" only as an indicator of project employment; conversely, non-submission does not automatically grant regular status. Applying the principles just laid down, the Court found that Carpio was a regular employee of Modair, from the time of his engagement in 1998 until the completion of the NYK Project in 2013. (Carpio v. Modair Manila Co. LTD. Inc., G.R. No. 239622, 21 June 2021, as penned by J. M.V Lopez) Seafarers are Not Regular Employees Seafarers cannot be considered as regular Ees. The contract which they sign every time they are hired governs their employment. Their employment is terminated when the contract expires. Their employment is fixed for a certain period. (Ravago v. Esso Eastern Maritime Ltd., G.R. No. 158324, 15 Mar.
- 80. 2024 GOLDEN NOTES 66 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2005) In case of OFWs, Art. 295 of the LC does not apply. Q: L. Natividad Poultry Farms is a business engaged in livestock and poultry production which employed several workers as livestock feed mixers or as maintenance personnel. The workers filed complaints for illegal dismissal against L. Natividad, asserting that they are regular Ees, having been continuously employed by L. Natividad for a period ranging from more than one (1) year to 17 years. They stress that L. Natividad provided all the tools, equipment, and materials they used as maintenance personnel and then gave them specific tasks and supervised their work. The CA ruled that petitioners cannot be considered as regular Ees because there was no reasonable connection between the nature of their carpentry and masonry work and respondents' usual business in poultry and livestock production, sale, and distribution. Are the petitioners regular Ees of L. Natividad? A: YES. The necessity or desirability of the work performed by an Ee can be inferred from the length of time that an Ee has been performing this work. If an Ee has been employed for at least one (1) year, he or she is considered a regular Ee by operation of law. Likewise, if an Ee has been on the job for at least one (1) year, even if the performance of the job is intermittent, the repeated and continuous need for the Ee's services is sufficient evidence of the indispensability of his or her services to the Er's business. Thus, even if the Court of Appeals is of the opinion that carpentry and masonry are not necessary or desirable to the business of livestock and poultry production, the nature of their employment could have been characterized as being under the second paragraph of Art. 280. Thus, petitioners' service of more than one (1) year to respondents has made them regular Ees for so long as the activities they were required to do subsist. (Mario Abuda v. L. Natividad Poultry Farms, G.R. No. 200712, 04 July 2018) Q: Various camera operators were engaged by and rendered services directly to GMA Network, Inc. and received compensation for such. They were subsequently dismissed by GMA which led them to file a complaint for “illegal dismissal, non-payment of salary or wages, and regularization,” claiming that they were regular Ees of GMA because as camera operators, they performed functions that were necessary and desirable to its business as a television and broadcasting company. They also claimed that they were illegally dismissed for lack of just or authorized cause. On the other hand, GMA argues that they were not their Ees, and that even if they were, they could not have attained regular status considering their failure to render “at least one year of service” as required by law. a) Is there an Er-Ee relationship between the camera operators and GMA? A: YES. To determine the existence of an Er-Ee relationship, case law has consistently applied the four-fold test, to wit: (a) the selection and engagement of the Ee; (b) the payment of wages; (c) the power of dismissal; and (d) the Er’s power to control the Ee on the means and methods by which the work is accomplished, this being deemed as the most crucial and determinative indicator of the presence or absence of an Er-Ee relationship. In applying the four-fold test in this case, (a) the camera operators were engaged by and rendered services directly to GMA; (b) they received compensation for their services; (c) they were dismissed by GMA; and (d) they were subject to GMA’s control and supervision on the following grounds: (a) their recordings and shoots were never left to their own discretion and craft; (b) they were required to follow the work schedules which GMA provided to them; (c) they were not allowed to leave the work site during tapings, which often lasted for days; (d) they were also required to follow company rules like any other Ee; (e) they were provided the equipment they used during tapings; and (f) they were assigned supervisors to monitor their performance and guarantee their compliance with company protocols and standards.
- 81. LABOR LAW ANDSOCIAL LEGISLATIONS 67 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW b) Assuming the existence of an Er-Ee relationship, were the camera operators regular Ees of GMA? A: YES. Under Art. 295 of the LC, there are two ways to attain regular employment status: (1) employment shall be deemed to be regular where the Ee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the Er, notwithstanding the provisions of written agreement and regardless of the oral agreement of the parties; and (2) any casual Ee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular Ee with respect to the activity in which he is employed and his employment shall continue while such activity exists. Only casual Ees performing work that is neither necessary nor desirable to the usual business and trade of the Er are required to render at least one year of service to attain regular status. Ees who perform functions which are necessary and desirable to the usual business and trade of the Er attain regular status from the time of engagement. Here, the camera operators were never casual Ees because they performed functions that were necessary and desirable to the usual business of GMA; hence, they did not need to render a year’s worth of service to be considered Ees. (Henry Paragele, et al. v. GMA Network, Inc., G.R. No. 235315, 13 July 2020) Domestic Helpers and House helpers The mere fact that the house helper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant. (Apex Mining Co., Inc. v. NLRC, G.R. No. 94951, 22 Apr. 1991) Contract of Perpetual Employment It deprives management of its prerogative to decide whom to hire, fire, and promote and renders inutile the basic precepts of labor relations. It is contrary to public policy and good customs, as it unjustly forbids the Er from terminating the services of an Ee despite the existence of a just or valid cause. Since the relation between capital and labor are not merely contractual, impressed as they are with so much public interest that the same should yield to common good. (Philippine Telegraph and Telephone Co. v. NLRC, G.R. No. 118978, 23 May 1997) Q: Moises was employed by La Tondeña at the maintenance section of its Engineering Department paid on a daily basis through petty cash vouchers. His work consisted mainly of painting company building and equipment and other odd jobs relating to maintenance. After a service of more than 1 year, Moises requested that he be included in the payroll of regular workers, instead of being paid through petty cash vouchers. Instead, La Tondeña dismissed Moises and claimed that Moises was contracted on a casual basis specifically to paint certain company buildings and that its completion terminated Moises’ employment. Can Moises be considered as a regular Ee? A: YES. The law demands that the nature and entirety of the activities performed by the Ee be considered. Here, the painting and maintenance work given to Moises manifests a treatment consistent with a maintenance man and not just a painter, for if his job was only to paint a building, there would be no basis for giving him other work assignments in-between painting activities. It is not tenable to argue that the painting and maintenance work of Moises are not necessary in La Tondena’s business of manufacturing liquors; otherwise, there would be no need for the regular maintenance section of the company’s engineering department. (De Leon v. NLRC, G.R. No. 70705, 21 Aug. 1989)
- 82. 2024 GOLDEN NOTES 68 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Q: A total of 43 Ees who are deaf-mutes were hired and re-hired on various periods by Far East Bank and Trust Co. as money sorters and counters through a uniformly worded agreement called “Employment Contract for Handicapped Workers.” The company disclaimed that these Ees were regular Ees and maintained, among others, that they are a special class of workers, who were hired temporarily under a special employment arrangement which was a result of overtures made by some civic and political personalities to the Bank. Should the deaf-mute Ees be considered as regular Ees? A: YES. The renewal of the contracts of the handicapped workers and the hiring of others leads to the conclusion that their tasks were beneficial and necessary to the bank. It also shows that they were qualified to perform the responsibilities of their positions; their disability did not render them unqualified or unfit for the tasks assigned to them. The Magna Carta for Disabled Persons mandates that a qualified disabled Ee should be given the same terms and conditions of employment as a qualified able-bodied person. The fact that the Ees were qualified disabled persons necessarily removes the employment contracts from the ambit of Art. 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, hence, they are covered by Art. 295 of the LC. (Bernardo v. NLRC, G.R. No. 122917, 12 July 1999) NOTE: The repeated rehiring of workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of the company. (Magsalin & Coca-Cola v. N.O.W.M., G.R. No. 148492, 09 May 2003) Q: Metromedia Times Corp. entered, for the fifth time, into an agreement with Efren Paguio, appointing him to be an account executive of the firm. He was to solicit advertisements for “The Manila Times.” The written contract between the parties provided that, “You are not an Ee of the Metromedia Times Corp. nor does the company have neither any obligations towards anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in any way except with the duly authorized consent in writing of both parties.” Is Efren Paguio a regular Ee of Metromedia Times Corporation? A: YES. He performed activities which were necessary and desirable to the business of the Er, and that the same went on for more than a year. He was an account executive in soliciting advertisements, clearly necessary and desirable, for the survival and continued operation of the business of the corporation. The law, in defining their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also based on the nature of the work of Efren has been called upon to perform. A stipulation in an agreement can be ignored as and when it is utilized to deprive the Ee of his security of tenure. (Paguio v. NLRC, G.R. No. 147816, 09 May 2003) Q: Super Comfort Hotel employed a regular pool of “extra waiters” who are asked to report for duty when the Hotel’s volume of business is beyond the capacity of the regularly employed waiters to undertake. Pedro has been an “extra waiter” for more than 10 years. He is also called upon to work on weekends, on holidays, and when there are big affairs at the hotel. What is Pedro’s status as an Ee under the LC? (2008 BAR) A: Pedro has acquired the status of a regular Ee. Pedro was engaged to perform activities which are necessary or desirable in the usual business or trade of the Er. Moreover, Pedro has been “extra waiter” for more than ten years. Under the law, any Ee who has rendered service for at least one year, whether such service is continuous or broken, shall be considered a regular Ee with respect to the activity in which he is employed, and his employment shall continue while such activity exists. (Art. 295, LC)
- 83. LABOR LAW ANDSOCIAL LEGISLATIONS 69 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Bus Drivers and Conductors are Considered Regular Employees Bus drivers and/or conductors are considered regular employees because: (1) they are directed to transport their passengers at a specified time and place; (2) they are not given the discretion to select and contract with prospective passengers; (3) their actual work hours could be determined with reasonable certainty and their average trips per month; and (4) the respondents supervised their time and performance of duties. Bus companies put checkers, who are assigned at tactical places along the travel routes that are plied by their buses. The drivers and/or conductors are required to be at the specific bus terminals at a specified time. In addition, there are always dispatchers in each and every bus terminal, who supervise and ensure prompt departure at specified times and arrival at the estimated proper time. Obviously, these drivers and/or conductors cannot be considered as field personnel because they are under the control and constant supervision of the bus companies while in the performance of their work. (Dasco v. PHILTRANCO, G.R No. 211141, 29 June 2016) b. CASUAL Casual employment It is an employment where the Ee is engaged in an activity which is not usually necessary or desirable in the usual business or trade of the Er, provided, that such employment is neither Project nor Seasonal. (Art. 295, LC) He performs only an incidental job in relation to the principal activity of the Er. NOTE: But despite the distinction between regular and casual employment, every Ee shall be entitled to the same rights and privileges and shall be subject to the same duties as may be granted by law to regular Ees during the period of their actual employment. An Ee is engaged to perform a job, work or service which is merely incidental to the business of the Er, and such job, work or service is for a definite period made known to the Ee at the time of engagement. (Sec. 5(b), Rule I, Book VI, IRR) Employment is casual when it is irregular, unpredictable, sporadic, and brief in nature, and outside the usual business of the Er. (Caro v. Rilloraza, G.R. No. L-9569, 30 Sept. 1997) Casual Ee becoming a Regular Ee If he has rendered at least one (1) year of service, whether such service is continuous or broken, he is considered as regular Ee with respect to the activity in which he is employed, and his employment shall continue while such activity exists. A casual Ee is only casual for one (1) year, and it is the passage of time that gives him a regular status. (KASAMMA-CCO v. CA, G.R. No. 159828, 19 Apr. 2006) The purpose is to give meaning to the constitutional guarantee of security of tenure and right to self- organization. (Mercado v. NLRC, G.R. No. 79868, 05 Sept. 1991) NOTE: The scheme of the employer in hiring workers on a uniformly fixed contract basis of 5 months and replacing them upon the expiration of their contracts with other workers with the same employment status was found to have been designed to prevent “casual” employees from attaining the status of a regular employee. (Pure Foods Corporation v. NLRC, G.R. No. 122653, 12 Dec. 1997) Q: Yakult Phils. is engaged in the manufacture of cultured milk. The workers were hired to cut cogon grass and weeds at the back of the factory building used by Yakult. They were not required to work on fixed schedule, and they worked on any day of the week on their own discretion and convenience. The services of the workers were terminated by Yakult before the expiration of the 1-year period. May casual or temporary Ees be dismissed by the Er before the expiration of the 1-year period of employment?
- 84. 2024 GOLDEN NOTES 70 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES A: YES. The usual business or trade of Yakult Phils. is the manufacture of cultured milk. The cutting of the cogon grasses in the premises of its factory is hardly necessary or desirable in the usual business of the Yakult. The workers are casual Ees. Nevertheless, they may be considered regular Ees if they have rendered services for at least one (1) year. When, as in this case, they were dismissed from their employment before the expiration of the one (1) year period, they cannot lawfully claim that their dismissal was illegal. (Capule, et al. v. NLRC, G.R. No. 90653, 12 Nov. 1990) Casual vs. Project Employee CASUAL EE PROJECT EE Engaged to perform a job, work or service which is incidental to the business of the Er and the definite period of his employment is made known to him at the time of his engagement. Employed for a specific project or undertaking where the completion or termination of which is determined at the time of his engagement. His work need not be incidental to the business of the Er His continued employment after the lapse one year makes him a regular Ee. His employment may exceed one year without necessarily making him a regular Ee. No termination report required. Job is coterminous with a specific project or phase thereof. It is required that a termination report be submitted at the nearest employment office upon completion of the project or phase. c. PROBATIONARY Probation It is the period during which the Er may determine if the Ee is qualified for possible inclusion in the regular force. (Holiday Inn Manila v. NLRC, G.R. No. 109114, 14 Sept. 1993) It is usually a six-month period during which the Er observes the performance and conduct of the Ee. If he passes the agreed standard, he will be retained as a regular Ee. If he fails, his tentative employment ends. There is probationary employment where the Ee upon his engagement is made to undergo a trial period during which the Er determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement. (Tamson’s Enterprises, Inc. v. CA, G.R. No. 192881, 16 Nov. 2011) Probationary Employment Employment where the Ee, upon his engagement: 1. Is made to undergo a trial period; 2. During which the Er determines his fitness to qualify for regular employment; and 3. Based on reasonable standards made known to the Ee at the time of engagement. (Sec. 6, Book VI, Rule I, IRR) NOTE: In all cases involving Ees engaged on probationary basis, the Er shall make known to the Ee the standards under which he will qualify as a regular Ee at the time of his engagement. (Sec. 6(d), Book VI, Rule I, IRR) Requisites for a Valid Probationary Employment 1. There must be a written contract; 2. The contract must spell out that the Ee will go through a probationary period of employment for a specified number of months;
- 85. LABOR LAW ANDSOCIAL LEGISLATIONS 71 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 3. The contract must specify reasonable standards on the basis of which his performance will be evaluated; 4. There must be an assessment of the performance of the probationary Ee in relation to the standards; and 5. The result of the assessment must be communicated to the Ee. Rules on Probationary Employment 1. Er shall make known to the Ee at the time he is hired, the standards by which he will qualify as a regular Ee; NOTE: Where no standards are made known to the Ee at that time, he shall be deemed a regular Ee. (Sec. 6(d), Rule VIII-A, Book VI, IRR) 2. Probationary employment must have been expressly agreed upon; without such explicit agreement, the employment is considered regular; 3. An Ee allowed to continue work after the probationary period shall be considered a regular Ee; 4. During the probationary period, the Ee enjoys security of tenure; his services can only be terminated for just or authorized causes. Q: Alcaraz signed an employment contract with Abbott for the position of Medical and Regulatory Affairs Manager which stated that she was to be placed on probation for a period of six (6) months. In line with this, she received an email containing Abbott’s organizational chart and a job description of her work. Further, during Alcaraz’s pre-employment orientation, she was briefed on her duties and responsibilities as Regulatory Affairs Manager. Abbot has a procedure which requires that the Ee’s performance must be discussed and reviewed with the Ee two times. Later on, Alcaraz was terminated for allegedly failing to meet the regularization standards for the said position. Alcaraz filed a complaint for illegal dismissal and damages against Abbott and its officers. She claimed that she should have already been considered as a regular and not a probationary Ee given Abbott’s failure to inform her of the reasonable standards for her regularization upon her engagement as required under Art. 295 of the Labor Code. Further, she claims that her performance was not discussed with her in line with the procedure of Abbot. Was Alcaraz sufficiently informed of the reasonable standards to qualify her as a regular Ee? A: YES. An Er is deemed to have made known the standards that would qualify a probationary Ee to be a regular Ee when it has exerted reasonable efforts to apprise the Ee of what he is expected to do or accomplish during the trial period of probation. In this case, Abbott clearly conveyed to Alcaraz her duties and responsibilities as Regulatory Affairs Manager prior to, during the time of her engagement, and the incipient stages of her employment. Hence, Alcaraz was validly terminated from her employment. Nonetheless, despite the existence of a sufficient ground to terminate Alcaraz’s employment and Abbott’s compliance with the Labor Code termination procedure, it is readily apparent that Abbott breached its contractual obligation to Alcaraz when it failed to abide by its own procedure in evaluating the performance of a probationary Ee. Since this procedure was not followed, the dismissal was therefore procedurally infirm rendering Abbot liable for nominal damages. (Abbott Laboratories v. Alcaraz, G.R. No. 192571, 23 July 2013) Period of Probationary Employment GR: It shall not exceed six (6) months from the date of the commencement of employment. XPNs:
- 86. 2024 GOLDEN NOTES 72 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 1. Covered by an Apprenticeship or Learnership agreement stipulating a different period (Art. 296, LC); or 2. When the parties to an employment contract may agree otherwise, such as: a. When the same is established by company policy; or b. When the same is required by the nature of work to be performed by the Ee. (Busier v. Leogardo, Jr., G.R. No. L-63316, 31 July 1984) e.g., The probationary period set for professors, instructors and teachers is three consecutive years of satisfactory service pursuant to DOLE Manual of Regulations for Private Schools. NOTE: By voluntarily agreeing to such an extension, the Ee waived any benefit attaching to the completion of the period if he still failed to make the grade during the period of extension. (Mariwasa Mfg. Inc. v. Hon. Leogardo, G.R. No. 74246, 26 Jan. 1989) 3. The Er gives the Ee a second chance to pass the standards set. (Mariwasa Manufacturing, Inc. v. Leogardo, Jr., G.R. No. 74246, 26 Jan. 1989) NOTE: Period of probation shall be reckoned from the date the Ee started working. (Sec. 6(b), Book VI, Rule I, IRR) Probationary Ees may be dismissed for cause before end of the probationary period. After the lapse of the probationary period 6 months, Ee becomes regular. Purpose of the Probation Period The purpose of the probation period is to afford the Er an opportunity to observe the fitness of a probationary Ee at work. Instances When Extension of Probationary Period is Allowed Extension is allowed only when: 1. Nature of the job requires extensive training; or 2. If it is a company policy that the period of probationary employment should be an extended period. NOTE: The extension of period should always be reasonable; Such that, the nature of the work so requires and that it is the amount of time required for an ordinary worker to learn the job. Rationale of the Prohibition on Double or Successive Probation The evil sought to be prevented is to discourage scheming Ers from using the system of double or successive probation to circumvent the mandate of the law on regularization and make it easier for them to dismiss their Ees. (Holiday Inn Manila v. NLRC, G.R. No. 109114, 14 Sept. 2003) Q: Michelle Miclat was employed on a probationary basis as marketing assistant by Clarion Printing House but during her employment she was not informed of the standards that would qualify her as a regular Ee. 30 days after, Clarion informed Miclat that her employment contract had been terminated without any reason. Miclat was informed that her termination was part of Clarion’s cost- cutting measures. Is Miclat considered as a regular Ee and hence entitled to its benefits? A: YES. In all cases of probationary employment, the Er shall make known to the Ee the standards under which he will qualify as a regular Ee at the time of his engagement. Where no standards are made known to the Ee at that time, he shall be deemed a regular Ee. In the case at bar, she was deemed to have been hired from day one as a regular Ee. (Clarion Printing House Inc., v. NLRC, G.R. No. 148372, 27 June 2005)
- 87. LABOR LAW ANDSOCIAL LEGISLATIONS 73 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Obligation of the Er to his Probationary Ees There is obligation on the part of Er to inform standards for regularization at the time of engagement. The failure to inform has the effect that upon the expiry of the probationary employment, with or without the period provided for in the contract, the worker is deemed to be regular. Q: Middleby Phils. Corp. hired Alcira as engineering support services supervisor on a probationary basis for six months. Apparently unhappy with Alcira’s performance, Middleby terminated his services. Alcira contends that he was already a regular Ee when his employment was terminated. According to Alcira’s computation, since Art. 13 of the NCC provides that 1 month is composed of 30 days, 6 months totaling 180 days, then his 180th day would fall on 16 Nov. 1996 making him a regular Ee before his termination. Is the contention of the petitioner in the computation of six months correct? A: NO. The computation of the six (6) month probationary period is reckoned from the date of appointment up to the same calendar date of the sixth month following. In short, since the number of days in each month was irrelevant, Alcira was still a probationary Ee when Middleby opted not to “regularize” him on 20 Nov. 1996. (Alcira v. NLRC, G.R. No. 149859, 09 June 2004) NOTE: In Mitsubishi Motors v. Chrysler Phils. Labor Union (G.R. No. 148738, 29 June 2004), the SC ruled in this wise: “Applying Art. 13 of the NCC, the probationary period of 6-months consists of 180 days. This is in conformity with Art. 13(1) of the NCC. The number of months in the probationary period (6 months), should then be multiplied by the number of days within a month (30 days). Hence, the period of 180 days. As clearly provided in Art. 13, in computing a period, the first day shall be excluded and the last day included. Thus, the 180 days commenced on 27 May 1996, and ended on 23 Nov. 1996. The termination letter dated 25 Nov. 1996 was served on Paras only on 26 Nov. 1996. He was, by then already a regular Ee of the company under Art. 295 of the LC.” How to resolve the conflict between the Alcira and Mitsubishi Motors case: 1. Statutory Construction – The latter case prevails (Mitsubishi Motors); or 2. Rule more favorable to the Ee – Use the computation which would amount to granting the subject Ee regular employment status (Based on Constitutional and statutory provisions for the liberal interpretation of labor laws). Instances When a probationary Ee is deemed to be a Regular Ee 1. If he is allowed to work after a probationary period. (Art. 295, LC) 2. If no standards, under which he will qualify as a regular Ee, are made known to him at the time of his engagement. (Rule I, Book VI, IRR) Grounds for Terminating Probationary Employment (J-A-FaR) 1. Just causes 2. Authorized causes; or 3. When he Fails to qualify as a Regular Ee in accordance with reasonable standards made known by the Er to the Ee at the time of his engagement. (ICMC v. NLRC, G.R. No. 72222, 30 Jan. 1989; Art. 295, LC) NOTE: If pre-termination of probationary contract is due to the valid causes, the Er is not liable to pay the monetary value of the unexpired portion of the employment. While probationary Ees do not enjoy permanent status, they are afforded the security of tenure protection of the Constitution. Consequently, they cannot be removed from their positions unless for cause. Such constitutional protection, however, ends upon the expiration of the period stated in their probationary contract of employment. Thereafter, the parties are free to renew the contract or not. (CSA v. NLRC, G.R. No. 87333, 06 Sept. 1991)
- 88. 2024 GOLDEN NOTES 74 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Limitations on the Er’s Power to Terminate a Probationary Employment Contract 1. The power must be exercised in accordance with the specific requirements of the contract; 2. If a particular time is prescribed, the termination must be within such time and if formal notice is required, then that form must be used; 3. The Er’s dissatisfaction must be real and in good faith, not feigned to circumvent the contract or the law; and 4. There must be no unlawful discrimination in the dismissal. (Manila Hotel Corporation v. NLRC, G.R. No. L-53453, 22 Jan. 1986) NOTE: The probationary Ee is entitled to procedural due process prior to dismissal from service. Q: Ron Cruz was employed as gardener by Manila Hotel on “probation status” effective 22 Sept. 1976. The appointment signed by Cruz provided for a 6-month probationary period. On 20 Mar. 1977, or a day before the expiration of the probationary period, Cruz was promoted to lead gardener position. On the same day, Cruz’ position was “abolished” by Manila Hotel allegedly due to economic reverses or business recession, and to salvage the enterprise from imminent danger of collapse. Was Cruz illegally dismissed? A: YES. There is no dispute that as a probationary Ee, Cruz had but limited tenure. Although on probationary basis, however, Cruz still enjoys the constitutional protection on security of tenure. During his tenure of employment, therefore, or before his contract expires, Cruz cannot be removed except for cause as provided for by law. What makes Cruz’ dismissal highly suspicious is that it took place at a time when he needed only but a day to be eligible as a regular Ee. That he is competent finds support in his being promoted to a lead gardener in so short span of less than six (6) months. By terminating his employment or abolishing his position with but only one day remaining in his probationary appointment, the hotel deprived Cruz of qualifying as a regular Ee with its concomitant rights and privileges. (Manila Hotel Corp. v. NLRC, G.R. No. L-53453, 22 Jan. 1986) Period of Probationary Employment of Private School Teachers The probationary employment of academic teaching personnel shall not be more than a period of six (6) consecutive semesters or nine (9) consecutive trimesters of satisfactory service, as the case may be. (Sec. 117, The Manual of Regulations for Private Higher Education) NOTE: An academic teaching personnel, who does not possess the minimum academic qualifications under Secs. 35 and 36 of the Manual of Regulations for Private Higher Education shall be considered as a part-time Ee and, therefore, cannot avail of the status and privileges of a probationary employment. A part-time Ee cannot acquire a regular permanent status, and, hence, may be terminated when a qualified teacher becomes available. (Manual of Regulations for Private Higher Education) Full-Time Teacher One whose total working day is devoted to school, no other regular remunerative employment, and is paid on a regular monthly basis regardless of the number of teaching hours. In college, the normal teaching load of a full-time instructor shall be 18 hours a week. Professors and instructors are independent contractors. They are compensated for their services by wages and salaries, rather than share of profits; they cannot substitute others to do their work without the consent of the university and can be laid off if their work is unsatisfactory. All these indicate that the university has control over their work and that they are, therefore, Ees and not independent contractors. (Feati University v. Hon. Jose S. Bautista, and Feati University Faculty Club- PAFLU, G.R. No. L-21278, 27 Dec. 1966)
- 89. LABOR LAW ANDSOCIAL LEGISLATIONS 75 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Requirement of Full-Time Academic Personnel or Teacher 1. Possesses at least the minimum academic qualifications prescribed by the Department; 2. Paid monthly or hourly, based on the regular teaching loads as provided for in the policies, rules and standards of the Department and the school; 3. Total working day of not more than eight (8) hours a day is devoted to the school; 4. Has no other remunerative occupation elsewhere requiring regular hours of work that will conflict with the working hours in the school; and 5. Not teaching full-time in any other educational institution; and 6. Academic personnel must have rendered three (3) consecutive years of service for those elementary and secondary levels, six (6) consecutive regular semesters in the tertiary level and nine (9) consecutive trimesters for those in the tertiary level where collegiate courses are offered on a trimester basis (Sec. 92, Manual of Regulations for Private Higher Education) NOTE: All teaching personnel who do not meet the foregoing qualifications are considered part-time. (Sec. 45, Manual of Regulations for Private Higher Education) Legal Requisites for Acquisition by a Teacher of Permanent Employment 1. The teacher is a full-time teacher; 2. Must have rendered three (3) consecutive years of services; and 3. Such service must be satisfactory. (Jocelyn Herrera-Manaois v. St. Scholastica’s College, G.R. No. 188914, 11 Dec. 2013) Q: Colegio de San Agustin (CSA) hired Gela Jose as a grade school classroom teacher on a probationary basis for SY ‘84–‘85. Her contract was renewed for SY’s ‘85-‘86 and ‘86-‘87. On 24 Mar. 1987, the CSA wrote the Gela that "it would be in the best interest of the students and their families that she seeks employment in another school or business concern for next school year." Notwithstanding the said notice, the CSA still paid Gela her salary for 15 Apr. to 15 May 1987. On 06 Apr. 1987, Gela wrote the CSA and sought reconsideration but she received no reply. Thereafter, she filed a complaint for illegal dismissal. Was Gela illegally dismissed? A: NO. The Faculty Manual of CSA underscores the completion of three (3) years of continuous service at CSA before a probationary teacher acquires tenure. Hence, Gela cannot claim any vested right to a permanent appointment since she had not yet achieved the prerequisite three (3) year period under the Manual of Regulation for Private Schools and the Faculty Manual of CSA. In the instant case where the CSA did not wish to renew the contract of employment for the next school year, Gela has no ground to protest. She was not illegally dismissed. Her contract merely expired. (CSA v. NLRC, G.R No. 87333, 06 Sept. 1991) Q: During their probationary employment, eight Ees were berated and insulted by their supervisor. In protest, they walked out. The supervisor shouted at them to go home and never to report back to work. Later, the personnel manager required them to explain why they should not be dismissed from employment for abandonment and failure to qualify for the positions applied for. They filed a complaint for illegal dismissal against their Er. As the Labor Arbiter, how will you resolve the case? (2006 BAR) A: As the LA, I will resolve the case in favor of the eight probationary Ees due to the following: 1. Probationary Ees also enjoy security of tenure. (Biboso v. Victoria Milling, G.R. No. L-44360, 31 Mar. 1977)
- 90. 2024 GOLDEN NOTES 76 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2. In all cases involving Ees on probationary status, the Er shall make known to the Ee at the time he is hired, the standards by which he will qualify for the positions applied for. 3. The filing of the complaint for illegal dismissal effectively negates the Er’s theory of abandonment. (Rizada v. NLRC, G.R. No. 96982, 21 Sept. 1999) 4. The order to go home and not to return to work constitutes dismissal from employment. 5. The eight (8) probationary Ees employment were terminated without just cause and without due process. In view of the foregoing, I will order reinstatement to their former positions without loss of seniority rights with full back wages, plus damages and attorney’s fees. Q: Arlene started working as a Casual or Assistant Clinical Instructor for two semesters in HNU's College of Nursing while awaiting the results of her Nursing Board Examination. She alleged that upon her hiring, HNU did not inform her of the standards for the evaluation of her satisfactory completion of her probationary period. In the second semester of S.Y. 1994- 1995, she was hired as a full-time Clinical Instructor until S.Y. 1998-1999, and was assigned at the Medical Ward. During the second semester of S.Y. 1998-1999, she was transferred to the Guidance Center as a Nursing Guidance Instructor handling guidance, education, and graduate school courses. At this time, she was elected as Municipal Councilor of Carmen, Bohol. Upon her reelection as Municipal Councilor for the 2001-2004 term, she took a leave of absence from HNU. Arlene rejoined HNU and was given a full-time load for the S.Y. 2004-2005. For S.Y. 2005-2006 and 2006-2007, Arlene signed contracts for term/semesteral, employment. However, in a notice, HNU informed Arlene that her contract of employment, which would have expired on 31 March 2007, will no longer be renewed. Arlene argued that since she taught at HNU for more than six consecutive regular semesters, she already attained the status of a regular Ee pursuant to the Manual of Regulations for Private School Teachers. Thus, she claimed that her employment was illegally terminated. Is Arlene’s contention correct? A: NO. A private school teacher acquires permanent status when the following requisites are met: 1) The teacher serves full-time; 2) he/she must have rendered three consecutive years of service; and 3) such service must have been satisfactory. While Arlene has rendered three consecutive years of satisfactory service, she was, however, not a full- time teacher at the College of Nursing of HNU. Only a full-time teaching personnel can acquire regular or permanent status. The three-year or one-year clinical practice experience is a minimum academic requirement to qualify as a faculty member in a College of Nursing, and is therefore, required for one to be considered as a full-time faculty of such. Arlene failed to meet the required minimum clinical practice experience under the law and the relevant regulations. Since she failed to provide substantial evidence, her work experience cannot be considered as "clinical practice." Being unqualified as a nursing faculty from the start, Arlene cannot possibly be considered a full-time faculty and thus, could not, even after rendering satisfactory service for three years, be entitled to permanency. Therefore, her stint as a clinical instructor from 1994-1997 cannot even be considered as compliance with the clinical practice experience requirement for the purpose of determining whether or not she is a full-time faculty when she was employed again as a clinical instructor from 2004-2007. The fixed-term contracts presented as evidence would reveal that the parties intended that their Er- Ee relationship would last only for a specific period. Even if no written fixed-term contract was presented, judicial notice can be made upon the fact that teachers' employment contracts are for a specific semester or term. For the second requisite of a valid fixed-term contract, Arlene was on equal footing with HNU. She was an honors graduate and
- 91. LABOR LAW ANDSOCIAL LEGISLATIONS 77 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW has stellar qualifications. Moreover, she is an elected public official and appears to be quite popular, given that she has won as municipal councilor multiple times and even placed number one in terms of votes garnered. These facts would make apparent that Arlene is not a mere run-of-the-mill Ee, and that she certainly has the capability to be on equal footing in dealing with her Er when it came to her employment terms. Thus, petitioner was validly contracted for a fixed term. The expiry of her latest contract on 31 March 2007 effectively ended the Ee-Er relationship she had with HNU. No dismissal, whether illegal or not, ever happened. Therefore, she is not entitled to any of the reliefs sought. (Arlene Palgan v. Holy Name University, et.al., G.R. No. 219916, 10 Feb. 2021) Q: UST has a CBA with the Union. The CBA requires a master’s degree for a professor to be tenured. The CBA, however, also provides that “If he does not finish his degree in five (5) semesters, he shall be separated from service at the end of the fifth semester; however, if he is made to serve the University further, in spite of the lack of a master's degree, he shall be deemed to have attained tenure”. Is the stipulation conferring tenureship despite the lack of master’s degree valid? A: NO. When the CBA was executed between the parties in 2006, they had no right to include therein the provision relative to the acquisition of tenure by default, because it is contrary to, and thus violative of the 1992 Revised Manual of Regulations for Private Schools that was in effect at the time. As such, said CBA provision is null and void, and can have no effect as between the parties. “A void contract is equivalent to nothing; it produces no civil effect; and it does not create, modify or extinguish a juridical relation.” It cannot be said either that by agreeing to the tenure by default provision in the CBA, UST is deemed to be in estoppel or have waived the application of the requirement under CHED Memorandum Order No. 40-08. Such a waiver is precisely contrary to law. Moreover, a waiver would prejudice the rights of the students and the public, who have a right to expect that UST is acting within the bounds of the law and provides quality education by hiring only qualified teaching personnel. As the Court held in Escorpizo v. University of Baguio (G.R. No. 121962, 30 Apr. 1999), a school CBA must be read in conjunction with statutory and administrative regulations governing faculty qualifications. Such regulations form part of a valid CBA without need for the parties to make express reference to it. While the contracting parties may establish such stipulations, clauses, terms and conditions, as they may see fit, the right to contract is still subject to the limitation that the agreement must not be contrary to law or public policy. (Son v. UST, G.R. No 211273, 18 Apr. 2018) Q: In 2010, Guagua National Colleges (petitioner) implemented a 15% tuition fee increase for the school year 2010-2011. After deducting scholarship expenses and making provisions for dropouts, unpaid accounts, and contingencies, the net tuition fee incremental proceeds (TIP) of petitioner amounted to Php 4,579,923.00. Pursuant to Sec. 5(2) of R.A. No. 6728, petitioner allocated 70% of the TIP, or Php 3,205,946.00, as follows: (1) 13th month pay and cash gift - P 91,709.00; (2) honorarium – Php 286,497.00; (3) clothing and family assistance – Php 191,225.00; (4) SSS, PHIC, and HDMF contribution - P 67,413.00; and (5) Retirement benefit fund contribution - P 2,569,102.00. Respondents Guagua National Colleges Faculty Labor Union and Guagua National Colleges Non- Teaching and Maintenance Labor Union demanded that the 70% of the TIP be allocated to the salaries of the Ees. As basis for their demand, respondents quoted Sec. 182(b) of the 2010 Revised Manual, which states that the increase in tuition or other school fees, as well as new fees shall be subject to the condition, among others, that no increase in tuition or other school fees or charges shall be approved unless 70% of the proceeds is allocated for increase in salaries or wages of the members of the faculty and all other Ees of the school concerned. Is the contention of the respondents correct?
- 92. 2024 GOLDEN NOTES 78 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES A: NO. The guidelines issued under DECS Order No. 15, series of 1992 on the allocation of the 70% incremental proceeds under R.A. No. 6728 restricted the scope of "other benefits" by limiting its applicability to "wage related benefits," which the law itself does not require. The term "other benefits" should not refer only to other wage- related benefits. Well settled is the doctrine that in case of conflict, the law prevails over the administrative regulations implementing it. To be valid, a rule or regulation must conform and be consistent with the provisions of the enabling to statute. As such, it cannot amend the law either by abridging or expanding its scope. Sec. 5(2) of R.A. No. 6728 clearly states that a tuition fee increase is allowed if 70% of the amount subsidized allotted for tuition fee or of the tuition fee increases shall go to the payment of salaries, wages, allowances, and other benefits of teaching and non-teaching personnel. The law does not qualify the term "other benefits" to refer only to "wage-related benefits." Hence, the allocation of a portion of the 70% TIP for the Ees' retirement plan, which is clearly intended for the benefit of the Ees, fall under the category of "other benefits" as provided under the law. Moreover, on 04 Feb. 2011, then DepEd Secretary Luistro issued DepEd Order No. 11 s. 2011. It amended Sec. 182 of the 2010 Revised Manual of Private Schools to conform to the provision of Sec. 5(2) of R.A. No. 6728, among others, to include other benefits in the allocation of the allowed tuition fee increase, apart from the payment of salaries, wages, and allowances of members of the faculty and other school Ees. Thus, Guagua National Colleges' allocation of a portion of the 70% net tuition fee incremental proceeds for contribution to the retirement plan of its Ees is VALID. (Guagua National Colleges v. Guagua National Colleges Faculty Labor Union, G.R. No. 213730, 23 June 2021) d. PROJECT Project A "project" has reference to a particular job or undertaking that may or may not be within the regular or usual business of the Er. In either case, the project must be distinct, separate, and identifiable from the main business of the Er, and its duration must be determined or determinable. (PAL v. NLRC, G.R. No. 125792, 09 Nov. 1998) Project Employment Project employment is employment that has been fixed for: 1. Specific undertaking – A specific project or undertaking the completion; or 2. Time-bound – Termination of which has been determined at the time of engagement of the Ee. (Sec. 5(a), Book VI, Rule I, IRR) The period is not the determining factor, so that even if the period is more than one (1) year, the Ee does not necessarily become regular. NOTE: Where the employment of a project Ee is extended long after the supposed project has been finished, the Ees are removed from the scope of project Ees and considered as regular Ees. Repeated hiring on a project-to-project basis is considered necessary and desirable to the business of the Er. The Ee is deemed regular. (Maraguinot v. NLRC, G.R. No. 120969, 22 July 1998) The litmus test to determine whether an individual is a project employee lies in setting a fixed period of employment involving a specific undertaking which completion or termination has been determined at the time of the particular Ee’s engagement. (Leyte Geothermal Power Progressive Employees Union v. PNOC-EDC, G.R. No. 170351, 30 Mar. 2011) Q: In a case for illegal dismissal, the issue is whether the respondents were regular Ees and were illegally dismissed. The respondents were
- 93. LABOR LAW ANDSOCIAL LEGISLATIONS 79 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW continuously hired by the company and assigned to different projects from the beginning of their employment in 1990 until their termination in 1993. They also claimed that they were not limited to performing work as cement cutters, but they also cleaned canals and pipes, fixed tools, and other related work at the company. Are the respondents regular Ees? A: YES. The principal test in determining whether an Ee is a project Ee is whether he/she is assigned to carry out a "specific project or undertaking," the duration and scope of which are specified at the time the Ee is engaged in the project, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. A true project Ee should be assigned to a project which begins and ends at determined or determinable times and be informed thereof at the time of hiring. Clearly, the presentation of service contracts between the Er and their client (even if it shows the duration of the project), in lieu of the Ees' individual employment contracts, does not establish that the latter are project Ees. There was no other substantial evidence offered to prove that respondents were informed at the time of their hiring, that they were project Ees. Moreover, petitioner's failure to file termination reports at the end of each project was an indication that respondents were regular Ees. (Jovero v. Cerio, G.R. No. 202466, 23 June 2021) Q: Herma Shipyard, Inc., (HERMA) is engaged in the business of shipbuilding and repair. Several of its Ees occupy various positions. In support of their employment is a contract of employment denominated as Kasunduang Paglilingkod, which classifies them as a project-based Ee only. The Ees were informed at the time of their engagement that their status is only a project Ee and their duration of specific project or undertaking. However, under Paragraph 10 of their employment contract, it allows the extension of the Ees’ employment until the completion of the specific work. Is the extension agreement under the employment contract violation of the second requisite of project employment that the completion or termination of such project or undertaking be determined at the time of engagement? A: NO. It is enough that Herma Shipyard gave the approximate or target completion date in the project employment contract. Given the nature of its business and the scope of its projects which take months or even years to finish, Herma Shipyard cannot be expected to give a definite and exact completion date. It can only approximate or estimate the completion date. What is important is that the Ees were apprised at the time of their engagement that their employment is coterminous with the specific project and the purpose of the extension is only to complete the same specific project, and not to keep them employed even after the completion thereof. (Herma Shipyard Inc. v. Oliveros et al., G.R. No. 208936, 17 Apr. 2017) Indicators of Project Employment in the Construction Industry Either one or more of the following circumstances, among others, may be considered as indicators that an Ee is a project Ee: 1. The duration of the specific/identified undertaking for which the worker is engaged is reasonably determinable; 2. Such duration, as well as the specific work/service to be performed, is defined in an employment agreement, and is made clear to the Ee at the time of hiring; NOTE: Absent any other proof that the project Ees were informed of their status as such, it will be presumed that they are regular Ees. 3. The work/service performed by the Ee is in connection with the particular project/ undertaking for which he is engaged; 4. The Ee, while not employed and awaiting engagement, is free to offer his services to any other Er;
- 94. 2024 GOLDEN NOTES 80 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. The termination of his employment in the particular project/undertaking is reported to the DOLE Regional Office having jurisdiction over the workplace within 30 days following the date of his separation from work, using the prescribed form on Ee’s terminations, dismissals or suspensions; or 6. An undertaking in the employment contract by the Er to pay completion bonus to the project Ee as practiced by most construction companies. (D.O. 19-93; Hanjin Heavy Industries v. Ibañez, G.R. No. 170181, 26 June 2008) Requisites in Determining Whether an Ee is a Project Ee 1. Designation of named Ees as “Project Ees”; 2. The project Ee was assigned to carry out a specific project or undertaking; 3. The duration and scope of which were specified at the time the Ee was engaged for that project (Imbuido v. NLRC, G.R. No. 114734, 31 May 2000); 4. The Ee must have been dismissed every after completion of his project or phase; and 5. Report to the DOLE of Ee’s dismissal on account of completion of contract. (D.O. 19-1993) Types of Ees in the Construction Industry 1. Project Ees - those employed in connection with a particular construction project or phase; and 2. Non-project Ees - those employed by a construction company without reference to a particular project. NOTE: In the case of Exodus International Construction Corporation v. Guillermo Biscocho, (G.R. No. 166109, 23 Feb 2011), when one project is completed, Ees were automatically transferred to the next project. There was no employment agreement given to the Ees which clearly spelled out the duration of their employment, the specific work to be performed and that such is made clear to them at the time of hiring. As such, they are regular Ees falling under the classification of non-project Ees. Requisites to Acquire Regular Ee Status of Project Ee 1. There is a continuous rehiring of project Ee’s even after cessation of a project; and 2. The tasks performed by the alleged “project Ee” are vital, necessary, and indispensable to the usual business or trade of the Er. (D.M. Consunji, Inc. v. JAMIN, G.R. No. 192514, 18 Apr. 2012) NOTE: The length of time during which the Ee was continuously rehired is not controlling, but merely serves as a badge of regular employment. “Day Certain” Rule It states that a project employment that ends on a certain date does not end on an exact date but upon the completion of the project. Q: Diosdado, a carpenter, was hired by Building Industries Corporation (BIC), and assigned to build a small house in Alabang. His contract of employment specifically referred to him as a "project Ee," although it did not provide any particular date of completion of the project. Is the completion of the house a valid cause for the termination of Diosdado’s employment? (2009 BAR) A: YES. The completion of the house should be a valid cause for termination of Diosdado’s employment, although the employment contract may not state a particular date. However, if it did not specify that the termination of the parties’ employment relationship was to be on a “day certain”—the day when the phase of work would be completed—the Ee can be considered to have been a regular Ee. (Filipinas Pre-Fabricated Building Systems, v. Puente, G.R. No. 153832, 18 Mar. 2005) NOTE: To satisfy due process requirements, under DOLE D.O. No. 19, Series of 1993, the Er is required
- 95. LABOR LAW ANDSOCIAL LEGISLATIONS 81 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW to report to the relevant DOLE Regional Office the fact of termination of project Ees as a result of the completion of the project or any phase thereof in which one is employed. Entitlement to Separation Pay GR: Project Ees are not entitled to separation pay if their services are terminated as a result of the completion of project. XPN: If the projects they are working on have not yet been completed when their services are terminated; project Ees also enjoy security of tenure during the limited time of their employment. (De Ocampo v. NLRC, G.R. No. 81077, 06 June 1990) Q: Roger Puente was hired by Filsystems, Inc., initially as an installer and eventually promoted to mobile crane operator, and was stationed at the company’s premises. Puente claimed in his complaint for illegal dismissal, that his work was continuous and without interruption for 10 years, and that he was dismissed from his employment without any cause. Filsystems on its part averred that Puente was a project Ee in the company’s various projects, and that after the completion of each project, his employment was terminated, and such was reported to the DOLE. Is Roger Puente a regular Ee? A: NO. Puente is a project Ee. The contracts of employment of Puente attest to the fact that he was hired for specific projects. His employment was coterminous with the completion of the projects for which he had been hired. Those contracts expressly provided that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction projects. Furthermore, the company regularly submitted to DOLE reports of the termination of services of project workers. Such compliance with the reportorial requirement confirms that Puente was a project Ee. The mere rehiring of Puente on a project-to-project basis did not confer upon him regular employment status. (Filipinas Pre-Fabricated Building Systems, Inc. v. Puente, G.R. No. 153832, 18 Mar. 2005) In the case of Alcatel v. Relos, while the Ee performed tasks that were clearly vital, necessary, and indispensable to the usual business or trade of the company, he was not continuously rehired after the cessation of every project. Alcatel did not rehire the Ee until after a lapse of 33 months, for the PLDT 1342 project. Alcatel's continuous rehiring of respondent in various capacities was done entirely within the framework of one and the same project – the PLDT 1342 project. This did not make the Ee a regular Ee of Alcatel as he was not continuously rehired after the cessation of a project. (Alcatel v. Relos, G.R. No. 164315, 03 July 1999) e. SEASONAL Seasonal Employment Employment where the job, work, or service to be performed is seasonal in nature and the employment is for the duration of the season. (Sec. 5(a), Book VI, Rule I, IRR) An employment arrangement where an Ee is engaged to work during a particular season on an activity that is usually necessary or desirable in the usual business or trade of the Er. NOTE: For Seasonal Ees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. (Mercado v. NLRC, G.R. No. 79869, 05 Sept. 1991) One-year duration on the job is pertinent in deciding whether a casual Ee has become regular or not, but it is not pertinent to a Seasonal or Project Ee. Passage of time does not make a seasonal worker regular or permanent. (Ibid.) During off-season, the relationship of Er-Ee is not severed; the Seasonal Ee is merely considered on LOA without pay. Seasonal workers who are repeatedly engaged from season to season performing the same tasks are deemed to have
- 96. 2024 GOLDEN NOTES 82 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES acquired regular employment. (Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade, G.R. No. 149440, 28 Jan. 2003) Seasonal Ees as Regular Ees Seasonal Ees can be considered regular Ees. The fact that Seasonal Ees do not work continuously for one whole year but only for the duration of the season does not detract from considering them in regular employment. Seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in that period, but merely considered on leave until re- employed. If the Ee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment will be considered regular, but only with respect to such activity and while such activity exists. (Benares v. Pancho, G.R. No. 151827, 29 Apr. 2005) It is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. Q: Carlito Codilan and Maximo Docena had been working for the rice mill for 25 years, while Eugenio Go, Teofilo Trangria, and Reynaldo Tulin have been working for 22, 15, and 6 years respectively. The operations of the rice mill continue to operate and do business throughout the year even if there are only two or three harvest seasons within the year. This seasonal harvesting is the reason why the company considers the workers as seasonal Ees. Is the company correct in considering the Ees as seasonal Ees? A: NO. The fact is that big rice mills such as the one owned by the company continue to operate and do business throughout the year even if there are only two or three harvest seasons within the year. It is a common practice among farmers and rice dealers to store their palay and to have the same milled as the need arises. Thus, the milling operations are not seasonal. Finally, considering the number of years that they have worked, the lowest being six (6) years, the workers have long attained the status of regular Ees as defined under Art. 295. (Tacloban Sagkahan Rice Mill v. NLRC, G.R. No. 73806, 21 Mar. 1990) Entitlement to Separation Pay When the business establishment is sold which effectively terminates the employment of the seasonal Ees, the latter would be entitled to separation pay. NOTE: “Month pay” shall be understood, in this regard, as average monthly pay during the season they worked. (Abad, Jr., 2015) f. FIXED-TERM Term Employment A contract of employment for a definite period terminates by its own terms at the end of such period. (Brent School v. Zamora, G.R. No. L-48494, 05 Feb. 1990) Term employment is not a circumvention of the law on security of tenure if it follows the requisites laid down by the Brent ruling. (Romares v. NLRC, G.R. No. 122327, 19 Aug. 1998) The defined period must be a genuine condition of the job and not merely to avoid regular status of the Ee. (Azucena, 2016) Decisive Determinant in Term Employment It is the day certain agreed upon by the parties for the commencement and the termination of their employment relation.
- 97. LABOR LAW ANDSOCIAL LEGISLATIONS 83 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Fixed Term Employment It is an employment where a fixed period of employment was agreed upon: 1. Knowingly and voluntarily by the parties; and 2. Without any force, duress or improper pressure being brought to bear upon the Ee and business of Er. (Philips Semiconductor v. Fadriquela, G.R. No. 141717, 14 Apr. 2004) Fixed-Term Employment vs. Project Employment Both employments are time bound or for a certain period – as agreed upon at the time of engagement. However, in project employment, the Ee is tasked to do specific undertaking, which is not present in fixed-term employment. Brent Doctrine Art. 295 of the LC does not prohibit an employment contract with a fixed period, provided it is entered into by the parties without any force, duress, or improper pressure being brought to bear upon either party, particularly the Ee and absent any other circumstances vitiating consent; or where 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 over the latter. Such employment for a defined period is allowed even where the duties of the Ee consist of activities usually necessary or desirable in the usual business of the Er. There can of course be no quarrel with the proposition that where, from the circumstances, it is apparent that periods have been imposed to preclude acquisition of tenurial security by the Ee, they should be struck down or disregarded as contrary to public policy, morals, etc. (Brent School, Inc. v. Zamora, G.R. No. L-48494, 5 Feb. 1990) Overseas Seafarers are Contractual Employees The employment of overseas seafarers is governed by the POEA Standard Employment Contract for Filipino Seamen. Their employment is governed by the contracts they sign every time they are rehired, and their employment is terminated when the contract expires. It is an accepted maritime industry practice that employment of seafarers is for a fixed period only. Domestic Seafarers are Not Contractual Employees Seamen employed in domestic shipping are entitled to security of tenure, can become permanent Ees, and can be terminated only for just or authorized causes. Domestic seafarers are covered by the LC, including its Book VI. Q: Darrell was hired as an athletic director in Amorita School for a period of five years. As such, he oversees the work of coaches and related staff involved in intercollegiate or interscholastic athletic programs. However, he was not rehired upon the expiration of said period. Darrell questions his termination alleging that he was a regular Ee and could not be dismissed without valid cause. a) Is he a regular Ee? A: NO. Darrell is not a regular Ee but an Ee under a fixed-term contract. While it can be said that the services he rendered were usually necessary and desirable to the business of the school, it cannot also be denied that his employment was for a fixed term of five years. The decisive determinant in fixed-term employment should not be the activities that the Ee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relation. (Brent School Inc. v. Zamora, G.R. No. 48494, 05 Feb. 1990) b) Will Darrell automatically become a regular Ee if he is rehired by the school for another definite period of employment? A: NO. The decisive determinant in term employment is the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when and not
- 98. 2024 GOLDEN NOTES 84 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES whether the work is usually necessary and desirable to the business of the Er. Q: Does the “Reasonable Connection Rule” apply in fixed term employment for a fixed-term Ee to be eventually classified as a regular Ee? A: NO. It should be apparent that this settled and familiar notion of a period, in the context of a contract of employment, takes no account at all the nature of the duties of the Ee; it has absolutely no relevance to the character of his duties as being usually necessary and desirable to the usual business of the Er, or not. Q: Dean Jose and other Ees are holding administrative positions as dean, department heads, and institute secretaries. In the implementation of the Reorganization, Retrenchment and Restructuring program effective 01 Jan. 1984, Dean Jose and other Ees were retired but subsequently rehired. Their appointment to their administrative positions as dean, department heads, and institute secretaries had been extended by the company from time to time until the expiration of their last appointment on 31 May 1988. Were Dean Jose and other Ees illegally dismissed? A: NO. Petitioners were dismissed by reason of the expiration of their contracts of employment. Petitioners' appointments as dean, department heads, and institute secretaries were for fixed terms of definite periods as shown by their respective contracts of employment, which all expired on the same date, May 31, 1988. The validity of employment for a fixed period has been acknowledged and affirmed by the SC. (Blancaflor v. NLRC, G.R. No. 101013, 02 Feb. 1993) Q: Lina has been working as a steward with a Miami, U.S.A.-based Loyal Cruise Lines for the past 15 years. She was recruited by a local manning agency, Macapagal Shipping, and was made to sign a 10-month employment contract every time she left for Miami. Macapagal Shipping paid for Lina’s round-trip travel expenses from Manila to Miami. Because of a food poisoning incident which happened during her last cruise assignment, Lina was not re- hired. Lina claims she has been illegally terminated and seeks separation pay. If you were the Labor Arbiter handling the case, how would you decide? (2014 BAR) A: I will dismiss Lina's complaint. Lina is a contractual Ee, and the length of her employment is determined by the contracts she entered. Here, her employment was terminated at the expiration of the contract. (Millares, et al. v. NLRC G.R. No. 110524, 29 July 2002) Use of Seaman’s Book Does Not Detract from Being Land-Based Workers The employees, Offshore Oilriggers, averred that while the company made them use passports for overseas contract workers whenever they departed for, and returned from, overseas employment, they were also instructed to use their Seaman's Book upon reaching port for transfer to, and while aboard, the oilrig. The employees claimed that this practice entitled them to the benefits granted by law to both land-based workers and seafarers. They have nothing to do with manning vessels or with sea navigation. Their use of the Seaman's Book does not detract from the fact that they are truly land-based workers. (Agga v. NLRC, G.R. No. 123882, 16 Nov. 1998) Those Employed in Non-mobile Vessels or Fixed Structures Cannot Be Considered as Filipino Seafarers A “worker” means any member of the labor force, whether employed or unemployed. (Art. 13(a), LC) A “seaman" as any person employed in a vessel engaged in maritime navigation. (Art. 13(g), LC) It is implied from the above definition that the capability of a vessel to engage in maritime navigation is crucial in determining whether one can be considered as a "seaman" (the term used prior to the more gender-neutral "seafarer") under the ambit of our LC. It must be emphasized that notwithstanding the evolution of how the POEA defines a "seafarer," the
- 99. LABOR LAW ANDSOCIAL LEGISLATIONS 85 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW same should still be read with Art. 13(g) of the LC, which contains the legal definition that may not be expanded or limited by mere administrative rules or regulations. Indeed, all the definitions mentioned would all point to the fact that in order to be considered a seaman or seafarer, one would have to be, at the very least, employed in a vessel engaged in maritime navigation. Thus, it is clear that those employed in non-mobile vessels or fixed structures, even if the said vessels/structures are located offshore or in the middle of the sea, cannot be considered as seafarers under the law. Mandatory Remittance of Foreign Exchange Earnings It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of Labor. 3. RELATED CONCEPTS a. FLOATING STATUS (Art. 301, LC; DOLE D.O. No. 215-20) An employment is not deemed terminated when: 1. There is a bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months; or, 2. The fulfilment by the Ee of a military or civic duty. (Art. 301, LC) During this period, the Ee is considered on “floating status,” which is also known as temporary lay-off, temporary off-detail, or temporary retrenchment. Since the lay-off is only temporary, the employment status of the Ee is not deemed terminated, but merely suspended. (Dela Cruz v. NLRC, G.R. No. 119536, 17 Feb. 1997) Floating Status 1. Labor Code When Employment not Deemed Terminated The bonafide suspension of the operation of a business or undertaking for a period not exceeding 6 months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. (Art. 301, LC) NOTE: The floating status of an Ee should last only for a legally prescribed period of time. When that floating status of an Ee lasts for more than 6 months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his separation. (Agro Commercial Security Services Agency, Inc. v. NLRC, G.R. Nos. 82823-24, 31 July 1989) 2. DOLE D.O. 174-17 (Manpower Services) Effect of Termination of Employment Where the termination results from the expiration of Service Agreement, or from the completion of the phase of the job or work for which the employee is engaged, the latter may opt to wait for re-employment within three (3) months to resign and transfer to another contractor-employer. Failure of the contractor to provide new employment shall entitle the employee to separation benefits, as may be provided by law or the Service Agreement, whichever is higher, without prejudice to his/her entitlement to completion bonuses or other emoluments. Furthermore, the mere expiration of the Service Agreement shall not be deemed as a termination of employment of the contractor’s/subcontractor’s employee, who are the regular employees of the latter.
- 100. 2024 GOLDEN NOTES 86 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 3. DOLE D.O. No. 150-16 (Private Security Guards) Reserved Status If after a period of six (6) months, the Security Service Contractor/Private Security Agency cannot provide work or give an assignment to the reserved security guard, the latter can be separated from service and shall be entitled to separation pay. An assignment of the security guard and other private security personnel as a reliever for less than one-month shall not be considered as an interruption of the six (6) months period. (Sec. 10.3, DOLE D.O. No. 150-16) NOTE: No security guard and other private security personnel can be placed in a workpool or on reserved status in any of the following situations: a. After expiration of a service agreement, if there are other principals where he/she can be assigned; b. As a measure to constructively dismiss the security guard; and c. As an act of retaliation for filing any complaint against the employer for violation of labor laws, among others. Reinstatement of Ee on Floating Status The Er may suspend business operations or the Ee may be relieved on the performance of his work when there is a need to perform civic or military duty, provided that the period in both instances should not last for a period beyond six (6) months. After the Er has resumed operations of the Ee has fulfilled his civic or military duty, then he must be recalled to work within a month. Otherwise, the Ee shall be considered terminated, and the Er will have to pay separation pay. NOTE: If the Er does not pay him separation pay, then that will amount to constructive dismissal. Floating status cannot last beyond 6 months. After 6 months, the Er must be able to provide the security guard with work assignment within one (1) month after the six-month period. Q: Loque was hired as a security guard by Seventh Fleet Security Services, Inc. Loque filed a complaint for constructive dismissal, and argued that since he was placed on floating status period of more than six months, he is deemed to have been constructively dismissed. To avoid liability for constructive dismissal, Seventh Fleet asserted that it had directed Loque "to report to Seventh Fleet's office for posting within 48 hours" through the letters dated 14 May 2014 and 28 May 2014. Seventh Fleet faulted Loque for not complying with its directive. On the other hand, Loque claimed that he went to Seventh Fleet's office to report for work on two occasions — on 19 May 2014 and 11 July 2014, but he was barred from entering the premises of Seventh Fleet. The Labor Arbiter found Seventh Fleet guilty of illegal constructive dismissal. The NLRC reversed the ruling of the LA and held that placing Loque on floating status was a valid exercise of Seventh Fleet's management prerogative. Is the NLRC correct? A: NO. While there is no specific provision in the LC governing the "floating status" or temporary "off- detail" of Ees, the Court, applying Art. 286 (now Art. 301) of the LC by analogy, considers this situation as a form of temporary retrenchment or lay-off. Conformably with Art. 301, the placement of an Ee on "floating status" must not exceed six months. Otherwise, the Ee may be considered constructively dismissed. The burden of proving that there are no posts available to which the security guard can be assigned rests on the Er. However, the mere lapse of six months in "floating status" should not automatically result to constructive dismissal. The peculiar circumstances of the Ee's failure to assume another post must still be inquired upon. In this case, Seventh Fleet was not able to show that Loque was not barred from entering its premises. The letters sent by Seventh Fleet to Loque are in the nature of general return to work orders. Such general return to work orders will not absolve Seventh Fleet since jurisprudence requires not only that the Ee be recalled to the agency's office, but that the Ee be deployed to a specific client before the
- 101. LABOR LAW ANDSOCIAL LEGISLATIONS 87 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW lapse of six months. Considering that Loque was placed on floating status for more than six months without being deployed to a specific assignment, and that the letters sent by Seventh Fleet are bereft of any reference to any specific client or indication that he would be assigned to a specific client, Loque is therefore deemed constructively dismissed. It follows then that Loque could not have abandoned his employment with Seventh Fleet, for abandonment is incompatible with constructive dismissal. (Seventh Fleet Security Services, Inc. v. Loque, G.R. No. 230005, 22 Jan. 2020) Q: Juan was alleged to have made disrespectful remarks to a superior Ee in TelTel business process outsourcing company. He was placed in preventive suspension. A company investigation was conducted and found that Juan is not liable. However, he was moved to another position on another branch but eventually told to go back again to the original branch. But this time, he was told that the company still needed to find an account for him. He was told that he was considered as a “floater” and he will not get paid unless his floating status has been lifted. In his desire to keep his job and to receive his salary, Juan exhausted his earned vacation leaves. Juan alleged that he had been constructively dismissed. Is TelTel correct? A: NO. The floating status principle does not find application in the instant case. While it may be argued that the nature of the call center business is such that it is subject to seasonal peaks and troughs because of client pullouts, changes in clients' requirements and demands, and a myriad other factors, still, the necessity to transfer Juan to another practice/account does not depend on TelTel's third party-client/contracts. When the controversy arose, TelTel had several clients in its roster to which it can easily assign Juan as Quality Analyst without any hindrance. (Telus International Philippines, Inc And Michael Sy v. Harvey De Guzman, G.R. No. 202676, 04 Dec. 2019) Suspension of Employment Relationship The employer-employee relationship shall be deemed suspended in case of suspension of operation of the business or undertaking of the employer for a period not exceeding six (6) months, unless the suspension is for the purpose of defeating the rights of the employees under the Code, and in case of mandatory fulfillment by the employee of a military or civic duty. The payment of wages of the employee as well as the grant of other benefits and privileges while he is on suspended employment or on a military or civic duty shall be subject to existing laws and decrees and to the applicable individual or collective bargaining agreement and voluntary employer practice or policy. In case of declaration of war, pandemic and similar national emergencies, the employer and the employees, through the union, if any, or with the assistance of the department of labor and employment, shall meet in good faith for the purpose of extending the suspension of employment for a period not exceeding six (6) months: provided, that the employer shall report to the department of labor and employment, through the regional offices, the extension of suspension of employment ten (10) days prior to the effectivity thereof subject to inspection; provided, however, that the employees shall not lose employment if they find alternative employment during the extended suspension of employment except in cases of written, unequivocal and voluntary resignation; provided further, that should retrenchment be necessary before or after the expiration of the extension of suspension of employment, the affected employee shall be entitled to separation pay as prescribed by the labor code, company policies or collective bargaining agreement, whichever is higher; provided, finally, that the retrenched employees shall have priority in the re- hiring if they indicate their desire to resume their work not later than one (1) month from the resumption of operations. This notwithstanding, by mutual agreement of the employer and the employees, through the union, if any, or with the assistance of the department of labor and employment, employees may be recalled to work or retrenched subject to the requirement of
- 102. 2024 GOLDEN NOTES 88 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES notice and separation pay, anytime before the expiration of the extension of suspension of employment. The extension of suspension of employment shall not affect the right of the employees to separation pay. The first six (6) months of suspension of employment shall be included in the computation of the employees' separation pay. (Sec. 12, DOLE D.O. No. 215-20) b. EMPLOYMENT SUBJECT TO A SUSPENSIVE CONDITION Void Potestative Condition In Gemudiano, Jr. v. Naess Shipping Philippines, Inc. (G.R. No. 223825, 20 Jan. 2020), the Addendum to the contract of employment provides: "the employment relationship between the Employer on one hand and the Seaman on the other shall commence once the Master has issued boarding confirmation to the seaman." Relying on this provision, the shipowners insist that there is no employer-employee relationship between them and the seafarer and that the labor arbiter had no jurisdiction over the seafarer's complaint. True, the parties to a contract are free to adopt such stipulations, clauses, terms and conditions as they may deem convenient provided such contractual stipulations should not be contrary to law, morals, good customs, public order or public policy. But such is not the case here. The stipulation contained in the Addendum is a condition which holds in suspense the performance of the respective obligations of the seafarer and the shipowners under the contract of employment, or the onset of their employment relations. It is a condition solely dependent on the will or whim of the shipowners since the commencement of the employment relations is at the discretion or prerogative of the latter's master of the ship through the issuance of a boarding confirmation to the seafarer. The Supreme Court in Naga Telephone Co., Inc. v. CA (G.R. No. 107112, 24 Feb. 1994), referred to this kind of condition as a "potestative condition," the fulfillment of which depends exclusively upon the will of the debtor, in which case, the conditional obligation is void. Art. 1182 of the Civil Code of the Philippines reads: “When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon the will of a third person, the obligation shall take effect in conformity with the provisions of this Code.” In this regard, the Supreme Court stressed in Romero v. CA (G.R. No. 107207, 23 Nov. 1995): “We must hasten to add, however, that where the so- called "potestative condition" is imposed not on the birth of the obligation but on its fulfillment, only the condition is avoided, leaving unaffected the obligation itself. Clearly, the condition set forth in the Addendum is one that is imposed not on the birth of the contract of employment since the contract has already been perfected, but only on the fulfillment or performance of their respective obligations, i.e., for the seafarer to render services on board the ship and for the shipowners to pay him the agreed compensation for such services. A purely potestative imposition, such as the one in the Addendum, must be obliterated from the face of the contract without affecting the rest of the stipulations considering that the condition relates to the fulfillment of an already existing obligation and not to its inception. Moreover, the condition imposed for the commencement of the employment relations offends the principle of mutuality of contracts ordained in Art. 1308 of the Civil Code which states that contracts must bind both contracting parties, and its validity or compliance cannot be left to the will of one of them. The Supreme Court is thus constrained to treat the condition as void and of no effect, and declare the respective obligations of the parties as unconditional. Consequently, the employer-employee relationship between the seafarer and the shipowners should be deemed to have arisen as of the agreed effectivity date of the contract of employment.
- 103. LABOR LAW ANDSOCIAL LEGISLATIONS 89 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW B. LEGITIMATE CONTRACTING VS. LABOR-ONLY CONTRACTING (Arts. 106-109, LC; DOLE D.O. No. 174-17; DOLE D.C. No. 01-17; E.O. No. 51, Series of 2018) LEGITIMATE SUBCONTRACTING LABOR-ONLY CONTRACTING 1. The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof; 2. The contractor or subcontractor has substantial capital or investment; and 3. The Service Agreement ensures compliance with all the rights and benefits for all the Ees of the contractor or subcontractor under the labor laws. (Sec. 8, D.O. No. 174, s. 2017) 1. The contractor or subcontractor does not have substantial capital or investment to perform the job, work or service under its own account and responsibility; and 2. The Ees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. (Sasan v. NLRC, G.R. No. 176240, 17 Oct. 2008) Legitimate Subcontracting The agreement between the principal and the contractor or subcontractor assures the contractual Ees' entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. (Petron Corporation v. ARMZ Caberte, G.R. No. 182255, 15 June 2015) Substantial Capital It refers to paid-up capital stocks/shares of at least P5 Million in the case of corporations, partnerships, and cooperatives. P5 Million net worth in the case of a single proprietorship. (Sec. 3(L), DOLE D.O. No. 174 s. 2017) The law does not require both substantial capital and investments, it is sufficient that either of the two is complied with. (Neri v. NLRC, G.R. Nos. 97008-09, 23 July 1993) Burden of proof to prove that he/it has substantial capital or investment rests on the contractor himself. (Guarin v. NLRC, G.R. No. 86010, 03 Oct. 1989) NOTE: In legitimate Job Contracting, the principal is jointly and severally liable with the contractor for the payment of unpaid wages. (Arts. 106, 107 & 10, LC) Independent Contractor An independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on their own account and under their own responsibility according to their own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. (Chavez v. NLRC, G.R. No. 146530, 17 Jan. 2005.) NOTE: Independent contractors often present themselves to possess unique skills, expertise, or talent to distinguish them from ordinary Ees. (Sonza v. ABS-CBN, G.R. No. 138051, 10 June 2004) When hired by reason of her peculiar talents, skills, personality, and celebrity status proved the presence of one of the elements of an independent contractor. (Tiangco v. ABS-CBN Broadcasting Corporation, G.R No. 200432 Dec. 6, 2021)
- 104. 2024 GOLDEN NOTES 90 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES An independent contractor is not under the compulsory coverage of the SSS. He may be covered as a self-employed person (Sec. 8(j), RA 11199) Indirect or Statutory Employer One who enters a contract with an independent contractor for the performance of any work, task, job, or project not directly related to the Er’s business. (Baguio v. NLRC, G.R. Nos. 79004-08, 04 Oct. 1991) NOTE: No Er-Ee relationship exists between the owner of the project and the Ees of the independent contractor. (Baguio v. NLRC, G.R. Nos. 79004-08, 04 Oct. 1991) The principal Er is considered only an indirect Er. (PCI Automation Center, Inc. v. NLRC, G.R. No. 115920, 29 Jan. 1996) What is contracted is the performance and completion of a designated job, and not just the supplying of people to do the job. Major Laws Applicable to Work Relationship 1. Between the Principal and Contractor – The Civil Code and pertinent Commercial Laws 2. Between Contractor and his Ees – the Labor Code and Special Labor Laws. NOTE: Between the principal and the contractor’s Ees, no Er-Ee relationship exists; the contractor, being himself a businessman, is the Er. But the contractor may in turn become a contractee if he contracts with a contractor. Er-Ee relationship may be declared to exist between the principal and the contractor’s workers where the contracting arrangement is not legitimate. Employee vs. Independent Contractor EMPLOYEE INDEPENDENT CONTRACTOR As to their Existence Existence of an Er-Ee relationship is determined by law. Existence of an Independent Contractorship is determined by the contract. As to the Exercise of Control Er exercises the right of control not only the end achieved, but also to manner and means used to achieve that end. Only the result of their work is subject to the Er’s control. As to Wages Wages should comply with the minimum wage established by the law. Payment given to an independent contractor is compensation that is agreed upon in the contract. As to Payment of Contributions Er is required to pay for Ee’s contributions, such as Pag-IBIG, PhilHealth, and SSS. The independent contractor pays for his own contribution. As to Termination Ee may be terminated only due to reasons stated in the LC. Other valid grouds may be indicated in the contract. Labor-Only Contracting (LOC) It refers to an arrangement where the contractor, who does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, supplies workers to an Er and the workers recruited are performing activities which are directly related to the principal business of such Er. (Art. 106, LC)
- 105. LABOR LAW ANDSOCIAL LEGISLATIONS 91 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW It is a prohibited act, an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work or service for a principal. NOTE: In labor-only contracting, there is really no contracting and no contractor. There is only a representative to gather and supply people to the principal. (Azucena, 2016) A finding that a contractor is a “labor-only” contractor is equivalent to declaring that there is an Er-Ee relationship between the principal and the Ees of the “labor-only” contractor. (San Miguel Corp. v. MAERC Integrated Systems, G.R. No. 144672, 10 July 2003) NOTE: A finding that a contractor is a labor-only contractor, as opposed to permissible job contracting, is equivalent to declaring that there is an Er-Ee relationship between the principal and the Ees of the supposed contractor, and the labor-only contractor is considered as a mere agent of the principal, the real Er. (Allied Banking Corporation v. Reynold Calumpang, G.R. No. 219435, 17 Jan. 2018) Q: A was hired by PPI Holdings but whose employment was later transferred to CBMI, a manpower agency. CMBI eventually terminated A after 14 years of service. A then filed an illegal dismissal case against PPI, arguing that he was a regular employee for the aforementioned duration. Was A the direct employer of Conjusta? A: NO. CBMI is a labor-only contractor, thus considered as a mere agent of PPI, which in turn was deemed to be A employer. The following must be considered in determining whether CBMI was a legitimate job contractor or was engaged in labor- only contracting: (a) registration with the proper government agencies; (b) existence of substantial capital or investment; (c) service agreement that ensures compliance with all the rights and benefits under labor laws; (d) nature of the activities performed by the employees, i.e., if they are usually necessary or desirable to the operation of the principal 's company or directly related to the main business of the principal within a definite predetermined period; and (e) the exercise of the right to control the performance of the employees' work Here, the only evidence on record to support PPI and CBMI's claim of legitimate job contracting are the certificates of registration, financial statements, and service agreements. But the Court had consistently ruled that a certificate of registration as an independent contractor is not conclusive evidence of such status. Such registration merely prevents the legal presumption of being a labor-only contractor from arising. The financial statements presented to prove that CBMI had substantial capital likewise did not suffice to classify it as an independent contractor. Consequently, PPI and CBMI are solidarily liable for A’s illegal dismissal and monetary claims. (Rico Pali Conjusta v. PPI Holdings, Inc., G.R. No. 252720, 22 August 2022, as penned by J. M.V Lopez) Confirming Elements To have labor-only contracting, the essential element of supplying workers to another is not enough. To it must be added either one of two confirming elements: 1. Lack of substantial capital or investment and performance of activities directly related or usually necessary or desirable to the principal’s main business; or 2. The contractor does not exercise control over the performance of the Ees. (Azucena, 2016) NOTE: If the essential element is absent, there can be no LOC. And even if the essential element is present, but confirming element one or two is absent, there is still no LOC. (Azucena, 2016) Trilateral Relationship In legitimate contracting, there exists a trilateral relationship under which there is a contract for a specific job, work or service between the principal and the contractor or subcontractor, and a contract of employment between the contractor or subcontractor and its workers. (Azucena, 2016)
- 106. 2024 GOLDEN NOTES 92 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES NOTE: There is no employer-employee relationship between the contractor and principal who engages the contractor’s services, but there is an employer- employee relationship between the contractor and workers hired to accomplish the work for the principal. There are three parties involved in these arrangements: 1. Principal (Contractee) – It refers to any Er, whether a person or entity, including government agencies and government-owned and controlled corporations, who/which puts out or farms out a job, service, or work to a contractor. 2. Contractor or subcontractor – It refers to any person or entity, including a cooperative, engaged in a legitimate contracting or subcontracting agreement providing either services, workers or combination of services to a principal under a Service Agreement; 3. Contractual workers – Includes one employed by a contractor to perform or complete a job, work or service pursuant to a Service Agreement with a principal. (DOLE D.O. No. 174 s. 2017) Factors for a Contractor to be Considered as a Legitimate Job Contractor 1. The contractor or subcontractor is engaged in a distinct and independent business and undertakes to perform the job or work on its own responsibility, according to its own manner and method; 2. The contractor or subcontractor has substantial capital to carry out the job farmed out by the principal on his account, manner and method, investment in the form of tools, equipment, machinery and supervision; 3. In performing the work farmed out, the contractor or subcontractor is free from the control and/or direction of the principal in all matters connected with the performance of the work except as to the result thereto; and 4. The Service Agreement ensures compliance with all the rights and benefits for all the employees of the contractor or subcontractor under the labor laws. Bilateral Relationship Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and talents that set them apart from ordinary employees. There is no trilateral relationship in this case because the independent contractor himself or herself performs the work for the principal. In other words, the relationship is bilateral. (Fuji Television Network, Inc. v. Espiritu, G.R. Nos. 204944-45, 03 Dec. 2014) Other Examples of Independent Contractor 1. Columnist (Orozco v. Court of Appeals, G.R. No. 155207, 13 Aug. 2008) 2. Masiador and Sentenciador (Semblante v. Court of Appeals, G.R. No. 196426, 15 Aug 2011) 3. Basketball referees (Bernarte v. Philippine Basketball Association, G.R. No. 192084, 14 Sept. 2011) Contractor or Subcontractor to Furnish a Bond An Er or indirect Er may require the contractor or subcontractor to furnish a bond equal to the cost of labor under contract, on the condition that the bond will answer for the wages due the Ees should the contractor or subcontractor fail to pay the same. (Art. 107, LC) NOTE: Where the Er fails to require the posting of the bond, he must be liable for whatever the contractor may have incurred to his Ees, without prejudice to its right of reimbursement from the contractor for whatever amount paid. (Baguio v. NLRC, G.R. Nos. 79004-08, 04 Oct. 1991)
- 107. LABOR LAW ANDSOCIAL LEGISLATIONS 93 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Job Contracting vs. Labor-Only Contracting JOB CONTRACTING LABOR-ONLY CONTRACTING The Er or principal is merely an indirect Er, by operation of law, of his contractor’s Ees. The Er or principal is treated as direct Er of the contractor’s Ees in all instances. (Contractor = agent of the Er) The law creates an Er- Ee relationship for a limited purpose. The statute creates an Er-Ee relationship for a comprehensive purpose. The principal becomes solidarily liable. The liability, however, does not extend to the payment of backwages or separation pay of Ees who are illegally dismissed. The principal becomes solidarily liable with the contractor not only for unpaid wages but also for all the rightful claims of the Ees under the Labor Code and ancillary laws. Allowed by law Prohibited by law Presence of substantial capital or investment. Absence of substantial capital or investment. DOLE D.O. No. 174 s. 2017 It is not applicable to trilateral relationship which characterizes contracting or subcontracting arrangement. Including: 1. BPO/KPO - It does not contemplate to cover information-technology enabled services involving an entire or specific business process such as Business Process Outsourcing (BPO) or Knowledge Process Outsourcing (KPO). (DOLE D.O. No. 01, s. 2017) 2. Construction Industry - Licensing and exercise of regulatory powers over the construction industry is lodged with the Philippine Constructors Accreditation Board (PCAB) of the Construction Industry Authority of the Philippines (CIAP). 3. Private Security Agency - Except for the registration requirement as provided in DO No. 174, s. 2017, contracting or subcontracting arrangement in the private security industry shall be governed by DO No. 150, s. 2016. 4. Other Contractual Relationships – DOLE D.O. No. 174. s. 2017 does not contemplate to cover contractual relationship such as in contract of sale or purchase, contract of lease, contract of carriage, contract growing or growership agreement, toll manufacturing, contract of management, operation and maintenance, and such other contracts governed by the NCC and special laws. Extent of Er’s Liability in Invalid Contracting Where the contracting is found to be labor-only contracting, the liability is immediately and directly imposed upon the principal. The principal shoulders all the obligations of an Er, not just the payment of wages. The liability becomes direct and total as that of a directly hiring Er. Extent of Principal’s Liability in Legitimate Contracting The contractor or subcontractor shall be considered the Er of the contractual Ee for purposes of enforcing the provisions of the LC and other social legislation. The principal shall be solidarily liable with the contractor in the event of any violation of any provisions of the Labor Code, including the failure to pay wages. (D.O. No. 18-02) Wages and Money Claims If the contractor or subcontractor fails to pay the wages of his Ees in accordance with the Code, the Er shall be jointly and severally liable with the contractor or subcontractor to such Ees to the extent of the work performed under the contract, in
- 108. 2024 GOLDEN NOTES 94 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES the same manner and extent that he is liable to Ees directly employed by him. (Art. 107, LC) NOTE: Where no Er-Ee relationship exists between the parties and no issue is involved which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it is the Regional Trial Court that has jurisdiction. Other Violations The court has interpreted the liability of the principal under Art. 109 as a qualified or limited liability. Liability 1. For failure to pay the minimum wage or the service incentive leave or other benefits – The principal is equally liable with the contractor as if the principal were the direct Er. 2. With punitive character – Such as an award for backwages and separation pay because of an illegal dismissal of the contractor’s Ee, the liability should be solely that of the contractor, in the absence of proof that the principal conspired with the contractor in the commission of the illegal dismissal. NOTE: The contractor’s liability for underpaid wages and unpaid overtime work could be enforced against the surety bond posted by the contractor as required by the principal. The law’s aim in imposing indirect liability upon the principal is to assure payment of monetary obligations to the workers. This aim is accomplished through the principal’s requiring the posting of a bond. After satisfying from the bond the unpaid wages and overtime pay, the contractor cannot recover from the principal if the principal has already handed over to the contractor the amount covering the wages, or the pay increase mandated by a wage order. (Rosewood Processing, Inc. v. NLRC, G.R. Nos. 116476-84, 21 May 1998) Q: Star Crafts is a lantern maker based in Pampanga. It supplies Christmas lanterns to stores in Luzon, Metro Manila, and parts of Visayas, with the months of August to November being the busiest months. Its factory employs a workforce of 2,000 workers who make different lanterns daily for the whole year. Because of increased demand, Star Crafts entered into a contractual arrangement with People Plus, a service contractor, to supply the former with I 00 workers for only 4 months, August to November, at a rate different from what they pay their regular employees. The contract with People Plus stipulates that all equipment and raw materials will be supplied by Star Crafts with the express condition that the workers cannot take any of the designs home and must complete their tasks within the premises of Star Crafts. Is there an employer-employee relationship between Star Crafts and the 100 workers from People Plus? Explain. (2015 BAR) A: YES. People Plus is a labor-only-contractor because it is not substantially capitalized. Neither does it carry on an independent business in which it uses its own investment in the form of tools, equipment, machineries or work premises. Hence, it is just an agent or recruiter of workers who perform work directly related to the trade of Star Crafts. Since both the essential element and the conforming element of labor-only contracting are present, Star Crafts becomes the employer of the supplied worker. As principal, Star Crafts will always be an employer in relation to the workers supplied by its contractor. Its status as employer is either direct or indirect depending on whether the contractor is legitimate or not. Thus, even if People Plus were a legitimate job contractor, still Star Crafts will be treated as a statutory employer for purposes of paying the workers’ unpaid wages and benefits. NOTE: A labor-only contractor is not substantially capitalized and does not carry on an independent business in which it uses its own investment in the form of tools, equipment, machineries or work premises. (Art. 106, LC)
- 109. LABOR LAW ANDSOCIAL LEGISLATIONS 95 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW IV. LABOR STANDARDS A. CONDITIONS OF EMPLOYMENT 1. COVERED EMPLOYEES; EXCEPTIONS (Art. 82, LC; Secs. 1-2, Rule I, Book III, Omnibus Rules Implementing the Labor Code) GR: Title I, Book III of the LC deals with hours of work, weekly rest periods, holidays, service incentive leaves and service charges. It covers all Ees in all establishments, whether for profit or not. (Art. 82, LC) XPNs: (G-F-M-O-M-P-W-D) 1. Government Ees; 2. Field personnel; 3. Managerial Ees; 4. Officers and members of the managerial staff; 5. Members of the family of the Er who are dependent on him for support; 6. Persons in the personal service of another; and 7. Workers paid by results(Secs. 1 and 2, Rule I, Book III, IRR); and 8. Domestic helpers. The aforementioned Ees are not entitled to overtime pay, premium pay for rest days and holidays, night shift differential pay, holiday pay, service incentive leave, and service charges. (Poquiz, 2012) Q: Mrs. B, the personal cook in the household of X, filed a monetary claim against her employer, X, for denying her service incentive leave pay. X argued that Mrs. B did not avail of any service incentive leave at the end of her one (1) year of service and hence, not entitled to the said monetary claim. Assuming that Mrs. B is instead a clerk in X's company with at least 30 regular employees, will her monetary claim prosper? Explain. (2019 BAR) A: YES. The money claim will prosper. A clerk is not one of those exempt employees under Art. 82 of the Labor Code. It shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the SOLE in appropriate regulations. (Art. 82, LC) Government Employees The terms and conditions of their employment are governed by the Civil Service Law. In case of GOCCs with original charters, terms and conditions of employment may be governed by such legislated charters. Whereas, GOCCs without original charters and created under the Corporation Code are governed by the LC. (Poquiz, 2012) Managerial Employees A managerial Ee is one who is vested with powers or prerogatives to lay down or execute management policies and/or to hire, transfer, suspend, lay off, recall, discharge, assign or discipline Ees, or to effectively recommend such managerial actions. All Ees not falling within this definition are considered rank and file Ees. (PMTI-ULGWF v. Ferrer-Calleja, G.R. No. 85915, 17 Jan. 1990) 1. Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; 2. They customarily and regularly direct the work of two or more Ees therein; and 3. They have the authority to hire or fire Ees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other Ees, are given particular weight. (Sec. 2(b), Rule I, Book III, IRR) They are employed as such by virtue of their special training or expertise, experience or knowledge and
- 110. 2024 GOLDEN NOTES 96 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES for positions which require the exercise of independent judgment and discretion. They are not subject to the rigid observance of regular office hours, as the true worth of their services do not depend so much on the time they spend in office, but more on the results of their accomplishments. For these types of workers, it is not feasible to provide fixed hourly rate of pay or maximum hours of labor. (UPSU v. Laguesma, G.R. No. 122226, 25 Mar. 1998) Officers or Members of Managerial Staff 1. Their primary duty consists of the performance of work directly related to management policies of their Er; 2. They customarily and regularly exercise discretion and independent judgment; 3. They regularly and directly assist a proprietor or a managerial Ee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or execute, under general supervision, special assignments, and tasks; and 4. They do not devote more than 20% of their hours worked in a work week to activities which are not directly and closely related to the performance of the work described above. (Sec. 2(c), Rule I, Book III, IRR) NOTE: Officers and members of a managerial staff (such as project engineers) are considered managerial Ees for they customarily and regularly exercise discretion and independent judgment, that is, their powers are not subject to evaluation, review and final action by the department heads and other higher executives of the company. (Franklin Baker Co. of the Philippines v. Trajano, G.R. No. 75039, 28 Jan. 1988) Test of Supervisory or Managerial Status It depends on whether a person possesses authority that is not merely routinary or clerical in nature but one that requires use of independent judgement. Managerial Employees under Art. 82(2) vs. Art. 212(m) ART. 82(2), BOOK III, LABOR STANDARDS ART. 212(M), BOOK V, LABOR RELATIONS As to definition Those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to the other officers or members of the managerial staff. Vested with the powers or prerogative to lay down and execute management policies, and/or to hire, transfer, suspend, lay-off, recall, discharge, assign, or discipline Ees. As to application Used only for purposes of Book III (i.e., working conditions, rest periods, and benefits) Used only for purposes of Book V (i.e., forming, joining and assisting of unions, certification election, and, collective bargaining) As to inclusion of supervisors Supervisors are members of the managerial staff. In effect, supervisor is a manager for purposes of Book III. Supervisors are not managerial Ees under Book V. (Azucena, 2016) Domestic Servants or Persons in the Personal Service of Another 1. Perform such services in the Er's home which are usually necessary or desirable for the maintenance and enjoyment thereof; or 2. Minister to the personal comfort, convenience, or safety of the Er as well as the members of his Er's household. (Sec. 2(d), Rule I, Book III, IRR) NOTE: They are not covered by this Title because terms and conditions of employment are governed by the provisions of R.A. No. 10361, otherwise
- 111. LABOR LAW ANDSOCIAL LEGISLATIONS 97 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW known as the Batas Kasambahay or Domestic Workers Act. A laundrywoman in staff houses of a company or within the premises of the business of the Er, not actually serving the family of the Er, is a regular Ee. She is not included in the definition of domestic servants. (Apex Mining Co. Inc. v. NLRC, G.R. No. 94951, 22 Apr. 1991) Field Personnel Field personnel refer to non-agricultural Ees who: 1. Regularly perform their duties away from the principal place of business or branch office of the Er; and 2. Whose actual hours of work in the field cannot be determined with reasonable certainty. (Sec. 2(d), Rule I, Book III, IRR) They are exempted from the coverage due to the nature of their functions which requires performance of service away from the principal place of business. Hence, they are free from the personal supervision of the Er and the latter cannot determine with reasonable certainty the actual number of hours of work expended for the Er's interest. The definition of a "field personnel" is not merely concerned with the location where the Ee regularly performs his duties but also with the fact that the Ee’s performance is unsupervised by the Er. In order to conclude whether an Ee is a field Ee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the Er. In so doing, an inquiry must be made as to whether or not the Ee’s time and performance are constantly supervised by the Er. (Autobus Transport Systems Inc. v. Bautista, G.R. No. 156367, 16 May 2005) e.g., Outside sales personnel, agents on commission basis, or insurance field agents (San Miguel Brewery, Inc. v. Democratic Labor Union, G.R. No. L-18353, 31 July 1963); meter readers, medical representatives. (Duka, 2016) Rule in Case of Drivers/Bus Conductors It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductor's reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific places at specified times, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. He cannot be considered field personnel. (Autobus Transport System, Inc. v. Bautista, G.R. No. 156367, 16 May 2005) Members of the Family They are exempted from the coverage, for the support given by the Er may exceed the benefit for which an Ee is entitled under appropriate labor provisions. To cover them under Art. 82 may create labor problems that would eventually break-up the family, which is the evil sought to be prevented. (Poquiz, 2012) Two Categories of Workers Paid by Results 1. Those whose time and performance are supervised by the Er; and NOTE: Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises. 2. Those whose time and performance are unsupervised. NOTE: Here, the Er control is over the result of the work. Workers on “pakyao” and “takay”
- 112. 2024 GOLDEN NOTES 98 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES basis belong to this group. (Lambo v. NLRC, G.R. No. 111042, 26 Oct. 1999) Payment of this type of worker is determined by the results of the work performed or the number of units produced, not the number of hours used in the completion of the job, or the time spent in production. (Poquiz, 2012) Tailors and similar workers hired in the tailoring establishment, although paid weekly wages on piece-work basis, are Ees and not independent contractors, and accordingly, as regular Ees paid on piece-rate basis, they are not entitled to overtime pay, holiday pay, premium pay for holiday/rest day, and service incentive leave pay. (Villuga v. NLRC, G.R. No. 75038, 23 Aug. 1993) An Ees who are engaged on a task or contract basis, purely commission basis, or those paid by results, are not automatically excluded by that fact alone. To be excluded, the Ee must also fall under the classification of field personnel. 2. HOURS OF WORK a. NORMAL HOURS OF WORK (Arts. 83-84, LC; Secs. 3-4, Rule I, Book III, Omnibus Rules Implementing the Labor Code) GR: The normal hours of work of any Ee shall not exceed eight (8) hours a day. (Art. 83, LC) NOTE: There is no hard limit on the maximum hours of work that may be rendered by an Ee. However, work rendered beyond the eight-hour limit would not be considered normal. It would be overtime, and thus subject to additional pay to entitled Ees. XPNs: 1. Health personnel – Including resident physicians, nurses, nutritionists, dietitians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (Art. 83, LC); and 2. Compressed workweek (CWW) – An alternative arrangement whereby the normal workweek is reduced to less than six (6) days but the total number of normal work hours per week shall remain at forty-eight (48) hours. The normal workday is increased to more than eight (8) hours without corresponding overtime premium. (D.O. No. 02-04, s. 2004) NOTE: Department Orders providing for maximum hours of work for bus drivers, movie workers, sea farers, where there is a compressed work week arrangement in place, and children Ees are also subjected to a maximum number of work hours per day. Rationale of the EIGHT (8)-Hour Labor 1. To safeguard the health and welfare of the laborer; 2. To minimize unemployment by utilizing different shifts; (Manila Terminal Co., Inc. v. CIR, G.R. No. L-4148, 16 July 1952) and 3. To afford the Ees adequate time to lead richer and more fruitful, meaningful lives and to be able to participate intelligently in public concerns. NOTE: Normal hours of work may be shortened or compressed. Neither does it follow that a person who does not observe normal hours of work cannot be deemed an Ee. In Cosmopolitan Funeral Homes, Inc. v. Maalat (G.R. No. 86693, 02 July 1990), the Er similarly denied the existence of an Er-Ee relationship, as the claimant according to it, was a "supervisor on commission basis" who did not observe normal hours of work. The SC declared that there was an Er-Ee relationship, noting that "the supervisor, although compensated on a commission basis, is exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes." (Lazaro v. SSS, G.R. No. 138254, 30 July 2004)
- 113. LABOR LAW ANDSOCIAL LEGISLATIONS 99 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW The eight-hour work requirement does not, however, preclude the Er in the exercise of its management prerogatives to reduce the number of working hours, provided that there is no diminution of existing benefits. (Poquiz, 2012) The right to fix the work schedules of the Ee rests principally on their Er. (Sime Darby Pilipinas v. NLRC, G.R. No. 119205, 15 Apr. 1998) Management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of Ees, work supervision, layoff of workers and discipline, dismissal, and recall of workers. (Manila Jockey Club Ees Labor Union v. Manila Jockey Club, Inc., G.R. No. 167760, 07 Mar. 2007) Work day It is the 24-hour period which commences from the time the Ee regularly starts to work. Illustration: If the worker starts to work at 8 am today, the work day is from 8 am today up to 8 am tomorrow. (Azucena, 2016) Part-Time Work It is not prohibited to have normal hours of work of less than eight (8) hours a day. What the law regulates is work hours exceeding eight (8) – it prescribes the maximum but not the minimum. NOTE: Under Art. 124, as amended by R.A. No. 6727, wage proportionate to part-time work is recognized. The wage and benefits of a part-time worker are in proportion to the number of hours worked. Illustration: If an Ee earns P300.00 for an eight- hour work, he shall then get P150.00 for work done in four (4) hours. Broken Hours Minimum normal eight (8) working hours fixed by law need not be continuous to constitute the legal working day. It may mean broken hours of say, 4 hours in the morning and 4 hours in the evening or variation thereof provided the total of 8 hours is accomplished within the work day. (Chan, 2017) Hours Worked Working time is one during which an Ee is actually working. It may include an instance when an Ee is not actually working but he is required to be present in the Er’s premises. Thus, the fact that he is required to be present although not actually doing any work, is still deemed working time. (Poquiz, 2012) When Hours Worked are Compensable 1. Ee is required to be on duty or to be at a prescribed workplace; 2. Ee is suffered or permitted to work; 3. Rest periods of short duration during working hours which shall not be more than 20 minutes; and 4. Meal periods of less than 20 minutes. (Sec. 7, Rule I, Book III, IRR) NOTE: Travel time, when beneficial to the Er, is compensable. (Rada v. NLRC, G.R. No. 96078, 09 Jan. 1992) Principles in Determining Hours Worked 1. All hours 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. Rest period is excluded from hours worked, even if Ee does not leave his workplace, it being enough that: a. He stops working; b. May rest completely; or
- 114. 2024 GOLDEN NOTES 100 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES c. May leave his workplace, to go elsewhere, whether within or outside the premises of the workplace. 3. All time spent for work is considered hours worked if: a. The work performed was necessary; b. If it benefited the Er; or c. The Ee could not abandon his work at the end of his normal working hours because he had no replacement; d. Provided, the work was with the knowledge of his Er or immediate supervisor. 4. The time during which an Ee is inactive by reason of interruptions in his work beyond his control shall be considered working time: a. If the imminence of the resumption of the work requires the Ees presence at the place of work; or b. If the interval is too brief to be utilized effectively and gainfully in the Ees own interest. (Sec. 4, Rule I, Book III, IRR, LC) Q: Can the number of hours of work be reduced by an Er? A: YES. However, financial losses must be shown before a company can validly opt to reduce the work hours of its Ees because the Ees would suffer a reduction in pay if their work hours are unilaterally reduced by the Er. (Linton Commercial Co., Inc. v. Heller, G.R. No. 163147, 10 Oct. 2007) Waiting Time It shall be considered as working time if: 1. Waiting is an integral part of this work; 2. The Ee is required or engaged by the Er to wait; or 3. When Ee 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. (Sec. 5, Rule I, Book III, IRR, LC) NOTE: An Ee who is not required to leave word at his home or with company officials where he may be reached is not working while on call. (Sec. 5(b), Rule I, Book III, IRR, LC) The controlling factor is whether waiting time spent in idleness is so spent predominantly for the Er’s benefit or for the Ee’s. Q: Gil Bates, a computer analyst and programmer of Hard Drive Company, works eight hours a day for five days a week at the main office providing customers information technology assistance. On Saturdays, however, the company requires him to keep his cellular phone open from 8:00 A.M. to 5:00 P.M. so that the Management could contact him in case of heavy workload or emergency problems needing his expertise. May said hours on Saturdays be considered compensable working hours “while on call”? If so, should said compensation be reported to the Social Security System (SSS)? (2004 BAR) A: YES. Said hours on Saturdays should be considered as compensable working hours "while on call." Under the IRR of the LC, an employee who is not required to leave word at his home or with company officials as to where he may be reached is not working while on call. But in the question, Gil Bates was required to keep his cell phone open from 8:00 A.M. to 5:00 P.M. Therefore, Bates should be considered as working while on call if he cannot use effectively and gainfully for his own purpose the time from 8:00 A.M. to 5:00 P.M. on Saturdays when he is required to keep his cellphone open. The compensation actually received by Bates for working while on call on Saturdays should be reported to the SSS because under the Social Security Law, compensation means "all actual remuneration for employment."
- 115. LABOR LAW ANDSOCIAL LEGISLATIONS 101 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Engaged to Wait vs. Waiting to be Engaged ENGAGED TO WAIT WAITING TO BE ENGAGED Waiting is an integral part of the job. The time spent waiting is compensable. Idle time is not working time. It is not compensable. NOTE: The idle time that an employee may spend for resting and during which he may leave the spot or place of work though not the premises of his employer, is not counted as working time only where the work is broken or is not continuous. (National Development Co. v. Court of Industrial Relations, G.R. No. L-15422, 30 Nov. 1962) Health Personnel in the Private Healthcare Industry Waiting time such as endorsement period, spent by health personnel shall be considered as working time if: 1. He or she is required or engaged by the employer to wait; 2. He or she is required to remain on call in the employer's premises or so close thereto that he cannot use the time effectively and gainfully for his own purpose; or 3. An employee is not required to leave word at his home or with company officials where he may be reached is not working while on call. (Sec. 7, DOLE D.O. No. 182-17 Guidelines Governing the Employment and Working Conditions of Health Personnel in the Private Healthcare Industry) Seafarers Waiting time shall not be considered as compensable working time if: 1. The seafarer is completely relieved from his/her duty; and 2. Can use the time effectively for his/her own purpose. (Sec. 5, DOLE D.O. No. 129-13, Rules and Regulations Governing the Employment and Working Conditions of Seafarers Onboard Ships Engaged in Domestic Shipping) Audio-Visual Production Workers Waiting Time shall be considered as actual working time if: 1. The worker is required to standby; and 2. Restricted to the confines of the workplace premises. (DOLE-FDCP Joint Memorandum Circular No. 001-20) NOTE: All on-call workers engaged for their services who are outside the premises of the set or location shall likewise be compensated in the event of cancellation not less than twenty-four (24) hours immediately preceding the scheduled shoot. (Ibid.) Preliminary (Before Work) and Postliminary (after Actual Work) Activities Deemed Performed during Working Hours and Compensable 1. Where such activities are controlled by the Er or required by the Er; and 2. Pursued necessarily and primarily for the Er's benefit. (31 Am. Jur. 882-883) NOTE: Ees are entitled to portal pay for time spent on incidental activities before or after the regular working period. (CCHI, Labor Law Course, 318) Thirty (30)-Minute Assembly Time It is long practiced and institutionalized by mutual consent of the parties under the CBA cannot be considered waiting time of the Ees if they are not subject to the absolute control of the company during this period. (Arica v. NLRC, G.R. No. 78210, 28 Feb. 1989)
- 116. 2024 GOLDEN NOTES 102 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Thirty (30)-Minute Assembly Time When Not Compensable The 30-minute assembly time is not compensable, given the following reasons: 1. The assembly is routinary and non- complicated; 2. The Ees’ houses are situated on the same area as the workplace; and 3. The Ees were not subjected to disciplinary action should they fail to report in the assembly time. Therefore, the 30-minute assembly time was not primarily intended for the interest of the Er, but ultimately for the Ees to indicate their availability or unavailability for work during workdays. (Ibid.) Travel Time from Home to Work GR: Normal travel from home to work is not working time. XPNs: 1. Emergency call outside his regular working hours where he is required to travel to his regular place of business or some other work site; 2. Done through a conveyance provided by the Er; 3. Done under the supervision and control of the Er; and 4. Done under vexing and dangerous circumstances. Travel that is All in a Day’s Work It is the time spent in travel as part of the Ees principal activity (e.g., Travel from job site to job site during the work day, must be counted as working hours). Illustration: Travel from main workplace (5:00PM) to jobsite A (6:00PM) to jobsite B (7:00PM) to jobsite C (8:00PM) to main workplace (9:00PM) is compensable. But, if instead of travelling back to the main workplace, Ee decides to go home from jobsite C, travel time from 8 PM is no longer compensable, because it would already fall under the category of work to home travel. Travel Away from Home GR: 1. Travel that requires an overnight stay on the part of the Ee when it cuts across the Ees workday is clearly working time. 2. 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. XPN: During meal period or when Ee is permitted to sleep in adequate facilities furnished by the Er. “Facilities” Articles or services provided by the employer for the benefit of the employee or his/her family but shall not include tools of the trade of articles or services primarily for the benefit of the employer or necessary to the conduct of the employer's business. (Sec. 4(e), DOLE D.O. No. 126-13) NOTE: The term shall include transportation furnished to the employee between his home and work where the travel time does not constitute hours worked compensable under the LC and other law. (Sec. 4(e)(4), DOLE D.O. No. 126-13) Sleeping Time A worker sleeping may be working. Whether sleeping time allowed an Ee will be considered as part of his working time will depend upon the express or implied agreement of the parties. In the
- 117. LABOR LAW ANDSOCIAL LEGISLATIONS 103 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW absence of an agreement, it will depend upon the nature of the service and its relation to the working time. Sleeping Time When Compensable 1. it is subject to serious interruption; or 2. takes place under conditions substantially less desirable than would be likely to exist at the Ee’s home. Sleeping Time When Not Compensable It is not working time if there is an opportunity for comparatively uninterrupted sleep under fairly desirable conditions. (Azucena, 2010) Power Interruptions Not Exceeding 20 Minutes are Compensable Brownouts of short duration but not exceeding 20 minutes shall be treated as worked or compensable hours whether used productively by the Ees or not. (DOLE P.I. 36-78) Power Interruptions Exceeding 20 Minutes May Not be Compensable Brownouts running for more than 20 minutes may not be treated as hours worked provided that any of the following conditions are present: 1. The Ees can leave their workplace or go elsewhere whether within or without the work premises; or 2. The Ees can use the time effectively for their own interest. (Durabuilt Recapping Plant v. NLRC, G.R. No. 76746, 27 July 1987) NOTE: In each case, the Er may extend the working hours of his Ees outside the regular schedules to compensate for the loss of productive man-hours without being liable for overtime pay. (Chan, 2017) Industrial enterprises with one or two workshifts may adopt any of the workshifts prescribed for enterprises with three workshifts to prevent serious loss or damage to materials, machineries, or equipment that may result in case of power interruption. (DOLE P.I. 36, 1978) The days when work was not required and no work could be done because of shutdown due to electrical power interruptions, lack of raw materials and repair of machines, are not deemed hours worked. (Durabit Recapping Plant Company v. NLRC, G.R. No. 76746, 27 July 1987) When a CBA contains a reporting time-off provision wherein Ees who have reported for work but are unable to continue because of emergencies such as typhoons, flood, earthquake, and transportation strike shall also mean to include brownout or power outage because the key element of the provision is that Ees who have reported for work are unable to continue working because of the incident. Hence, Ees who were prevented to continue their work due to brownout should also be remunerated. (Supreme Steel Corporation v. Nagkakaisang Manggagawa ng Supreme Independent Union, G.R. No. 185556, 28 Mar. 2011) Time spent during which an Ee is inactive by reason of interruptions beyond his control is working time, such as twenty-minute electric power failure or machine breakdowns. The pay for this non- productive time is known as idle-time pay. Where the work is broken or is not continuous, the idle time that an Ee may spend for rest is not counted as working time. (NDC v. CIR, G.R. No. L-53961, 30 June 1987) Lectures, Meetings, Training-Programs, and Similar Activities Attendance at lectures, meetings, training programs and similar activities need not be counted as working time if the following criteria are met: 1. Attendance is outside of the Ee's regular working hours; 2. Attendance is in fact voluntary; and 3. The Ee does not perform any productive work during such attendance. (Sec. 6, Rule I, Book III, IRR, LC)
- 118. 2024 GOLDEN NOTES 104 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Attending CBA Negotiations When Compensable 1. There is an agreement for the compensability in the parties’ ground rules; 2. There is an established policy allowing compensability; and 3. When it is done during regular work hours with the agreement of the Er. Grievance Meeting GR: Time spent in adjusting grievance between Er and Ees during the time Ees are required by the Er to be on the premises is compensable. XPN: When a bona fide union is involved and there is a CBA, policy, and practice to contrary. Strikes GR: Not compensable. XPN: If there is an agreement to allow “strike duration pay” provided under the company policy, practice or CBA. Hearing, Arbitration, or Conciliation Not compensable because it is hardly fair for an Ee or laborer to fight or litigate against his Er and eventually consider it as hours worked. (JP Heilbronn Co. v. National Labor Union, G.R. No. L- 5121, 30 Jan. 1953) Semestral Break of Teachers Semestral break of teachers are considered as compensable hours worked for it is a form of an interruption beyond their control. (University of Pangasinan Faculty Union v. NLRC, G.R. Nos. 64821- 23, 29, Jan. 1993) NOTE: Payment of compensation is given only to regular full-time teachers. (Duka, 2016) Hours of Work of Health Personnel GR: Eight (8) hours for five (5) days (40-hour workweek), exclusive of time for meals. XPN: Where the exigencies of the service require that such personnel work for six (6) days or 48 hours, they shall be entitled to an additional compensation of at least 30% of their regular wage for work on the 6th day. (Art. 83, LC) Health Personnel Covered by the 40-Hour Workweek 1. Those in cities and municipalities with a population of at least one (1) million; or 2. Those in hospitals and clinics with a bed capacity of at least 100. NOTE: Art. 83(2) of the LC does not require hospitals to pay the Ees a full weekly salary with paid two (2) days off. (San Juan de Dios Ees Association-AFW, et al. v. NLRC, G.R. No. 126383, 28 Nov. 1997) Resident Physicians on Duty Beyond the 40- Hour Workweek Limitation GR: The customary practice of requiring resident physicians beyond the 40 hours of work per week is not permissible and violates the limitation under Art. 83 of the LC. XPN: If there is a training agreement between the resident physician and the hospital and the training program that is duly accredited or approved by appropriate government agency. Work Hours of Seamen or Seafarers Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board. It could not have been the purpose of the law to require their Ers to pay them overtime even when
- 119. LABOR LAW ANDSOCIAL LEGISLATIONS 105 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW they are not actually working, otherwise, every sailor on board a vessel would be entitled to overtime for 16 hours each day, even if he had spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and cannot leave ship beyond the regular eight (8) working hours a day, but whether they actually rendered service in excess of said number of hours. 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, to go somewhere else, whether within or outside the premises of said factory, shop or boat. If these requisites are complied with, the period of such rest shall not be counted. (Luzon Stevedoring Co. v. Luzon Marine Department Union, G.R. No. L-9265, 29 Apr. 1975) Maximum Hours Of Work Certain workers may not be required to work beyond a certain number of work hours a day. 1. Public Utility Bus drivers and conductors – 12 hours per 24-hour period. (D.O. 118- 12, s. 2012) 2. Movie and television industry worker/ talent – shall not exceed eight (8) hours in a day. If required to work beyond eight (8) hours – the maximum actual hours of work shall not exceed 12 hours in any 24-hour period; If aged 60 years old and above – shall not exceed eight (8) hours per day; NOTE: The hours of work of children in the industry must be in accordance with R.A. No. 9231 and its IRR. (D.O. 65-04, s. 2004) 3. Seafarers onboard ships engaged in domestic shipping – 14 hours per 24-hour period or 77 hours per seven (7) days. (D.O. 129-13, s. 2013) b. MEAL PERIODS (Art. 85, LC; Sec. 7, Rule I, Book III, Omnibus Rules Implementing the Labor Code) Duration Every Er shall give his Ees not less than sixty (60) minutes or one (1) hour time-off for regular meals. (Art. 85, LC) As a general rule, Ees are entitled to at least one hour time-off for regular meals which can be taken inside or outside company premises. Rationale for Meal Breaks For a full one-hour undisturbed lunch break, the Ees can freely and effectively use this hour not only for eating, but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since the Ees are no longer required to work during this one-hour lunch break, there is no more need for them to be compensated for this period. (Sime Darby Pilipinas, Inc. v. NLRC, G.R. No. 90426, 15 Dec. 1989) Meal Period When Compensable 1. When it is predominantly spent for the Er’s benefit; or 2. When it is less than 60 minutes. NOTE: Where during a meal period, the laborers are required to stand by for emergency work, or where the meal hour is not one of complete rest, such is considered overtime. (Pan American World Airways System v. Pan American Ees Association, G.R. No. L- 16275, 23 Feb. 1961) Rest periods or coffee breaks running from 5 to 20 minutes shall be considered as compensable working time. (Sec. 7, Rule I, Book III, IRR, LC) Meal Periods During Overtime Work When Compensable Meal periods provided during overtime work are compensable since the one (1)-hour meal period (non-compensable) is not given during OT work because the latter is usually for a short period and
- 120. 2024 GOLDEN NOTES 106 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES to deduct from the same would reduce to nothing the Ees’ OT work. Thus, the one-hour break for meals during OT should be treated as compensable. Shortened Meal Periods When Compensable (O- P-E-N) 1. Work is Non-manual in nature or does not involve strenuous physical exertion; 2. Establishment regularly Operates less than sixteen (16) hours a day; 3. Work is necessary to prevent serious loss of Perishable goods; and 4. 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. (Sec. 7, Rule I, Book III, IRR, LC) NOTE: The meal hour was not one of complete rest but a work hour because for its duration, the laborers had to be on ready call. (Pan American World Airways System v. Pan American Ees Association, G.R. No. L-16275, 23 Feb. 1961) Shortened Meal Periods When Not Compensable (S-A-D-B-O-T) 1. Work of the Ees does not involve Strenuous physical exertion and they are provided with adequate coffee breaks in the morning and afternoon; 2. Ees voluntarily Agree in writing and are willing to waive OT pay for the shortened meal period; 3. No Diminution in the salary and other fringe benefits of the Ees which are existing before the effectivity of the shortened meal period; 4. Value of the Benefits derived by the Ees from the proposed work arrangements is equal to or commensurate with the compensation due them for the shortened meal period as well as the OT pay for 30 min. as determined by the Ees concerned; 5. Overtime pay will become due and demandable after the new time schedule; and 6. Arrangement is of Temporary duration. NOTE: Ee requested for the shorter meal time so that they can leave work earlier than the previously established schedule. The implementing rules allow the mealtime to be less than 60 minutes, under specified cases but in no case shorter than 20 minutes. (Sec. 7, Rule I, Book III, IRR, LC) If the so called “mealtime” is less than twenty (20) minutes, it becomes only a rest period and is considered working time. (Azucena, 2016) c. NIGHT-SHIFT (Art. 86, LC; Secs. 1-6, Rule II, Book III, Omnibus Rules Implementing the Labor Code) Night-Shift Differential (NSD) Every Ee shall be paid a night shift differential of not less than 10% of his regular wage for each hour of work performed between 10:00 PM and 6:00 AM. (Art. 86, LC) GR: All Ees are entitled to NSD. XPNs: (Go-Re-Do-Ma-Fi) 1. Those of the Government and any of its political subdivisions, including GOCCs; 2. Those of Retail and service establishments regularly employing not more than five (5) workers; 3. Domestic helpers and persons in the personal service of another; 4. Managerial Ees as defined in Book Three of the Labor Code; and 5. Field personnel and other Ees whose time and performance are unsupervised by the Er, including those who are engaged on task or contract basis, purely commission basis, or
- 121. LABOR LAW ANDSOCIAL LEGISLATIONS 107 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. (Sec 1, Rule II, Book III, IRR, LC) NOTE: Where the night-time work of an Ee overlaps with overtime work, the receipt of overtime pay does not preclude the receipt of night differential pay. The latter is night pay, while the former is payment beyond eight-hour work. (Poquiz, 2012) Rationale of NSD The philosophy behind the provision is to give premium to night work when an Ee is supposed to be sleeping. Working at night is violative of the law of nature for it is the period for rest and sleep. An Ee who works at night has less stamina and vigor, thus, he can easily contract a disease. (Association of International Shipping Lines, Inc. v. United Harbor Pilots' Association of the Philippines, Inc., G.R. No. 172029, 06 Aug. 2008) Work done at night places has a greater burden on the worker. It is more strenuous and onerous than work done during the day. Therefore, it deserves greater or extra compensation. (Shell Co. v. NLU, G.R. No. L-1309, 26 July 1948) Non-Waivability of NSD GR: Waiver of NSD is against public policy. (Mercury Drug Co., Inc. v. Dayao, et al., G.R. No. L-30452, 30 Sept. 1982) XPN: Waiver is allowed if it will result in higher or better benefits to Ees. Burden of Proof of Payment The burden of proving that payment of NSD has been made rests upon the party who will suffer if no evidence at all is presented by either party. (National Semiconductor (HK) Distribution, Ltd. v. NLRC and Santos, G.R. No. 123520, 26 June 1998) Night Differential in Overtime Pay If work done between 10:00PM and 6:00AM is overtime work, then the ten percent (10%) NSD should be based on the overtime rate. When the tour of duty of an Ee falls at nighttime, the receipt of overtime pay will not preclude the right to night differential pay. The latter is payment for work done during the night and the other is payment for the excess of the regular eight-hour work. (NARIC v. NARIC Workers Union, et al., G.R. No. L-12075, 29 May 1959) d. OVERTIME WORK (Arts. 87-90, LC; Secs. 8-10, Rule I, Book III, Omnibus Rules Implementing the Labor Code) It is the service rendered in excess of and in addition to eight (8) hours on ordinary working days. (Caltex Regular Employees at Manila Office v. Caltex Philippines, G.R. No. 111359, 15 Aug. 1995) NOTE: It is not enough that the hours worked fall on disagreeable or inconvenient hours. The hours worked must be in excess of eight (8) hours worked during the prescribe daily work period, or the forty (40) hours worked during the regular work week from Monday to Friday. Overtime Pay It is the additional compensation of at least 25% on the regular wage for the service or work rendered or performed in excess of eight (8) hours a day by Ees or laborers in employment covered by the eight (8)-hour Labor Law. (Art. 87, LC) It is based on regular base pay excluding money received by Ee in different concepts such as Christmas bonus and other fringe benefits. It is computed by multiplying the overtime hourly rate by the number of hours in excess of eight. (Azucena, 2016) NOTE: Express instruction from the Er to the Ee to render OT work is not required for the Ee to be entitled to OT pay. It is sufficient that the Ee is permitted or suffered to work. (Azucena, 2016) However, written authority after office hours during
- 122. 2024 GOLDEN NOTES 108 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES rest days and holidays are required for entitlement to compensation. Rationale for Overtime Pay Ee is made to work longer than what is commensurate with his agreed compensation for the statutory fixed or voluntarily agreed hours of labor he is supposed to do. (PNB v. PEMA and CIR, G.R. No. L-30279, 30 July 1982) The reason the law requires additional compensation for work beyond the normal working day is to encourage Ers to dispense with such work, thus providing Ees an opportunity to satisfy their mental, moral, and spiritual needs. They may have more hours to devote to reading, amusement, and other recreational activities necessary for their well-being. Moreover, they could share longer hours in the company of their family, attending to spiritual or religious needs. Law on overtime will surely ease unemployment problem, for Ers will be constrained to employ additional Ees to work in other shifts necessary for the operation of the business. (Shell Co. v. NLU, G.R. No. L-1309, 26 July 1948) Condition for Entitlement to Overtime Pay Entitlement to overtime pay must first be supported by sufficient proof that said overtime work was actually performed before an Ee may avail of said benefit. (Cagampan v. NLRC, G.R. Nos. 85122-24, 22 Mar. 1991) An Ee is entitled to overtime pay for work rendered in excess of eight (8) hours, despite the fact that his employment contract specifies a 12-hour workday at a fixed monthly salary rate that is above the legal minimum rate. The provisions of the pertinent labor laws prevail over the terms of the contract. (PESALA v. NLRC, G.R. No. 105963, 22 Aug. 1996) Overtime Pay of Worker Aboard a Vessel In National Shipyards and Steel Corporation v. CIR (G.R. No. L-17068, 30 Dec. 1961), the Court held that the correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and cannot leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours. Overtime Pay vs. Premium Pay OVERTIME PAY PREMIUM PAY Additional compensation for work performed beyond 8 hours on ordinary days (within the worker’s 24-hour workday). Additional compensation for work performed within 8 hours on days when normally he should not be working (on non- working days, such as rest days and special days). But additional compensation for work rendered in excess of 8 hours during these days is also considered OT pay. He shall be paid an additional compensation of at least 30% of his regular wage. He shall be entitled to additional compensation for work performed on Sunday only when it is established as a rest day. When the nature of the work has no regular workdays and no regular rest days, he shall be paid an additional compensation of at least 30% of his regular wage for work performed on Sundays and holidays. (Art 93, LC) He shall be paid an additional compensation for the overtime work in the amount equivalent to his regular wage plus at least 25%. (Art. 87, LC)
- 123. LABOR LAW ANDSOCIAL LEGISLATIONS 109 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Overtime Pay Rates OVERTIME PAY RATES During a regular working day Additional compensation of 25% of the regular wage During a holiday or rest day Rate of the first 8 hours worked on plus at least 30% of the regular wage (RW): A. If done on a special holiday OR rest day: 30% of 130% of RW B. If done on a special holiday AND rest day: 30% of 150% of RW C. If done on a regular holiday: 30% of 200% of RW Basis of Computation of Overtime Pay Regular wage which includes the cash wage only, without deduction on account of the facilities provided by the Er. (Art. 90, LC) Prima Facie Evidence of Overtime Pay Q: Respondent security agency did not pay Zonio for overtime work, work rendered on holidays and rest days, as well as 13th month pay, service incentive leave, and night shift differential. Zonio, along with some of his colleagues, received a memorandum suspending them for sleeping while on duty. Zonio filed a complaint against respondents for illegal suspension and nonpayment of overtime pay, holiday and rest day premiums pay, and night shift differentials pay. To support his allegations. Zonio submitted in evidence photocopies of the entries in the logbook, signed by incoming and outgoing security guards and were not countersigned by their supervisor or any authorized representative. His claim was denied because the evidence Zonio adduced raises serious doubt as to whether he actually rendered work on a given date and time. Did Zonio sufficiently prove his entitlement to monetary claims? A: YES. Admittedly, the logbook is only a personal record of Zonio and other security guards. It is not verified or countersigned by respondents. Anyway, the fact that the entries are not verified or countersigned will not militate against Zonio. The entries in the logbook are prima facie evidence of Zonio's claim. Prima facie evidence is such evidence as, in the judgment of the law, is sufficient to establish a given fact, or the group, or chain of facts constituting the party's claim or defense, and which if not rebutted or contradicted, will remain sufficient. Evidence which, if unexplained or uncontradicted, is sufficient to sustain a judgment in favor of the issue it supports, but which may be contradicted by other evidence. Respondents dispute the veracity of the entries in the logbook, yet, they did not proffer evidence to rebut them, or show that they paid Zonio for the services he rendered on the dates and the hours indicated in the logbook. The best evidence for respondents would have been the payrolls, vouchers, payslips, daily time records, and the like, which are in their custody and absolute control. However, respondents did not present any of these. This failure gives rise to the presumption that either they do not have them, or if they do, their presentation is prejudicial to their cause. (Reggie Orbista Zonio v. 1st Quantum Leap Security Agency, Inc. and Romulo Q. Par, G.R. No. 224944, 05 May 2021, as penned by J. M.V Lopez) Waiver of Overtime Pay GR: The right to overtime pay cannot be waived. The right is intended for the benefit of the laborers and Ees. Any stipulation in the contract that the laborer shall work beyond eight hours without additional compensation for the extra hours is contrary to law as well as null and void. (Azucena, 2016) The right of the laborer to overtime compensation cannot be waived expressly or impliedly. Where the contract of employment requires work for more than eight hours at a specified wage per day, without providing for a fixed hourly rate or that the daily wages include overtime pay, said wages cannot be
- 124. 2024 GOLDEN NOTES 110 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES considered as including overtime compensation required under the Eight-hour Labor Law. (Manila Terminal Co., Inc. v. CIR, G.R. No. L-4148, 16 July 1952) XPNs: 1. When the alleged waiver of overtime pay is in consideration of benefits and privileges which may be more than what will accrue to them in overtime pay, the waiver may be permitted. (Azucena, 2016) 2. Compressed Workweek (CWW) arrangement. Q: Socorro is a clerk-typist in Hospicio de San Jose, a charitable institution dependent for its existence on contributions and donations from well-wishers. She renders work 11 hours a day but has not been given OT pay since her place of work is a charitable institution. Is Socorro entitled to overtime pay? Explain briefly. (2002 BAR) A: YES. Socorro is entitled to OT pay. She does not fall under any of the exceptions to the coverage of Art. 82, under the provisions of hours of work. The LC is equally applicable to non-profit institutions. A covered Ee who works beyond eight (8) hours is entitled to OT compensation. Q: Danilo Flores applied for the position of driver in the motor-pool of Gold Company, a multinational corporation. Danilo was informed that he would frequently be working overtime as he would have to drive for the company's executives even beyond the ordinary 8-hour work day. He was provided with a contract of employment wherein he would be paid a monthly rate equivalent to 35 times his daily wage, regular sick and vacation leaves, 5 day- leave with pay every month and time off with pay when the company's executives using the cars do not need Danilo's service for more than eight hours a day, in lieu of overtime. Are the above provisions of the contract of employment in conformity with, or violative of, the law? A: Except for the provision that Danilo shall have time off with pay when the company's executives using the cars do not need Danilo's service for more than eight (8) hours a day, in lieu of OT, the provisions of the contract of employment of Danilo are not violative of any labor law because they instead improve upon the present provisions of pertinent labor laws. Q: The employment contract requires work for more than eight (8) hours a day with a fixed wage inclusive of OT pay. Is that valid? A: NO. When the contract of employment requires work for more than eight hours at specific wages per day, without providing for a fixed hourly rate or that the daily wages include OT pay, said wages cannot be considered as including OT compensation. (Manila Terminal Co. v. CIR, G.R. No. L-4148, 16 July 1952) However, in cases of built-in OT pay in Government- Approved Contracts. When the OT pay was already provided in the written contract with a built-in OT pay and signed by the director of the bureau of employment services and enforced by the Er, non- payment of OT pay by the Er is valid. (Engineering Equipment, Inc. v. Minister of Labor, G.R. No. L-64967, 23 Sept. 1985) Overtime Rate Subject to Stipulation GR: The premium for work performed on the Ee’s rest days or on special days or regular holidays are included as part of the regular rate of the Ee in the computation of OT pay for any OT work rendered on said days, especially if the Er pays only the minimum OT rates prescribed by law. XPN: Ees and Er may stipulate in their collective agreement the payment of OT rates higher than those provided by law and exclude the premium rates in the computation of OT pay. Such agreement may be considered valid only if the stipulated OT pay rates will yield to the Ees not less than the minimum prescribed by law. Overtime Pay in a CWW Scheme Any work performed beyond twelve (12) hours a day or forty-eight (48) hours a week shall be subject to OT premium. (D.A. 02-04, s. 2004)
- 125. LABOR LAW ANDSOCIAL LEGISLATIONS 111 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Built-in Overtime Pay or Composite/Package Pay It is not per se illegal, but there should have been express agreement to that effect. Such arrangement, if there be any, must appear in the manner required by law on how overtime compensation must be determined. (Damasco v. NLRC, et al., G.R. No. 115755, 04 Dec. 2000) Requisites for a Valid Built-in Overtime Pay (Base pay with Integrated Overtime Pay) 1. A clear written agreement knowingly and freely entered into by the Ee; and 2. The mathematical result shows that the agreed legal wage rate and the overtime pay, computed separately are equal or higher than the separate amounts legally due. (Azucena, 2016) Overload Work vs. Overtime Work Where a teacher is engaged to undertake actual additional teaching work after completing his regular teaching load, such additional work is referred to as overload. When the overload is performed within eight (8) hours normal working day, such overload pay is considered part of the basic pay for the purpose of computing 13th month pay. "Overload work" is sometimes misunderstood as synonymous to "overtime work." The two terms are not the same. Overtime work is work rendered in excess of the normal working hours of eight in a day. On the other hand, since overload work may be performed either within or outside eight hours in a day, overload work may or may not be overtime work. (DOLE's Explanatory Bulletin on Inclusion of Teacher's Overload in Computing 13th Month Pay) Emergency Overtime Work GR: The Ee may not be compelled to work more than eight (8) hours a day. XPN: Compulsory Overtime (Wa-D-U-P-Fa-C) 1. When the country is at War or when any other national or local emergency has been declared by Congress or the Chief Executive; 2. When overtime work is necessary to prevent loss of life or property, or in case of imminent Danger to public safety due to actual or impending emergency in the locality caused by serious accident, fire, floods, typhoons, earthquake, epidemic or other disaster or calamities; 3. When there is Urgent work to be performed on machines, installations, or equipment, in order to avoid serious loss or damage to the Er or some other causes of similar nature; 4. When the work is necessary to prevent loss or damage to Perishable goods; 5. When overtime work is necessary to avail of Favorable weather or environmental conditions where performance or quality of work is dependent thereon; or 6. When the Completion or continuation of work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the Er. NOTE: The Ee may still refuse to render overtime even if compelled, although not without disciplinary consequence for his refusal that could constitute insubordination, a potential ground for termination of employment. An Ee may not be compelled to render overtime work; overtime work is voluntary. (Art. 89, LC; Sec. 10, IRR, LC) Q: Is the foregoing enumeration exclusive? A: YES. In cases not falling within any of these enumerated in this Sec., no Ee may be made to work
- 126. 2024 GOLDEN NOTES 112 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES beyond eight (8) hours a day against his will. (Sec. 10, Rule I, Book III, IRR, LC) Q: Is mandatory overtime involuntary servitude? A: NO. The Ee may still refuse to render overtime even if compelled, although not without disciplinary consequence for his refusal that could constitute insubordination, a potential ground for termination of employment. Petitioner’s attempt to brush aside his refusal to render overtime work as inconsequential when Graphics, Inc.’s order for him to do so is justified by Graphics, Inc.’s contractual commitments to its clients. Such an order is legal under Art. 89 of the LC and the petitioner’s unexplained refusal to obey is insubordination that merits dismissal from service. (Realda v. New Age Graphics Inc., G.R. No. 192190, 25 Apr. 2012) NOTE: The working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that employees shall observe such rules as have been laid down by the company. Manila Jockey Employees’ Union v. Manila Jockey Club (G.R. No. 167760, 7 Mar. 2007) Q: LKG Garments Inc. makes baby clothes for export. As part of its measures to meet its orders, LKG requires its Ees to work beyond eight (8) hours everyday, from Monday to Saturday. It pays its Ees an additional 35% of their regular hourly wage for work rendered in excess of eight (8) hours per day. Because of additional orders, LKG now requires two (2) shifts of workers with both shifts working beyond eight (8) hours but only up to a maximum of four (4) hours. Carding is an Ee who used to render up to six (6) hours of overtime work before the change in schedule. He complains that the change adversely affected him because now he can only earn up to a maximum of four (4) hours’ worth of overtime pay. Does Carding have a cause of action against the company? (2015 BAR) A: NO. A change in work schedule is a management prerogative of LKG. Thus, Carding has no cause of action against LKG if, as a result of its change to two (2) shifts, he now can only expect a maximum of four (4) hours overtime work. Besides, Art. 87 of the LC does not guarantee Carding a certain number of hours of overtime work. In Manila Jockey Ees’ Union v. Manila Jockey Club, Inc. (G.R. No. 167760, 07 Mar. 2007), the SC held that the basis of overtime claim is an Ee’s having been “permitted to work.” Otherwise, as in this case, such is not demandable. Q: After working from 10 A.M. to 5 P.M. on a Thursday as one of 5,000 employees in a beer factory, A hurried home to catch the early evening news and have dinner with his family. At around 10 P.M. of the same day, the plant manager called and ordered A to fill in for C who missed the second shift. (2010 BAR) (a) May A validly refuse the plant manager’s directive? Explain. A: YES. A may validly refuse to fill in for C. A may not be compelled to perform overtime work considering that the plant manager’s directive is not for an emergency overtime work, as contemplated under Art. 89 of the LC. (b) Assuming that A was made to work from 11 P.M. on Thursday until 2 A.M. on Friday, may the company argue that, since he was two (2) hours late in coming to work on Thursday morning, he should only be paid for work rendered from 1 A.M. to 2 A.M.? Explain? A: NO. Undertime is not offset by overtime. (Art. 88, LC) Prohibition Against Offsetting Where a worker incurs undertime hours during his regular daily work, said undertime hours should not be offset against the overtime hours on the same day or on any other day. (Art. 88, LC) Offsetting of undertime work by overtime work, whether on the same or on another day is prohibited by jurisprudence and by statute. (Azucena, 2016)
- 127. LABOR LAW ANDSOCIAL LEGISLATIONS 113 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Q: A case against an employer company was filed charging it with having violated the prohibition against offsetting undertime for overtime work on another day. The complainants were able to show that, pursuant to the Collective Bargaining Agreement (CBA), employees of the union had been required to work “overtime” on Saturday but were paid only at regular rates of pay on the thesis that they were not required to complete, and they did not in fact complete, the eight-hour work period daily from Monday through Friday. Given the circumstances, the employer contended that the employees were not entitled to overtime compensation, i.e., with premium rates of pay. Decide the controversy. (2003 BAR) A: Art. 88 of the LC provides that undertime work on any particular day shall not be offset by overtime work on any other day. The CBA, the law between the parties and the Union has shown that the employees are required to render overtime work on Saturdays, thus the contention of the employer is not tenable. The employer cannot use the undertime incurred from Monday through Friday to offset the overtime on Saturday. Hence, the employees are entitled to overtime compensation, i.e., premium rates of pay on Saturday. e. COMPRESSED WORK WEEK, FLEXIBLE WORK ARRANGEMENT, ALTERNATIVE WORK ARRANGEMENTS, TELECOMMUTING PROGRAM (DOLE D.A. No. 02-04; DOLE D.A. No. 02-09; DOLE D.A. No. 04-10; Secs. 3-5, R.A. No. 11165) Compressed Work Week (CWW) It is a scheme where the normal workweek is reduced to less than six (6) days but the total number of 48 work hours per week shall remain. The normal workday is increased to more than eight hours, but not to exceed 12 hours, without corresponding overtime premium. The concept can be adjusted accordingly depending on the normal workweek of the company. (D.A. No. 02-04, s. 2004) Requisites of CWW 1. The scheme is expressly and voluntarily supported by majority of the Ees; 2. In firms using substances, or operating in conditions that are hazardous to health, a certification is needed from an accredited safety organization or the firm’s safety committee that work beyond 8 hours is within the limit or levels of exposure set by DOLE’s occupational safety and health standards; and 3. The DOLE Regional Office is duly notified. (Ibid.) CWW When Valid (Te-H-N-C-S) 1. Temporary; 2. It is a more Humane solution instead of a retrenchment of personnel; 3. There is Notice and consultations with the workers and supervisors; 4. A Consensus is reached on how to deal with deteriorating economic conditions; and 5. It is sufficiently proven that the company was Suffering from losses. NOTE: Under the Bureau of Working Conditions’ bulletin, a reduction of the number of regular working days (RWDs) is valid where the arrangement is resorted to by the Er to prevent serious losses due to causes beyond his control, such as: 1. When there is a substantial slump in the demand for his goods or services; or 2. When there is a lack of raw materials. Linton Commercial Co., Inc. v. Heller, G.R. No. 163147, 10 Oct. 2007) Q: Under what conditions may a "compressed work week" schedule be legally authorized as an exception to the "eight-hour a day" requirement under the LC? (2005 BAR) A: A CWW schedule may be authorized under the following conditions: 1. The Ee voluntarily agrees to it; 2. There is no diminution in their weekly or monthly take home pay or fringe benefits;
- 128. 2024 GOLDEN NOTES 114 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 3. The benefits are more than or at least commensurate or equal to what is due to the Ees without the compressed work week; 4. OT pay will be due and demandable when they are required to work on those days which should have ceased to be working days because of the compressed work week schedule; 5. No strenuous physical exertion or that they are given adequate rest periods; and 6. It must be for a temporary duration as determined by the DOLE. Flexible Work Arrangements (FWAs) These are alternative schedules or arrangements other than the standard and traditional workweeks. Flexible Work Arrangements are recommended over the outright closure of the business or the termination of the services of its Ees. (D.A. 002-09, s. 2009) Types of FWAs 1. Compressed Workweek 2. Reduction of Workdays – Refers to one where the normal workdays per week are reduced but should not last for more than six months; 3. Rotation of Workers - Refers to one where the Ees are rotated or alternately provided work within the workweek; 4. Forced Leave - Refers to one where the Ees are required to go on leave for several days or weeks utilizing their leave credits, if there are any; 5. Broken-time schedule - Refers to one where the work schedule is not continuous but the work-hours within the day or week remain; and 6. Flexi-holidays schedule - Refers to one where the Ees agree to avail the holidays at some other days provided there is no diminution of existing benefits as a result of such arrangement. NOTE: Under these FWAs, the Ers and the Ees are encouraged to explore alternative schemes under any agreement and company policy or practice in order to cushion and mitigate the effect of the loss of income of the Ees. (D.A. 02-09, s. 2009) Administration of FWAs The parties shall be primarily responsible for the administration of the FWAs. In cases there are differences in the interpretation, the guidelines are as follows: 1. The differences shall be treated as grievances under the applicable grievance mechanism of the company; 2. Absent such grievance mechanism or inadequate mechanism, it shall be referred to the Regional office which has jurisdiction over the workplace; and 3. The employers are required to keep and maintain the documentary requirements proving that the flexible work arrangement was voluntarily adopted. (DOLE D.O. 002-09) Notice Requirement Prior to its implementation, the Er shall notify the DOLE through the Regional Office which has jurisdiction over the workplace, of the adoption of a FWA. The notice shall be in the Report Form attached to D.A. 02-09, s. 2009. Alternative Work Arrangement D.A. 17-B-20, s. 2020 was issued in order to to assist Ers to resume their business operations while preserving the employment of their workers under the enhanced community quarantine, general community quarantine or other quarantine arrangements. Alternative Work Schemes Alternative Work Schemes/Flexible Work Arrangements are temporary in nature and shall be
- 129. LABOR LAW ANDSOCIAL LEGISLATIONS 115 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW adopted for as long as the Public Health Crisis exists. (Sec. 4, Labor Advisory No. 17-B, s. 2020) 1. Transfer - Ees are transferred to another branch or outlet of the same Er; 2. Assignment - Ees are assigned to another function or position in the same or other branch or outlet of the same Er; 3. Job rotation - Ees are alternately required to work within the workweek; 4. Reduction of workdays - Normal workdays per week are reduced; 5. Partial closure - Some units or departments of the establishment are continued while other units or departments are closed; and 6. Other work arrangements, including adjustment of wage and wage-related benefits of the Ees. (D.A. 17-B-20, s. 2020) Wages and Wage-Related Benefits Ers and Ees may agree voluntarily to temporarily adjust Ees’ wage and wage-related benefits as provided for in existing employment contract, company policy or CBA. The adjustments in wages and/or wage-related benefits shall not exceed six (6) months or the period agreed upon in the CBA, if any. After such period, Ers and Ees shall review their agreement and may renew the same. (Sec. 5, D.A. 17-20, s. 2020) Reporting Requirement Ers shall report the adopted alternative working schemes and other work arrangements including the adjustment of wage and wage-related benefits of the Ees, if any, and submit a duly certified copy of all agreements to the DOLE Regional Office having jurisdiction over their principal place of business. (Sec. 6, D.A. 17-20, s. 2020) Telecommuting Act It refers to a work arrangement that allows an employee in the private sector to work from an alternative workplace with the use of telecommunication and/or computer technologies. (Sec. 3, R.A. No. 11165) Telecommuting Agreement The Er and Ees shall adhere to and be guided by the mutually agreed policy or telecommuting agreement, which stipulates for the following provisions, including but not limited to: 1. Eligibility; 2. Applicable code of conduct and performance evaluation and assessment; 3. Appropriate alternative workplace/s; 4. Use and cost of equipment; 5. Work days and/or hours; 6. Conditions of employment, compensation, and benefits particularly those unique to telecommuting Ees; 7. Non-diminution of benefits; 8. Occupational safety and health; 9. Observance of data privacy policy; 10. Dispute settlement; and 11. Termination or change of work arrangement. (Sec. 4, R.A. No. 11165) Termination of Telecommuting Arrangement The Er or Ees may terminate or change the telecommuting work arrangement, in accordance with the telecommuting policy or agreement, without prejudice to employment relationship and working conditions of the Ee, at no cost to the latter. Telecommuting Program An Er in the private sector may offer a telecommuting program to its Es on a voluntary basis or as a result of collective bargaining, if any, and upon such terms and conditions as they may mutually agree upon. (Sec. 3, D.O. 202-19) NOTE: Such terms and conditions shall not be less than the minimum labor standards set by law, and shall include compensable work hours, minimum
- 130. 2024 GOLDEN NOTES 116 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES number of work hours, overtime, rest days, entitlement to leave benefits, social welfare benefits, and security of tenure. Fair Treatment The Er shall ensure that telecommuting Ees are given the same treatment as that of comparable Ees working at the Er's premises. All telecommuting Ees shall be covered by the same set of applicable rules and existing CBA, if any. They shall also: 1. Receive a rate of pay, including overtime and night shift differential, and other similar monetary benefits not lower than those provided in applicable laws, and/or CBA; 2. Have the right to rest days, regular holidays, and special nonworking days; 3. Have the same or equivalent workload and performance standards as those of comparable workers at the Er's premises; provided that the parties may mutually agree to different performance standards that may be more appropriate given the location of the Ee is not at the premises of the Er; 4. Without additional cost, have the same access to training and career development opportunities as those of comparable workers at the Er's premises, and be subject to the same appraisal policies covering these workers, including the qualification provided on the preceding item; 5. Without additional cost, receive appropriate training on the technical equipment at their disposal, and the characteristics and conditions of telecommuting; and 6. Have the same collective rights as the workers at the Er's premises, including access to safety and health services when necessary, and shall not be barred from communicating with worker's representatives. (Sec. 4, D.O. 202-19) The Er shall also ensure that measures are taken to prevent the telecommuting Ee from being isolated from the rest of the working community in the company by giving the telecommuting Ee the opportunity to meet with colleagues on a regular basis and allowing access to the regular workplace and company information. Data Protection To ensure the protection of data used and processed by the telecommuting Ee for professional purposes, the Er shall be responsible for strictly taking the appropriate measures, which are not limited to: 1. Disabling of hardware, 2. Universal Serial Bus (USB) access, and 3. External cloud-based storage can be taken by the Er. For this purpose, the provisions of the Data Privacy Act of 2012 shall have suppletory effect. (Sec. 5, D.O. 202-19) Notice and Monitoring The Er shall notify the DOLE on the adoption of a telecommuting work arrangement, by accomplishing the DOLE prescribed report form and submitting the same in print or digital copy, to the nearest DOLE Field or Provincial Office having jurisdiction over the area where the principal office is located. If the Er has branches or operational units outside the region of its principal office, each branch or operational unit shall also submit its respective report to the nearest DOLE Field or Provincial Office having jurisdiction over the branch or operational unit. (Sec. 7, D.O. 202-19) f. NON-COMPENSABLE HOURS 3. REST PERIODS (Arts. 91-93, LC; Secs. 1-9, Rule III, Book III, Omnibus Rules Implementing the Labor Code) Right to Weekly Rest Day (WRD) Every Er shall give his Ees a rest period of not less than twenty-four (24) consecutive hours after every six (6) consecutive normal workdays. (Sec. 3, Rule III, Book III, IRR, LC)
- 131. LABOR LAW ANDSOCIAL LEGISLATIONS 117 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Rest day Not Necessarily Sunday or Holiday All establishments and enterprises may operate or open for business on Sundays and holidays provided that the Ees are given the weekly rest day and the benefits provided under the law. (Sec. 2, Rule III, Book III, IRR, LC) Scope of WRD It shall apply to all Ers whether operating for profit or not, including public utilities operated by private persons. (Sec. 1, Rule III, Book III, IRR, LC) Q: A Ladies Dormitory run or managed by a charitable non-profit organization claims that it is exempt from the coverage of the Weekly Rest Period provision of the Labor Code. Is the claim valid? (1998 BAR) A: NO. The claim is not valid. The provisions on weekly rest periods in the LC cover every employer, whether operating for profit or not. (Art. 91, LC) Weekly rest periods shall apply to all Employers whether operating for profit or not, including public utilities operated by private persons. (Sec. 1, Rule III, Book III, IRR) Person Who Determines the WRD GR: Er shall determine and schedule the WRD of his Ee. XPNs: (C-SO-R) 1. CBA; 2. Rules and regulations as the SOLE may provide; and 3. Preference of Ee based on Religious grounds – Ee shall make known his preference in writing at least 7 days before the desired effectivity of the initial rest day so preferred. (Sec. 4(1), Rule III, Book III, IRR, LC) XPNs to XPN (no. 3): Er may schedule the WRD of his choice for at least two (2) days in a month if the preference of the Ee will inevitably result in: 1. Serious prejudice to the operations of the undertaking; and 2. The Er cannot normally be expected to resort to other remedial measures. (Sec. 4(2), Rule III, Book III, IRR) NOTE: The Er is mandated to respect the choice of its Ee as to their rest day based on religion. Right of the Ee to Know the Schedule of their WRDs Er shall make known the rest period by means of: 1. Written notice; 2. Posted conspicuously in the workplace; and 3. At least one week before it becomes effective. (Sec. 5, Rule III, Book III, IRR) Emergency Rest Day Work GR: The Ee cannot be compelled by the Er to work on his rest day. XPNs: 1. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic, or other disaster or calamity to prevent loss of life and property, or imminent danger to public safety; 2. In cases of urgent work to be performed on the machinery, equipment, or installation to avoid serious loss which the Er would otherwise suffer; 3. In the event of abnormal pressure of work due to special circumstances, where the Er cannot ordinarily be expected to resort to other measures; 4. To prevent loss or damage to perishable goods; NOTE: Instead of ordinary loss, it must be serious. There must be loss and not just damage.
- 132. 2024 GOLDEN NOTES 118 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the Er; and 6. Under other circumstances analogous or similar to the foregoing as determined by the SOLE. (Art. 92, LC) Q: Is the aforementioned list exclusive? A: YES. No Ee shall be required against his will to work on his scheduled rest day except under circumstances provided in Art. 92. Where an Ee volunteers to work on his rest day under other circumstances, he shall express such desire in writing, subject to the rule regarding additional compensation. Employee Volunteers to Work on his Rest Day Under Other Circumstances He may be allowed to do so, provided he shall express it in writing subject to additional compensation. (Sec. 6(2), Rule III, Book III, IRR, LC) Q: Lawyer Antonio Martin recently formed a law partnership with five other lawyer-friends of his. They hired two office secretaries, an accounting clerk-cashier, one bookkeeper, and two messengers. You are among three associate attorneys. The workweek is Monday to Friday. There is no vacation leave, but sick leave is 15 days for every year of continuous and satisfactory service. Managing partner Martin is preparing a set of personnel policies in terms and conditions of employment for the staff and has asked you to give him a brief memo on the questions listed below. Should the law firm schedule a rest day for the employees, including you? (1987 BAR) A: NO. There is no need under the LC to schedule a rest day. Under the Code, it requires an employer to provide each of his employees a weekly rest day after every six consecutive normal work days. Here, the work week is such that it is for five (5) days. The Saturdays and Sundays when the employees are not required to work more than satisfy the required weekly rest day. 4. HOLIDAYS (Art. 94, LC; Secs. 1-11, Rule IV, Book III, Omnibus Rules Implementing the Labor Code) Legal Holiday It is a day designated or set apart by the legislature, for a purpose within the meaning of the term "holiday" to commemorate an important event. Regular Holidays (RHs) GR: They are compensable whether worked or unworked subject to certain conditions. They are also called “legal holidays.” XPN: A legal holiday falling on a Sunday creates no legal obligation for the Er to pay extra, aside from the usual holiday pay, to its monthly-paid Ees. (Wellington Investment and Manufacturing Corp. v. Trajano, G.R. No. 114698, 03 July 1995)
- 133. LABOR LAW ANDSOCIAL LEGISLATIONS 119 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Regular Holidays and Special Holidays HOLIDAY DATE REGULAR HOLIDAYS (E.O. No. 292, as amended by R.A. No. 9849) New Year’s Day January 1 Araw ng Kagitingan Monday nearest April 9 Maundy Thursday Movable date Good Friday Movable date Labor Day Monday nearest May 1 Independence Day June 12 National Heroes Day Last Monday of August Eid’l Fitr Movable date Eid’l Adha Movable date Bonifacio Day Monday nearest November 30 Christmas Day December 25 Rizal Day Monday nearest December 30 SPECIAL (NON-WORKING) HOLIDAYS (E.O. No. 292, as amended by R.A. No. 9849, as further amended by R.A. No. 10966) Ninoy Aquino Day Monday nearest August 21 All Saints Day November 1 Feast of Immaculate Conception of Mary December 8 Last day of the year December 31 Other holidays declared by law and ordinance NOTE: Every worker shall be paid his regular daily wage during regular holidays; the computation of which is determined by a legal formula which is not changed by the fact that there are two holidays falling on one day. (Asian Transmission Corp. v. Court of Appeals, G.R. No. 144664, 15 Mar. 2004) For movable days, the President shall issue a proclamation, at least six (6) months prior to the holiday concerned, the specific date that shall be declared as a non-working day. (R.A. No. 9492) RH falling within temporary or periodic shutdown and temporary cessation of work are compensable. However, if the temporary or periodic shutdown and cessation of work is due to business reverses, the Er may not pay the Ees during such period. Muslim Holidays (MHs) 1. Amun Jadid (New Year) – falls on the first day of the first lunar month of Muharram; 2. Maulid-un-Nabi (Birthday of the Prophet Muhammad) falls on the 12th day of the third lunar month of Rabi-ul-Awwal; and 3. Lailatul Isra Wal Mi'raj (Nocturnal Journey and Ascension of the Prophet Muhammad) – falls on the 27th day of the seventh lunar month of Rajab. (Art. 169, P.D. No. 1083) NOTE: Muslim holidays shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Sultan Kudarat, Sulu, Tawi-Tawi, Zamboanga del Norte and Zamboanga del Sur, and in the Cities of Cotabato, Iligan, Marawi, Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created. Upon proclamation by the President of the Philippines, Muslim holidays may also be officially observed in other provinces and cities. (Art. 170, P.D. No. 1083) Determination of Eid’l Fitr and/or Eid’l Adha The proclamation declaring a national holiday for the observance of Eid’l Fitr and/or Eid’l Adha shall be issued: 1. After the approximate date of the Islamic holiday has been determined in accordance with the: a. Islamic Calendar (Hijra); b. Lunar Calendar; or c. Upon astronomical calculations, whichever is possible or convenient; and 2. The Office of Muslim Affairs shall inform the Office of the President on which day the holiday shall fall. (Proc. 295, s. 2011)
- 134. 2024 GOLDEN NOTES 120 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Christian Ee Working Within the Muslim Area Cannot be Compelled to Work During Muslim Holiday All workers, Muslims and Christians, working within the Muslim area are entitled to holiday pay on Muslim holidays. (SMC v. CA, G.R. No. 146775, 30 Jan. 2002) Muslim Ee Working Outside the Muslim Area Cannot be Compelled to Work During the Observance of the MH GR: Muslim Ees shall be excused from work during MH without diminution of salary or wages. XPN: Those who are permitted or suffered to work on MH are entitled to at least 100% basic pay + 100% as premium of their basic pay. (Ibid.) Rule as to Payment of Regular Muslim Holidays There is no distinction between Muslims and non– Muslims as regards payment of benefits for Muslim holidays. Muslims throughout the Philippines are also entitled to holiday pay on Christian holidays declared by law as regular holidays. Wages and other emoluments granted by law are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker's faith or religion. The law on holiday pay knows no religion. (Ibid.) Holiday Swapping In the event the holiday falls on a Wednesday, the holiday will be observed on the Monday of that week. If the holiday falls on a Sunday, the holiday will be observed on the Monday that follows. Q: During the open forum following your lecture before members of various unions affiliated with a labor federation, you were asked the following question: Araw ng Kagitingan and Good Friday are among the 10 paid regular holidays under Art. 94 of the LC. How much will an employee receive when both holidays fall on the same day? (2005 BAR) A: The employee will receive 200% of his regular daily wage when both regular holidays fall on the same day and he does not work. The law provides that he shall receive his regular daily wage for each regular holiday. The employee will receive 100% for Araw ng Kagitingan and 100% for Good Friday. If he works on that day, he is entitled to 400% of his regular daily wage, otherwise, there will be a diminution of benefits. (Asian Transmission Corp. v. Court of Appeals, G.R. No. 144664, 15 Mar. 2004) NOTE: Medical representatives who do not obtain prodictivity allowances by virtue of generated sales are excluded from “basic salary” for the purposes of the computation of 13th month pay. (Philippine Duplicators, Inc. v. NLRC G.R. No. 110068, 15 Feb. 1995) Q: Nico is a medical representative engaged in the promotion of pharmaceutical products and medical devices for Northern Pharmaceuticals, Inc. He regularly visits physicians' clinics to inform them of the chemical composition and benefits of his employer's products. At the end of every day, he receives a basic wage of Php 700.00 plus a Php 150.00 “productivity allowance.” For purposes of computing Nico's 13th month pay, should the daily “productivity allowance” be included? (2018 BAR) A: NO. The second paragraph of Sec. 5(a) of the Revised Guidelines Implementing the 13th Month Pay Law states that “employees who are paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13th month pay, based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and commission.” However, the Court in Philippine Duplicators, Inc. v. NLRC (G.R. No. 110068, 15 Feb. 1995), declared the aforesaid provision as null and void with respect to those medical representatives who do not obtain productivity allowances by virtue of generated sales. Such allowances are in the nature of profit- sharing bonuses or commissions that should be properly excluded from the ambit of the term “basic salary” for purposes of computing 13th month pay due to employees.
- 135. LABOR LAW ANDSOCIAL LEGISLATIONS 121 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 5. SERVICE CHARGES (Art. 96, LC; Secs. 1-7, Rule VI, Book III, Omnibus Rules Implementing the Labor Code; R.A. No. 11360; DOLE D.O. No. 206-19; DOLE L.A. No. 14- 19) These are charges collected by hotels, restaurants, and similar establishments distributed completely and equally among the covered workers except managerial Ees. (Art. 96, LC, as amended by Sec. 1, R.A. No. 11360) Covered Employees GR: All Ees are covered, regardless of their position, designation, and employment status, irrespective of the method by which their wages are paid. NOTE: Applies only to hotels, restaurants, and other similar establishment such as but not limited to lodging houses, nightclubs cocktails lounge, massage clinics, bars, casinos and gambling houses and sports clubs (DOLE D.O 242, s. 2024) XPN: Managerial Ees (Sec. 2, Rule VI, Book III, IRR, LC) Distribution of Service Charges Previously, all service charges collected by covered Ers are required to be distributed at the rate of 85% for all covered Ees and 15% for management. R.A. No. 11360 amended Art. 96 of the LC wherein the former provides that all service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial Ees. Frequency of Distribution The period is not less than once every two (2) weeks or twice a month at intervals not exceeding 16 days. (Sec. 4, IRR, R.A. No. 11360) Service Charge vs. Tips SERVICE CHARGE TIPS Collected by the management from the customers. Voluntary payments made by the customers to the Ees for excellent service. Tips Tips are handled similarly as service charges. Pooled tips should be monitored, accounted for, and distributed in the same manner as the service charges. A waiter must drop in a tip box the tips he received. Otherwise, he commits “tip pocketing,” a serious offense of dishonesty that may cost them their job. Rule if Service Charge Is Abolished If it is abolished, the share of the covered Ees shall be considered integrated in their wages on the basis of the average monthly share of each Ees for the past twelve (12) months immediately preceding the abolition. (Sec. 5, Rule V, Book III, IRR, LC) NOTE: Service charges form part of the award in illegal dismissal cases. Compliance with Minimum Wage Service charges paid to the covered Ees shall not be considered in determining the Er’s compliance with the increased minimum wage. (Art. 96, LC, as amended by Sec. 1, R.A. No. 11360) 6. OCCUPATIONAL SAFETY AND HEALTH STANDARDS LAW (Secs. 4-6, 8 and 12, R.A. No. 11058) Occupational Safety and Health Standards Law (OSHSL) Under this law, the Er is required to observe safety standards and provide safety devices. On the part of the Ee, the Implementing Rules require proper use of these safeguards and devices. (Azucena, 2021)
- 136. 2024 GOLDEN NOTES 122 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Coverage GR: This Act shall apply to all establishments, projects, sites, including Philippine Economic Zone Authority (PEZA) establishments, and all other places where work is being undertaken in all branches of economic activity XPN: Public sector. (Sec. 2, R.A. No. 11058) Covered Workplaces Covered workplaces refer to establishments, projects, sites and all other places where work is being undertaken wherein the number of Ee, nature of operations, and risk or hazard involved in the business, as determined by the SOLE, require compliance with the provisions of this Act. (Sec. 3(c), R.A. No. 11058) Duties of the Employer Every Er, contractor or subcontractor, if any, and any person who manages, controls or supervises the work being undertaken shall: 1. Furnish the workers a place of employment free from hazardous conditions that are causing or are likely to cause death, illness or physical harm to the workers; 2. Give complete job safety instructions or orientation to all the workers especially to those entering the job for the first time, including those relating to familiarization with their work environment; 3. Inform the workers of the hazards associated with their work health risks involved to which they are exposed to, preventive measures to eliminate or minimize the risks, and steps to be taken in cases of emergency; 4. Use only approved devices and equipment for the workplace; 5. Comply with OSH standards including training medical examination and where necessary, provision of protective and safety devices such as personal protective equipment (PPE) and machine guards; 6. Allow workers and their safety and health representatives to participate actively in the process of organizing, planning, implementing and evaluating the safety and health program to improve safety and health in the workplace; and 7. Provide, where necessary, for measures to deal with emergencies and accidents including first- aid arrangements. (Sec. 4(a), R.A. No. 11058) Worker’s Duties Every worker shall: 1. Participate in ensuring compliance with OSH standards in the workplace. 2. Make proper use of all safeguards and safety devices furnished for the worker's protection and that of others and shall observe instructions to prevent accidents or imminent danger situation in workplace. 3. Observe the prescribed steps to be taken in cases of emergency. 4. Report to the supervisor any work hazard that may be discovered in the workplace. (Sec. 4(b), R.A. No. 11058) Any Other Person’s Duties It shall be the duty of any person, including the builder or contractor who visits, builds, renovates, or installs devices or conducts business in any establishment or workplace to comply with the provisions of this Act and all other regulations issued by the SOLE. (Sec. 4(c), R.A. No. 11058) NOTE: Whenever two (2) or more undertakings are engaged in activities simultaneously in one (1) workplace, it shall be the duty of ALL engaged to collaborate in the application of OSH standards and regulations. (Sec. 4(d), R.A. No. 11058)
- 137. LABOR LAW ANDSOCIAL LEGISLATIONS 123 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Workers’ Right to Know The right to safety and health at work shall be guaranteed. All workers shall be appropriately informed by the Er about all types of hazards in the workplace, provided access to training and education on chemical safety, electrical safety mechanical safety, and ergonomical safety. (Sec. 5, R.A. No. 11058) Workers’ Right to Refuse Unsafe Work The worker has the right of refusal to work without threat or reprisal from the Er if, as determined by the DOLE, an imminent danger situation exists in the workplace that may result in illness, injury, or death and corrective actions to eliminate the danger have not been undertaken by the Er. (Sec. 6, R.A. No. 11058) Workers’ Right to Personal Protective Equipment (PPE) Every Er, contractor or subcontructor, if any, shall provide his workers, free of charge, protective equipment for their eyes, face, hands and feet, and free, and lifeline, safety belt or harness, gas or dust respirators or masks, protective shields whenever necessary by reason of the hazardous work process or environment, chemical, radiological, mechanical and other irritants or hazards capable of causing injury or impairment in the function of any part of the body through absorption, inhalation or physical contact. NOTE: The cost of the PPE shall be part of the safety and health program which is a separate pay item pursuant to Sec. 20 of this Act. (Sec. 8, R.A. No. 11058) Q: A group of health employees received a fixed amount of hazard pay which was not in accord with Sec. 21 of RA 7305 otherwise known as The Magna Carta of Public Health Workers which prescribed hazard allowances to be equivalent to at least 5% of the monthly basic salary of health workers within SG 20 and above. However, those paid beyond 5% of the workers’ basic salary were disallowed. Was the hazard pay properly disallowed? A: YES. There is no dispute that our public health workers are entitled to hazard allowances under Sec. 21 of R.A. No. 7305. However, the IRR of R.A. No. 7305 provides: Public health workers shall be compensated hazard allowances equivalent to at least five percent (5%) for health workers with salary grade 20 and above. This may be granted on a monthly, quarterly or annual basis. The public health workers exposed to high risk hazard may receive a hazard pay not exceeding 5% higher than those prescribed above. Accordingly, the Court ruled that the DOH exceeded its limited power of implementing the provisions of RA No. 7305 in fixing an exact amount of hazard pay for public health workers with SG 20 and above. The DOH AO was void on its face for being ultra vires unreasonable insofar as it conflicts with RA No. 7305. It is hornbook that an administrative agency, like the DOH, cannot amend an act of Congress. Moreover, while the Court sustained the disallowance as the fixed amount of hazard pay granted was based on a void administrative issuance, the Court found sufficient justification to excuse the health Ee’s liability on equitable grounds. They were entitled to the grant of hazard pay under the law. The clear, direct, and reasonable connection of the fair amount of hazard allowances to the actual performance of Ee’s official work could not be denied. It was only the DOH's irregular implementation of such grant that caused the disallowance of the overpayments. Thus, the Court could not brush aside the deplorable inequity that will be caused to Ee’s. if ordered to refund the disallowed amounts, which were purposely given to compensate for the life-threatening risks that they had to endure in the performance of their duties and service to the public. (Abrenica v. Commission on Audit, G.R. No. 218185, 14 Sept. 2021, as penned by J. M.V. Lopez)
- 138. 2024 GOLDEN NOTES 124 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES B. WAGES 1. COMPONENTS AND EXCLUSIONS a. WAGES (Art. 97(f), LC) “Wage” is the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, payable by an Er to an Ee under a written or unwritten contract of employment: 1. For work done or to be done, or for services rendered or to be rendered; and 2. Includes fair and reasonable value of board, lodging, or other facilities customarily furnished by the Er to the Ee as determined by SOLE. NOTE: “Fair and reasonable value” shall not include any profit to the Er or to any person affiliated with the Er. (Art. 97(f), LC) Twin Attributes of Wages 1. Cash wage takes the form of ready money paid by the Er for services rendered by the Ee. 2. Facilities are articles or services customarily given for the benefit of the Ee and are voluntarily accepted by him. NOTE: The term “wages” also covers all benefits of the Ee under the CBA such as severance pay, educational allowance, accrued vacation leave earned but not enjoyed, as well as workmen's compensation awards and unpaid salaries for services rendered. (PNB v. Cruz, G.R. No. 80593, 18 Dec. 1989) Agricultural Work It refers to all farming activities in all its branches and includes among others, the cultivation and tillage of the soil, production, cultivation, growing and harvesting of any agricultural or horticultural commodities, dairying, raising of livestock or poultry, the culture of fish and other aquatic products in farms or ponds, and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing and/or processing of sugar, coconut, abaca, tobacco, pineapple, aquatic or other farm products. (Art. 97 (d), LC) Wage vs. Salary WAGE SALARY Applies to the compensation for manual labor, skilled, or unskilled, paid at stated times, and measured by the day, week, month, or season. Denotes a higher degree of employment or a superior grade of services and implies a position of office. Indicates considerable pay for a lower and less responsible character of employment. Suggestive of a larger and more important service. (Gaa v. CA, G.R. No. L-44169, 03 Dec. 1985) NOTE: In many situations, however, the words "wages" and "salary" are synonymous. (Azucena, 2021) “Wages” Include Sales Commissions In as much as the words “wage,” “pay,” and “salary” have the same meaning, and commission is included in the definition of “wage,” the logical conclusion is, in the computation of the separation pay, the salary base should also include the earned sales commissions. (Songco et al. v. NLRC, G.R. Nos. 50999- 51000, 23 Mar. 1990)
- 139. LABOR LAW ANDSOCIAL LEGISLATIONS 125 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW b. FACILITIES Facilities as Part of Wages “Facilities” shall include articles or services for the benefit of the Ee or his family but shall not include tools of the trade or articles or service primarily for the benefit of the Er or necessary to the conduct of the Er’s business. (Sec. 5, Rule VII-A, Book III, IRR) Facilities are items of expense necessary for the laborer's and his family's existence and subsistence so that by express provision of law, they form part of the wage and when furnished by the Er are deductible therefrom, since if they are not so furnished, the laborer would spend and pay for them just the same. (Our Haus Realty Development Corp. v. Parian, G.R. No. 204651, 06 Aug. 2014) e.g., Rice ration, housing, recreational facilities, medical treatment to dependents, school facilities, cost of light, water, fuel, meals, or snacks (Atok Big Wedge Mutual Benefit Association v. Atok Big Wedge Mining Co., G.R. No. L-7349, 19 Jul. 1955; Mayon Hotel v. Adana, G.R. No. 157634, 16 May 2005) Facilities Exclude Profit The value of facilities should not be more than the actual cost to the Er of the board, lodging, or other facilities customarily furnished by him to his Ees. The "fair and reasonable value" does not include any profit to the Er or to any persons affiliated with the Er. Significance of Determination of Facilities Beneficial to Er or Ee It is significant to determine when articles or services are beneficial to an Ee because those articles or services which are advantageous to the Ee cannot be charged against the cash wage of an Ee. Articles or tools of the trade that are primarily for the benefit of the Er or necessary to the conduct of his business cannot be deducted from the Er's wages because they are not considered as facilities. Requirements for Deducting Values for Facilities 1. Proof must be shown that such facilities are customarily furnished by the trade; NOTE: It is important to determine when facilities are customarily furnished or not, for the fair and reasonable value of facilities not customarily furnished cannot be charged against the cash wage. For example, a messenger who slept in the office cannot be charged by the Er for housing allowance because the office is not a regular sleeping quarter. On the other hand, housing quarters are common in a mining industry; hence, the latter can charge its Ees for housing quarter. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) 2. The provision of deductible facilities must be voluntarily accepted in writing by the Ee; and 3. The facilities must be charged at fair and reasonable value. (Ibid.) NOTE: Where the facilities are given free of charge by the Er and there is no prior agreement to deduct the cost of said facilities from the wages of the Ees, the Er cannot subsequently charge the cost of the facilities or otherwise avail of the order. (Sec. 2(g), Rule IV, DO 126-13) Voluntary Acceptance of Facilities Acceptance of facilities is voluntary, for to compel the Ee to accept such facilities against his will would be violative of the fundamental right of Ee to the free disposal of his wage guaranteed under Art. 112. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997)
- 140. 2024 GOLDEN NOTES 126 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES c. SUPPLEMENTS FACILITIES SUPPLEMENT As to their Nature Items of expense Extra remuneration or benefits As to their Inclusion to Wage Forms part of the wage Independent of wage As to their Deductibility Deductible from the wage Not wage deductible To whose Benefit For the benefit of the worker and his family Granted for the convenience of the Er Supplements Not Part of Wages Supplements are extra remunerations or benefits given to or received by laborers over and above their ordinary earnings or wages. Since they are not considered as part of wages, their value cannot be deducted from the cash wage of an Ee. Examples are vacation leave pay, overtime pay in excess of the legal rate, profit-sharing benefits, sick pension, retirement and death benefits, family allowances, Christmas bonus, war-risk or cost-of- living bonuses or other bonuses other than those paid as reward for extra output or time spent on the jobs. (Atok Big Wedge Mining Co. v. Atok Big Wedge Mutual Benefit Assoc., G.R. No. L-7349, 19 Jul. 1955) Criterion in Determining Whether an Item is a Supplement or Facility The criterion in making a distinction between the two not so much lies in the kind (food, lodging) but the purpose (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) If it is primarily for the Ee’s gain, then the benefit is a facility; if its provision is mainly for the Er’s advantage, then it is a supplement. Again, this is to ensure that Ees are protected in circumstances where the Er designates a benefit as deductible from the wages even though it clearly works to the Er’s greater convenience or advantage. Under the purpose test, substantial consideration must be given to the nature of the Er’s business in relation to the character or type of work performed by the Ees involved. (Our Haus Realty Development Corp. v. Parian, G.R. No. 204651, 06 Aug. 2014) Tips Not Part of Wages; Element of Compulsion in Tipping Wage is the remuneration directly paid by the Er to an Ee. On the other hand, tips are paid directly to an Ee by the customer; hence, they fall short of the definition provided in Art. 97. Although a tip denotes a voluntary act, it lacks the essential element of a gift, that is, the free bestowing of a gratuity without consideration. Despite its apparent voluntariness, there is an element of compulsion in tipping. (Ace Navigation Co., Inc. v. C.A., G.R. No. 140364. 15 Aug. 2000) Status of Food and Lodging, or the Electricity and Water Consumed by a Hotel Worker These are supplements. Considering, therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel. Furthermore, granting that meals and lodging were provided and indeed constituted facilities, such facilities could not be deducted without the Er complying first with certain legal requirements. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) Q: Gamma Company pays its regular Ees P350.00 a day and houses them in a dormitory inside its factory compound in Manila. Gamma Company also provides them with three full meals a day. In the course of a routine inspection, a DOLE Inspector noted that the workers' pay is below the prescribed minimum wage of P426.00 plus P30.00 allowance, and thus required Gamma Company to pay wage differentials.
- 141. LABOR LAW ANDSOCIAL LEGISLATIONS 127 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Gamma Company denies any liability, explaining that after the market value of the company- provided board and lodging are added to the Ees' P350 cash daily wage, the Ees' effective daily rate would be way above the minimum pay required by law. The company counsel further points out that the Ees are aware that their food and lodging form part of their salary and have long accepted the arrangement. Is the company's position legally correct? (2013 BAR) A: NO. The following requisites were not complied with: 1. Proof that such facilities are customarily furnished by the trade; 2. The provision of deductible facilities is voluntarily accepted by the Ee; and, 3. The facilities are charged at a fair and reasonable value. Mere availment is not sufficient to allow deduction from Ee’s wages. (Mayon Hotel & Restaurant v. Adarna, G.R. No. 157634, 16 May 2005) Gratuity It is something given freely or without recompense; a gift; something voluntarily given in return for a favor or services. Gratuity pay is not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is to reward them in return for a satisfactory work and efficient service to the company. 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 unlike salary, cost-of-living- allowances, holiday pay, leave benefits, etc., which are covered by the Labor Code. (Azucena, 2016) d. BONUS Rule on Demandability and Enforceability of Bonus A bonus is an amount granted and paid ex gratia to the employee. It cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employees’ basic salaries or wages. If there is no profit, there should be no bonus. If profit is reduced, bonus should likewise be reduced, absent any agreement making such bonus part of the compensation of the employees. (Chan, 2019) e. 13TH MONTH PAY (P.D. No. 851; Revised Guidelines on The Implementation of the 13th Month Pay Law) 13th Month Pay or its Equivalent It is a form of monetary benefit equivalent to the monthly basic compensation received by an Ee, computed pro-rata according to the number of months within a year that the Ee has rendered service to the Er. (DOLE’s BWC issues Q & A on 13th month pay) “Its equivalent” Jurisprudence has interpreted the term “its equivalent” to approximate the legal requirement in all respects. If the grant is at variance with the law, it is regarded as a contractual obligation distinct from the legal obligation. The grant must reflect the same intent as the law, namely, magnanimity. If the bonus is provided in graduated amounts depending on the length of service of Ees, its purpose is to give bigger awards to long-service Ees, which is a purpose not found in the law. Hence the provision is meant to be in addition to the legal requirement. (United CNC Textile Workers Union v. Valenzuela, G.R. No. 70763, 30 Apr. 1987; Universal Corn Products v. NLRC, G.R. No. L- 60337, 21 Aug. 1987)
- 142. 2024 GOLDEN NOTES 128 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Formula and Computation of 13th Month Pay Where: NOTE: The minimum wage in NCR is Php 570.00. (Wage Order No. NCR-23) As to the number of days worked per year: 1. 393.80 – For those who are required to work everyday, including Sundays or rest days, special days, and regular holidays; 2. 313 – For those who do not work and are not considered paid on Sundays or rest days; 3. 261 – For those who do not work and are not considered paid on Saturdays and Sundays or rest days Illustration: Using the basic wage in the NCR at Php 570.00 per day and a six-day workweek or an equivalent Monthly Basic Salary of P14,867.50. ( 570×313�12 months�): January no absence P14,867.50 February no absence P14,867.50 March no absence P14,867.50 April company shutdown no salary May company shutdown no salary June 5 days leave w/pay P14,867.50 July company shutdown no salary August company shutdown no salary September 10 days leave w/o pay P9,167.50 October no absence P14,867.50 November 1 day leave w/o pay P14,297.50 December no absence P14,867.50 Total basic salary earned for the year P112,670.00 P112,670.00�12 months� = Php 9,389.17 is the proportionate 13th month pay (2022 Handbook on Worker’s Statutory Monetary Benefits) Basic Salary Includes all remunerations or earnings paid by the Er to an Ee for services rendered including cost-of- living allowances. It does not include all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary such as: 1. Cash equivalent of unused vacation and sick leave credits; 2. Overtime pay; 3. Premium pay; 4. Night Shift Differential; 5. Holiday pay; and 6. Commissions
- 143. LABOR LAW ANDSOCIAL LEGISLATIONS 129 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW XPN: If it is an integral part of the basic salary. (Philippine Duplicators, Inc. v. NLRC, G.R. No. 110068, 15 Feb. 1995) These salary-related benefits should be included in the computation of the 13th moth pay if by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the Ees. Time of Payment of 13th Month Pay Under P.D. No. 851, all Ers are required to pay all their rank-and-file Ees, a 13th month pay not later than Dec. 24 of every year. Absence of CBA Provision Not a Bar in Giving 13th Month Pay The absence of an express provision in the CBA obligating the Er to pay the members of a union 13th month pay is immaterial. Notwithstanding therefore the absence of any contractual agreement, the payment of a 13th month pay, being a statutory grant, is mandatory and is deemed incorporated in the CBA. Nature of 13th Month Pay Such is in the nature of additional income granted to Ees who are not receiving the same. (Agabon v. NLRC, G.R. No. 158693, 17 Nov. 2004) It is based on wage but not part of wage. (Central Azucarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, G.R. No. 188949, 26 Jul. 2010) Minimum Period of Service Required It is imposed as a “minimum service requirement” that the Ee should have worked for at least one (1) month during a calendar year. (No. X(A), DOLE Handbook on Workers Statutory Monetary Benefits) Persons Covered by P.D. No. 851 1. Ees GR: All rank-and-file Ees are covered by PD 851 regardless of the amount of basic salary that they receive in a month, if their Ers are not otherwise exempted from paying the 13th month pay. Such Ees are entitled to the 13th month pay regardless of said designation of employment status, and irrespective of the method by which their wages are paid. Provided, that they have worked for at least one month, during a calendar year. (Revised Guidelines on the Implementation of the 13th Month Pay Law) XPNs: a. Government Ees; b. Ees paid purely on commission basis; c. Ees already receiving 13th month pay; d. Managers; and e. Seafarers. NOTE: Managerial Ees may receive 13th month pay if they are granted under an employment contract or a company policy or practice. (Chan, 2019) 2. Ers GR: All Ers are covered by P.D. No. 581. XPNs: a. The Government and any of its political subdivisions, including GOCCs; XPN to this XPN: Corporations operating essentially as private subsidiaries of the Government. b. Ers already paying their Ees 13th month pay or more in a calendar year in its equivalent at the time of the issuance of the Revised Guidelines; c. Ers of those who are paid on purely basis of: i. Commission; NOTE: Bus drivers and conductors who are paid a fixed or guaranteed minimum wage, in case their commission be less than the statutory minimum, are entitled to a 13th-month pay equivalent to 1/12
- 144. 2024 GOLDEN NOTES 130 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES of their total earnings during the calendar year. (Philippine Agricultural Commercial and Industrial Workers Union v. NLRC, G.R. No. 107994, 14 Aug. 1995) ii. Boundary; or iii. Task; and iv. Fixed amount for performing a specific work irrespective of the time consumed in the performance thereof. XPN: Where the workers are paid on a piece-rate basis, in which case, the Er shall be covered by the Revised Guidelines insofar as the workers are concerned. NOTE: Piece-Rate Workers refer to those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated without regard to the time spent in producing the same. d. Distressed Ers: i. Currently incurring substantial losses; or ii. In the case of non-profit institutions and organizations, where their income, whether from donations, contributions, grants, and other earnings from any source, has consistently declined by more than 40% of their normal income for the last two (2) years, subject to the provision of Sec. 7 of P.D. 851. Domestic Workers or Kasambahays Previously, not covered by 13th month pay law are Ers of household helpers and persons in the personal service of another in relation to such workers. However, the Batas Kasambahay or Domestic Workers Act is now explicit in its commandment that a domestic worker or kasambahay is entitled to 13th month pay as provided by law. (Sec. 25, Art. IV, R.A. No. 10361, otherwise known as the “Domestic Workers Act”) Options of Covered Ers 1. Pay 1/2 of the 13th month pay required before the opening of the regular school year and the other half on or before the 24th day of December of every year. 2. In any establishment where a union has been recognized or certified as the CB agent of the Ee, the periodicity or frequency of payment of the 13th month pay may be the subject of agreement. Other Types of Employment Entitled to 13th Month Pay 1. Part-time Ee; (Item 5(b), Revised Guidelines of PD 851) 2. Extras; 3. Casual Ee; and 4. Seasonal Ee. (BWC Opinion, 19 Dec. 1987) Q: What would be your advice to your client, a manufacturing company, who asks for your legal opinion on whether or not the 13th Month Pay Law covers a casual Ee who is paid a daily wage? (1998 BAR) A: I will advise the manufacturing company to pay the casual Ee 13th Month Pay if such casual Ee has worked for at least one month in a calendar year. The law on 13th Month Pay provides that Ees are entitled to the benefit of said law regardless of their designation or employment status. NOTE: Ees are entitled to the 13th month pay benefits regardless of their designation and irrespective of the method by which their wages are paid. (Jackson Building-Condominium Corp. v. NLRC, G.R. No. 112546, 14 Mar. 1996) Equivalent Forms of the 13th Month Pay 1. Christmas Bonus; 2. Midyear Bonus; 3. Profit Sharing Scheme; and
- 145. LABOR LAW ANDSOCIAL LEGISLATIONS 131 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 4. Other Cash bonuses amounting to not less than 1/12 of its basic salary Where an employer pays less than 1/12th of the employee's basic salary, the employer shall pay the difference. (DOLE Philippines v. Hon. Leogardo and Associated Labor Union, G.R. No. L- 60018, 23 Oct. 1982) NOTE: It must always be in the form of a legal tender. Things Not Proper Substitutes For 13th Month Pay 1. Free rice; 2. Electricity; 3. Cash and stock dividends; and 4. Cost-of-living Allowance. (Sec. 3, P.D. 85) Q: Concepcion Textile Co. included the OT pay, night-shift differential pay, and the like in the computation of its Ees’ 13th month pay. Subsequently, with the promulgation of the decision of the SC in the case of SMC v. Inciong (G.R. No. L-49774, 24 Feb. 1981) holding that these other monetary claims should not be included in the computation of the 13th Month Pay, Concepcion Textile Co. sought to recover under the principle of solutio indebiti the overpayment of the Ees’ 13th month pay, by debiting against future 13th month payments whatever excess amounts it had previously made. a) Is the Company's action tenable? A: NO. The Company's action is not tenable. The principle of solutio indebiti which is a civil law concept is not applicable in labor law. (Davao Fruits Corp. v. NLRC, et al., G.R. No. 85073, 24 Aug. 1993) After the 1981 SMC ruling, the Court decided the case of Philippine Duplicators Inc. v. NLRC (G.R. No. 110068, Nov. 15, 1995). Accordingly, management may undertake to exclude sick leave, vacation leave, maternity leave, premium pay for regular holiday, night differential pay, and cost of living allowance. b) With respect to the payment of the 13th month pay after the SMC ruling, what arrangement, if any, must the Company make in order to exclude from the 13th month pay all earnings and remunerations other than the basic pay? A: The company should include sales commissions based on the settled rule. (Songco v. NLRC, G.R. No. L-50999, 23 Mar. 1990) Adjudicated Claims Non-payment of the 13th month pay provided by P.D. 851 and the rules of NLRC shall be treated as money claims cases. NOTE: Difference of opinion on how to compute the 13th month pay is non-strikeable and a strike held on that ground is illegal. (Isalama Machine Works Corp. v. NLRC, G.R. No. 10016, 02 Mar. 1995) The following Ees may or may not be entitled to 13th month pay 1. Ee paid by results – Entitled to 13th month pay; NOTE: Ees paid a fixed or guaranteed wage plus commission are also entitled to the mandated 13thmonth pay, based on their total earnings during the calendar year, i.e., on both their fixed or guaranteed wage and commission. 2. Those with Multiple Ers – Government Ees working part time in a private enterprise, including private educational institutions, as well as Ees working in two or more private firms, whether full or part time basis, are entitled to the required 13th month pay from all their private Ers regardless of their total earnings from each or all their Ers; (Revised Guidelines on the Implementation of 13th Month Pay Law) 3. Private School Teachers, including faculty members of universities and colleges – Entitled regardless of the number of months they teach or are paid within a year, if they have rendered service for at least one (1) month within a year;
- 146. 2024 GOLDEN NOTES 132 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 4. Resigned or Separated Ees – If resigned or separated from work before the time of payment of 13th month pay, entitled to monetary benefits in proportion to the length of time he started working during the calendar year up to the time of resignation or termination of service (Pro-rated 13th month pay); (Sec. 6, DOLE Revised Guidelines on 13th Month Pay) and 5. Ees who are paid a fixed or guaranteed wage plus commission – also entitled to the 13th- month pay, based on their earnings during the calendar year (i.e., on both their fixed or guaranteed wage and commission). NOTE: In the consolidated cases of Boie Takeda Chemicals, Inc. v. Dionisio de la Serna, (G.R. No. 92174, 10 Dec. 1993), and Philippine Fuji Xerox Corporation v. Cresenciano Trajano and Philippine Fuji Xerox Ees Union, (G.R. No. 102552, 10 Dec. 1993), the Court ruled that commissions, while included in the generic term wage, are not part of "basic salary/wage" and therefore, should not be included in computing the 13th month pay. Thus, in remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or guaranteed wage is patently the “basic salary” for this is what the Ee receives for a standard work period. Commissions are given for extra efforts exerted in consummating sales or other related transactions. They are, as such, additional pay, which this Court has made clear do not form part of the “basic salary.” (Boie-Takeda Chemicals Inc v. Dela Serna, 10 Dec. 1993; Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2016) Q: Dennis was a taxi driver who was being paid on the “boundary” system basis. He worked tirelessly for Cabrera Transport Inc. for fourteen (14) years until he was eligible for retirement. He was entitled to retirement benefits. During the entire duration of his service, Dennis was not given his 13th month pay or his service incentive leave pay. (2012 BAR) a) Is Dennis entitled to 13th month pay and service incentive leave (SIL) pay? Explain. A: NO. A taxi driver paid under the “boundary system” is not entitled to a 13th month pay and a SIL pay. Hence, his retirement pay should be computed solely on the basis of his salary. Specifically, Sec. 3(e) of the Rules and Regulations Implementing P.D. 851 excludes from the obligation of 13th Month Pay “Employers of those who are paid on… boundary” basis. On the other hand, Sec. 1(d), Rule V, Book III of the Omnibus Rules provides that those “employees whose performance is unsupervised by the employer” are not entitled to SIL. A taxi driver paid under the Boundary System is an “unsupervised” employee. NOTE: A taxi driver is an “unsupervised employee” and if paid under the “boundary system” is not entitled to a 13th month pay and a SIL. (Sec. 3 (e) of the Rules and Regulations Implementing P.D. 851 and, Sec. 1(d), Rule V, Book III of the Omnibus Rules) b) Since he was not given his 13th month pay and SIL pay, should Dennis be paid upon retirement, in addition to the salary equivalent to 15 days for every year of service, the additional 2.5 days representing one-twelfth (1/12) of the 13th month pay as well as the five (5) days representing the service incentive leave for a total of 22.5 days? Explain. A: NO. Since he is not entitled to 13th month pay and SIL, his retirement pay should be computed solely on the basis of his salary. (R&E Transport v. Latag, G.R. No. 155214, 13 Feb. 2004; 2009-2017 UST FCL Bar Q&A) NOTE: Taxi drivers do not receive fixed wages thus, the basis for computing their benefits should be the average daily income and retirement pay should be computed on the sole basis of his salary. (R&E Transport v. Latag, G.R. No. 155214, 13 Feb. 2004) Q: TRX, a local shipping firm, maintains a fleet of motorized boats plying the island barangays of AP, a coastal town. At day's end, the boat
- 147. LABOR LAW ANDSOCIAL LEGISLATIONS 133 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW operators/crew members turn over to the boat owner their cash collections from cargo fees and passenger fares, less the expenses for diesel fuel, food, landing fees and spare parts. Fifty percent (50%) of the monthly income or earnings derived from the operations of the boats are given to the boatmen by way of compensation. Deducted from the individual shares of the boatmen are their cash advance and peso value of their absences, if any. Are these boatmen entitled to overtime pay, holiday pay, and 13th month pay? (2004 BAR) A: NO. If the boatmen are considered employees, like jeepney drivers paid on a boundary system because they are workers who are paid by results. Said workers, under the LC are not entitled, among others, to overtime pay and holiday pay. In accordance with the IRR of the 13th Month Pay Law, however, the boatmen are entitled to the 13th month pay. Workers who are paid by results are to be paid their 13th month pay. NOTE: Boatmen are considered employees paid on a boundary system and are not entitled to Holiday pay and overtime pay but are entitled to 13th month pay. (Azucena, 2016) Application of Pro-Ration of 13th Month Pay GR: Pro-ration of 13th month pay applies only in cases of resignation or separation from work. Computation should be based on length of service and not on the actual wage earned by the worker. (Honda Phils. v. Samahan ng Manggagawa sa Honda, G.R. No. 145561, 15 June 2005) XPN: Ees who are paid a guaranteed minimum wage or commissions earned are entitled to 13th Month Pay based on total earnings. (Philippine Agricultural Commercial and Industrial Workers Union v. NLRC, G.R. No. 107994, 14 Aug. 1995) 14th Month Pay Not Legally Demandable GR: The granting of 14th month pay is a management prerogative and is not legally demandable. It is basically a bonus and is gratuitous in nature. (Kamaya Point Hotel v. NLRC, G.R. No. 75289, 31 Aug. 1989) XPN: A bonus, however, becomes a demandable or enforceable obligation when it is made part of the wage or salary or compensation of the Ee. If it is additional compensation which the Er promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. XPN to the XPN: Where it is not payable to all but only to some Ees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. (Metro Transit Organization, Inc. v. NLRC, G.R. No. 116008, 11 July 1995) Q: ETPI (company) entered into a collective bargaining agreement with ETEU (union). A side agreement of the said CBA provided that company confirms that the 14th, 15th and 16th month bonuses (other than 13th month pay) are granted. The company then planned to defer the payment of the 14th, 15th and 16th month bonuses due continuing deterioration of company’s financial position. The union opposed and filed a preventive mediation complaint before the NCMB. May the company validly postpone the payment of said bonuses? A: NO. A reading of the provision reveals that the same provides for the giving of 14th, 15th and 16th month bonuses without qualification. There were no conditions specified in the CBA Side Agreements for the grant of the benefits contrary to the claim of ETPI that the same is justified only when there are profits earned by the company. In fine, the payment of these bonuses was not related to the profitability of business operations. Verily, by virtue of its incorporation in the CBA Side Agreements, the grant of 14th, 15th and 16th month bonuses has become more than just an act of generosity on the part of ETPI, but a contractual obligation it has undertaken. (ETPI v. ETEU, G.R. No. 185665, 08 Feb. 2012)
- 148. 2024 GOLDEN NOTES 134 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Commission in Relation to 13th Month Pay 1. The salesman’s commissions, comprising a pre- determined percent of the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of computing their 13th month pay. These commissions are not overtime payments, nor profit-sharing payments nor any other fringe benefit. Thus, the salesmen's commissions, comprising a pre-determined percent of the selling price of the goods sold by each salesman, were properly included in the term “basic salary” for purposes of computing their 13th -month pay. (Philippine Duplicators, Inc. v. NLRC, G.R. No. 110068, 15 Feb. 1995) 2. The so-called commission received by medical representatives of Boie Takeda Chemicals or by the rank-and-file Ees of Phil. Fuji Xerox were excluded from the term basic salary because these were paid as productivity bonuses. Such bonuses closely resemble profit sharing, payments and have no clear, direct, and necessary relation to the amount of work actually done by each individual Ee. (Boie-Takeda Chemicals, Inc. v. Dela Serna, G.R. No. 92174, 10 Dec. 1993) Productivity Bonus vs. Sales Commissions A productivity bonus is something extra for which no specific additional services are rendered by any Ee and hence not legally demandable, absent a contractual undertaking to pay it. Sales commissions, on the other hand, such as those paid in Duplicators, are intimately related to or directly proportional to the extent or energy of an Ee's endeavors. Commissions are paid upon the specific results achieved by a salesman-Ee. It is a percentage of the sales closed by a salesman and operates as an integral part of such salesman's basic pay. (Philippine Duplicators, Inc. v. NLRC, G.R. No. 110068, 15 Feb. 1995) f. HOLIDAY PAY (Art. 94, LC; Secs. 1-7, Rule IV, Book III, Omnibus Rules Implementing the Labor Code) Holiday Pay Holiday Pay is a one-day pay given by law to an Ee even if he does not work on a regular holiday. (Azucena, 2016) The payment of the regular daily wage for any unworked regular holiday. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2016) It is a premium given to Ees pursuant to the law even if he has not been suffered to work on a regular holiday. It is limited to the 12 regular holidays, also called legal holidays listed by law. The Ee should not have been absent without pay on the working day proceeding the regular holiday. Persons Entitled to Holiday Pay GR: All Ees are entitled. (Sec. 1, Rule IV, Book III, IRR) XPNs: 1. Government Ees and any of its political subdivisions, including GOCCs (with original charter); 2. Retail and service establishments regularly employing less than ten (10) workers; 3. Domestic helpers and persons in the personal service of another; 4. Ee engaged on task or contract basis or purely commission basis; 5. Members of the family of the Er who are dependent on him for support; 6. Managerial Ees and other members of the managerial staff; 7. Field personnel and other Ees whose time and performance are unsupervised by the Er; and
- 149. LABOR LAW ANDSOCIAL LEGISLATIONS 135 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 8. Ees paid Fixed amount for performing work irrespective of the time consumed in the performance thereof. (Ibid.) Retail Establishments They are engaged in the sale of goods to end users for personal or household use. (e.g., Grocery) Service Establishments They are engaged in the sale of services to individuals for their own or household use. (e.g., TV repair shop) Exemption of Retail or Service Establishments MINIMUM WAGE HOLIDAY PAY/SIL Applies to establishments employing not more than 10 Ees. Applies to establishments employing less than 10 Ees. Has to be obtained by applying for it with the Regional Wage Board. Granted by the LC. May be availed of without the need of a prior application for exemption. Purpose of Holiday Pay To secure the payment of undiminished monthly income undisturbed by any work interruption. In other words, although the worker is forced to take a rest, he earns what he should earn, that is, his holiday pay. (JRC v. NLRC, G.R. No. 65482, 01 Dec. 1987) Holiday pay is primarily aimed at benefiting the daily-paid workers whose income is circumscribed by the principle of “no-work, no pay.” Prior to the enactment of the LC, daily paid workers were not paid for unworked regular holidays. On the other hand, monthly-paid Ees do not suffer any reductions in pay for not working during such holidays. The law on holiday pay is, thus, conceived to be the countervailing measure to partially offset the disadvantages inherent in the daily compensation system of employment. (Poquiz, 2012) Regular Holiday vs. Special Holiday REGULAR HOLIDAY SPECIAL HOLIDAY If unworked Compensable, subject to certain conditions Not compensable If worked Rate is 200% of the regular rate Additional 30% premium pay of 100% RW Limited to the 12 holidays provided in the LC. Not exclusive; law or ordinance may provide for other special holidays. Formula to Compute Wage on Holidays 1. Regular Holiday a. If it is Ee’s regular workday i. Unworked – 100%; or ii. Worked: 1. First 8 hours – 200% 2. Excess of 8 hours – plus 30% of hourly rate on said day. b. If it is Ee’s rest day i. Unworked – 100%; or ii. Worked: 1. First 8 hours – plus 30% of 200% 2. Excess of 8 hours –plus 30% of hourly rate on said day. (M.C. No. 01, s. 2004)
- 150. 2024 GOLDEN NOTES 136 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Regular Holiday Regular Workday Unworked 100% Worked First 8 hrs Excess of 8 hrs 200% plus 30% of hourly rate on said day Rest Day Unworked 100% Worked First 8 hrs First 8 hrs plus 30% of 200% plus 30% of hourly rate on said day 2. For declared Special Holidays, such as Special Non-Working Day, Special Public Holiday, Special National Holiday in addition to the 3 nationwide special non-working days: a. If it is Ee’s regular workday i. Unworked – no pay unless there is a favorable company policy, practice or CBA granting payment of wages on special days even if unworked. ii. Worked: 1. First 8 hours – plus 30% of daily wage rate of 100% 2. Excess of 8 hours – plus 30% of hourly rate on said day b. If it is Ee’s rest day and worked: i. First 8 hours – plus 50% of the daily rate of 100% ii. Excess of 8 hours - plus 30% of hourly rate on said day. Special Holiday Regular Workday Unworked GR: No Pay. XPN: favorable 1. company policy 2. practice 3. CBA granting payment of wages on special days even if unworked Worked First 8 hrs Excess of 8 hrs plus 30% of daily wage rate of 100% plus 30% of hourly rate on said day Rest Day Unworked None Worked First 8 hrs First 8 hrs plus 50% of the daily rate of 100% plus 30% of hourly rate on said day 3. For those declared as Special Working Holidays, the following rules shall apply: a. For work performed, an Ee is entitled only to his basic rate. b. No premium pay is required since work performed on said days is considered work on ordinary working days. Important Condition that Should be Met in Order to Avail/Receive the Single Holiday Pay The Ee should not have been absent without pay on the working day immediately preceding the RH.
- 151. LABOR LAW ANDSOCIAL LEGISLATIONS 137 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Monthly Paid vs. Daily Paid Ees MONTHLY PAID EEs DAILY PAID EEs One whose wage or salary is being paid every day of the month, including rest days, Sundays, regular or special days, although he does not regularly work on these days. Not excluded from benefit of holiday pay. One whose wage or salary is being paid only on those days he actually worked, except in cases of regular or special days, although he does not regularly work on these days. (In Re: United South Dock handlers, Inc., Opinion of the Bureau of Working Conditions, 23 Nov. 1987) HOLIDAY PAY OF CERTAIN EMPLOYEES Private School Teachers (Faculty Members of Colleges and Universities) 1. RH during semestral vacations – not entitled to holiday pay. 2. RH during Christmas vacation – entitled to holiday pay. Christmas breaks do not represent a break in the academic calendar. It is something that falls within the semester. While a semestral break is a break in the middle of the academic calendar. Hourly-Paid Teachers No pay on regular holidays including Christmas and semestral vacations, but with pay on special public holidays and other no-class days when classes are called off or shortened on account of floods, typhoons, rallies and the like, whether extension days be ordered or not. (Jose Rizal College v. NLRC, G.R. No. 65482, 01 Dec. 1987) In case of extensions, said faculty teachers shall likewise be paid their hourly rates should they teach during said extensions. (ibid.) In the event extensions are called for, they are also entitled to their pay for the extended days. Field Personnel Field personnel are not entitled to holiday pay. The law requires that the actual hours of work in the field be reasonably ascertained. Field Personnel’s actual hours of work in the field cannot be determined with reasonable certainty. (Union of Filipro Ees v. Vivar, Jr., et al., G.R. No. 79255, 20 Jan. 1992) Part-Time Worker If the work is partial, the pay should also be partial. (Azucena, 2016) The amount of holiday pay of a part-timer is to be determined on a case-to-case basis. The basis is any of the following, whichever yields the highest amount: 1. The regular wage per day; 2. The basic wage on the working day preceding the regular holiday if the Ee is present or on leave with pay on the last working day immediately prior to the regular holiday; 3. The average of his basic wages for the last seven working days for Ees who are paid by results; or 4. The basic wage on the particular holiday, if worked. (DOLE Explanatory Bulletin on Part- Time Employment, 02 Jan. 1996) Piece-Rate Workers A piece-rate Ee is entitled to holiday pay. Where a covered Ee is paid by results or output, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual work days immediately preceding the regular holiday. Provided, Holiday pay shall not be less than the statutory minimum wage rate. (Sec. 8, Rule IV, Book III, IRR)
- 152. 2024 GOLDEN NOTES 138 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Seasonal Workers Seasonal workers may not be paid the required Holiday pay during off-season where they are not at work. (Sec. 8, Rule IV, Book III, IRR) The employment relationship is deemed to be suspended during the off-season for seasonal workers. Workers having No Regular Work Days They shall be entitled to holiday pay. (Sec. 8, Rule IV, Book III, IRR) Q: Are the school faculty who according to their contracts are paid per lecture hour entitled to unworked holiday pay? A: 1. If during RH, NO. Art. 94 of the LC is silent with respect to faculty members paid by the hour who because of their teaching contracts are obliged to work and consent to be paid only for work actually done (except when an emergency or a fortuitous event or a national need calls for the declaration of special holidays). (Jose Rizal College v. NLRC, G.R. No. 65482, 01 Dec. 1987) 2. If during special public holidays, YES. The law and the IRR governing holiday pay are silent as to payment on special public holidays. Be it noted that when a special public holiday is declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered. (Ibid.) Double Holiday Pay If two regular holidays fall on the same day (such as Maundy Thursday or Good Friday falling on Araw ng Kagitingan), the Ees should be paid 400% of the basic wage for both holidays, provided he worked on that day or was on leave of absence with pay or was on authorized absence on the day prior to the regular holiday. Holiday pay is a statutory benefit demandable under the law. Since a worker is entitled to the enjoyment of 10 paid regular holidays (Art. 94, LC), the fact that two holidays fall on the same date should not operate to reduce to nine the ten-holiday pay benefits a worker is entitled to receive. (Asian Transmission Corp v. CA, G.R. No 144664, 25 Mar. 2004) When two RHs fall on the same day, the following rates apply: Concept of Successive Regular Holidays Conditions for an Ee to be Entitled to Two (2) Successive Holiday Pays On the day immediately preceding the first RH, he must be: 1. Present (worked); or, 2. On leave of absence (LOA) with pay. (Sec. 10, Rule IV, Book III, IRR)
- 153. LABOR LAW ANDSOCIAL LEGISLATIONS 139 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW If the Above Stated Conditions are Not Met He must work on the first RH to be entitled to holiday pay on the second RH. (ibid.) Effects of Absences 1. All covered Ees shall be entitled to holiday pay when they are on LOA with pay on the workday immediately preceding the regular holiday. Ees who are on LOA without pay on the day immediately preceding a regular holiday may not be paid the required holiday pay if they do not work on such regular holiday. 2. Ers shall grant the same percentage of the holiday pay as the benefit granted by competent authority in the form of Ee’s compensation or social security payment, whichever is higher, if the Ees are not reporting for work while on such leave benefits. 3. Where the day immediately preceding the holiday is a non-work day in the establishment or the scheduled rest day of the Ee, he/she shall not be deemed to be on LOA on that day, in which case he/she shall be entitled to the holiday pay if he/she worked on the day immediately preceding the non-work day or rest day. 4. Where there are two (2) successive regular holidays, like Maundy Thursday and Good Friday, an Ee may not be paid for both holidays if he/she absents himself/herself from work on the day immediately preceding the first holiday, unless he/she works on the first holiday, in which case he/she is entitled to his/her holiday pay on the second holiday. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2016) Effects of Business Closure on Holiday Pay 1. In case of temporary or periodic shutdown and temporary cessation of work of an establishment, as when a yearly inventory or when the repair or cleaning of machineries and equipment is undertaken, the regular holidays falling within the period shall be compensated. 2. The regular holiday during the cessation of operation of an enterprise due to business reverses as authorized by the SOLE may not be paid by the Er. (Sec. 7, Rule IV, Book III) Deferment of Holiday Pay (for year 2020) In various labor advisories issued by the DOLE in 2020, namely, Advisories 13A, 15, 20, 22, 25, 27, and 29, the DOLE authorized the deferment, not exemption, of the payment of holiday pay on account of the national emergency arising from the COVID-19 situation. In Advisory 31, the DOLE has ordered the Ers who chose to defer holiday payment to make payment of those holiday pay on or before 31 Dec. 2020. Worker's Faith/Religion on Religion-Related Holiday Wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker's faith or religion. (San Miguel Corporation v. Court of Appeals, G.R. No. 146775, 30 Jan. 2002) 2. PRINCIPLES a. NO WORK, NO PAY “No Work, No Pay” Principle (Fair Day’s Wage for a Fair Day’s Labor) GR: If there is no work performed by the Ee, without the fault of the Er, there can be no wage or pay. Burden of economic loss suffered by Ee shall not be shifted to the Er. XPNs: When the laborer was able, willing and ready to work but was: 1. Prevented by management; 2. Illegally locked out; 3. Illegally suspended; 4. Illegally dismissed; and
- 154. 2024 GOLDEN NOTES 140 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. Illegally prevented from working. (Aklan Electric Coop. v. NLRC, G.R. No. 129246, 10 Jan. 2000) b. EQUAL PAY FOR EQUAL WORK “Equal Pay for Equal Work” Principle Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. Ees holding the same position and rank are presumed to be performing equal work. The rule equal pay for equal work applies whether the Ee is hired locally or abroad. (International School Alliance of Educators v. Quisumbing, G.R. No. 128845, 01 June 2000) Application of Title GR: The Title on Wages of the LC applies to all Ees. XPNs: 1. Farm tenancy or leasehold; 2. Household or domestic helpers, including family drivers and persons working in the personal service of another; 3. Home workers engaged in needlework or in any cottage industry duly registered in accordance with law; (Art. 98, LC) and 4. Workers in any duly registered cooperatives when so recommended by the Bureau of Cooperative Development and upon approval of the SOLE. NOTE: Workers of a registered BMBE are only exempted from the Minimum Wage Law, not from the Title on Wages of the LC. (R.A. No. 9178) c. FAIR WAGE FOR FAIR WORK A fair day's wage for a fair day's labor continues to govern the relation between labor and capital and remains a basic factor in determining Ees' wages. If there is no work performed by the Ee there can be no wage or pay unless the laborer was able, willing and ready to work but was prevented by management or was illegally locked out, suspended or dismissed. Where the Ee's dismissal was for a just cause, it would neither be fair nor just to allow the Ee to recover something he has not earned and could not have earned. (PAL v. NLRC, G.R. No. 55159, 22 June 1989) Thus, where the failure of workers to work was not due to the Er's fault, the burden of economic loss suffered by the Ees should not be shifted to the Er. Each party must bear his own loss. (Azucena, 2021) Backwages Not Granted to Dismissed Employees who Participated in an Illegal Strike even if Later Reinstated Conformably with the long honored principle of a fair day's wage for a fair day's labor,employees dismissed for joining an illegal strike are not entitled to backwages for the period of the strike even if they are reinstated by virtue of their being merely members of the striking union who did not commit any illegal act during the strike. (Escario v. NLRC, G.R. No. 124055, 08 Jun 2000) NOTE: In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union (G.R. No. 158075, 30 June 2006), the Court laid down the exceptions to this rule. Jurisprudential law, however, recognizes several exceptions to the "no backwages rule," to wit: when the employees were illegally locked to thus compel them to stage a strike; when the employer is guilty of the grossest form of ULP; when the employer committed discrimination in the rehiring of strikers refusing to readmit those against whom there were pending criminal cases while admitting non-strikers who were also criminally charged in court; or when the workers who staged a voluntary ULP strike offered to return to work unconditionally but the employer refused to reinstate them. Not any of these or analogous instances is, however, present in the instant case. Respondent urges this Court to apply the exceptional rule enunciated in Philippine Marine Officers' Guild v. Compania Maritima and similar cases where the employees unconditionally offered to return to work, it arguing that there was such an offer on its part to return to work but the Hotel screened the returning strikers and refused to
- 155. LABOR LAW ANDSOCIAL LEGISLATIONS 141 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW readmit those whom it found to have perpetrated prohibited acts during the strike. It must be stressed, however, that for the exception in Philippine Marine Officers' Guild to apply, it is required that the strike must be legal. None of the exceptions mentioned above is existing in these cases and, as found by the Court, both strikes conducted by the union were illegal. Thus, the listed employees are not entitled to backwages despite the CA's order of reinstatement. (Bigg's, Inc. v. Boncacas, G.R. Nos. 200487 & 200636, 06 Mar. 2019) d. NON-DIMINUTION OF BENEFITS (Art. 100, LC) GR: Nothing in the LC shall be construed to eliminate or in any way diminish supplements, or other Ee benefits being enjoyed at the time of the promulgation of the Code. (Art. 100, LC) A company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer (Sevilla Trading Company v. A.V.A. Tomas Semana, G.R. No. 152546, 28 Apr. 2004) XPNs: 1. Correction of error; 2. Contingent benefit or conditional bonus; 3. Wage order compliance; 4. Benefits on reimbursement basis; 5. Reclassification of position; 6. Negotiated benefits; and NOTE: Benefits initiated through negotiation between Er and Ees, such as those contained in a CBA are not within the prohibition of Art. 100 because, as products of bilateral contract, they can only be eliminated or diminished bilaterally. (Azucena, 2016) 7. Productivity incentives NOTE: If the error is not corrected in a reasonable time, it ripens into a company policy and Ees can demand it as a matter of right. Diminution Of Benefits When Present 1. The grant or benefit is founded on a policy or has ripened into a practice over a long period of time; 2. the practice is consistent and deliberate; 3. the practice is not due to error in the construction or application of a doubtful or difficult question of law; and 4. the diminution or discontinuance is done unilaterally by the employer." (Nippon Paint Philippines, Inc. v. NIPPEA, G.R. No. 229396 30 Jun. 2021) NOTE: The Non-Diminution Rule, however, applies only if the benefit is based on an express policy, a written contract, or has ripened into a practice. To be considered a practice, it must be consistently and deliberately made by the Er over a long period of time. (Wesleyan University-Philippines v. Wesleyan University-Faculty and Staff Assn., G.R. No. 181806, 12 Mar. 2014) With regard to the length of time, the Court held that jurisprudence has not laid down any rule requiring a specific minimum number of years. (Sevilla Trading Co. v. Semana, G.R. No. 152456, 28 Apr. 2004) However, in Supreme Steel Corp. v. NMS-IND-APL (G.R. No. 185556, 28 Mar. 2011), the Court held that, “While it is true that jurisprudence has not laid down any rule requiring a specific minimum number of years in order for a practice to be considered as a voluntary act of the Er, under existing jurisprudence on this matter, an act carried out within less than a year would certainly not qualify as such.”
- 156. 2024 GOLDEN NOTES 142 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Purpose of Non-Diminution of Benefits The philosophy behind the law is to prohibit Ers from reducing benefits already enjoyed by Ees. A contrary rule will corrupt the Er's mind to abuse and exploit Ees, prostituting the social justice and protection to labor clauses enshrined in the fundamental charter. Thus, a change of method of payment of wages from monthly to daily will not be allowed if it would result in reduction of pay. However, if the method introduced would augment the worker's pay it will be valid. Reclassification of position of Ees pursuant to reorganization, without affecting their compensation is not covered by the proscription. (Opinion of the SOLE, 07 Oct. 1975) An agreement reducing certain labor standards benefits such as overtime and premium pay violates Art. 100. Provisions of existing laws are deemed part of a contract. (Republic Planters Bank v. NLRC, G.R. No. 117460, 06 Jan. 1997) However, if there is an impelling reasonable justification of the diminution or reduction because of an emergency, exigency, or business losses, such diminution or reduction would be valid, provided, it is duly approved by the SOLE or his duly authorized representative pursuant to Art. 233. (Poquiz, 2012) Bonus Treated as Not Part of Wages Bonus is not considered part of wages if it is paid only upon realization of profits or amount of production or output. (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Assn., G.R. No. L-5276, 03 Mar. 1953) Where the bonus is not payable to all but only to some Ees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. (Poquiz, 2012) Stoplock Gate or Non-chargeability Clause Having entered into an agreement with its Ees, an Er may not be allowed to renege on its obligation under a CBA should, at the same time, the law grants the Ees the same or better terms and conditions of employment. Ee benefits derived from law are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided by the agreement itself or by law. (Meycauayan College v. Hon. Drilon G.R. No. 81144, 07 May 1990) Any allowance/wage granted under the collective bargaining agreement cannot be credited to similar form of benefit that may thereafter be ordained by the government through legislation. Such portion of the contract is the "stoplock" gate or known in its technical term as the “non-chargeability” clause. (Marcopper Mining Corp. v. NLRC, G.R. No. 103525, 29 Mar. 1996) This doctrine was resounded in this manner: the CBA provides, "It is hereby agreed that these salary increases shall be exclusive of any wage increase that may be provided by the law as a result of any economic change." The Court ruled that the above provision in the CBA is clear that the salary increases shall not include any wage increase that may be provided by law as a result of economic change. The CBA needs no interpretation as it is not ambiguous. Thus, the wage increase granted by the petitioner to its Ees under the CBA cannot be considered as creditable benefit. (Mindanao Steel Corp. v. Minsteel Free Workers Organization, G.R. No. 130693, 04 Mar. 2004; UKCEU- PTGWO v. Kimberly Clark Phils, G.R. No. 162957, 06 Mar. 2006) Benefit Acquired Through Company Practice An Ee can demand as a matter of right benefits granted by the Er for a considerable and long period of time, as the same may ripen into a company practice. If it is a past error that is being corrected, no vested right may be said arisen nor any diminution of benefit under Art. 100 of the Labor Code may be said to have resulted by virtue of the correction. (Globe Mackay v. NLRC, G.R. No. 74156, 29 June 1988)
- 157. LABOR LAW ANDSOCIAL LEGISLATIONS 143 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Instances of Violation of the Rule on Non- Diminution of Benefits Withdrawal of the following would amount to diminution of Ee’s existing benefits: 1. Enjoyment of the privilege of commutation of sick leave benefits into cash equivalent as a company practice; (Davao Integrated Port Stevedoring Services v. Abarquez, G.R. No. 102132, 19 Mar. 1993) 2. Grant of resignation benefits to a Branch Manager on the basis of company practice of applying expired CBA concluded by the supervisory union; (Republic Planters Bank, v. NLRC, G.R. No. 79488, 30 Sept. 1988) and 3. Giving of special bonus as the company's long and regular practice. (Meralco v. Quisumbing, G.R. No. 127598, 27 Jan. 1999) 3. PAYMENT OF WAGES (Arts. 102-105, LC; Secs. 1-7 and 10-14, Rule VIII, Book III, Omnibus Rules Implementing the Labor Code) Forms of Payment GR: As a general rule, wages shall be paid in legal tender. (Sec. 1, Rule VIII, Book III, IRR of LC) No Er shall pay the wages of an Ee by means of: 1. Promissory notes; 2. Vouchers; 3. Coupons; 4. Tokens; 5. Tickets; 6. Chits; or 7. Any object other than legal tender. NOTE: This prohibition applies even when expressly requested by the Ee. However, payment of wages and other monetary benefits through electronic money (e-money) is now allowed (DOLE Labor Advisory No. 26, Series of 2020) XPNs: Payment of wages by check or money order shall be allowed if: 1. It is customary on the date of the effectivity of the Code; 2. Necessary because of special circumstances as specified in the regulation issued by the SOLE; 3. Stipulated in the CBA; (Art. 102, LC) or 4. Where the following conditions are met: a. There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace; b. The Er or any of his agents or representatives does not receive any pecuniary benefit directly or indirectly from the arrangement; c. The Ees are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours worked if done during working hours; and d. The payment by check is with the written consent of the Ees concerned if there is no collective agreement authorizing the payment of wages by bank checks. (Sec. 2, Rule VIII, Book III, IRR of LC) Q: Benito is the owner of an eponymous clothing brand that is a top seller. He employs a number of male and female models who wear Benito's clothes in promotional shoots and videos. His deal with the models is that Benito will pay them with 3 sets of free clothes per week. Is this arrangement allowed? (2015 BAR) A: NO. The arrangement is not allowed. The models are Benito’s employees. As such, their services are required to be paid only in legal tender, even when expressly requested by the employee otherwise (Art. 102, LC). Hence, no lawful deal in this regard can be entered into by and between Benito and his models. The three (3) sets of clothes, regardless of
- 158. 2024 GOLDEN NOTES 144 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES value, are in kind and are therefore not in the form prescribed by law. Time of Payment GR: Wages shall be paid: 1. At least once every two (2) weeks; or 2. Twice a month at intervals not exceeding 16 days. XPNs: 1. On account of force majeure or circumstances beyond the Er’s control, payment shall be made immediately after such force majeure or circumstances have ceased; 2. If engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, in the absence of a CBA or arbitration award: a. That 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 the work. (Art. 103, LC) Place of Payment GR: At or near the place of undertaking. (Art. 104, LC) XPN: Payment in a place other than the workplace shall be permissible only under the following circumstances: 1. When payment cannot be effected at or near the place of work by reason of the deterioration of peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood, epidemic or other calamity rendering payment thereat impossible; 2. When the Er provides free transportation to the Ees back and forth; and 3. Under any other analogous circumstances; Provided, that the time spent by the Ees in collecting their wages shall be considered as compensable hours worked. NOTE: No Er shall pay his Ees in any bar, night or day club, drinking establishment, massage clinic, dance hall, or other similar places or in places where games are played with stakes of money or things representing money except in the case of persons employed in said places. (Sec. 4, Rule VIII, Book III, IRR of LC) Requisites of Payment Through Banks 1. Shall be made upon written permission of the majority of the Ees or workers concerned; 2. With 25 or more Ees; and 3. Located within one (1) kilometer radius from a commercial, savings, or rural bank. (Sec. 7, R.A. No. 6727) NOTE: Payment shall be made within the period of payment of wages fixed by the Labor Code. Requisites of Payment Through Automated Teller Machine (ATM) 1. The ATM system of payment is with the written consent of the Ees concerned; 2. The Ees are given reasonable time to withdraw their wages from the bank facility which time, if done during working hours, shall be considered compensable hours worked; 3. The system shall allow workers to receive their wages within the period or frequency and in the amount prescribed under the Labor Code, as amended; 4. There is a bank or ATM facility within a radius of one (1) kilometer to the place of work; 5. Upon request of the concerned Ees, the Er shall issue a record of payment of wages, benefits and deductions for a particular period;
- 159. LABOR LAW ANDSOCIAL LEGISLATIONS 145 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 6. There shall be an additional expense and no diminution of benefits and privileges because of the ATM system of payment; and 7. The Er shall assume responsibility in case the wage protection provisions of law and regulations are not complied with under the arrangement. (DOLE Labor Advisory, Series of 1996) Direct Payment of Wages GR: Wages shall be paid directly to the workers to whom they are due. (Art. 105, LC) XPNs: 1. Payment through another person may be made in cases of force majeure which renders the payment impossible, provided that such person is under written authority given by the worker for the purpose; 2. Where the Er is authorized in writing by the Ee to pay his wages to a member of his family; 3. Where payment to another person of any part of the Ee's wages is authorized by existing law, including payments for the insurance premiums of the Ee and union dues where the right to check-off has been recognized by the Er in accordance with a collective agreement or authorized in writing by the individual Ees concerned; (Sec. 5, Rule VIII, Book III, IRR of LC; Art. 105, LC) or 4. In case of death of the Ee, the Er may pay the wages to the heirs without the necessity of intestate proceedings. When the heirs are of age, they shall: a. Execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs to the exclusion of all other persons; b. In case any of the heirs is a minor, such affidavit shall be executed in his behalf by his natural guardian or next of kin; c. Upon presentation of the affidavit to the Er, he shall make payment to the heirs as representative of the SOLE. (Sec. 6, Rule VIII, Book III, IRR of LC) 4. PROHIBITIONS REGARDING WAGES (Arts. 112-119, LC; DOLE L.A. No. 11-14) Non-Interference in Disposal of Wages Er shall not limit or interfere with the freedom of any Ee to dispose of his wages. He shall not force, compel or oblige his Ees to purchase merchandise, commodities or other property from any other person, or otherwise make use of any store services of such Er or any other person. (Art. 112, LC) Civil Code Provisions on Non-Interference in Disposal of Wages 1. Art. 1705 – The laborer's wages shall be paid in legal currency. 2. Art. 1706 – Withholding of the wages, except for a debt due, shall not be made by the Er. 3. Art. 1707 – The laborer's wages shall be a lien on the goods manufactured or the work done. 4. 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. 5. Art. 1709 – The Er shall neither seize nor retain any tool or other articles belonging to the laborer. Q: Tarcisio was employed as operations manager and received a monthly salary of P25,000.00 through his payroll account with DB Bank. He obtained a loan from Roberto to purchase a car. Tarcisio failed to pay Roberto when the loan fell due. Roberto sued to collect and moved to garnish Tarcisio’s payroll account. The latter vigorously objected and argued that salaries were exempt from garnishment. Is Tarcisio correct? Explain your answer. (2017 BAR) A: NO. Tarcisio is not correct. Under Art. 1708 of the NCC, only wages, which are the compensation paid for manual skilled or unskilled labor, are exempt
- 160. 2024 GOLDEN NOTES 146 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES from garnishment. Here, the subject of garnishment is Tarcisio’s salary as a managerial employee, which is not considered as wages. Hence, Tarcisio’s salary may be garnished. Wage Deduction GR: No Er, in his own behalf or on behalf of any person, shall make any deduction from the wages of his Ees. (Art. 113, LC) XPNs: 1. Where the worker is insured with his consent by the Er; and 2. For union dues, in cases where the right of the worker or his union to check off has been recognized by the Er or authorized in writing by the individual worker concerned. (Art. 113, LC) NOTE: Art. 241(o) of the LC provides that special assessments may be validly checked-off if there is an individual written authorization duly signed by every Ee. 3. In cases where the Er is authorized by law or regulations issued by the SOLE: a. Deductions for value of meals and facilities freely agreed upon; (Azucena, 2016) b. In case where the Ee is indebted to the Er where such indebtedness has become due and demandable; (Art. 1706) c. In court awards, wages may be subject of execution or attachment, but only for debts incurred for food, shelter, clothing, and medical attendance; (Art. 1703) d. Taxes withheld pursuant to the Tax Code; e. Salary deduction of a member of a legally established cooperative; (Sec. 59, R.A. No. 6938) f. Deductions for SSS, PhilHealth and Pag-IBIG premiums; g. Deductions for loss or damage, provided that requisites provided are satisfied; (Art. 114, LC) h. Deductions made with the written authorization of the Ee for payment to a third person; (Sec. 13, Rule VIII, Book III, IRR of LC) i. Deductions as disciplinary measures for habitual tardiness; (Opinion dated 10 Mar. 1975 of the SOLE) j. Agency fees. (Art. 259(e), LC) The law prohibits the Er from making deductions from the wages of an Ee. The evil sought to be prevented is to forestall the commission of unwarranted practices of Ers by making unnecessary deductions without Ee's knowledge or authorization. (Galvadores v. Trajano, G.R. No. 70067, 15 Sept. 1986) Deductions for Absences and Tardiness (Principle of No-Work No-Pay) Deductions for unpaid absences are allowed. An Er will not be liable for violation of the prohibition against wage deduction for absences or tardiness incurred by the Ee. Check-off It is a system by which union dues and other assessments are deducted from the Ee's wage by the Er upon authorization from the worker or by mandate of the law. (Poquiz, 2012) Duration of Check-Off The Ees' check-off authorization even if declared irrevocable, is good only as the Ees remain members of the union concerned, because as such members they were obliged to pay the corresponding dues and assessments to their union. The moment they are separated from and left the union and joined another labor organization, they were no longer obliged to pay said dues and assessments. There would be no longer any reason
- 161. LABOR LAW ANDSOCIAL LEGISLATIONS 147 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW or occasion for the company to continue making deductions. (Phil. Federation of Petroleum Workers v. CIR, G.R. No. L-26346, 27 Feb. 1971) Compulsory Check-Off Check-off may be enforced with the consent of the Er or by authority in writing by the Ees. When the union and the Er agree, the attitude of the Ees is immaterial. When the Ees duly authorize the check-off, the Er's consent is unnecessary, and its recognition of the right is obligatory. (A.L. Ammen Trans. Co. v. BITEMAA, 91 Phil 649, 25 July 1952) Agency Fees It is an amount equivalent to the union dues, which a non-union member pays to the union because he benefits from the CBA negotiated by the union. Deduction to Ensure Employment The employment contract provides for 25% deduction from Ee's salary representing the Er's share in procuring job placement for him. The provision in the contract was contested, but the Er argued that the Ee was already estopped in complaining about the deduction. The Supreme Court declared the employment contract illegal and iniquitous, thus, null and void. (Commando Security Agency v. NLRC, G.R. No. 95844, 20 July 1992) Reduction of Workdays; Effect on Wages In situations where the Er has to reduce the number of regular working days to prevent serious losses, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw materials, the Er may deduct the wages corresponding to the days taken off from the workweek, consistent with the principle of “no work, no pay.” This is without prejudice to an agreement or company policy which provides otherwise. (Handbook on Workers’ Statutory Monetary Benefits, 2016) Prohibition Against Deposit Requirement GR: While deductions from the Ees’ wages may be made for cash bonds or deposits, the Er, however, is not allowed to unilaterally impose upon its Ees the giving of cash bonds or deposits. XPN: If the Er proved and established that it falls under any of the following: 1. That it is engaged in such trades, occupations or business were the practice of making deductions or requiring deposits is a recognized one; or 2. That the cash bond or deposit is necessary or desirable as determined by the DOLE Secretary in appropriate rules and regulations. In the case of Nina Jewelry v. Montecillo (G.R. No. 188169, 28 Nov. 2011), the court ruled that the petitioners should first establish that the making of deductions from the salaries is authorized by law, or regulations issued by the SOLE. Further, the posting of cash bonds should be proven as a recognized practice in the jewelry manufacturing business, or alternatively, the petitioners should seek for the determination by the SOLE through the issuance of appropriate rules and regulations that the policy the former seeks to implement is necessary or desirable in the conduct of business. Prohibition on Withholding of Wages It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker. (Art. 116, LC) Although management prerogative refers to the right to regulate all aspects of employment, it cannot be understood to include the right to temporarily withhold salary/wages without the consent of the Er. To sanction such an interpretation would be contrary to Art. 166 of the Labor Code. (SHS Perforated Materials, Inc. v. Diaz, G.R. No. 185814, 13 Oct. 2010) As an exception, Ers usually withhold the release of the last salary and benefits of terminated or
- 162. 2024 GOLDEN NOTES 148 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES resigning Ees prior to or pending their compliance with certain clearance procedure. Clearance procedures are instituted to ensure that the properties, real or personal, belonging to the Er but are in the possession of the separated Ee, are returned to the Er before the Ee’s departure. (Milan v. NLRC and Solid Mills, Inc., G.R. No. 202961, 04 Feb. 2015) Other Prohibitions 1. Inducing a worker to give up any part of his wages by force, intimidation, stealth, threat, or by any other means whatsoever without his consent; (Art. 116, LC) 2. To make deductions from wages for the benefit of the Er or his representative as consideration of a promise of Employment or retention in employment; (Art. 117, LC) 3. Refusal by Er to pay or reduce wages or benefits in discrimination of any Ee who has filed any complaint or instituted any proceedings under the code or has testified or about to testify; (Art. 118, LC) or 4. Unlawful for any person to make any statement, report, or record filed or kept pursuant to the Code knowing such statement, report or record to be false in any material aspect. (Art. 119, LC) Deposit for Loss or Damage GR: Er shall not require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the Er. (Art. 114, LC) XPN: Er is engaged in such trade or business where the practice of making deductions or requiring deposits is a recognized one or is necessary or desirable as determined by the SOLE in appropriate rules and regulations. NOTE: Security guards and other private security personnel in the private security industry are now also included in the exception in the prohibition against deposits for loss or damage. (DOLE Department Order No. 150, Series of 2016) Requisites for Payment of Loss and Damage 1. It is clearly shown that the Ee is responsible for the loss or damage; 2. The Ee is given reasonable opportunity to show cause why deduction should not be made; 3. The total amount of such deductions is fair and reasonable and shall not exceed the actual loss or damage; and 4. The deduction from the wages of the Ee does not exceed 20% of his wages in a week. (Sec. 11, Rule VIII, Book III, IRR of LC) 5. WAGE DISTORTION (Art. 124, LC) Wage distortion is a situation where an increase in prescribed wage results in the elimination or severe contraction of intentional quantitative differences in wage or 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. (Art. 124, LC) It is the disappearance or virtual disappearance of pay differentials between lower and higher positions in an enterprise because of compliance with a wage order. (P.I. Manufacturing v. P.I. Manufacturing Supervisors and Foreman, G.R. No. 167217, 04 Feb. 2008) NOTE: Wage distortion presupposes an increase in the compensation of the lower pay class in an office hierarchy without a corresponding raise for high level Ees in the same region of the country, resulting in the elimination or severe diminution of the distinction between the two groups or classes. (Prubankers Association v. Prudential Bank & Trust Company, G.R. No. 131247, 25 Jan. 1999)
- 163. LABOR LAW ANDSOCIAL LEGISLATIONS 149 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Elements of Wage Distortion 1. An existing hierarchy of positions with corresponding salary rates; 2. A significant change or increase in the salary rate of a lower pay class without a corresponding increase in the salary rate of a higher one; 3. The elimination of the distinction between the two (2) groups or classes; and 4. The wage distortion exists in the same region of the country. (Alliance Trade Unions v. NLRC, G.R. No. 140689, 17 Feb. 2004) In mandating an adjustment, the law did not require that there be an elimination or total abrogation of quantitative wage or salary differences. A severe contraction is enough. (Metrobank v. NLRC, G.R. No. 102636, 10 Sept. 1993) Wage distortion does not arise when a wage order gives Ees in one branch of a bank higher compensation than that given to their counterparts in other regions occupying the same pay scale who are not covered by said wage order. In short, the implementation of wage orders in one region but not in others does not in itself necessarily result in wage distortion. (Prubankers Association v. Prudential Bank & Trust Company, G.R. No. 131247, 25 Jan. 1999) Wage distortion is applied to voluntary and unilateral increases by the Er in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the Er would be completely tied even in cases where an increase in wage of a particular group is justified due to a re- evaluation of the high productivity of a particular group, or as in the present case, the need to increase the competitiveness of Bankard’s hiring rate. An Er would be discouraged from adjusting the salary rates of a particular group of Ees for fear that it would result to a demand by all Ees for a similar increase, especially if the financial conditions of the business cannot address an across-the-board increase. (Bankard Ees Union-Workers Alliance Trade Unions v. NLRC, G.R. No. 140689, 17 Feb. 2004) Causes of Wage Distortion 1. Government decreed increases in minimum wages; 2. Merger of two companies (with differing classifications of Ees and different wage rates) where the surviving company absorbs all the Ees of the dissolved corporation; or 3. The effectivity dates of wage increases given to each of the two classes of Ees (rank-and-file and supervisory) had not been synchronized in their respective CBAs. (Metro Transit Org., Inc. v. NLRC, G.R. No. 116008, 11 July 1995) Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion. (Prubankers Association v. Prudential Bank & Trust Company, G.R. No. 131247, 25 Jan. 1999) Cases Not Representative of Wage Distortion 1. Where the hierarchy of positions based on skills, length of service and other logical bases of differentiation was preserved; (Ibid.) 2. A disparity in wages between Ees holding similar positions but in different regions; 3. Where the disparity was simply due to the fact that the Ees had been hired on different dates and were thus receiving different salaries; (Manila Mandarin Ees Union v. NLRC, G.R. No. 108556, 19 Nov. 1996) 4. That an Ee was initially hired at a position level carrying a hiring rate higher than the rates of others; 5. That an Ee failed to meet the cut-off date in the grant of yearly CBA increase; or
- 164. 2024 GOLDEN NOTES 150 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 6. That the Ee had been promoted while the others were not. Two (2) Methods of Adjusting Minimum Wage 1. Floor wage method – involves the fixing of a determinate amount to be added to the prevailing statutory minimum wage rates. On the other hand, 2. Salary-ceiling method – the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase. (Norkis Free and Ind. Workers Union v. Norkis Trading Co., Inc., G.R. No. 157098, 30 Jun. 2005) Formula in determining “distortion adjustment” The above standard formula has been applied by the RTWPB to correct wage or pay-scale structures in cases of wage distortion as an appropriate measure acceptable to the parties. (Poquiz, 2018, citing Metropolitan Bank and Trust Co. Employees Union ALU-TUCP v. NLRC, G.R. No. 102363, 10 Sept. 1993) Advisory Formula in Correcting the Effects of the Wage Order on the Existing Wage Structure (Wage Distortion) 1. Pineda Formula; 2. Pineda-Cruz-So Formula; Where: Exponent is represented by n 3. Percentile Approach; 4. Philippine Construction Supply Formula; Where: 5. Jimenez, Ofreneo, Delas Alas Jr. (JODA) Formula; Where: Wa = old daily minimum wage Wb = daily wage of employee where Wb > Wa, or Wb is above Wa) Wc = new daily minimum wage = Wa + mandated wage increase 6. Wirerope Formula; and 7. Bagtas Approach. Q: Bankard, Inc. approved a New Salary Scale which increased the hiring rates of new Ees. The Bankard Ees Union pressed the company for an increase in the salary of its old regular Ees. The company refused to do so. The union filed a Notice of Strike on the ground of discrimination for it claimed that a wage
- 165. LABOR LAW ANDSOCIAL LEGISLATIONS 151 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW distortion exists, and the company refused to negotiate to correct the distortions. Is there a wage distortion brought about by the New Salary Scale? A: NO. The union cannot legally obligate Bankard to correct the alleged “wage distortion” as the increase in the wages and salaries of the newly hired was not due to a prescribed law or wage order. If the compulsory mandate under Art. 124 to correct wage distortion is applied to voluntary and unilateral increases by the Er in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the Er would be completely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity of a particular group or the need to increase the competitiveness of Bankard’s hiring rate. An Er would be discouraged from adjusting the salary rates of a particular group of Ees for fear that it would result to a demand by all Ees for a similar increase, especially if the financial conditions of the business cannot address an across-the-board increase. (Bankard Ees Union-Workers Alliance Trade Unions v. NLRC, G.R. No. 140689, 17 Feb. 2004) Negotiated Wage Increases to Correct Wage Distortion; Its Interest and Validity The law recognizes the validity of negotiated wage increases to correct wage distortion. The legislative intent is to encourage the parties to solve the problem of wage distortion through voluntary negotiations or arbitration, rather than strikes, lockouts, or other concerted activities of the Ees or the management. Unilateral grant of wage increase on the part of an Er is recognized as a means of correcting wage distortions including wage adjustments under a collective bargaining agreement. Recognition and validation of wage increases given by Ers after unilaterally or because of CBNs for the purpose of correcting wage distortions are in keeping with the public policy of encouraging Ers to grant wage and allowance increases to their Ees which are higher than the minimum rates of increases prescribed by statute or administrative regulation. (Associated Labor Unions-TUCP v. NLRC, et al., G.R. No. 109328, 16 Aug. 1994) To compel Ers simply to add on legislated increases in salaries or allowances without regard to what is already being paid would be to penalize Ers who grant their workers more than the statutory prescribed minimum rates of increases. Clearly, this would be counter-productive so far as securing the interest of labor is concerned. (Metro Bank & Trust Co. Ees Union v. NLRC, G.R. No. 102636, 10 Sept. 1993) Settlement of Wage Distortion The application of wage increases brought about by Wage Orders issued by the Board may result in distortions in the wage structure within the establishment. The Er and the workers are mandated by law to resolve such wage distortion problems in the following manner: ORGANIZED ESTABLISHMENT (with union) UNORGANIZED ESTABLISHMENT (without union) The Er and the union shall negotiate to correct distortion. The Er and the workers shall endeavor to correct the distortion. Any dispute shall be resolved through a grievance procedure under the CBA. Any dispute shall be settled through the NCMB. If it remains unresolved, it shall be dealt with through voluntary arbitration. If it remains unresolved within 10 days it shall be referred to the NLRC. The dispute will be resolved within 10 days from the time the dispute was referred to voluntary arbitration. The NLRC shall conduct continuous hearings and decide the dispute within 20 days from the time the same was referred.
- 166. 2024 GOLDEN NOTES 152 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES The pendency of the dispute arising from a wage distortion shall not in any way delay the applicability of any wage increase prescribed pursuant to the provisions of law or Wage order. (Sec. 7, Chapter III, IRR of R.A. No. 6727) NOTE: Correction of wage distortion may be done by re-establishing a substantial or significant gap (not precisely the same amount) between the wage rates of the differing classes of Ees. (Azucena, 2016) Q: How should a wage distortion be settled? A: Any dispute arising from wage distortion shall be resolved through the grievance procedure as provided in the applicable collective bargaining agreement and, if the dispute remains unresolved, then through voluntary arbitration. In cases where there are no collective bargaining agreements or recognized labor unions, the employers and workers shall endeavor to correct such wage distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it remains unresolved after 10 calendar days of conciliation, the issue of wage distortion shall be referred to the appropriate branch of the NLRC. (R.A. No. 6727, Wage Rationalization Act, amending, among others, Art. 124 of the LC) Non-Strikeablity of Wage Distortion Wage Distortion is non-strikeable. The legislative intent that solution of the problem of wage distortions shall be sought by voluntary negotiation or arbitration, and not by strikes, lockouts, or other concerted activities of the Ees or management, is made clear in R.A. No. 6727 issued on 07 July 1989. (Ilaw at Buklod ng Manggagawa v. NLRC, G.R. No. 91980, 27 Jun.1991) 6. MINIMUM WAGE (Art. 99, LC; Secs. 7, 9 and 15, Rule VII, Book III, Omnibus Rules Implementing the Labor Code) Regional Minimum Wage It refers to the lowest basic wage rates an Er can pay his works, as fixed by the Regional Tripartite Wages and Productivity Boards (RTWBPs), and which shall not be lower than the applicable statutory minimum wage rates. (Sec. 4(k), Rule 1, NWPC Guidelines No. 01, s. 2007) Statutory Minimum Wage It is the lowest wage rate fixed by law that an Er can pay his workers. (IRR, R. A. No. 6727) It is compensation which is less than such minimum rate is considered an underpayment that violates the law. (Azucena, 2016) Purpose The purpose of minimum wage law is “to set barrier below which wages may not fall, in order to develop competition on a high level of efficient rather than competition on a low level of wages.” The minimum must be fair and just. 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 an increase of prices of commodities and increase in wants, and to provide means for a desirable improvement in his mode of living. (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Association, G.R. No. L-5276, 03 Mar. 1953) Inability of an Employer to Pay is Immaterial The Er cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company, the payment of minimum wages not being dependent on the Er’s ability to pay. If, in fact, the Er cannot pay a subsistence wage, then he should not continue his operation unless he improves his methods and equipment so as to make the payment of the minimum wage feasible for him, otherwise, the Er is wasting the toil of the workers
- 167. LABOR LAW ANDSOCIAL LEGISLATIONS 153 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW and the material resources used in the employment. (Azucena, 2021) Non-Applicability of Estoppel The acceptance of by an Ee of the wages paid him without objections does not give rise to estoppel precluding him from suing for the difference between the amount received and the amount he should have received pursuant to a valid minimum wage law. In other words, the law gives the Ee the right to be paid at least the minimum wage. Such legal right cannot be waived or given away even if he does not complain at the time he receives a wage below the minimum. (Azucena, 2016) Minimum Wage Non-Negotiable and Non- Waivable The minimum wage fixed by law is mandatory, thus, it is non-waivable and non-negotiable. The enactment is compulsory in nature to ensure decent living conditions. (PAM Co. v. PAMEA-FFW, G.R. No. L- 35254, 29 Jan. 1973) XPNs to the Coverage of Minimum Wage: 1. Household or domestic helpers, including family drivers and persons in the personal service of another; NOTE: Household or domestic workers are only exempt from the minimum wage prescribed by wage orders. R.A. No. 10361, otherwise known as “Batas Kasambahay,” which prescribes the minimum wage for household or domestic helpers. 2. Homeworkers engaged in needle-work; 3. Workers employed in any establishment duly registered with the National Cottage Industries and Development Authority provided that such workers perform the work in their respective homes; 4. Workers in any duly registered cooperative when so recommended by the Bureau of Cooperative Development and upon approval of the SOLE. (Sec. 3, Rule VII, Book III, IRR); 5. Ees of retail and service establishments regularly employing not more than 10 Ees; (Sec. 4, R.A. No. 6727) 6. Workers in a duly registered cooperative when so recommended by the Bureau of Cooperative Development and upon approval of the SOLE; (Sec. 2, Rule VII, Book III, IRR) 7. Workers of a BMBE. NOTE: Retail and service establishments must file an application for exemption with the duly appropriate Regional Board. Additional Exemptions The NWPC Guidelines on Exemption from wage orders adds categories of exemptible enterprises such as 1. distressed establishments, 2. new business enterprises, and 3. establishments adversely affected by natural calamities. Wage Orders issued by the wage boards under Arts. 99 and 122 may provide for other exemptions from the Minimum Wage Law. (Azucena, 2016) C. LEAVES 1. SERVICE INCENTIVE LEAVES (Art. 95, LC; Secs. 1-6, Rule V, Book III, Omnibus Rules Implementing the Labor Code) Service Incentive Leave (SIL) It is a five-day leave with pay for every Ee who has rendered at least one year of service whether continuous or broken. (Art. 95, LC)
- 168. 2024 GOLDEN NOTES 154 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Purpose of the law The stipulation in the contract for the allowance of a vacation to Ees is merely a recognition by management and labor that a short interval of complete rest and relaxation from daily routine with the benefit of full pay is essential to the mental and physical well-being of the workmen. (Bencio v. Joseph Bouder, Inc., 24 So. 2d 398; A.L.R. 2d 352; Sunripe Coconut Products v. NLU, 97 Phil. 691, 18 Oct. 1955) “At least 1 year of service” Service for not less than 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 is less than 12 months, in which case said period shall be considered as one year. (Sec. 3, Rule V, Book III, IRR) Right to SIL GR: Every Ee who has rendered at least one (1) year of service shall be entitled to a yearly SIL of five (5) days with pay. Leave pay means an Ee gets paid despite absence from work. (Azucena, 2016) XPNs: 1. Government Ees, whether employed by the National Government or and any of its political subdivisions, including those employed in GOCCs with original charters or created under special laws; 2. Domestic helpers and persons in the personal service of another; 3. Managerial Ees, if they meet all of the following conditions: a. Their primary duty is to manage the establishment in which they are employed or of a department or subdivision thereof; b. They customarily and regularly direct the work of two or more Ees therein; and c. They have the authority to hire or fire other Ees of lower rank; or their suggestions and recommendations as to hiring, firing, and promotion, or any other change of status of other Ees are given particular weight. 4. Field personnel and those whose time and performance is unsupervised by the Er, including those who are engaged on: a. Task or contract basis; b. Purely commission basis; or c. Those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof; 5. Those who are already enjoying this benefit; 6. Those enjoying vacation leave with pay of at least five (5) days; and 7. Those employed in establishments regularly employing less than 10 Ees. (Sec. 1, Rule V, Book III, IRR) NOTE: Ees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of SIL, unless they fall under the classification of field personnel. If required to be at specific places at specific times, Ees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the Ee; as such they are entitled to SIL. (Autobus Transport Systems v. Bautista, G.R. No. 156367, 16 May 2005) Teachers of Private Schools on Contract Basis are Entitled to SIL In Cebu Institute of Technology v. Ople (G.R. No. 70203, 18 Dec. 1987), teaching personnel cannot be deemed as field personnel which refers to “non- agricultural Ees 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
- 169. LABOR LAW ANDSOCIAL LEGISLATIONS 155 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW the field cannot be determined with reasonable certainty.” (Art. 82(3), LC) Part-time Workers are Entitled to the Full Benefit of the Yearly 5-Day SIL A part-time worker is entitled to SIL whether the service within 12 months is continuous or broken or where the working days in the employment contract as a matter of practice or policy is less than 12 months. The availment and commutation of the same can be proportionate to the daily work rendered and the regular daily salary. (DOLE’s Explanatory Bulletin on Part-time Employment, 02 Jan. 1996) Entitlement of Piece-Rate Workers To SIL Piece-rate workers are entitled to the full benefit of the yearly five-day SIL. Under the SIL Law, the exclusion from its coverage of workers who are paid on a purely commission basis is only with respect to field personnel. Ees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of SIL, unless they fall under the classification of field personnel. (Serrano v. Severino Santos, G.R. No. 187698, 09 Aug. 2010) Entitlement of Ees With Salaries Above Minimum Wage To SIL Ees with salaries above minimum wage are entitled to SIL. The difference between the minimum wage and the actual salary received by the Ees cannot be deemed as their 13th month pay and SIL pay as such difference is not equivalent to or of the same import as the said benefits contemplated by law. (JPL Marketing Promotions v. CA, G.R. No. 151966, 08 July 2005) Burden of Proof of Employers One of those excluded from the obligation to grant SIL are “establishments regularly employing less than ten workers.” When an Er claims that it falls within the exception, it is the Er’s duty, not of the Ees, to prove that there are less than ten Ees in the company. If it fails to discharge its task, the Er must be deemed to be covered by the rule, notwithstanding the Ees’ failure to allege the exact number of Ees in the corporation. (Murillo, et al. v. Sun Valley Realty, Inc., G.R. No. 67272, 30 June 1988) Entitlement of Terminated Ees to SIL 1. Illegally dismissed Ees – Entitled to SIL until actual reinstatement; (Integrated Contractor and Plumbing Works, Inc. v. NLRC, G.R. No. 152427, 09 Aug. 2005) and 2. Legally dismissed Ees – The Ee who had not been paid SIL from the outset of employment is entitled only to such pay after a year from commencement of service until termination of employment or contract. (JPL Marketing Promotions v. CA, G.R. No. 151966, 08 July 2005) Commutability of SIL to Monetary Equivalent GR: It is commutable if not used or exhausted at the end of the year. (Sec. 5, Rule V, IRR) It is aimed primarily at encouraging workers to work continuously and with dedication to the company. XPN: R.A. No. 10361 grants SIL to domestic workers. Their SIL need not be converted to cash or carried over to succeeding years. (Art. 139, LC) Basis for Cash Conversion The basis shall be the salary rate at the date of commutation. The availment and commutation of the SIL may be on a pro-rata basis. Prescription of SIL Applying Art. 306 of the LC in light of the peculiarity of SIL, the three (3)-year prescriptive period commences, not at the end of the year when the Ee becomes entitled to the commutation of his SIL, but from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation or upon termination of the Ees’ services, as the case may be. (Autobus Transport Systems v. Bautista, G.R. No. 156367, 16 May 2005)
- 170. 2024 GOLDEN NOTES 156 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2. LEAVES UNDER SPECIAL LAWS a. EXPANDED MATERNITY LEAVE (R.A. No. 11210) 105-Day Expanded Maternity Leave Law R.A. No. 11210 or the Expanded Maternity Leave Law (EMLL) was signed into law on 20 Feb. 2019 and took effect on 11 Mar. 2019. Maternity Leave Under the SSS vs. Expanded Maternity Leave Law MATERNITY LEAVE (SEC. 14-A OF R.A. NO. 8282) EMLL (R.A. No. 11210) 60 days for normal delivery; 78 days for caesarean delivery Minimum of 105 days for live childbirth, regardless of mode of delivery 60 days for miscarriage or ETP Child must be legitimate Regardless of the civil status or legitimacy of the child Limited to 4 childbirths Regardless of frequency of pregnancy Daily maternity benefit equivalent to 100% of her ADSC Full pay which consists of basic salary and allowances as may be provided under existing guidelines Applicability The expanded maternity leave applies to all qualified female workers regardless of civil status, employment status, and the legitimacy of her child. (Sec. 3, R.A. No. 11210) Maternity leave shall be granted to a qualified female worker in every instance of pregnancy, miscarriage, or emergency termination of pregnancy regardless of frequency. (Sec. 4, Rule IV, IRR of R.A. No. 11210) Period in General All covered female workers in government and the private sector, including those in the informal economy, regardless of civil status or the legitimacy of her child, shall be granted 105 days maternity leave with full pay and an option to extend for an additional 30 days without pay. Provided, that in case the worker qualifies as a solo parent under the "Solo Parents’ Welfare Act", the worker shall be granted an additional 15 days maternity leave with full pay. (Sec. 3, R.A. No. 11210) Covered Female Workers Under the EMLL, maternity leave applies to all qualified female workers in the: 1. Public sector; 2. Private sector; and 3. Informal economy; NOTE: Informal economy refers to the self- employed, occasionally or personally hired, subcontracted, paid and unpaid family workers in household, incorporated, and unincorporated enterprises, including home workers, micro-entrepreneurs and producers, and operators of sari-sari store (Sec. 3, R.A. No. 11210); 4. Voluntary contributors to the SSS; and 5. National athletes. (Sec. 1, Rule III, IRR of R.A. No. 11210) NOTE: National athletes are those athletes including : a. PWDs who are Filipino citizens, members of the national training pool, recognized and accredited by the Philippine Olympic Committee (POC) and the Philippine Sports Commission (PSC) b. Athletes with disabilities (AWDs) who are recognized and accredited by the National Paralympic Committee of the Philippines and the PSC and whohave represented the country in international sports competitions. (Sec. 1(l), Rule II, IRR of R.A. No. 11210)
- 171. LABOR LAW ANDSOCIAL LEGISLATIONS 157 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Benefits Granted Under the EMLL 1. Paid leave benefit granted to a qualified female worker in the public sector, for the duration of: a. 105 days with full pay for live childbirth, regardless of the mode of delivery, and an additional 15 days paid leave if the female worker qualifies as a solo parent under R.A. No. 8972 or the “Solo Parents’ Welfare Act of 2000;” or b. 60 days with full pay for miscarriage and emergency termination of pregnancy (ETP). 2. Paid leave benefit granted to a qualified female worker in the private sector covered by the SSS, including those in the informal economy, for the duration of: a. Same as those provided under 1(a) or 1(b); b. Employed female workers shall receive full pay which consists of: i. SSS maternity benefit computed based on their average monthly salary credit; and ii. Salary differential to be paid by the Er, if any. 3. An “option” to extend for an additional 30 days without pay in case of live childbirth, provided that: a. The Er shall be given due notice; b. The same must be in writing; c. It must be given at least 45 days before the end of the female worker’s maternity leave; and d. No prior notice is necessary in the event of a medical emergency, a subsequent notice to the Er shall suffice. 4. Paid maternity leave, allowances, and benefits granted to female national athletes; 5. Health care services for pre-natal, delivery, postpartum, and pregnancy-related conditions granted to female workers, particularly those who are neither voluntary nor regular members of the SSS, as governed by the existing rules and regulations of the PhilHealth. (Sec. 2, Rule III, IRR of R.A. No. 11210) Pregnancy It refers to the period from the conception up to the time before actual delivery or birth of a child. (Sec. 1(m), Rule II, IRR of R.A. No. 11210) Miscarriage and Emergency Termination of Pregnancy “Miscarriage” refers to pregnancy loss before the 20th week of gestation. (Sec. 1(k), Rule II, IRR of R.A. No. 11210) “Emergency termination of pregnancy” (ETP) refers to pregnancy loss on or after the 20th week of gestation, including stillbirth. (Sec. 1(c), Rule II, IRR of R.A. No. 11210) Q: Is the option of the 30-day extension without pay available to all qualified female workers? A: NO. The 30-day extension without pay is only available in cases of live childbirth. Hence, if a female worker suffers miscarriage or ETP, she is not entitled to such extension. Manner of Enjoyment of the Benefit Enjoyment of maternity leave cannot be deferred but should be availed of either before or after the actual period of delivery in a continuous and uninterrupted manner, and such that: 1. In cases of live childbirth, 105 days maternity leave with full pay shall be granted; or 2. In cases of miscarriage or emergency termination of pregnancy, 60 days maternity
- 172. 2024 GOLDEN NOTES 158 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES leave shall be granted. (Sec. 2, Rule IV, IRR of R.A. No. 11210) NOTE: in all the above instances, the maternity leave can be credited as combinations of prenatal and postnatal leave as long as it does not exceed 105 days or 60 days, as the case may be. In no case shall postnatal leave be less than 60 days. (Ibid.) Extended Maternity Leave In cases of live childbirth, an additional maternity leave of 30 days, without pay, can be availed of, at the option of the female worker, provided that the employer shall be given due notice. (Sec. 3, IRR of R.A. No. 11210) Due notice to the employer must be in writing and must be given at least 45 days before the end of the female worker's maternity leave. However, no prior notice shall be necessary in the event of a medical emergency but subsequent notice shall be given to the employer. (Ibid.) NOTE: The above period of extended maternity leave without pay shall not be considered as gap in the service. (Ibid.) Frequency of the Grant Maternity leave shall be granted to a qualified female worker in every instance of pregnancy, miscarriage, or ETP, regardless of frequency. (Sec. 4, IRR of R.A. No. 11210) Grant of Maternity Leave Benefits after Termination of Employment. Maternity leave with full pay shall also be granted even if the childbirth, miscarriage, or ETP occurs not more than 15 calendar days after the termination of an Ee’s service, as her right thereto has already accrued. However, such period is not applicable when the employment of the pregnant woman worker has been terminated without just cause. (Sec. 5, Rule IV, IRR of R.A. No. 11210) Maternity Leave of a Female Worker with Pending Administrative Case The maternity leave benefits granted under R.A. No. 11210 and its IRR shall be enjoyed by a female worker in the public sector and in the private sector even if she has a pending administrative case. (Sec. 6, IRR of R.A. No. 11210.) Non-Diminution of Benefits Nothing shall be construed as to diminish existing maternity benefits currently enjoyed whether or not these are granted under CBAs or present laws if the same are more beneficial to the female worker. Any other working arrangement which the female worker shall agree to, during the additional maternity leave period, shall be allowed provided that the female worker consented to in writing and shall primarily uphold her maternal functions and the requirements of postnatal care. (Sec. 7, IRR of R.A. No. 11210) Security of Tenure Those who avail of the benefits whether in the public or private sector, shall be assured of security of tenure. As such, the exercise of this option by them shall not be used as basis for demotion in employment or termination. (Sec. 8, IRR of R.A. No. 11210) The transfer to a parallel position or reassignment from one organizational unit to another in the same agency or private enterprise shall be allowed provided that it shall not involve a reduction in rank, status, salary, or otherwise amount to constructive dismissal. (Ibid.) Non-Discrimination No employer whether in the public or private sector shall discriminate against the employment of women in order to avoid the benefits provided for in this Rules. (Sec. 9, IRR of R.A. No. 11210)
- 173. LABOR LAW ANDSOCIAL LEGISLATIONS 159 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Maternity Leave for Female Workers in the Public Sector Any pregnant female worker in the government service, regardless of employment status and length of service is eligible. (Sec. 4, R.A. No. 11210; Sec. 1, Rule V, IRR of R.A. No. 11210) “Female Workers in the Public Sector” Those women in government service who hold public office by virtue of an appointment issued by the propert appointing officer or authority or by way of election in: 1. National Government Agencies (NGAs); 2. LGUs; 3. GOCCs; 4. State Universities and Colleges (SUCs); and 5. Local Universities and Colleges (LUCs). (Sec. 1(h), Rule II, IRR of R.A. No. 11210) “Employment Status in the Public Sector” It refers to the status of appointment. It may be permanent, temporary, coterminous, fixed term, casual, contractual, substitute, or provisional. (Sec. 1(e), IRR of R.A. No. 11210) Notice of Pregnancy and Application for Maternity Leave The female worker shall: 1. Give prior notice to the head of agency of her pregnancy and her availment of maternity leave at least 30 days in advance, whenever possible, specifying the effective date of the leave; and 2. Use the prescribed civil service form in the filing of the maternity leave application, supported by a medical certificate. (Sec. 2, Rule V, IRR of R.A. No. 11210) In Case the Employee Qualifies as a Solo Parent Under the Solo Parents’ Welfare Act The Ee shall be paid an additional maternity benefit of 15 days. An additional maternity leave of 30 days, without pay, can be availed of, at the option of the female worker. Provided that: 1. The head of the agency shall be given due notice, in writing, 45 days before the end of her maternity leave; and 2. That no prior notice shall be necessary in the event of a medical emergency but subsequent notice shall be given to the head of the agency. (Sec. 4, R.A. No. 11210) NOTE: Maternity leave of sixty (60) days, with full pay, shall be granted for miscarriage or emergency termination of pregnancy. Maternity Leave in the Teaching Profession Female teachers may also avail of maternity leave even during long vacations, i.e., summer and Christmas vacations, in which case both the maternity leave benefits and the proportional vacation pay (PVP) shall be granted. (Sec. 3, Rule V, IRR of R.A. No. 11210) Extended Maternity Leave In cases of live childbirth, the female worker has the option to extend her maternity leave for an additional 30 days without pay, or use her earned sick leave credits for extended leave with pay. In case the sick leave credits are exhausted, the vacation leave credits may be used. (Sec. 4, IRR of R.A. No. 11210) Manner of payment of Maternity Leave Benefits The female worker shall be entitled to full pay during maternity leave which shall be paid by the agency. She shall have the option to receive full pay either through lump sum payment or regular payment of salary through agency payroll. A clearance from money, property and work-related accountabilities shall be secured by the female Ee. (Sec. 5, IRR of R.A. No. 11210)
- 174. 2024 GOLDEN NOTES 160 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Consecutive Pregnancies and Multiple Childbirths In case of overlapping maternity benefit claims (e.g., one miscarriage or emergency termination of pregnancy after the other or followed by live childbirth), the Ee shall be granted maternity benefits for the two contingencies in a consecutive manner. The female worker shall be paid only one maternity benefit, regardless of the number of offspring, per childbirth/delivery. (Sec. 6, IRR of R.A. No. 11210) Q: Can local elected and appointed officials, like barangay officials, avail of the extended maternity leave? A: YES. The coverage of R.A. No. 11210 includes female workers in the public sector, including the LGUs. Their entitlement to maternity leave benefits is also granted under the Local Government Code of 1991 and its IRR, and CSC-DBM Joint Circular No. 1, s. 2004 (Leave Benefits of Barangay Officials). Q: Can contract of service and job order workers in government avail of maternity leave under R.A. No. 11210? A: YES. Female contract of service and job order workers in the government are classified as female workers in the informal economy. They can claim maternity leave benefits from the SSS if they have remitted to the SSS at least three (3) monthly contributions in the 12-month period immediately preceding the semester of her childbirth, miscarriage, or ETP. (Sec. 1, Rule VII, IRR of R.A. No. 11210) Maternity Leave For Female Workers In The Private Sector To qualify for the grant of maternity leave benefit, the female worker must meet the following requirements: 1. She must have at least 3 monthly contributions in the 12-month period immediately preceding the semester of childbirth, miscarriage, or ETP; and 2. She shall have notified her Er of her pregnancy and the probable date of her childbirth, which notice shall be transmitted to the SSS in accordance with the rules and regulations it may provide. (Sec. 1, Rule VI, IRR of R.A. 11210) NOTE: The failure of the pregnant female worker to notify the Er shall not bar her from receiving the maternity benefits, subject to guidelines to be prescribed by the SSS. (Sec. 2(c), IRR of R.A. 11210) “Employment status in the private sector” It referes to the type of employment which may be regular, probationary, casual, project, or seasonal. (Sec. 1(f), Rule II, IRR of R.A. 11210) Amount of Benefit The qualified Ee must receive full payment of the benefit which shall be advanced by the Er within 30 days from the filing of the maternity leave application. (Sec. 3, Rule VI, IRR of R.A. 11210) In the case of self-employed female members, including those in the informal economy, OFWs and voluntary SSS members, the SSS shall directly pay the maternity benefit. (Ibid.) SSS Reimbursement The SSS shall immediately reimburse the Er the maternity benefits advanced to the employed female member, only to the extent of 100% of her average daily salary credit (ADSC) for 105 days, 120 days or 60 days, as the case may be, upon receipt of satisfactory and legal proof of such payment (Sec. 4, IRR of R.A. 11210) NOTE: Average daily salary credit (ADSC) is the result obtained by dividing the sum of the six (6) highest monthly salary credits in the twelve-month period immediately preceding the semester of contingency by one hundred eighty (180). (Sec. 1(vi), SSS Circular No. 2019-009)
- 175. LABOR LAW ANDSOCIAL LEGISLATIONS 161 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Salary Differential GR: Ers from the private sector shall pay for the difference between the full salary and the actual cash benefits received from the SSS. (Sec. 5, IRR of R.A. 11210) XPNs: 1. Those operating distressed establishments; a. For corporation/cooperative When the actual net loss amounts to 25% of total assets or when the corporation/cooperative registers capital deficiency, i.e. negative stockholders' equity immediately preceding the application for exemption. b. For sole proprietorship and partnership When the accumulated net losses for the last two (2) full accounting periods immediately preceding application for exemption amounts to 20% or more of the total invested capital at the beginning of the period under review or when the sole proprietorship or partnership registers capital deficiency, i.e. negative net worth as of the last full accounting period immediately preceding application for exemption. c. For Non-stock, non-profit organizations When the accumulated net losses for the last two (2) full accounting periods immediately preceding application for exemption amounts to 20% or more of the fund balance/members' contribution at the beginning of the period or when an establishment registers capital deficiency, i.e. negative fund balance/members; contribution as of the last full accounting period or interim period, if any, immediately preceding application for exemption. d. For banks and quasi-banks When there is a certification from the Bangko Sentral ng Pilipinas that it is under receivership or liquidation as provided in Sec. 30 of RA 7653, otherwise known as the New Central Bank Act. 2. Those retail/service establishments and other enterprises employing not more than 10 workers; 3. Those considered as micro-business enterprises and engaged in the production, processing, or manufacturing of products or commodities including agro-processing, trading, and services, whose total assets are not more than three million pesos; and 4. Those who are already providing similar or more than the benefits herein provided under an existing CBA or company policy. (Ibid.) NOTE: The XPNs shall be subject to an annual submission of justification by the Er claiming exemption for the approval of the DOLE. (Ibid.) Bar to Recovery of Sickness Benefits The payment of daily SSS maternity benefits shall be a bar to recovery of sickness benefits provided under R.A. No. 11199 or the Social Security Act of 2018, for the same period for which daily maternity benefits have been received. (Sec. 6, IRR of R.A. 11210) Consecutive Pregnancies and Multiple Childbirths In cases of consecutive pregnancies resulting in overlapping maternity leaves and in cases of multiple childbirths, the following rules shall govern: 1. In case of the overlapping of two (2) maternity benefit claims, the female member shall be granted maternity benefits for the two contingencies in a consecutive manner. However, the amount of benefit corresponding to the period where there is an overlap shall be deducted from the current maternity benefit claim; and
- 176. 2024 GOLDEN NOTES 162 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2. The female member shall be paid only one maternity benefit, regardless of the number of offspring per childbirth or delivery. (Sec. 7, IRR of R.A. 11210) Liability of the Employer The Er shall pay to the SSS damages equivalent to the benefits which she would otherwise have been entitled to any of the following instances: 1. Failure of the Er to remit to the SSS the required contributions for the female worker; or 2. Failure of the Er to transmit to SSS the female worker’s notification on the fact of pregnancy and probable date of childbirth. (Sec. 8, Ibid.) Dispute Resolution Any dispute, controversy, or claim as regards the grant of SSS maternity leave benefit under this Rules shall be filed before the Social Security Commission (SSC). (Sec. 9, IRR of R.A. 11210) Any dispute, controversy, or claim arising out of or relating to the payment of salary differential shall be filed before the DOLE Field/Provincial/Regional Office having jurisdiction over the workplace and shall be subject to existing enforcement mechanisms of the DOLE. (Ibid.) Maternity Leave For Female Workers In The Informal Economy “Female Workers in the Informal Economy” Those self-employed, occasionally or personally hired, subcontracted, paid and unpaid family workers in household incorporated and unincorporated enterprises, including home workers, micro-entrepreneurs and producers, and operators of sari-sari stores. (Sec. 1(i), Rule II, IRR of R.A. 11210) Coverage Condition: She must have remitted to the SSS at least three (3) monthly contributions in the 12- month period immediately preceding the semester of her childbirth, miscarriage, or ETP. Manner of payment: The SSS shall directly pay the maternity benefit. NOTE: In the case of self-employed female members, including OFWs and voluntary SSS members, the SSS shall directly pay the maternity benefit. Allocation Of Maternity Leave Credits 1. Allocation to the Child’s Father or Alternative Caregiver In case of live childbirth, a qualified female worker entitled to maternity leave benefits may, at her option, allocate up to 7 days of said benefits to the child’s father, whether the same is married to the female worker. (Sec. 1, Rule VIII, Ibid.) In case of death, absence, or incapacity of the child’s father, the female worker may allocate to an alternate caregiver, who may be any of the following upon the election of the mother taking into account the best interests of the child: a. A relative within the fourth degree of consanguinity; or b. The current partner, regardless of sexual orientation or gender identity of the female worker sharing the same household. (Ibid.) The option to allocate maternity leave credits shall not be applicable in case the female worker suffers miscarriage or ETP. (Ibid.) NOTE: The allocated benefit granted to the child's father under this law is over and above that which is provided under R.A. No. 8187, or the "Paternity Leave Act of 1996." (Ibid.) 2. Allocation for the SSS-Covered Female Ees
- 177. LABOR LAW ANDSOCIAL LEGISLATIONS 163 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW In case the female worker avails of the option to allocate, the SSS shall pay her the amount of the maternity benefit corresponding to the period not allocated. (Sec. 2, Ibid.) As applicable, the father or, in his death, absence, or incapacity, the alternate caregiver shall be granted by his employer a leave with pay equivalent to a period from 1 to 7 days, which may be enjoyed either in a continuous or in an intermittent manner not later than the period of the maternity leave availed of. (Ibid.) The female Ee shall notify her Er of her option to allocate with her application for maternity leave. The father or alternate caregiver, as the case may be, shall notify the Er concerned of his or her availment of the allocated leave and the inclusive dates thereof (Ibid.) NOTE: This written notice to the employers shall be required even if the child's father or the alternate caregiver is employed in the public sector. (Ibid) 3. Allocation of Maternity Leave Credits for Female Workers in the Public Sector In case the female worker opts to allocate, she shall submit a written notice to the head of agency or the head of agency's authorized representative, with her application for maternity leave. (Sec. 3, Ibid.) The allocated maternity leave may be enjoyed by the child's father or the alternate caregiver either in a continuous or in an intermittent manner not later than the period of the maternity leave availed of. (Ibid.) In case full pay has been given to the female worker, the child's father or the alternate caregiver, as the case may be, shall only be excused from work (leave without pay). (Ibid.) NOTE: The leave without pay shall not be considered as a gap in the service. (Ibid.) Death or Permanent Incapacity of the Female Worker The balance of her maternity leave benefits, if any, shall accrue to the child's father or to a qualified alternate caregiver as provided in the above paragraphs subject to the following conditions: 1. That the maternity leave benefits have not yet been commuted to cash, if applicable; and 2. That a certified true copy of the death certificate or medical certificate or abstract is provided to the employers of both the female worker and the child's father or alternate caregiver. (Sec. 4, Ibid.) 3. In case the maternity leave benefits of the deceased or permanently incapacitated female worker have already been paid to the latter in full, the child's father or alternate caregiver shall be entitled to enjoy the remaining unexpired leave credits of the female worker, if there be any, without pay. (Ibid.) NOTE: such leave without pay shall not be considered as a gap in the service of the child's father or alternate caregiver, in both the public and private sector. (Ibid.) Maternity Leave for Female National Athletes In the event that a national athlete who is in the roster of national athletes of the National Sports Association (NSA) to which she is affiliated becomes pregnant, she will be referred to: 1. A physician of the Philippine Sports Commission (PSC); or 2. An obstetrician-gynecologist to determine her fitness to continue training. (Sec. 1, Rule IX, Ibid.) She will be allowed to participate in all team-related activities, unless the physician advises that participation is not medically safe or should be limited. Upon medical advice, she shall go on maternity leave until cleared to return to training. (Ibid.)
- 178. 2024 GOLDEN NOTES 164 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES She shall continue receiving her allowance and be entitled to the same benefits while on maternity leave prior to childbirth and up to six (6) months after, unless she can resume sooner as advised by her physician, in which case, she will continue to receive the same allowances and benefits she received prior to and during the pregnancy. (Ibid.) NOTE: a female national athlete employed in the public sector shall not receive double compensation or benefits. (Ibid.) b. PATERNITY LEAVE (R.A. No. 8187, as amended by R.A. No. 11210) Paternity Leave It refers to the leave benefits granted to a married male Ee allowing him not to report for work for 7 days but continue to earn compensation on the condition that his spouse has delivered a child or suffered a miscarriage for purposes of enabling him to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly-born child. (Sec. 3, R.A. No. 8187; Sec. 1, Revised IRR of R.A. No. 8187) Non-Commutation of Benefits In the event that the paternity leave benefit is not availed of, said leave shall not be convertible to cash. (Sec. 7, IRR of R.A. No. 8187) Concept of Paternity Leave Benefits Every married male Ee in the private and public sectors shall be entitled to a paternity leave of seven days with full pay for the first four (4) deliveries of the legitimate spouse with whom he is cohabiting. (Sec. 2, R.A. No. 8187) NOTE: If the spouses are not physically living together because of the workstation or occupation, the male Ee is still entitled to the paternity leave benefit. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2020) Conditions for Entitlement to Paternity Leave 1. He is a married male Ee at the time of the delivery of his child; 2. He is cohabiting with his spouse at the time she gives birth or suffers a miscarriage; NOTE: “spouse” refers to the lawful wife who is a woman is is legally married to the male Ee concerned. (Sec. 1(d), Revised IRRs of R.A. No. 8187) 3. He has applied for paternity leave within a reasonable period of time from the expected date of delivery by his pregnant spouse, or within such period as may be provided by company rules or by collective bargaining agreement; and 4. His wife has given birth or suffered a miscarriage. (Sec. 3, IRR of R.A. No. 8187) NOTE: In case of miscarriage, prior application for leave shall not be required. (Sec. 4, Revised IRRs of R.A. No. 8187) Crediting of Existing Benefits 1. If the existing paternity leave benefit under the collective bargaining agreement, contract, or company policy is greater than seven (7) calendar days as provided for in R.A. No. 8187, the greater benefit shall prevail. 2. If the existing paternity leave benefit is less than that provided in R.A. No. 8187, the Er shall adjust the existing benefit to cover the difference. (Sec. 9, Revised IRR of R.A. No. 8187) NOTE: Where a company policy, contract, or CBA provides for an emergency or contingency leave without specific provisions on paternity leave, the Er shall grant to the Ee seven (7) calendar days of paternity leave. (Handbook on Workers’ Statutory Monetary Benefits, Bureau of Working Conditions, 2020) The allocated benefit granted to the child's father under the 105-Day Expanded Maternity Leave Law
- 179. LABOR LAW ANDSOCIAL LEGISLATIONS 165 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW is over and above that which is provided under R.A. No. 8187, or the "Paternity Leave Act of 1996." Availment of the Paternity Leave May be After the Delivery Paternity leave may be availed after the delivery without prejudice to an Er’s policy of allowing the Ee to avail of the benefit before or during the delivery, provided that the total number of days shall not be more than seven (7) days for each covered delivery. (Handbook on Workers’ Statutory Monetary Benefits, 2020) Q: Because of the stress in caring for her four (4) growing children, Tammy suffered a miscarriage late in her pregnancy and had to undergo an operation. In the course of the operation, her obstetrician further discovered a suspicious- looking mass that required the subsequent removal of her uterus (hysterectomy). After surgery, her physician advised Tammy to be on full bed rest for six (6) weeks. Meanwhile, the biopsy of the sample tissue taken from the mass in Tammy's uterus showed a beginning malignancy that required an immediate series of chemotherapy once a week for four (4) weeks. What can Roger, Tammy's second husband and the father of her two (2) younger children, claim as benefits under the circumstances? (2013 BAR) A: Under R.A. No. 8187 or the Paternity Leave Act of 1996, Roger can claim paternity leave of seven (7) days with full pay if he is lawfully married to Tammy and cohabiting with her at the time of the miscarriage. Q: Mans Weto had been an Ee of Nopolt Assurance Company for the last ten (10) years. His wife of six (6) years died last year. They had four (4) children. He then fell in love with Jovy, his co-Ee, and they got married. In October this year, Weto's new wife is expected to give birth to her first child. He has accordingly filed his application for paternity leave, conformably with the provisions of the Paternity Leave Law which took effect in 1996. The HRD manager of the assurance firm denied his application, on the ground that Weto had already used up his entitlement under the law. Weto argued that he has a new wife who will be giving birth for the first time, therefore, his entitlement to paternity leave benefits would begin to run anew. Whose contention is correct, Weto or the HRD manager? (2005 BAR) A: The contention of Weto is correct. The law provides that every married male is entitled to a paternity leave of 7 days for the first 4 deliveries of the legitimate spouse with whom he is cohabiting with. The fact that Jovy is his second wife and that Weto had four children with his first wife is immaterial. The important fact is that this is the first child of Jovy with Weto. The law did not distinguish, therefore, we should not distinguish. The paternity leave was intended to enable the husband to effectively lend support to his wife in her period of recovery and/or in the nursing of the newly born child. (Sec. 3, RA. No. 8187) To deny Weto this benefit would be to defeat the rationale for the law. Moreover, the case of Weto is a gray area and the doubt should be resolved in his favor. c. SOLO PARENT LEAVE (R.A. No. 8972, as amended by R.A. No. 11861) Parental Leave It refers to leave benefits granted to a solo parent to enable the performance of parental duties and responsibilities where physical presence is required or beneficial to the child (Sec. 3(e), R.A. No. 8972, as amended by R.A. No. 11861) In addition to leave privileges under exiting laws, a forfeitable and noncumulative parental leave of not more than seven (7) working days with pay every year shall be granted to any solo parent employee, regardless of employment status, who has rendered service of at least six (6) months. (Sec. 8, Ibid.) NOTE: the parental leave benefit may be availed of by the solo parent employees in the government and the private sector. (Ibid.)
- 180. 2024 GOLDEN NOTES 166 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Children or Dependents 1. Those living with and dependent upon the solo parent for support who are unmarried, unemployed and 22 years old or below; or 2. Those over 22 years old but who are unable to fully take care or protect themselves from abuse, neglect, cruelty, exploitation, or discrimination because of a physical or mental disability or condition. (Sec. 3(b), R.A. No. 8972, as amended by R.A. No. 11861) NOTE: this definition shall only apply for purposes of availing the benefits under this Act. (Ibid.) Spouse It refers to a husband or wife by virtue of a valid marriage or a partner in a common-law relationship as defined under Art. 147 of the Family Code. (Sec. 3(f), Ibid.) Categories of Solo Parent 1. A parent who provides sole parental care and support of the child or children due to: a. Birth as a consequence of rape, even without final conviction. Provided: i. That the mother has the sole parental care and support of the child or children; and ii. That the solo parent under this category may still be considered a solo parent under any of the categories in this Sec.; b. Death of the spouse; c. Detention of the spouse for at least 3 months or service of sentence for a criminal conviction; d. Physical or mental incapacity of the spouse as certified by a public or private medical practitioner; e. Legal separation or de facto separation for at least 6 months, and the solo parent is entrusted with the sole parental care and support of the child or children; f. Declaration of nullity or annulment of marriage, as decreed by a court recognized by law, or due to divorce, subject to existing laws, and the solo parent is entrusted with the sole parental care and support of the child or children; or g. Abandonment by the spouse for at least six (6) months; 2. Spouse or any family member of an OFW, or the guardian of the child or children of an OFW. Provided: a. That the said OFW belongs to the low/semi- skilled worker category and is away from the Philippines for an uninterrupted period of 12 months; and b. That the OFW, his or her spouse, family member, or guardian of the child or children of an OFW falls under the requirements of this Sec.; 3. Unmarried mother or father who keeps and rears the child or children; 4. Any legal guardian, adoptive or foster parent who solely provides parental care and support to a child or children; 5. Any relative within 4th civil degree of consanguinity or affinity of the parent or legal guardian who assumes parental care and support of the child or children as a result of the death, abandonment, disappearance or absence of the parents or solo parent for at least six (6) months; or NOTE: In cases of solo grandparents who are senior citizens but who have the sole parental care and support over their grandchildren who are unmarried, or unemployed and twenty-two (22) years old or below, or those twenty-two (22) years old or over but who are unable to
- 181. LABOR LAW ANDSOCIAL LEGISLATIONS 167 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW fully take care or protect themselves from abuse, neglect, cruelty, exploitation, or discrimination because of a physical or mental disability or condition, they shall be entitled to the benefits of this Act in addition to the benefits granted to them by R.A. No. 9257 or the Expanded Senior Citizens Act of 2003. 6. A pregnant woman who provides sole parental care and support to the unborn child or children. (Sec. 4, Ibid.) Work Discrimination No Er shall discriminate against any solo parent Ee with respect to terms and conditions of employment on account of his or her status. Ers may enter into agreements with their solo parent Ees for a telecommuting program, as provided in R.A. No. 11165 or the Telecommuting Act. (Sec. 7, Ibid.) NOTE: That said solo parent employees shall be given priority by their employer. (Ibid.) Non-Conversion of Parental Leave If the parental leave is not availed of, said leave shall not be convertible to cash unless specifically agreed upon previously. However, if said leave were denied an Ee because of non-compliance with the provisions of these Rules by an Er, the aforementioned leave may be used a basis for the computation of damages. (Sec. 20, Art. V, IRR of R.A. No. 8972) Limitation and Termination of the Benefits of a Solo Parent 1. Only a solo parent exercising sole parental care and support of the child or children is entitled to claim the benefits of solo parent under this Act; 2. The solo parent shall not lose his or her status as solo parent if the other parent provides occasional assistance and/or seasonal gifts that do not meet the legal requirement of support under the Family Code; 3. Absence of a valid and legal marriage between the mother and father of a child or dependent does not automatically entitle either individual to the benefits under this Act if the factual circumstances demonstrate that parental care and support are shared; and 4. When a solo parent ceases to be such by reason of change of status and circumstances, the said solo parent shall be ineligible to avail of the benefits under this Act. (Sec. 16, R.A. No. 8972, as amended by R.A. No. 11861) Flexible Work Schedule It refers to a work arrangement granted to solo parent employee to vary the arrival and departure time in the workplace without affecting the core work hours as defined by the employer. (Sec. 3(c), R.A. No. 8972, as amended by R.A. No. 11861) The Er shall provide for a flexible work schedule for solo parents. Provided, that the same shall not affect individual and company productivity: Provided, further, that any Er may request exemption from the above requirements from the DOLE on certain meritorious grounds. In the case of Ees in the government service, flexible working hours will be subject to the discretion of the head of the agency. In no case shall the weekly working hours be reduced in the event the agency adopts the flexible working hours schedule format (flexi-time). In the adoption of flexi-time, the core working hours shall be prescribed taking into consideration the needs of the service. (Sec. 16, Art. V, IRR, of R.A. No. 8972) Crediting of Existing Leave If there is an existing or similar benefit under a company policy, or a CBA or a collective negotiation agreement, the same shall be credited as such. If the same is greater than the seven (7) days provided for in R.A. No. 8972, the greater benefit shall prevail. (Sec. 21, Art. V, IRR of R.A. No. 8972)
- 182. 2024 GOLDEN NOTES 168 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES d. GYNECOLOGICAL LEAVE (R.A. No. 9710) A woman Ee having rendered continuous aggregate employment service of at least six (6) months for the last 12 months shall be entitled to a special leave benefit (SLB) of two (2) months with full pay based on her gross monthly compensation following surgery caused by gynecological disorders. (Sec. 18, R.A. No. 9710) Conditions for Entitlement Any female Ee in the public and private sector regardless of age and civil status shall be entitled to a special leave of two (2) months with full pay based on her gross monthly compensation subject to existing laws, rules and regulations due to surgery caused by gynecological disorders under such terms and conditions: 1. She has rendered at least six (6) months continuous aggregate employment service for the last 12 months prior to surgery; 2. She has filed an application for special leave; and 3. She has undergone surgery due to gynecological disorders as certified by a competent physician. (Sec. 2, D.O. 112-A-12) Application for Special Leave The female Ee shall file her application for leave with her Er within a reasonable period of time from the expected date of surgery, or within such period as may be provided by company rules and regulations or by CBA. (Sec. 3, Ibid.) Application When Not Necessary In cases requiring emergency surgical procedure, prior application for leave shall not be necessary provided: 1. That the employer shall be notified verbally or in written form within a reasonable period of time; and 2. that after the surgery or appropriate recuperating period, the female employee shall immediately file her application using the prescribed form. (Ibid.) Gross Monthly Compensation It refers to the monthly basic pay plus mandatory allowances fixed by the regional wage boards. (Sec. 7(L), IRR of R.A. No. 9710) Gynecological Disorders It refer to disorders that would require surgical procedures such as, but not limited to, dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. For purposes of the Act and these Rules and Regulations, gynecological surgeries shall also include hysterectomy, ovariectomy, and mastectomy. (Sec. 7(M), Ibid.) Frequency of Availment A female Ee can avail of the special leave benefit for every instance of surgery due to gynecological disorder for a maximum total period of two (2) months per year. (Sec. 6, D.O. 112-A-12) NOTE: SLB and SSS maternity benefit are mutually exclusive, as such a female Ee may avail the special leave benefit in case she undergoes surgery caused by gynecological disorder even on maternity leave. However, where the woman Ee undergone surgery due to gynecological disorder during her maternity leave, she is entitled only to the difference between the SLB and the maternity benefit. (Sec. 9, D.O. 112- A-12) Worker Not Required to Consume the Entire Period of Special Leave Q: Atty. Panga-Vega, Secretary of the House of Representatives Electoral Tribunal, applied for the special leave benefit under R.A. No. 9710 as she was under-going to undergo hysterectomy. A month later, after the procedure, she presented
- 183. LABOR LAW ANDSOCIAL LEGISLATIONS 169 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW a medical certificate that she was already fit to work and sought to resume her duties and functions. However, the HRET directed Panga- Vega to consume her 2-month special leave. Is Panga-Vega required to consume the entire 2- month special leave? A: NO. She is not required to consume the entire two-month special leave, as the rules on maternity leave can apply suppletorily. Similar to the special leave benefit under R.A. No. 9710, a maternity leave under the Omnibus Rules on Leave seeks to protect the health and welfare of women, specifically of working mothers, as its primary purpose is to afford them some measures of financial aid, and to grant them a period of rest and recuperation in connection with their pregnancies. Nothing in RA No. 9710 and the CSC Guidelines bar this more humane interpretation of the provision on special leave benefit. (HRET v. Panga-Vega, G.R. No. 228236, 27 Jan. 2021, as penned by J. M.V. Lopez) Special Leave Benefit (SLB) vs. SSS Sickness Benefit SPECIAL LEAVE BENEFIT SSS SICKNESS BENEFIT Granted in accordance with R.A. No. 9710. Granted in accordance with the SSS law or RA 1161 as amended by RA 8282. (Sec. 7, D.O. 112-A-12) SLB vs. Existing Statutory Leaves The SLB cannot be taken from statutory leaves (i.e., five-day SIL, Leave for Victims of VAWC, Parental Leave for Solo Parents). The benefit is in addition to the leave benefits granted by existing laws. (Sec. 8, D.O. 112-A-12) NOTE: If there are existing or similar benefits under a company policy or CBA providing similar or equal benefit to what is mandated by law, the same shall be considered as compliance unless the company policy, practice or CBA provides otherwise. (Sec. 10, DO 112-A-12) Mode of Payment The SLB is a leave privilege. The woman Ee shall not report for work for the duration of the leave but she will still receive her salary covering said period. The Er, in its discretion, may allow said Ee to receive her pay for the period covered by the approved leave before or during the surgery. The computation of her pay shall be based on her prevailing salary at the time of the surgery. (Sec. 11, D.O. 112-A-12) Non-Commutation of the Benefit The SLB shall be non-cumulative and non- convertible to cash unless otherwise provided by a CBA. (Sec. 12, D.O. 112-A-12) Crediting of Existing or Similar Benefits The existing or similar benefits under a company policy or CBA shall be considered as compliance, unless the company policy, practice, or CBA provides otherwise. In case the company policy, practice or CBA provides lesser benefits, the company shall grant the difference. (Sec. 10, D.O. 112-A-12) Q: Because of the stress in caring for her four (4) growing children, Tammy suffered a miscarriage late in her pregnancy and had to undergo an operation. In the course of the operation, her obstetrician further discovered a suspicious- looking mass that required the subsequent removal of her uterus (hysterectomy). After surgery, her physician advised Tammy to be on full bed rest for six (6) weeks. Meanwhile, the biopsy of the sample tissue taken from the mass in Tammy's uterus showed a beginning malignancy that required an immediate series of chemotherapy once a week for four (4) weeks. What benefits can Tammy claim under existing social legislation? (2013 BAR) A: Assuming she is employed, Tammy is entitled to a special leave benefit of two months with full pay (Gynecological Leave) pursuant to R.A. No. 9710 or the Magna Carta of Women. She can also claim Sickness Leave Benefit in accordance with the SSS Law as SLB and SSS maternity benefit are mutually exclusive. (Sec. 9, D.O. 112-A-12)
- 184. 2024 GOLDEN NOTES 170 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES e. BATTERED WOMAN LEAVE (R.A. No. 9262) Violence Against Women and Their Children It refers to any act or a series of acts committed by any person against a woman who is his wife, former wife, or against a woman with whom the person has or had a sexual or dating relationship, or with whom he has a common child, or against her child whether legitimate or illegitimate, within or without the family abode, which result in or is likely to result in physical, sexual, psychological harm or suffering, or economic abuse including threats of such acts, battery, assault, coercion, harassment or arbitrary deprivation of liberty. (Sec. 3(a), R.A. No. 9262) Leave Entitlement It allows the victim of violence, which may be physical, sexual, or psychological, to apply for the issuance of a protection order. If such victim is an Ee, she is entitled to a paid leave of up to 10 days in addition to other paid leaves under the LC, other laws, and company policies. The Ee has to submit a certification from the Punong Barangay or Kagawad, prosecutor, or clerk of court that an action under R.A. No. 9262 has been filed and is pending. For government Ees, in addition to the certification, the Ee concerned must file an application for leave citing R.A. No. 9262 as basis. NOTE: Ee can file for an extended leave from her Er if the ten-day leave is not enough and when the necessity arises as specified in the protection order issued by the barangay or court. DOJ Opinion on R.A. No. 9262 or the “Anti- Violence Against Women and Their Children Act of 2004” (VAWC Law) It appears that the query stemmed from an inquiry made by a private business organization regarding the application of the 10-day VAWC leave as provided in Sec. 43, to an employee who has previously filed for and availed of the 10-day VAWC leave, and on the same year, once again applied for another 10-day VAWC leave after suffering domestic abuse, this time in the hands of her new partner. Accordingly, the concerned private business organization sought clarification on whether the said female employee is still entitled to another 10- day VAWC leave based on the obtaining circumstances. Based on the provisions cited above, women who are victims of any act or series of acts which constitute as VAWC, committed by any person are entitled to a 10-day VAWC leave with pay. As provided under Sec. 42 of the IRR to the VAWC Law, a victim of VAWC who is employed shall be entitled to a 10-day VAWC leave with pay at any time during the application of any protection order, investigation, prosecution and/or trial of the criminal case, extendible when the necessity arises as specified in the protection order. The only requirement is the submission by the victim of a certification issued by the Punong Barangay/kagawad or prosecutor or the Clerk of Court, as the case may be, that such an action is pending. The VAWC Law provides that the criminal act may be done by any person against a woman victim. By using the term "any person," the VAWC Law effectively protects women from abuses by different persons (i.e., husband, partner or boyfriend), as long as there is a confluence of all the elements of the crime. Thus, if there is a separate incident of violence against the woman victim by a different person, which occurs within the same year, the woman victim is entitled to a separate 10-day VAWC leave. Moreover, according to Sec. 4 of the VAWC Law, the law shall be liberally construed to promote the protection and safety of victims of VAWC. Penalties for Violation Any Er who shall prejudice the right of the person under this Sec. shall be penalized in accordance with the provisions of the Labor Code and Civil Service Rules and Regulations. Likewise, an Er who shall prejudice any person for assisting a co-Ee who is a
- 185. LABOR LAW ANDSOCIAL LEGISLATIONS 171 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW victim under this Act shall likewise be liable for discrimination. Noncumulative/ Non-Conversion to Cash The availment of the 10-day leave shall be at the option of the woman Ee, which shall cover the days that she has to attend to medical and legal concerns. Leaves not availed of are noncumulative and not convertible to cash. Q: Can an Ee apply for the 10-day leave from her Er just because of a black eye or any manifestation of abuse? A: NO. The 10-day leave under the VAWC may only be availed of if the victim has applied for any protection order with the intention to file a case against the assailant. Compassionate Leave Time permitted away from work given as a feeling or showing of sympathy and sadness for the suffering or bad luck of employees and wanting to help them. It is granted because of unusual distressing circumstances affecting an employee. NOTE: The term “Compassionate leave” has not yet been defined under the Philippine laws and jurisprudence. Bereavement Leave Bereavement leave and other death benefits are granted to an Ee to give aid to, and if possible, lessen the grief of, the said Ee and his family who suffered the loss of a loved one. (Continental Steel Manufacturing Corp. v. Montaño, G.R. No. 182836, 13 Oct. 2009) Garden Leaves The practice of the Er directing an Ee not to attend work during the period of notice of resignation or termination of the employment is colloquially known as “garden leave” or “gardening leave.” The Ee might be given no work or limited duties, or be required to be available during the notice period to, for example, assist with the completion of work or ensure the smooth transition of work to their successor, otherwise, the Ee is given no work and is directed to have no contact with clients or continuing Ees. During the period of garden leave, Ees continue to be paid their salary and any other contractual benefits as if they were rendering their services to the employer. (Mejila v. Wrigley Philippines, Inc., G.R. Nos. 199469 & 199505, 11 Sept. 2019) D. SPECIAL GROUPS OF EMPLOYEES 1. WOMEN (Arts. 130 and 132-136, LC) Other Laws protecting women Workers 1. The State recognizes the role of women in nation-building and shall ensure the fundamental equality before the law of women and men. (Sec. 14, Art. II, 1987 Constitution) 2. The State shall protect working women by providing safe and healthful working conditions, taking into account their maternal functions, and such facilities and opportunities that will enhance their welfare and enable them to realize their full potential in the service of the nation. (Sec. 14, Art. XIII, 1987 Constitution) 3. R.A. No. 6725 or “An Act Strengthening the Prohibition on Discrimination against Women with Respect to Terms and Conditions of Employment” – which explicitly prohibits discrimination against women with respect to terms and conditions of employment, promotion, and training opportunities. 4. R.A. No. 6955 or “An Act to Declare Unlawful the Practice of Matching Filipino Women for Marriage to Foreign Nationals on Mail Order Basis” – which bans the “mail-order-bride” practice for a fee and the export of female labor to countries that cannot guarantee protection to the rights of women workers.
- 186. 2024 GOLDEN NOTES 172 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. R.A. No. 7192 or “Women in Development and Nation Building Act” – affords women equal opportunities with men to act and to enter into contracts, and for appointment, admission, training, graduation, and commissioning in all military or similar schools. 6. R.A. No. 7322 or “An Act Increasing Maternity Benefits in Favor of Women Workers in the Private Sector” 7. R.A. No. 7877 or “Anti-Sexual Harassment Act” 8. R.A. No. 8042 or the “Migrant Workers and Overseas Filipinos Act of 1995” – which prescribes as a matter of policy, the deployment of migrant workers, with emphasis on women, only in countries where their rights are secure. (Philippine Telegraph and Telephone Co. v. NLRC, G.R. No. 118978, 23 May 1997) 9. R.A. No. 11210 or the “105-Day Extended Maternity Leave Law” 10. R.A. No. 9710 or “the Magna Carta of Women;” and 11. R.A. No. 9262 or the “Anti-Violence against Women and Children” State Policy on Non-Discrimination Against Women The State condemns discrimination against women in all its forms and pursues by all appropriate means and without delay the policy of eliminating discrimination against women in keeping with the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) and other international instruments consistent with Philippine law. The State shall accord women the rights, protection, and opportunities available to every member of society. (Sec. 2, R.A. No. 9710 or the Magna Carta of Women) The State shall take steps to review and, when necessary, amend and/or repeal existing laws that are discriminatory to women within three (3) years from the effectivity of this Act. (Sec. 12, R.A. No. 9710) Facilities for Women under the Labor Code The SOLE shall establish standards that will ensure the safety and health of women employees. In appropriate cases, he shall, by regulations, require any employer to: 1. Provide seats proper for women and permit them to use such seats when they are free from work and during working hours, provided they can perform their duties in this position without detriment to efficiency; 2. To establish separate toilet rooms and lavatories for men and women and provide at least a dressing room for women; 3. To establish a nursery in a workplace for the benefit of the women employees therein; and 4. To determine appropriate minimum age and other standards for retirement or termination in special occupations such as those of flight attendants and the like. (Art. 130, LC) Discrimination 1. Discrimination with respect to the terms and conditions of employment solely on account of sex. a. Discrimination in pay – Payment of a lesser compensation including wage, salary or other forms of remuneration and fringe benefits, to a female Ee as against a male Ee; b. Discrimination in employment opportunity – favoring a male Ee over a female Ee with respect to promotion, assignment, transfer, training opportunities, study and scholarship grants solely on account of their sexes (Art. 134, LC); c. Discrimination in hiring – favoring a male applicant with respect to hiring where the particular job can equally be handled by a woman; d. Discrimination in dismissal – favoring a male Ee over a female Ee with respect to dismissal of personnel or the application of
- 187. LABOR LAW ANDSOCIAL LEGISLATIONS 173 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW the “last in, first out principle” or other retrenchment policy of the Er. (Poquiz, 2012) 2. Stipulating, whether as a condition for employment or continuation of employment: a. That a woman Ee shall not get married; or b. That upon marriage, such woman Ee shall be deemed resigned or separated. (Art. 134, LC) and 3. Dismissing, discriminating or otherwise prejudice a woman Ee by reason of her being married. (Ibid.) Standard of Reasonable Test Under the standard reasonable test, the Er has the burden of proof to prove the existence of a reasonable business necessity that would justify an employment policy. (Star Paper Corp. v. Simbol, G.R. No. 164774, 12 Apr. 2006) Expanded Breastfeeding Promotion Act of 2009 Nursing Ees shall be granted break intervals in addition to the regular time-off for meals to breastfeed or express milk. These intervals, which shall include the time it takes an Ee to get to and from the workplace lactation station, shall be counted as compensable hours worked. (Sec. 12, IRR of R.A. No. 10028) The DOLE may adjust the same provided hat such intervals shall not be less than a total of 40 minutes for every eight (8)-hour working period. (Ibid.) Q: Can an individual, the sole proprietor of a business enterprise, be said to have violated the Anti-Sexual Harassment Act of 1995 if he clearly discriminates against women in the adoption of policy standards for employment and promotions in the enterprise? Explain. (2003 BAR) A: When an Er discriminates against women in the adoption of policy standards for employment and promotion in his enterprise, he is not guilty of Sexual Harassment. Instead, the Er is guilty of discrimination against women Ees which is declared to be unlawful by the Labor Code. For an Er to commit Sexual Harassment, he—as a person of authority, influence or moral ascendancy—should have demanded, requested or otherwise required a sexual favor from his Ee whether the demand, request or requirement for submission is accepted by the object of said act. Stipulation Against Marriage It shall be unlawful for the Er to: 1. Require as a condition of employment or continuation of employment that a woman Ee shall not get married; 2. Stipulate expressly or tacitly that upon getting married, a woman Ee shall be deemed resigned or separated; or 3. Actually dismiss, discharge, discriminate or otherwise prejudice a woman Ee merely by reason of her marriage. (Art. 134, LC) No-Spouse Employment Policy It is a policy banning spouses from working in the same company. Generally, spouses are allowed to work in the same company, provided it is not in the same department, where there is direct supervision or control. In case spouses are in the same department, one of them may be reassigned to another department. NOTE: The XPN of BFOQ occurs when the Er can prove that reasonable demands of the business require a distinction based on marital status and there is no better or acceptable policy which would better accomplish the business purpose. There must be a finding of any BFOQ to justify an Er’s no-spouse employment rule. There must be a compelling business necessity for which no alternative exists other than the discriminating practice.
- 188. 2024 GOLDEN NOTES 174 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Importance of the BFOQ 1. To ensure that the Ee can effectively perform his work; 2. So that the no-spouse employment rule will not impose any danger to business. Q: Glaxo, a company which has a policy against Ees having relationships with the Ees of its competitors, employed Tecson as a medical representative. Tecson married Bettsy, a Branch coordinator in one of Glaxo’s competitors. Tecson was then transferred to another area but he did not accept such transfer. Is the policy of Glaxo valid and reasonable so as to constitute the act of Tecson as willful disobedience? A: YES. The prohibition against personal or marital relationships with Ees of competitor companies upon Glaxo’s Ees is reasonable under the circumstances because relationships of that nature might compromise the interest of the company. Glaxo does not impose an absolute prohibition against relationships between its Ees and those of competitor companies. Its Ees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the Ee and the company that may arise out of such relationships. Furthermore, the prohibition forms part of the employment contract and Tecson was aware of such restrictions when he entered into a relationship with Bettsy. (Duncan Assoc. Of Detailman-PTGWO v. Glaxo Wellcome Phil. Inc., G.R. No. 162994, 17 Sept. 2004) Q: May a woman worker be dismissed on the ground of dishonesty for having written ‘’single” on the space for civil status on the application sheet, contrary to the fact that she was married? A: Art. 136 (now Art. 134) of the LC explicitly prohibits discrimination merely by reason of marriage of a female Ee. The policy of not accepting or disqualifying from work any woman worker who contracts marriage is afoul of the right against discrimination provided to all women workers by our labor laws and by our Constitution. (PT&T Co. v. NLRC, G.R. No. 118978, 23 May 1997) Q: An international flight stewardess of PAL was discharged from service, on account of her marriage. PAL contends that Art. 134 of the Labor Code applies only to women Ee in ordinary occupations. Is the termination legal? A: NO. The termination is not legal and the policy of PAL against marriage is patently illegal. Requiring that prospective flight attendants must be single and that they will be automatically separated from the service once they marry was declared void, it being violative of the clear mandate in Art. 134 of the LC with regard to discrimination against married women. Art. 134 is not intended to apply only to women employed in ordinary occupations, or it should have categorically expressed so. The sweeping intendment of the law be it on special or ordinary occupations. (Zialcita, v. PAL, RO4-3-3398- 76, 20 Feb. 1997) Prohibited Acts It shall be unlawful for any Er to: 1. Deny any woman Ee benefits provided by law; 2. Discharge any woman for the purpose of preventing her from enjoying any of the benefits provided by law; 3. Discharge such woman on account of her pregnancy, or while on leave or in confinement due to her pregnancy; and 4. Discharge or refuse the admission of such woman upon returning to her work for fear that she may again be pregnant. (Art. 135, LC) Discharging a Woman Due to Pregnancy The following are prohibited acts in connection with the pregnancy of a woman Ee: 1. To discharge her on account of her pregnancy; 2. To discharge her while she is on leave due to her pregnancy;
- 189. LABOR LAW ANDSOCIAL LEGISLATIONS 175 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 3. To discharge her while she is confined due to her pregnancy; 4. To discharge her upon returning to work for fear that she may again be pregnant; (Art. 135, LC) 5. To refuse her admission upon returning to work for fear that she may again be pregnant; (Sec. 13, Rule XII, Book III, Rules to Implement the LC) 6. Expulsion and non-readmission of women faculty/female student due to pregnancy outside of marriage. (Sec. 13(c), R.A. No. 9710) Series of Absences Due to Pregnancy and its Related Ailments Not a Ground to Dismiss Ee The court agreed that in concluding that respondent’s sickness was pregnancy-related and therefore, the petitioner cannot terminate respondent’s services because in doing so, petitioner will be violating Art. 137 (now Art. 135) of the LC. (Del Monte Philippines, Inc. v. Velasco, G.R. No. 153477, 06 Mar. 2007) Q: Can an Er dismiss an Ee on the ground of deliberately concealing her pregnancy and incurring absences without official leave? A: NO. Her absence was justified considering that she had just delivered a child, which can hardly be considered a forbidden act, a dereliction of duty; much less does it imply wrongful intent on the part of the Ee. (Lakpue Drug, Inc. v. Belga, G.R. No. 166379, 20 Oct. 2005) Penalty for Commission of the Prohibited Acts Mentioned The offender would be subject to the penalties provided under Art. 287 of the LC, the general penalty clause under said code. Fine: Not less than P1,000 nor more than P10,000; or Imprisonment: not less than three (3) months or more than three years, or both, at the discretion of the court. Persons Covered Under the Classification of Certain Women Workers Any woman who is permitted or suffered to work: 1. With or without compensation; 2. In any night club, cocktail lounge, massage clinic, bar or similar establishment; 3. Under the effective control or supervision of the Er for a substantial period of time; and 4. Shall be considered as an Ee of such establishment for purposes of labor and social legislation. (Art. 136, LC) 2. MINORS (R.A. No. 7610, as amended by R.A. No. 9231) Child Labor Any work or economic activity performed by a child that subjects him or her to any form of exploitation or is harmful to his or her health and safety or physical, mental, or psychosocial development. (Sec. 2, DOLE D.O. No. 65-04) Working Child Any child engaged as follows: 1. When the child is below 18 years of age in a work or economic activity that is not child labor; or 2. When the child is below 15 years of age: a. In work where he/she is directly under the responsibility of his/her parents or legal guardian and where only members of the child’s family are employed; or b. In public entertainment or information. (Ibid.)
- 190. 2024 GOLDEN NOTES 176 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Instances When the State can Intervene on Behalf of the Child 1. When the parent, guardian, teacher or person having care or custody of the child fails or is unable to protect the child against abuse, exploitation and discrimination; or 2. When such acts are committed against the child by the said parent, guardian, teacher or person having care and custody over the child. (Sec. 2, R.A. No. 7610) Employment of Children 1. No person under 18 years of age is allowed to be employed in an undertaking which is hazardous or deleterious in nature. 2. No Er shall discriminate against any person with respect to terms and conditions of employment on account of his age. (Art. 138, LC) 3. Children below fifteen (15) years of age shall not be employed, except: a. When a child works directly under the sole responsibility of his/her parents or legal guardian and where only members of his/her family are employed. Such employment must: i. neither endangers his/her life, safety, health, and morals, nor impairs his/her normal development; and ii. That the parent or legal guardian shall provide the said child with the prescribed primary and/or secondary education; or b. Where a child's employment or participation in public entertainment or information through cinema, theater, radio, television or other forms of media is essential. Provided that: i. The employment contract is concluded by the child's parents or legal guardian, with the express agreement of the child concerned, if possible, and the approval of the DOLE; and ii. The following requirements in all instances are strictly complied with: 1. The Er shall ensure the protection, health, safety, morals, and normal development of the child; 2. The Er shall institute measures to prevent the child's exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and 3. The Er shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skills acquisition of the child. (Sec. 12, R.A. No. 7610, as amended by R.A. No. 9231) NOTE: Where any such child may be employed, the employer shall first secure, before engaging such child, a work permit from the DOLE which shall ensure observance of the above requirements. (Ibid.) For purposes of this Article, the term "child" shall apply to all persons under 18 years of age. Prohibition on the Employment of Children in Certain Advertisements No child below 18 years of age shall be employed as a model in any advertisement directly or indirectly promoting: 1. alcoholic beverages; 2. intoxicating drinks; 3. tobacco and its byproducts; 4. gambling or any form of violence; or 5. pornography.
- 191. LABOR LAW ANDSOCIAL LEGISLATIONS 177 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Hours of Work of a Working Child 1. Below 15 years of age – may be allowed to work for not more than 20 hours a week. NOTE: The work shall not be more than four (4) hours at any given day; 2. 15 years of age but below 18 – shall not be allowed to work for more than 8 hours a day, and in no case beyond forty (40) hours a week; 3. Below 15 years of age – shall not be allowed to work between 8:00 P.M. and 6:00 A.M. of the following day; and 4. 15 years of age but below 18 – shall be allowed to work between ten o'clock in the evening and six o'clock in the morning of the following day. (Sec. 2-A, Ibid.) NOTE: Sleeping time as well travel time of a child engaged in public entertainment or information from his/her residence to his/her workplace shall not be included as hours worked without prejudice to the application of existing rules on employees compensation. (Sec. 15, DOLE D.O. No. 65-04) Prohibition Against Worst Forms of Child Labor No child shall be engaged in the worst forms of child labor. The phrase “worst forms of child labor” shall refer to any of the following: 1. All forms of slavery (Anti-Trafficking of Persons Act of 2003) or practices similar to slavery such as sale and trafficking of children, debt bondage and serfdom and forced or compulsory labor, including recruitment of children for use in armed conflict; 2. The use, procuring, offering of a child for prostitution, for the production of pornography or for pornographic performances; 3. The use, procuring, offering or exposing of a child for illegal or illicit activities, including the production and trafficking of dangerous drugs and volatile substances prohibited under existing laws; 4. Work which, by its nature or circumstances in which it is carried out, is hazardous or likely to be harmful to the health, safety or morals of children, such that it: a. Debases, degrades or demeans the intrinsic worth and dignity of a child as a human being; or b. Exposes the child to physical, emotional or sexual abuse, or is found to be highly stressful psychologically or may prejudice morals; or c. Is performed underground, underwater or at dangerous heights; or d. Involves the use of dangerous machinery, equipment and tools such as power-driven or explosive power-actuated tools; or e. Exposes the child to physical danger such as, but not limited to the dangerous feats of balancing, physical strength or contortion, or which requires the manual transport of heavy loads; or f. Is performed in an unhealthy environment exposing the child to hazardous working conditions, elements, substances, co-agents or processes involving ionizing, radiation, fire, flammable substances, noxious components and the like, or to extreme temperatures, noise levels, or vibrations; or g. Is performed under particularly difficult conditions; or h. Exposes the child to biological agents such as bacteria, fungi, viruses, protozoans, nematodes and other parasites; or i. Involves the manufacture or handling of explosives and other pyrotechnic products. (Sec. 12-D, R.A. No. 9231); and 5. Employing child models in all commercials or advertisements promoting alcoholic beverages,
- 192. 2024 GOLDEN NOTES 178 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES intoxicating drinks, tobacco and its by-products and violence. (Sec. 14, RA 7610) Persons Who Can File a Complaint For Unlawful Acts Committed Against Children 1. Offended party; 2. Parents or guardians; 3. Ascendants or collateral relatives within the 3rd degree of consanguinity; 4. Officer, social worker or representative of a licensed child-caring institution; 5. Officer or social worker of DSWD; 6. Barangay chairman of the place where the violation occurred, where the child is residing or employed; or, 7. At least three concerned, responsible citizens where the violation occurred. (Sec. 27, R.A. No. 7610, as amended by R.A. No. 9231) Jurisdiction Over Offenses Punishable Under R.A. No. 9231 The Family Courts shall have original jurisdiction over all cases involving offenses punishable under this Act. (Sec. 16-A, R.A. No. 7610, as amended by R.A. No. 9231) Normal Development of the Child It refers to physical, emotional, mental, and spiritual growth of a child within a safe and nurturing environment where he/she is given adequate nourishment, care and protection and the opportunity to perform tasks appropriate at each stage of development. 1. The child is provided with at least the mandatory elementary or secondary education; and 2. The Er secures a work permit for the child. (Secs. 8 to 12, Ibid.) Duty of The Employer Before Engaging a Minor Into Employment The Er shall first secure a work permit from the DOLE which shall ensure observance of the requirements. (Sec. 12, R.A. No. 7160) Working Child Permit When Required If a child below 15 years of age: 1. Will be engaged in public entertainment or information regardless of his/her role in a project. This includes projects which are non- profit, advocacy materials or political advertisements; or 2. Is a foreign national and will be engaged in public entertainment in the PH; 3. Will be engaged as regular extra or as part of a crowd and is included in the script or storyboard; 4. Has been selected for a project after undergoing auditions, workshops or VTR screenings; or 5. Has been selected as semi-finalist in a singing, dance or talent contest for a television show. (DOLE Circular No. 2, s. 2018) Working Child Permit When Not Required If a child below 15 years of age: 1. A spot extra or is cast outright on the day of filming or taping of a project; 2. Will join auditions or VTR screenings; 3. Part of the audience of a live television show unless the child’s participation is expected; 4. Picked or chosen as contestant from the audience of a live television show; 5. A contestant for a TV show but has not yet been selected as a semi-finalist; 6. A recipient of gift-giving activities in TV; 7. A participant in school-related performance; 8. A participant in sports activities, trainings, or workshops; or 9. Will be featured in a documentary material. (Ibid.)
- 193. LABOR LAW ANDSOCIAL LEGISLATIONS 179 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Issuance of Work Certificates or Permits to Children At Least 15 But Below 18 Years of Age When Not Required The issuance of a DOLE Certificate to youth aged 15 to below 18 years of age is not required by law. No Er shall deny the opportunity to any such youth applying for employment merely on the basis of lack of work permit or certificate of eligibility for employment. Any young person aged 15 to below 18 years of age may present a copy of this DOLE advisory to any Er, job provider, government authority, or his/her representative when seeking employment or anytime during employment. (DOLE D.A. No. 01-08) Regulation of Working Hours of a Child It includes: 1. All time during which a child is required to be at a prescribed workplace; and 2. All time during which a child is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. (Sec. 3, Chapter 1, Ibid.) Ownership, Usage and Administration of the Working Child’s Income The wages, salaries, earnings and other income of the working child shall belong to him/her in ownership and shall be set aside primarily for his/her support, education or skills acquisition and secondarily to the collective needs of the family provided, that not more than 20% of the child's income may be used for the collective needs of the family. (Sec. 12-B, R.A. No. 7610) Trust Fund to Preserve Part of the Working Child’s Income The parent or legal guardian of a working child below 18 years of age shall set up a trust fund for at least 30% of the earnings of the child whose wages and salaries from work and other income amount to at least P200,000.00 annually, for which he/she shall render a semi-annual accounting of the fund to the DOLE. The child shall have full control over the trust fund upon reaching the age of majority. (Sec. 12-C, R.A. No. 7610) Hazardous Workplaces 1. Nature of work exposes the workers to dangerous environmental elements, contaminants or work conditions; 2. Workers are engaged in construction work, logging, firefighting, mining, quarrying, blasting, stevedoring, dock work, deep-sea fishing, and mechanized farming; 3. Workers are engaged in the manufacture or handling of explosives and other pyrotechnic products; or 4. Workers use or are exposed to heavy or power- driven tools. Non-Hazardous Work It is any work or activity in which the Ee is not exposed to any risk which constitutes an imminent danger to his safety and health. Hazardous Work and Activities The following work and activities are hereby declared hazardous to persons below 18 years of age: 1. Work which exposes children to physical, psychological or sexual abuse; Examples are lewd shows (stripteasers, burlesque dancers, and the like), cabarets, bars (KTV, karaoke bars), dance halls, bath houses and massage clinics, escort service, or gambling halls and places. 2. Work underground, under water, at dangerous heights or at unguarded heights of two meters and above, or in confined places;
- 194. 2024 GOLDEN NOTES 180 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Examples are mining, deep sea fishing/diving, installing and repairing of telephone, telegraph and electrical lines; cable fitters, painting buildings, window cleaning, or fruit picking involving climbing. 3. Work with dangerous machinery, equipment and tools, or which involves manual handling or transport of heavy loads; Examples are logging, construction, quarrying, operating agricultural machinery in mechanized farming, metal work and welding, driving or operating havy equipment, operating or setting motor-driven machines, operating power-driven tools, stevedoring, working in airport hangars, working in warehouses, or working in docks. 4. Work in unhealthy environment which may expose children to hazardous processes; Examples are manufacture or handling of pyrotechnics, tanning, pesticide spraying, blacksmithing, hammersmiths, forging, extracting lard and oil, tiling and greasing of heavy machinery, fiber and plastic preparing, bleaching, dyeing, and finishing of textiles using chemicals, embalming and as undertakers, painting and as finishers in metal craft industries, applying of adhesive/solvent in footwear, handicraft, and woodwork industries, brewing and distilling of alcoholic beverages, recycling of batteries and containers or materials used or contaminated with chemicals, working in abattoirs or slaughterhouses, garbage collecting, handling of animal manure in poultry houses or as fertilizers in farming, working in hospitals or other health care facilities, assisting in laboratories and x-ray work, welding, working in furnaces and kilns, in discotheques, or in video arcades 5. Work under particularly difficult conditions such as work for long hours or during the night, or work where the child is unreasonably confined to the premises of the Er. (Sec. 3, D.O. No. 04 Series of 1999) NOTE: Persons between 15 and 18 years of age may be allowed to engage in domestic or household service, subject in all cases to the limitations prescribed in Nos. 1 to 5 above. (Sec. 4, Ibid.) Q: You were asked by a paint manufacturing company regarding the possible employment as a mixer of a person aged 17, who shall be directly under the care of the section supervisor. What advice would you give? Explain briefly. (2002 BAR) A: The paint manufacturing company cannot hire a person who is aged 17. Art. 137(c) of the LC provides that a person below 18 years of age shall not be allowed to work in an undertaking which is hazardous or deleterious in nature as determined by the SOLE. Paint manufacturing has been classified by the SOLE as hazardous work. Q: A spinster schoolteacher took pity on one of her pupils, a robust and precocious 12-year-old boy whose poor family could barely afford the cost of his schooling. She lives alone at her house near the school after her housemaid left. In the afternoon, she lets the boy do various chores as cleaning, fetching water and all kinds of errands after school hours. She gives him rice and Php 30.00 before the boy goes home at 7 every night. The school principal learned about it and charged her with violating the law which prohibits the employment of children below 15 years of age. In her defense, the teacher stated that the work performed by her pupil is not hazardous, and she invoked the exception provided in the Department Order of DOLE for the engagement of persons in domestic and household service. Is her defense tenable? (2004 BAR) A: NO. Under Art. 137 of the LC on “minimum employable age,” no child below 15 years of age shall be employed except when he works directly under the sole responsibility of his parents or guardian, the provisions of the alleged department order of DOLE to the contrary notwithstanding. A mere department order cannot prevail over the express prohibitory provisions of the LC.
- 195. LABOR LAW ANDSOCIAL LEGISLATIONS 181 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Q: Iya, 15 years old, signed up to model a clothing brand. She worked from 9am to 4 pm on weekdays and 1pm to 6pm on Saturdays for two (2) weeks. She was issued a child working permit under R.A. No. 9231. Which of the following statements is the most accurate? (2012 BAR) a) Working permit for Iya’s employment is not required because the job is not hazardous; b) Her work period exceeds the required working hours for children aged 15 years old; c) To require a 15-year-old to work without obtaining the requisite working permit is a form of child labor; d) Iya, who was engaged in a work that is not child labor, is a working child. A: d). Iya, who was engaged in a work that is not child labor, is a working child. (Sec. 12-A) Q: Determine whether the following minors should be prohibited from being hired and from performing their respective duties indicated hereunder: (2006 BAR) a) A 17-year-old boy working as miner at the Walwadi Mining Corporation. A: YES. He should be prohibited from being hired and from performing the duties of a miner because such constitutes hazardous work as it is a work underground under D.O. No. 04 Series of 1999. Art. 137(c) of LC expressly prohibits the employment of persons under 18 years of age in an undertaking which is hazardous or deleterious in nature as determined by the SOLE. b) An 11-year-old boy who is an accomplished singer and performer in different parts of the country. A: NO. He should not be prohibited from being hired and from performing as a singer. Under Sec. 12(2), Art. VIII of R.A. No. 7610, as amended by R.A. No. 7658, this constitutes an exception to the general prohibition against the employment of children below 15 years of age, provided that the following requirements are strictly complied with: 1. The Er shall ensure the protection, health safety and morals of the child; 2. The Er shall institute measures to prevent the child’s exploitation or discrimination taking into account the system and level of remuneration, and the duration and arrangement of working time; and 3. The Er shall formulate and implement, subject to the approval and supervision of competent authorities, a continuing program for training and skill acquisition of the child. Moreover, the child must be directly under the sole responsibility of his parents or guardian and his employment should not in any way interfere with his schooling. c) A 15-year-old girl working as a library assistant in a girls' high school. A: NO. She should not be prohibited from working as a library assistant because the prohibition in the LC against employment of persons below 18 years of age merely pertains to employment in an undertaking which is hazardous or deleterious in nature as identified in the guidelines issued by the SOLE. Working as a library assistant is not one of undertakings identified to be hazardous under D.O. No. 04 Series of 1999. d) A 16-year-old girl working as model promoting alcoholic beverages. A: YES. She should be prohibited from working as a model promoting alcoholic beverages. R.A. No. 7610 categorically prohibits the employment of child models in all commercials or advertisements promoting alcoholic beverages and intoxicating drinks, among other things. e) A 17-year-old boy working as a dealer in a casino. (2006 BAR) A: YES. He should be prohibited from working as a dealer in casino, because Art. 137(c) of the LC prohibits the employment of persons below 18
- 196. 2024 GOLDEN NOTES 182 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES years of age in an undertaking which is hazardous or deleterious in nature identified in the guidelines issued by the SOLE. Working as a dealer in a casino is classified as hazardous under D.O. No. 04 Series of 1999 as it exposes children to physical, psychological or sexual abuses. 3. KASAMBAHAYS (R.A. No. 10361) Persons covered by R.A. No. 10361 Otherwise Known as “Batas Kasambahay” All kasambahay engaged in domestic work, whether on a live-in or live-out arrangement, such as, but not limited to, the following: 1. General househelp; 2. Nursemaid or Yaya; 3. Cook; 4. Gardener; 5. Laundry person; 6. Working children or domestic workers 15 years old and above but below 18 years of age; or 7. Any person who regularly performs domestic work in one household on an occupational basis (live-out arrangement). (Sec. 4(d), R.A. No. 10361) Persons Not Covered by Batas Kasambahay 1. Service providers; 2. Family drivers; 3. Children under foster family arrangement; and 4. Any other person who performs work occasionally or sporadically and not on an occupational and regular basis. (Sec. 2, Rule 1, IRR of R.A. No. 10361) NOTE: Sec. 4(d) of the Kasambahay Law pertaining to who are included in the enumeration of domestic or household help cannot also be interpreted to include family drivers because the latter category of worker is clearly not included. (Atienza v. Saluta, G.R. No. 233413, 17 June 2019) Debt Bondage It refers to the rendering of service by the domestic worker as security or payment for a debt where the length and nature of service is not clearly defined or when the value of the service is not reasonably applied in the payment of the debt. (Sec. 4, R.A. No. 10361) Children under Foster Family Arrangement Those children who are living with a family or household of relative/s and are provided access to education and given an allowance incidental to education (i.e., “baon,” transportation, school projects, and school activities). NOTE: The foster family and foster care arrangements should be in compliance with the procedures and requirements as prescribed by R.A. No. 10165 or the Foster Care Act of 2012. Q: Soledad, a widowed schoolteacher, takes under her wing one of her students, Kiko, 13 years old, who was abandoned by his parents and has to do odd jobs in order to study. She allows Kiko to live in her house, provides him with clean clothes, food, and a daily allowance of 200 pesos. In exchange, Kiko does routine housework, consisting of cleaning the house and doing errands for Soledad. One day, a representative of the DOLE and the DSWD came to Soledad's house and charged her with violating the law that prohibits work by minors. Soledad objects and offers as a defense that she was not requiring Kiko to work as the chores were not hazardous. Further, she did not give him chores regularly but only intermittently as the need may arise. Is Soledad's defense meritorious? (2015 BAR) A: YES. Soledad’s defense is meritorious. Sec. 4(d) of the Kasambahay Law (R.A. No. 10361) provides that the term “Domestic Worker” shall not include children who are under foster family arrangement and those who are provided access to education and given an allowance incidental to education (i.e., “baon”, transportation, school projects and school activities).
- 197. LABOR LAW ANDSOCIAL LEGISLATIONS 183 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Examples of Persons Performing Work Occasionally or Sporadically and Not on an Occupational Basis 1. A janitress doing irregular laundry work for a household during rest day; 2. A construction worker doing casual gardening job for a household; or 3. A hospital nurse or a student doing baby-sitting job. (Q&A on Batas Kasambahay, DOLE) Employable Age for a Kasambahay The age should be 15 years old and above. NOTE: The employment of children 15 years old and above but below 18 years of age may be made under the following conditions: 1. They shall not be allowed to work for more than eight (8) hours a day, and in no case beyond 40 hours a week; 2. They shall not be allowed to work between 10 P.M. to 6 A.M. of the following day; 3. They shall not be allowed to do hazardous work or likely to be harmful to the health, safety or morals of children, as defined under existing laws and regulations; and 4. They shall not be denied access to education and training. (Sec. 2, Rule VI, IRR of R.A. No. 10361) NOTE: The consent of the parent/guardian of working children is required in the employment contract. Employer’s Household Household refers to the immediate family members or other occupants of the house who are directly and regularly provided services by the kasambahay. (Sec. 4(f), R.A. No. 10361) Modes of Hiring a Kasambahay An Er can hire directly or indirectly through private employment agencies (PEAs) registered with the DOLE regional offices. (Sec. 1, Rule II, IRR of R.A. No. 10361) The Er, whether the kasambahay is hired through a PEA or a third party, shall shoulder the expenses for hiring. The kasambahay shall not be charged of any cost of the recruitment, placement, or finder’s fee. (Sec. 2, Rule II, IRR of R.A. No. 10361) NOTE: The Er, whether directly hired or through PEA, shall pay the expenses that are directly used for the transfer of the kasambahay from place of origin to the place of work. The Er can be reimbursed of the deployment expenses when the kasambahay unreasonably leaves the Er within six (6) months from the time he/she started work. (Sec. 3, Rule II, IRR of R.A. No. 10361) If a kasambahay is hired thru a PEA, the agency is allowed to collect Service Fee from the Er. Pre-Employment Requirements Prior to the execution of the employment contract, the Er may require the following from the kasambahay: 1. Medical certificate or health certificate issued by a local government health officer; 2. Barangay and police clearance; 3. NBI clearance; and 4. Duly authenticated birth certificate or, if not available, voter’s ID baptismal record, or passport showing the kasambahay’s age. (Sec. 12, R.A. No. 10361) NOTE: All expenses made pursuant to the availment of pre-employment requirements, should be shouldered by the Er. The foregoing requirements are mandatory when the employment of the kasambahay is facilitated through a private employment agency. It is not a requirement for a kasambahay to be trained and certified by TESDA prior to employment. However, the kasambahay is encouraged to undergo competency assessment and be certified by TESDA. Training is not a
- 198. 2024 GOLDEN NOTES 184 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES requirement for competency assessment. (Q&A on Batas Kasambahay, DOLE) Recruitment and Finder’s Fees Regardless of whether the domestic worker was hired through a private employment agency or a third party, no share in the recruitment or finder’s fees shall be charged against the domestic worker by the said private employment agency or third party. (Sec. 13, R.A. No. 10361) Contract between the Er and Kasambahay Should be Written and Should Contain Conditions Set by Law The Er and the kasambahay shall enter into a written contract of employment in a language or dialect understood by them. NOTE: The contract need not be notarized. The Punong Barangay or his/her designated officer may attest to the contract and serve as witness to its execution. Contents of the Employment Contract 1. Duties and responsibilities of the kasambahay which include the responsibility to render satisfactory service at all times; 2. Period of employment; 3. Compensation; 4. Authorized deductions; 5. Hours of work and proportionate additional payment; 6. Rest days and allowable leaves; 7. Board, lodging and medical attention; 8. Agreements on deployment expenses, if any; 9. Loan agreement, if any; 10. Termination of employment; and 11. Any other lawful condition agreed upon by both parties. (Sec. 5, Rule II, IRR of R.A. No. 10361) Domestic Worker and the Employer are Not Deprived from Agreeing on: 1. Offsetting a day of absence with a particular rest day; 2. Waiving a particular rest day in return for an equivalent daily rate of pay; 3. Accumulating rest days not exceeding 5 days; or 4. Other similar arrangements. (Sec. 21, R.A. No. 10361) NOTE: If the kasambahay is below 18 years old, the employment contract shall be signed by his/her parent or lawful guardian on his/her behalf. (Sec. 5, Rule II, IRR of R.A. No. 10361) Registration of the Kasambahay The Er is required to register the kasambahay in the Registry of Domestic Workers in the barangay where the Er resides. For this purpose, the DILG, in coordination with the DOLE, shall formulate a registration system. (Sec. 17, R.A. No. 10361) NOTE: The registration of the kasambahay is free of charge. Domestic Workers Cannot Acquire Regularity of Employment under RA 10361 GR: All the indicia of regularity of employment remain absent in the employment of domestic helpers. (Chan, 2017) XPN: The mere fact that the househelper is working within the premises of the business of the Er and in relation to or in connection with the business, as in staff houses for its guest or even for its officers and Ees, warrants the conclusion that such househelper is and should be considered as a regular Ee. (Remington Industrial Sales Corp. v. Castaneda, G.R. No. 169295-96, 20 Nov. 2006) NOTE: Such a case must be based on its factual antecedents. Q: Linda was employed by Sectarian University (SU) to cook for the members of a religious order who teach and live inside the campus. While performing her assigned task, Linda accidentally burned herself. Because of the extent of her injuries, she went on medical leave. Meanwhile, SU engaged a replacement cook. Linda filed a complaint for illegal dismissal, but her Er SU contended that Linda was not a regular Ee but a domestic househelp. Decide. (2014 BAR)
- 199. LABOR LAW ANDSOCIAL LEGISLATIONS 185 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW A: The Er's argument that Linda was not a regular Ee has no merit. The definition of domestic servant or househelper contemplates one who is employed in the Er’s home to minister exclusively to the personal comfort and enjoyment of the Er’s family. The Supreme Court already held that the mere fact that the househelper is working in relation to or in connection with its business warrants the conclusion that such househelper or domestic servant is and should be considered as a regular Ee. (Apex Mining Co., Inc. v. NLRC, G.R. No. 94951, 22 Apr. 1991) Here, Linda was hired not to minister to the personal comfort and enjoyment of her Er's family but to attend to other Ees who teach and live inside the campus. Mandatory Benefits of a Kasambahay 1. Monthly minimum wage; 2. Daily rest period of eight (total) hours; 3. Weekly rest period of 24 (uninterrupted) hours; 4. Five days annual service incentive leave with pay; 5. 13th month pay; 6. SSS benefit; 7. PhilHealth benefit; and 8. Pag-IBIG benefit. Other Rights and Privileges of a Kasambahay 1. Freedom from Er’s interference in wage disposal; 2. Standard of treatment; 3. Board, lodging, and medical attendance; 4. Right to privacy; 5. Access to outside communication; 6. Access to education and training; 7. Right to be provided a copy of the employment contract; 8. Right to Certificate of Employment; 9. Right to form, join, or assist labor organization; 10. Right to terminate employment based on just cause; and 11. Right to exercise religious beliefs and cultural practices. (Sec. 1, Rule IV, IRR of RA 10361) Basic Necessities of a Kasambahay 1. At least three (3) adequate meals a day, taking into consideration the kasambahay’s religious beliefs and cultural practices; 2. Humane sleeping condition that respects the person’s privacy for live-in arrangement; and 3. Appropriate rest and basic medical assistance, including first-aid medicine, in case of illness and injuries sustained during service without loss of benefits. (Sec. 13, Rule IV, IRR of R.A. No. 10361) NOTE: For the Kasambahay under live-out arrangement, he/she shall be provided space for rest and access to sanitary facility. Though not part of the “basic necessities” required to be provided by the Er to the kasambahay, shampoo, soap, toothpaste etc. may be provided gratuitously. Monthly Minimum Wage of a Kasambahay MONTHLY MINIMUM WAGE IN CITIES AND 1ST CLASS MUNICIPALITIES OTHER MUNICIPALITIES NCR P6,500 CAR P4,900 I P5,500 II P5,500 III P5,000 P4,500 IV - A P6,000 P5,000 IV - B P5,500 V P5,000 VI P5,000 VII P5,500 P4,500 VIII P5,500 P5,000 IX P4,600 P4,100 X P5,000 P5,000 XI P4,500 XII P5,000 P4,500 XIII P5,000 (Current Monthly Minimum Wage for Domestic Workers as per National Wages and Productivity Commission)
- 200. 2024 GOLDEN NOTES 186 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES NOTE: The law provides a mechanism for increasing the minimum wage of the kasambahay. The Regional Tripartite Wages and Productivity Boards (RTWPB) may review, and if proper, determine and adjust the minimum wage. (Sec. 24, R.A. No. 10361) The RTWPB shall coordinate with TESDA on the wage review and adjustment based on the kasambahay’s competency level, in line with the thrust to professionalize the domestic service sector. Payment of Wages Wages shall be in cash and be paid at least once a month. (Secs. 3-4, Rule IV, IRR of R.A. No. 10361) NOTE: The Er shall, at all times, provide the kasambahay with a copy of the pay slip every pay day containing the amount paid and all deductions made, if any. The copies of the pay slip shall be kept by the Er for a period of three (3) years. (Sec. 26, R.A. No. 10361) Payment of wages by means of promissory, voucher, coupon, token, ticket, chit, or anything other than the cash wage is prohibited. (Sec. 3, Rule IV, IRR of R.A. No. 10361) Daily Rest Period The kasambahay is entitled to a total daily rest period of at least eight (8) hours. (Sec. 20, R.A. No. 10361) Prohibition of Work Beyond 16 Hours The Er cannot require the kasambahay to work beyond 16 hours at any given workday in return for an equivalent hourly rate. The eight-hour rest period must be observed. NOTE: This provision of special law is inconsistent with Art. 1695 of the Civil Code which prohibits more than ten (10) hours of work of a househelper. Nevertheless, applying the rules on statutory construction, in case of conflict between a general law and special law, the special law prevails. 24 Consecutive Hours of Rest in A Week Kasambahays are also entitled to at least 24 consecutive hours of rest in a week. The Er and the kasambahay shall agree in writing on the schedule of the weekly rest day. The Er shall respect the preferred weekly rest day of the kasambahay on religious grounds. (Sec. 21, Ibid.) Q: Can the Er shorten the 24-hour rest day period of the kasambahay A: NO. However, the kasambahay and the Er may agree to shorten the rest day, provided the Er pays for the hours worked during the shortened rest day. (Q&A on Batas Kasambahay, DOLE) Five (5)-Day Annual SIL The kasambahay can avail the five (5)-day annual SIL after one (1) year of service. NOTE: Any unused portion of the SIL shall not be cumulative or carried over to the succeeding years. Unused leaves shall not be convertible to cash. Other Agreements that the Er and the Kasambahay Can Enter into Relative to the Latter’s Weekly Rest Day and SIL 1. Offsetting a day of absence with a particular rest day; 2. Waiving a particular rest day in return for an equivalent daily rate of pay; 3. Accumulating rest days not exceeding 5 days; 4. Adding the accumulated rest days (max. of 5 days) to the five-day SIL; and 5. Waiving a particular SIL in return for an equivalent daily rate of pay. 13th month pay The kasambahay is entitled to 13th month pay after one (1) month of service. Computation of the 13thmonth Pay In computing the 13th month pay, the total basic wage received in a given calendar year shall be divided by 12. The amount derived shall be paid not
- 201. LABOR LAW ANDSOCIAL LEGISLATIONS 187 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW later than December 24 or upon separation from employment. (Sec. 8, Rule IV, IRR of R.A. No. 10361) SSS, PhilHealth, and PAG-IBIG The kasambahay is covered by SSS, PhilHealth and Pag-IBIG after one (1) month of service. Q: Supposing that in exchange for non- membership, the kasambahay agrees with the Er to receive the premiums and contributions in addition to his/her salary. Is this allowed? A: NO. Under the SSS, PhilHealth, and PAG-IBIG laws, the Er has the obligation to register the kasambahay and deduct and remit the required premiums and contributions. The Er shall incur certain liabilities, including criminal prosecution, if he fails or refuses to comply with his/her obligations. (Q&A on Batas Kasambahay, DOLE) Kasambahay Avails of Certain Loan Privileges from PAG-IBIG Fund Which Require the Payment of Additional or Upgraded Contributions Said additional or upgraded contributions shall be shouldered solely by the kasambahay. (Sec. 9, Art. IV, IRR of R.A. No. 10361) Er’s Liability in Case the Kasambahay Refuses to Be a Member of SSS, PhilHealth, and PAG-IBIG The Er is still liable under the SSS, PhilHealth, and PAG-IBIG laws in case the kasambahay refuses membership with those agencies, because it is mandatory and non-negotiable. (Q&A on Batas Kasambahay, DOLE) Person Liable to Pay the SSS premium, PhilHealth and PAG-IBIG Contributions of the Kasambahay GR: The Er shall pay the SSS premium, PhilHealth, and PAG-IBIG contributions of the kasambahay XPN: If the wage of the kasambahay is P5,000.00 or more, the kasambahay will pay his/her share in the premiums/contributions. (Sec. 9, Rule IV, IRR of R.A. No. 10361) Provisions Protecting Ers of a Kasambahay 1. Prohibition against privileged information; 2. Er may require certain pre-employment documents prior to engagement; 3. Ers are assured of quality services through DOLE-TESDA training, assessment, and certification of kasambahay; 4. Forfeiture of 15-day unpaid salary should the kasambahay leave the residence of the Er without any justifiable reason; and 5. Right to terminate the employment on justifiable grounds. (Q&A on Batas Kasambahay, DOLE) Grounds for Termination of Contract by the Kasambahay 1. Verbal or emotional abuse of the kasambahay by the Er or any member of the household; 2. Inhuman treatment including physical abuse of the kasambahay by the Er or any member of the household; 3. Commission of a Crime or offense against the kasambahay by the Er or any member of the household; 4. Violation by the Er of the terms and conditions of the employment contract and other standards set forth under the law; 5. Any disease prejudicial to the health of the kasambahay, the Er, or member/s of the household; and 6. Other causes analogous to the foregoing. (Sec. 33, R.A. No. 10361) Grounds for Termination of Contract by the Er 1. Misconduct or willful disobedience by the kasambahay of the lawful order of the Er in connection with the former’s work;
- 202. 2024 GOLDEN NOTES 188 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2. Gross or habitual neglect or inefficiency by the kasambahay in the performance of duties; 3. Fraud or willful breach of the trust reposed by the Er on the kasambahay; 4. Commission of a crime or offense by the kasambahay against the person of the Er or any immediate member of the Er’s family; 5. Violation by the kasambahay of the terms and conditions of the employment contract and other standards set forth under the law; 6. Any disease prejudicial to the health of the kasambahay, the Er, or member/s of the household; and 7. Other causes analogous to the foregoing. (Sec. 34, R.A. No. 10361) NOTE: Neither the domestic worker nor the Er may terminate the contract before the expiration of the term except for grounds provided for in Secs. 33 and 34 of the Batas Kasambahay. The domestic worker and the Er may mutually agree upon written notice to pre-terminate the contract of employment to end the employment relationship. (Sec. 32, Ibid.) Termination of Contract If the Duration of Service Is Not Determined in the Contract The kasambahay or the Er may terminate the contract any time if the duration of service is not determined in the contract. Either the Er or the kasambahay may give notice to end the working relationship five (5) days before the intended date of the termination of service. (Sec. 32, R.A. No. 10361) Effect of Unjust Dismissal by the Er The kasambahay shall receive the following if he/she is unjustly dismissed by the Er: 1. Outright payment of earned wage; and 2. Indemnity benefit in the form of wage equivalent to 15 days work. (Q&A on Batas Kasambahay, DOLE) Liabilities of a Kasambahay Who Leaves His/Her Er Without Justifiable Reason 1. Forfeiture of wage equivalent to 15 days work; and 2. Reimbursement of the deployment expenses, if the employment contract is terminated within 6 months from employment. (Sec. 32, R.A. No. 10361) Q: Can the Er inspect the belongings of the kasambahay before he/she leaves the household in case of termination of employment? A: NO. The Er cannot inspect the belongings of the kasambahay. However, the Er and the kasambahay can agree in their employment contract that an inspection can be made before he/she leaves the household. (Q&A on Batas Kasambahay, DOLE) Q: If there is non-payment or underpayment of wage and other labor-related concerns, where can the kasambahay seek assistance? A: The kasambahay can go to a Kasambahay Desk Officer situated in their respective barangays or the nearest DOLE field/provincial/regional office. (Q&A on Batas Kasambahay, DOLE) Replacement of Kasambahay Hired through PEAs Within one (1) month from the day the Kasambahay reported for work, the Er shall be entitled to a qualified replacement at no additional cost of any if the ff. grounds occurred: 1. The kasambahay is found to be suffering from an incurable or contagious disease, or mental illness as certified by a competent or government physician; 2. The kasambahay abandons the job without justifiable cause, voluntarily resigns, commits theft or any other analogous acts prejudicial to the Er or his/her family; or 3. The kasambahay is physically or mentally incapable of discharging the minimum
- 203. LABOR LAW ANDSOCIAL LEGISLATIONS 189 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW requirements of the job, as specified in the employment contract. (Sec. 4, Rule III, IRR of R.A. No. 10361) NOTE: The Er shall be entitled to a refund of seventy-five (75%) of the deployment expenses or fees paid to the PEA, if the latter failed to provide a qualified replacement after a lapse of one (1) month from receipt of the request for replacement. Responsibilities of the PEAs under the Law 1. Ensure that the kasambahay is qualified as required by the Er; 2. Secure the best terms and conditions of employment for the kasambahay; 3. Ensure that the employment agreement between the kasambahay and the Er stipulates the terms and conditions of employment and all the benefits in accordance with the IRR; 4. Provide a pre-employment orientation briefing to the kasambahay and the Er about their rights and responsibilities in accordance with the IRR; 5. Ensure that the kasambahay is not charged or required to pay any recruitment or placement fees; 6. Keep copies of employment contracts and agreements pertaining to recruited kasambahay, which shall be made available during inspections or whenever required by the DOLE or local government officials; 7. Assist the kasambahay in filing his/her complaints or grievances against the Ers; 8. Cooperate with government agencies in rescue operations involving abused or exploited kasambahay; and 9. Assume joint and solidary liability with the Er for payment of wages, wage-related and other benefits, including monthly contribution for SSS, PhilHealth, and Pag-IBIG membership. (Sec. 3, Rule III, IRR of R.A. No. 10361) Unlawful Acts under the Batas Kasambahay 1. Employment of children below 15 years of age; 2. Withholding of the kasambahay’s wages; 3. Interference in the disposal of the kasambahay’s wages; 4. Requiring kasambahay to make deposits for loss or damage; 5. Placing the kasambahay under debt bondage; and 6. Charging another household for temporarily performed tasks. (Sec. 1, Rule XII, IRR of R.A. No. 10361) NOTE: Unlawful acts are punishable with an administrative fine ranging from P10,000 to P40,000 to be imposed by the DOLE Regional Offices. Other Remedies for Unlawful Acts The aggrieved party may file the appropriate civil or criminal action before the regular courts. Remedy for Abused or Exploited Kasambahay The law mandates the conduct of immediate rescue of abused or exploited kasambahay by the municipal or city social welfare officer or a social welfare officer from DSWD, in coordination with the concerned barangay officials. (Sec. 1, Rule X, IRR of R.A. No. 10361) The law sets out that crimes or offenses committed under the Revised Penal Code and other criminal laws shall be filed with the regular courts. (Sec. 3, Rule X, IRR of R.A. No. 10361) Parties who can Report the Abuse Committed Against a Kasambahay 1. Offended kasambahay; 2. Parents or guardians of the offended kasambahay; 3. Ascendants, descendants or collateral relatives within the fourth (4th) civil degree of consanguinity or affinity; 4. Social workers from the LSWDOs or the DSWD Field Office;
- 204. 2024 GOLDEN NOTES 190 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. Police officers from the Women and Children Protection Desks; 6. Barangay Officials; 7. Lawyer, counselor, therapist, or healthcare provider of the offended kasambahay; or 8. At least two (2) concerned responsible citizens of the city or municipality where the abuse occurred and who has personal knowledge of the offense committed. (Sec. 3, Rule X, IRR of R.A. No. 10361) Q: Albert, a 40-year-old Er, asked his domestic helper, Inday, to give him a private massage. When Inday refused, Albert showed her Art. 141 of the Labor Code, which says that one of the duties of a domestic helper is to minister to the Er’s personal comfort and convenience. Is Inday’s refusal tenable? (2009 BAR) A: YES. Inday’s refusal to give her Er a “private massage” is in accordance with law because the nature of the work of a domestic worker must be in connection with household chores. Massaging is not a domestic work. Q: NBC has a rest house and recreational facility in the highlands of Tagaytay City for the use of its top executives and corporate clients. The rest house staff includes a caretaker, two cooks and a laundrywoman. All of them are reported to the SSS as domestic or household Ees of the resthouse and recreational facility and not of NBC. Can NBC legally consider the caretaker, cooks and laundrywoman as domestic Ees of the rest house and not of NBC? (2000 BAR) A: NO. They are not domestic Ees. They are the Ees of NBC because the rest house and recreational facility are business facilities which are for use of NBC’s top executives and clients. (Traders Royal Bank v. NLRC, G.R. No. 127864, 22 Dec. 1999) NOTE: A house help, a laundrywoman, a driver, houseboy or gardener working in staff houses of a company who attends to the needs of the company’s guests is not a househelper or domestic servant. He is an industrial worker who must be paid the industrial rate. 4. HOMEWORKERS (Arts. 151-153, LC) Homeworkers They are those who perform in or about his own home any processing or fabrication of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an Er and sold thereafter to the latter. NOTE: D.O. No. 05-92, DOLE (04 Feb. 1992) amended Rule XIV of the IRR. Industrial Homework It is a system of production under which work for an Er or contractor is carried out by a homeworker at his/her home. Materials may or may not be furnished by the Er or contractor. It differs from regular factory production principally in that it is a decentralized form of production where there is ordinarily very little supervision or regulation of methods of work. (Sec. 2(a), DOLE D.O. No. 05-92) Home It means any room, house, apartment or other premises used regularly, in whole or in part, as dwelling place, except those situated within the premises or compound of an employer, contractor or subcontractor and the work performed therein is under the active or personal supervision by or for the latter. (Sec. 2(c), Ibid.)
- 205. LABOR LAW ANDSOCIAL LEGISLATIONS 191 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW House helpers vs. Homeworkers (2017 BAR) HOUSE HELPERS HOMEWORKERS Ministers to the personal needs and comfort of his Er in the latter’s home Performs in or about his own home any processing or fabrication of goods or materials, in whole or in part, which have been furnished directly or indirectly, by an Er and sold thereafter to the latter. Er of a Homeworker It includes any person, natural or artificial who, for his account or benefit, or on behalf of any person residing outside the country, directly or indirectly, or through an Ee, agent contractor, subcontractor or any other person: 1. Delivers or causes to be delivered, any goods, articles or materials to be processed or fabricated in or about a home and thereafter to be returned or to be disposed of or distributed in accordance with his directions; or 2. Sells any goods, articles, or materials to be processed or fabricated in or abut a home and then repurchases them after such processing or fabrication, either by himself or through some other person. (Sec. 2(d), D.O. No. 05-92) Duty of the Er in Case He Contracts with Another in the Performance of His Work It shall be the duty of the Er to provide in such contract that the Ees or homeworkers of the contractor and the latter’s subcontractor shall be paid in accordance with the LC. (Sec. 11, D.O. No. 05- 92) Liability of the Er if the Contractor or Subcontractor Fails to Pay the Wages or Earnings of his Ees Er shall be jointly and severally liable with the contractor or subcontractor to the workers of the latter to the extent that such work is performed under such contract, in the same manner as if the Ees or homeworkers were directly engaged by the Er. (Sec. 11, D.O. No. 05-92) Right of Industrial Homeworkers to Form Labor Organizations D.O. No. 05-92 (04 Feb. 1992), replacing Rule XIV of the IRR Book III of the LC, authorizes the formation and registration of labor organization of industrial homeworkers. It also makes explicit the Ers duty to pay and remit SSS, PhilHealth and ECC premiums. (Secs. 3, DOLE D.O. No. 05-92) Payment for Homework Immediately upon receipt of the finished goods and articles, the Er is required to pay the homeworker for the work performed less corresponding homeworkers’ share of SSS, MEDICARE, and ECC premium contributions, which shall be remitted by the contract/subcontractor or Er to the SSS with the Ers’ share. (Sec. 6, DOLE D.O. No. 05-92) However, where payment is made to a contractor or subcontractor, the homeworker shall likewise be paid immediately after the goods or articles have been collected from the workers. (Ibid.) Conditions for Payment of Work The Er may require the homeworker to redo the work which has been improperly executed without having to pay the stipulated rate again. An Er, contractor, or subcontractor need not pay the homeworker for any work which has been done on goods and articles which have been returned for reasons attributable to the fault of the homeworker. (Sec. 9, D.O. No. 05-92)
- 206. 2024 GOLDEN NOTES 192 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Standard Rates for Homeworkers At the initiative of the Department or upon petition of any interested party, SOLE or his representative shall establish the standard output rate (SOR) or standard minimum rate through any of the following procedures: 1. Time and motion studies; 2. Individual/collective agreement between the ER and its workers as approved by SOLE; and 3. Consultation with representatives of employers and workers organization. (Sec. 7, D.O. No. 05- 92) Prohibitions for Homework The following shall be prohibited as homework: 1. Explosives, fireworks and similar articles; 2. Drugs and poisons; and 3. Other articles, the processing of which requires exposure to toxic substances. (Sec. 13, D.O. No. 05-92) Conditions for Deduction from Homeworker’s Earnings GR: The Er, contractor or subcontractor shall not make any deduction from the homeworker’s earnings for the value of materials which have been lost, destroyed, soiled or otherwise damage. XPN: Unless the following conditions are met: 1. The homeworker is clearly shown to be responsible for the loss or damage; 2. The homeworker is given reasonable opportunity to show cause why deductions should not be made; 3. The amount of such deduction is fair and reasonable and shall not exceed the actual loss or damages; and 4. The deduction is made at such rate that the amount deducted does not exceed 20% of the homeworker’s earnings in a week. (Sec. 8, D.O. No. 05-92) Q: Josie is the confidential secretary of the Chairman of the Board of the bank. She is presently on maternity leave. In an arrangement where the Chairman of the Board can still have access to her services, the bank allows her to work in her residence during her leave. For this purpose, the bank installed a fax machine in her residence, and gave her a cellphone and a beeper. Is Josie a homeworker under the law? Explain. (2000 BAR) A: NO. She is actually an office worker. She is not an industrial homeworker who accepts work to be fabricated or processed at home for a contractor, which work, when finished, will be returned to, or repurchased by said contractor. (Art. 155, LC) 5. NIGHT WORKERS (Arts. 154-161, LC) Night Work Night work is at least seven (7) consecutive hours of work between 10:00 PM and 6:00 AM. (Sec. 2, D.O. No. 119-12) Night Worker Any employed person whose work covers the period from ten o’clock in the evening to six o’clock the following morning, provided that the worker performs no less than 7 consecutive hours of work. (Sec. 2, D.O. No. 119-12) NOTE: R.A. No. 10151 inserted Chapter V (Arts. 154- 161) under Book 3, Title III of the LC. Persons Covered by the Provisions on Night Work GR: All persons who shall be employed or permitted or suffered to work at night. XPN: Those employed in agriculture, stock raising, fishing, maritime transport and inland navigation, during a period of not less than seven (7) consecutive hours, including the interval from midnight (12am) to five o’clock in the morning (5am), to be determined by the SOLE after
- 207. LABOR LAW ANDSOCIAL LEGISLATIONS 193 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW consulting the workers’ representatives/ labor organizations and Ers. (Art. 154, LC as added by RA 10151 approved on June 21, 2011) (Art. 154, LC as added by R.A. No. 10151 approved on 21 June 2011) Right of the Workers to Health Assessment GR: At their request, workers shall have the right to undergo health assessment without charge and to receive advice on how to reduce or avoid health problems associated with their work: 1. Before taking up an assignment as a night worker; 2. At regular intervals during such an assignment; and 3. If they experience health problems during such an assignment which are not caused by factors other than the performance of night work. (Art. 155, LC) NOTE: Findings of such assessments shall not be transmitted to others without the workers’ consent and shall not be used to their detriment. XPN: Finding of unfitness for night work. (Art. 155, LC) Worker Found to be Medically Unfit for Night Work Night workers who are certified by competent physician as unfit for night work due to health reasons shall be transferred, whenever practicable, to a similar job for which they are fit to work. If such transfer to a similar job is not practicable, or the workers are unable to render night work for a continuous period of not less than 6 months upon the certification of a competent public health authority, these workers shall be granted the same company benefits as other workers who are unable to work, or to secure employment during such period. (Sec. 5, D.O. No. 119-12) Separation from Employment of a Worker Found Medically Unfit for Night Work The provisions of D.O. No. 119-12 allow the application of Art. 298 to a worker who is found unfit for night work if his transfer to another (daytime) job is not practicable. Art. 298 authorizes the separation of an Ee suffering from a disease. For an Ee found unfit for night work, the Er’s ultimate recourse, therefore, may be employment termination based on an authorized cause. (Azucena, 2016) Temporarily Unfit for Night Work A night worker certified as temporarily unfit for night work for a period of not less than six (6) months shall be given the same protection against dismissal or notice of dismissal as other workers who are prevented from working for health reasons. (Sec. 5, D.O. No. 119-12) Employability of Women for Night Work Measures shall be taken to ensure that an alternative to night work is available to women workers who would otherwise be called upon to perform such work: 1. Before and after childbirth, for a period of at least 16 weeks, which shall be divided between the time before and after childbirth; 2. For additional periods, in respect of which a medical certificate is produced stating that said additional periods are necessary for the health of the mother or child: a. During pregnancy; b. During a specified time beyond the period, after childbirth is fixed pursuant to number 1, the length of which shall be determined by the DOLE after consulting the labor organizations and Ers. (Art. 158, LC)
- 208. 2024 GOLDEN NOTES 194 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES During the Periods Referred in Art. 158 1. A woman worker shall not be dismissed or given notice of dismissal, except for just or authorized causes provided for in the Code that are not connected with pregnancy, childbirth and childcare responsibilities. 2. A woman worker shall not lose the benefits regarding her status, seniority, and access to promotion which may attach to her regular night work position. (Ibid.) Pregnant Women and Nursing Mothers May Be Allowed to Work at Night They are allowed only if a competent physician, other than the company physician, shall certify their fitness to render night work, and specify, in the case of pregnant Ees, the period of the pregnancy that they can safely work. (Ibid.) Protection of Night Workers The law protects the night workers by requiring: 1. The provision of certain facilities such as sleeping or lactation quarters and means of transport; 2. Conduct of medical examination to determine fitness for night work; and, 3. Observance of legal process to decide appropriate action where a worker is found unfit for night work. Such process includes transfer of worker to day work, if practicable, and, only as a last recourse separation from employment. Mandatory Facilities 1. Suitable first-aid facilities, including arrangements where such workers, where necessary, can be taken immediately to a place for appropriate treatment. 2. Safe and healthful working conditions and adequate or reasonable facilities, i.e., sleeping or resting quarters in the establishment, and transportation from the work premises to the nearest point of their residence subject to exceptions and guidelines to be provided by the DOLE. (Art. 156, LC) 6. APPRENTICES AND LEARNERS (Arts. 58-60 and 73-74, LC) Apprentice A person undergoing training for an approved apprenticeable occupation during an established period assured by an apprenticeship agreement. (Sec. 4(k), R.A. No. 7796) Apprenticeship Training within employment with compulsory related theoretical instructions involving a contract between an apprentice and an Er on an approved apprenticeable occupation for a duration not exceeding six (6) months. (Sec. 4(j), R.A. No. 7796) Apprenticeable Occupation Any trade, form of employment or occupation which requires more than three (3) months of practical training on the job supplemented by related theoretical instruction. (Art. 58(c), LC) Learner A person hired as a trainee in industrial occupations which are non-apprenticeable and which may be learned through practical training on the job not exceeding three (3) months, whether or not such practical training is supplemented by theoretical instructions. (Sec. 1, Rule VII, Book II, Omnibus Rules Implementing the Labor Code) Learnership Any practical training on a learnable occupation which may or may not be supplemented by related theoretical instructions for a period not exceeding three (3) months. (TESDA Circular, No. 120, Series of 2020)
- 209. LABOR LAW ANDSOCIAL LEGISLATIONS 195 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Qualifications of an Apprentice 1. Must be at least fifteen (15) years of age; provided that those who are at least fifteen but not more than eighteen (18) years of age may be eligible for apprenticeship only in non- hazardous occupations 2. Be physically fit for the occupation in which the apprentice intends to be trained; 3. Possess good moral character, vocational aptitude, and capacity for apprenticeship as determined by the enterprise; 4. Have the ability to comprehend and follow oral and written instructions; 5. Not be a graduate of any apprenticeship program of the registered company provider; and 6. Have met the specific requirements of the Training Regulations. (Ibid.) Qualifications of Ers/Enterprises 1. Any entity, whether or not organized for profit, may establish or sponsor apprenticeship or learnership programs and employ apprentices/learners. 2. Any enterprise with ten (10) or more regular workers and is duly registered with the appropriate government authorities. 3. The number of apprentices to be accepted by the participating enterprise shall not be more than twenty percent (20%) of its total regular workforce. (Ibid.) NOTE: Only Ers in highly technical industries may employ apprentices and only in apprenticeable occupations approved by TESDA. (Ibid.) Qualifications of a Learner Any unemployed person who is fifteen (15) years old and above may apply for Learnership with any participating enterprise. Those below eighteen (18) years of age may only be employed in non- hazardous occupations. (Ibid.) Learners may be hired in semi-skilled and other industrial occupations which are registered/recognized learnable occupations as approved by TESDA or in non-apprenticeable occupations. (Ibid.) Wages of Apprentices Wage shall not start below 75% of the applicable minimum wage, benefits entitled to an apprentice under existing laws and other benefits depending on the enterprise’s capability, be it in cash or in kind that an apprentice may enjoy. (Ibid.) Wages of Learners Wage shall not start below 75% of the applicable minimum wage, benefits entitled a learner under existing laws, including accident and disability insurance policy and other benefits depending on the enterprise’s capability, be it in cash or in kind that a learner may enjoy. (Ibid.) Working Conditions of Apprentices and Learners 1. Apprentices and learners who are below 18 years of age shall not be allowed to work for more than 8 hours a day, and in no case beyond 40 hours a week. They shall not be allowed to work between 10 P.M. and 6 A.M. of the following day. They shall not also be engaged in hazardous workplaces and conditions. 2. Apprentices and learners who are 18 years of age and above can work overtime, provided there is no available regular worker on the job. The time spent on overtime work shall be duly credited to their training hours based on the approved Training Plan. An apprentice or learner may render training beyond the normal daily training hours provided the following minimum requirements are present: a. The night training is rendered within the required period consistent with existing laws, rules, and regulations;
- 210. 2024 GOLDEN NOTES 196 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES b. The apprentice/learner shall be paid a night shift differential of not less than 10% of the minimum wage in the region for each hour of work performed between 10 P.M. and 6 A.M. c. The apprentice/learner shall be entitled to an Overtime Pay, if applicable; d. The apprentice/learner should not be below 18 years old; and e. The minimum requirements above are agreed or may be improved by the company, the training provider, and the labor union. NOTE: There can be an apprenticeship program prior to probationary employment, provided that the job involved is highly-technical. (Art. 281, LC) 7. PERSONS WITH DISABILITIES (R.A. No. 7277, as amended by R.A. No. 9442, R.A. No. 10070, and R.A. No. 10524) R.A. No. 7277 or the Magna Carta for Disabled Persons ensures equal opportunities for disabled persons and prohibits discrimination against them. Persons with Disability (PWDs) Those whose earning capacity is impaired by: 1. Physical deficiency; 2. Age; 3. Injury; 4. Disease; 5. Mental deficiency; or 6. Illness. Impairment It refers to any loss, diminution or aberration of psychological, physiological, or anatomical structure of function. (Sec. 4(b), R.A. 7277) Disability 1. A physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individual; 2. A record of such an impairment; or 3. Being regarded as having such an impairment. (Sec. 4(c), Ibid.) Handicap It refers to a disadvantage for a given individual resulting from an impairment or a disability, that limits or prevents the functions or activity, that is considered normal given the age and sex of the individual. (Sec. 4(d), Ibid.) Qualified Disabled Employee It provides for Equal Opportunity for Employment by stating that no disabled person shall be denied access to opportunities for suitable employment. A qualified disabled Ee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able-bodied person. (Sec. 5, R.A. No. 7277) A qualified individual with disability is an individual with disability who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires. (Sec. 4(l), R.A. No. 7277) NOTE: Consideration shall be given to the Er’s judgment as to what functions of job are essential, and if an Er has prepared a written description before advertising or interviewing applicants for the job. (Sec. 4(l), R.A. No. 7277)
- 211. LABOR LAW ANDSOCIAL LEGISLATIONS 197 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Employment of PWDs 1. When their employment is necessary to prevent curtailment of employment opportunities; and 2. When it will not create unfair competition in labor costs or lower working standards. (Art. 79, LC) Employment Period of PWD There is no minimum or maximum duration. It depends on the agreement, but it is necessary that there is a specific duration stated. PWDs Can Be a Regular Employees PWDs can be a regular Ee if work is usually necessary or desirable in the usual business of the Er. (Bernardo v. NLRC, G.R No. 122917, 12 July 1999) Persons Who May Employ PWDs Ers in all industries, provided, the disability is not such as to effectively impede the performance of job operations in the particular occupation for which they are hired. (Sec. 7, R.A. No. 7277) Not All Workers with a Disability are Considered Disabled Workers The mere fact that a worker has a disability does not make him a disabled worker because his disability may not impair his efficiency or the quality of his work. If despite his disability he can still efficiently perform his work, he would be considered a qualified disabled worker entitled to the same treatment as qualified able-bodied workers. (Bernardo v. NLRC, G.R No. 122917, 12 July 1999) Rights and Privileges of PWDs 1. Equal opportunity for employment - No PWD shall be denied access to opportunities for suitable employment. Five percent (5%) of all casual emergency and contractual positions in the DSWD, Health, Education, Culture and Sports, and other government agencies, offices or corporations engaged in social development shall be reserved for PWDs (Sec. 5, R.A. No. 7277); XPN: BFOQ 2. Sheltered employment - The Government shall endeavor to provide them work if suitable employment for disabled persons cannot be found through open employment; (Sec. 6, R.A. No. 7277) 3. Apprenticeship - PWD may be hired as apprentices or learners if their disability is not such as to effectively impede the performance of job operations in the particular occupations for which they are hired (Art. 81, LC); 4. Vocational rehabilitation - To develop the skills and potentials of disabled workers and enable them to compete in the labor market; (Sec. 9, R.A. No. 7277); 5. Vocational guidance and counselling – The DSWD shall implement measures providing and evaluating vocational guidance and counselling to enable disabled persons to secure, retain and advance in employment. (Sec. 10, R.A. No. 7277); Wage Rate (2013 BAR) GR: Handicapped workers are entitled to not less than 75% of the applicable adjusted minimum wage. (Art. 80, LC) XPN: All qualified handicapped workers shall receive the full amount of the minimum wage rate prescribed herein pursuant to R.A. No. 7277. (Wage Order No. NCR-18) NOTE: Generally, if a PWD is hired as an apprentice or learner, he shall be paid not less than 75% of the applicable minimum wage. XPN: If the PWD, however is hired as a learner and employed in piece or incentive-rate jobs during the training period, he shall be paid 100% of the applicable minimum wage. (Chan, 2017)
- 212. 2024 GOLDEN NOTES 198 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Incentives for Employers Who Are Employing Disabled Workers 1. Entitled to an additional deduction, from their gross income, equivalent to 25% of the total amount paid as salaries and wages to disabled persons; NOTE: Such entities must present proof certified by DOLE that disabled persons are under their employment, and the disabled Ee is accredited with the DOLE and the DOH as to his disability, skills, and qualifications. 2. Private entities that improve or modify their physical facilities in order to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction from their net taxable income, equivalent to 50% of the direct costs of the improvements or modifications. (Sec. 8, R.A. No. 7277) The financial incentive, if any, granted by law to SPQ Garments whose cutters and sewers in its garments-for-export operations are 80% staffed by deaf and deaf-mute workers is additional deduction from its gross income equivalent to 25% of amount paid as salaries to persons with disability (2013 BAR). Basis: Magna Carta for Disabled Persons Persons with Disability vs. Differently Abled PWDs DIFFERENTLY ABLED Covers only workers. Covers all activities or endeavors. Earning capacity is impaired by age or physical, mental deficiency, or injury Refers to all suffering from restriction of different abilities as a result of mental, physical, sensory impairment to perform an activity in the manner or within range considered for human being. Basis: Loss/ impairment of earning capacity. Basis: Range of activity which is normal for a human being. Loss due to injury or physical or mental defect or age. Restriction due to impairment of mental, physical, and/or sensory defect. If hired, entitled to 75% of minimum wage. Subject to definite periods of employment. If qualified, entitled to all terms and conditions as qualified able-bodied person. Employable only when necessary to prevent curtailment of employment opportunity. No restrictions on employment. Must get equal opportunity and no unfair competition. Q: Ana Cruz has a low IQ. She has to be told at least three times before she understands her daily work assignment. However, her work output is at least equal to the output of the least efficient worker in her work section. Is Mr. Cruz a handicapped worker? Explain. (2000 BAR) A: NO. Low IQ does not make the worker “handicapped” in the contemplation of law.
- 213. LABOR LAW ANDSOCIAL LEGISLATIONS 199 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Handicap means such physical or mental infirmity that impairs capacity to work. The deficiency may also be due to age or injury. (Article 78, LC) Q: A bank hired several handicapped workers to count and sort out currencies. The handicapped workers knew that the contract was only for a period of six-months and the same period was provided for in their employment contracts. After six months, the bank terminated their employment on the grounds that their contract has expired. This prompted the workers to file with the Labor Arbiter a complaint for illegal dismissal. Will their action prosper? Why or why not? (2012 BAR) A: YES. According to Magna Carta for Persons with Disability, it guarantees to disabled workers the right of able-bodied workers, one of which is the right to regularization by reason of the nature of work concerned. (Sec. 5, R.A. No. 7277) E. SEXUAL HARASSMENT IN THE WORK ENVIRONMENT (R.A. No. 7877); SAFE SPACES ACT (R.A. No. 11313, Art IV) Requisites (Demand-IAM-WET) 1. Act is committed in a Work, Education, or Training-related environment; 2. The doer, the harasser, is any person who has Authority, Influence or Moral ascendancy over another; and 3. Doer Demands or requests, or requires a sexual favor from the victim. It does not matter whether such demand is accepted or not. (Sec. 3, R.A. No. 7877) NOTE: Based on the Congressional deliberations, Anti-Sexual Harassment Law aims to punish the harasser without regard to gender. (Azucena, 2016) Kinds 1. Quid Pro Quo (“This for that”) – doer asks for something in exchange for something; and 2. Hostile Environment Sexual Harassment in a Work-Related or Employment Environment Elements: 1. The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued employment of said individual, or in granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the Ee which in a way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said Ee (Quid Pro Quo Sexual Harassment); 2. The above acts would impair the Ees’ rights or privileges under existing labor laws; or 3. The above acts would result in an intimidating, hostile, or offensive environment for the Ee. (Hostile Environment Harassment). Sexual Harassment in an Education or Training- Related Environment Elements: 1. Sexual harassment is employed: a. Against one who is under the care, custody or supervision of the offender; or b. Against one whose education, training, apprenticeship or tutorship is entrusted to the offender; 2. When sexual favor is made a condition to the giving of a passing grade, or the granting of honors and scholarships, or the payment of a
- 214. 2024 GOLDEN NOTES 200 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES stipend, allowance or other benefits, privileges, or considerations; or 3. When sexual advances result in an intimidating, hostile or offensive environment for the student, trainee or apprentice. NOTE: While the provision states that there must be a “demand, request or requirement of a sexual favor”, it is not necessary that it be articulated in a categorical manner. It may be discerned, with equal certitude, from the acts of the offender. Likewise, it is not essential that the demand, request or requirement be made as a condition for continued employment or for promotion to a higher position. It is enough that the respondent’s acts result in creating an intimidating, hostile or offensive environment for the Ee. (Domingo v. Rayala, G.R. No. 155831, 18 Feb. 2008) Beso-Beso Fashion In the case of Aquino v. Acosta (A.M. No. CTA-01-1, 02 Apr. 2002), the Supreme Court absolved Judge Acosta of liability under the Sexual Harassment law in greeting complainant with a kiss on the cheek in a ‘beso-beso’ fashion, where most of the kissing incidents were done on festive and special occasions. The Court held that what respondent judge committed were casual gestures of friendship and camaraderie, nothing more, nothing less, and that there is no indication that respondent was motivated by malice or lewd design. However, the Court admonished Judge Acosta not to commit similar acts against complainant or other female Ees of the CTA, otherwise, his conduct may be construed as tainted with impropriety. Duties of the Er or Head of Office in a Work- Related, Education or Training Environment 1. Prevent or deter the commission of acts of Sexual Harassment; and 2. Provide the procedures for the resolution, settlement or prosecution of acts of Sexual Harassment. (Sec. 4, R.A. No. 7877) Duty of the Er or Head of Office Towards the End 1. Promulgate appropriate rules and regulations in consultation with and jointly approved by the Ee or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation or Sexual Harassment cases and the administrative sanctions therefore. NOTE: Administrative sanctions taken against the alleged harasser shall not be a bar to prosecution in the proper courts for unlawful acts of Sexual Harassment. The said rules and regulations issued shall include, among others, guidelines on proper decorum in the workplace and educational or training institutions; 2. Create a committee on decorum and investigation of cases on Sexual Harassment; and 3. The Er or head of office, education or training institution shall disseminate, or post a copy of this Act for the information of all concerned. (Sec. 4, R.A. No. 7877) Extent of Liability of the Employer or Head of Office Er shall may be solidarily liable for damages arising from the acts of Sexual Harassment committed in the employment, education, or training environment, provided that: 1. The Er or head of office, educational or training institution is informed of such acts by the offended party; and 2. No immediate action is taken thereon. (Sec. 5, R.A. No. 7877)
- 215. LABOR LAW ANDSOCIAL LEGISLATIONS 201 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Independent Action for Damages When May be Filed Nothing under this Act shall preclude the victim of work, education or training-related sexual harassment from instituting a separate and independent action for damages and other affirmative relief. (Sec. 6, R.A. No. 7877) Three-Fold Liability Rule in Sexual Harassment Cases An act of sexual harassment may give rise to civil, criminal, and administrative liability on the part of the offender, each proceeding independently of the others. Prescription of Action Any action arising from the violation of the provisions of this act shall prescribe in three (3) years. (Sec. 7, R.A. No. 7877) Managerial Employee Who Commits Sexual Harassment Can Be Dismissed For Lack of Trust and Confidence The managerial employee did not give due regard to his subordinate’s feeling and acted in chauvinistic disdain of her honor. He failed to act accordingly as a good father of the family. He actively facilitated the commission of immoral conduct. Sexual harassment abounds in all sick societies. It is reprehensible enough but more so when inflicted by those with moral ascendancy over their victims. We rule that it is a valid cause for separation from service. A managerial employee is bound by a more exacting work ethics. He failed to live up to this higher standard of responsibility when he succumbed to his moral perversity. And when such moral perversity is perpetrated against his subordinate, he provides a justifiable ground for his dismissal for lack of trust and confidence. It is the right, nay, the duty of every employer to protect its employees from oversexed superiors. To be sure, employers are given wider latitude of discretion in terminating the employment of managerial employees on the ground of lack of trust and confidence. (Villarama v. NLRC G.R. No. 106341, 02 Sept. 1994) Indifference or Insensibility to Complaints of Sexual Harassment Victims is a Ground for Constructive Dismissal The Supreme Court emphasizes that statements suggesting that a case is weak because there are no witnesses or bruises are highly insensitive to victims of sexual harassment. In stating that a sexual harassment case is hard to prove without witnesses or physical manifestations of force, employers discourage their employees from coming forward with sexual harassment incidents. They foster an environment in which employees feel that their word cannot be taken against the word of the perpetrator. In making these statements, the employer lends more credence to the perpetrator, even without the latter having been questioned or having submitted a written explanation. It allows the employee to feel that the sexual harassment complaint's resolution had already been pre- determined against him or her. Indifference to complaints of sexual harassment victims may no longer be tolerated. Recent social movements have raised awareness on the continued prevalence of sexual harassment, especially in the workplace, and has revealed that one of the causes of its pervasiveness is the lack of concern, empathy, and responsiveness to the situation. Many times, victims are blamed, hushed, and compelled to accept that it is just the way things are, and that they should either just leave or move on. In recognizing the need to address these concerns, the State's policy against sexual harassment has been strengthened through Republic Act No. 11313, otherwise known as the Safe Spaces Act. This law has expanded the definition of gender-based sexual harassment in the workplace and has added to the duties of an employer as to its prevention, deterrence, and punishment. It explicitly requires that complaints be investigated and resolved within 10 days or less upon its reporting. It likewise expressly provides for the liability of employers and
- 216. 2024 GOLDEN NOTES 202 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES duties of co-workers as to sexual harassment. The law likewise specifies the confidentiality of proceedings, and the issuance of a restraining order for the offended person. Moreover, it allows local government units to impose heavier penalties on perpetrators. Insensibility to a sexual harassment case is a ground for constructive dismissal. In this instance, it cannot be denied that the employee was compelled to leave her employment because of the hostile and offensive work environment created and reinforced by the offender and the employer. She was thus clearly constructively dismissed. (LBC Express-Vis, Inc. v. Palco, G.R. No. 217101, 12 Feb. 2020) Q: A Personnel Manager, while interviewing an attractive female applicant for employment, stared directly at her for prolonged periods, albeit in a friendly manner. After the interview, the manager accompanied the applicant to the door, shook her hand and patted her on the shoulder. He also asked the applicant if he could invite her for dinner and dancing at some future time. Did the Personnel Manager, by the above acts, commit sexual harassment? Reason. (2000 BAR) A: YES. The Personnel Manager is in a position to grant or not to grant a favor (a job) to the applicant. Under the circumstances, inviting the applicant for dinner or dancing creates a situation hostile or unfriendly to the applicant's chances for a job if she turns down the invitation. (Sec. 3(a)(3), R.A. No. 7877) Q: In the course of an interview, another female applicant inquired from the same Personnel Manager if she had the physical attributes required for the position she applied for. The Personnel Manager replied: "You will be more attractive if you will wear micro-mini dresses without the undergarments that ladies normally wear." Did the Personnel Manager, by the above reply, commit an act of sexual harassment? A: YES. The remarks would result in an offensive or hostile environment for the Ee. Moreover, the remarks did not give due regard to the applicant’s feelings, and it is a chauvinistic disdain of her honor, justifying the finding of Sexual Harassment. (Villarama v. NLRC, G.R. No. 106341, 02 Sept. 1994) Q: Pedrito Masculado, a college graduate from the province, tried his luck in the city and landed a job as a utility/maintenance man at the warehouse of a big shopping mall. After working as a casual Ee for 6 months, he signed a contract for probationary employment for 6 months. Being well-built and physically attractive, his supervisor, Mr. Hercules Barak, took special interest to befriend him. When his probationary period was about to expire, he was surprised when one afternoon after working hours, Mr. Barak followed him to the men’s comfort room. After seeing that no one else was around, Mr. Barak placed his arm over Pedrito’s shoulder and softly said: “You have great potential to become a regular Ee and I think I can give you a favorable recommendation. Can you come over to my condo unit on Saturday evening so we can have a little drink? I’m alone, and I’m sure you want to stay longer with the company.” Is Mr. Barak liable for sexual harassment committed in a work-related or employment environment? (2000 BAR) A: YES. The elements sexual harassment are all present. The act of Mr. Barak was committed in a workplace. Mr. Barak, as supervisor of Pedrito Masculado, has authority, influence and moral ascendancy over Masculado. Given the specific circumstances mentioned in the question, like Mr. Barak following Masculado to the comfort room, etc. Mr. Barak was requesting a sexual favor from Masculado for a favorable recommendation regarding the latter's employment. It is not impossible for a male, who is a homosexual, to ask for a sexual favor from another male. Q: Nena worked as an Executive Assistant for Nesting, CEO of Nordic Corporation. One day, Nesting called Nena into his office and showed
- 217. LABOR LAW ANDSOCIAL LEGISLATIONS 203 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW her lewd pictures of women in seductive poses which Nena found offensive. Nena complained before the General Manager who, in turn, investigated the matter and recommended the dismissal of Nesting to the Board of Directors. Before the Board of Directors, Nesting argued, that since the Anti-Sexual Harassment Law requires the existence of "sexual favors," he should not be dismissed from the service since he did not ask for any sexual favor from Nena. Is Nesting correct? (2018 BAR) A: NO. Nesting’s argument on lack of sexual favor is incorrect. While his actions require further proof of being a “sexual favor” in terms of criminal liability under R.A. 7877, his employment may still be terminated under Art. 297 of the Labor Code. In Villarama v. NLRC and Golden Donuts (G.R. No. 106341, 02 Sept. 1994), the Supreme Court held that a managerial employee is bound by more exacting work ethics, with a high standard of responsibility. Sexual harassment of a subordinate amounts to “moral perversity” which provides a justifiable ground for dismissal due to lack of trust and confidence. Under the Safe Spaces Act, the crime of gender- based sexual harassment in the workplace includes “a conduct of sexual nature and other conduct- based on sex affecting the dignity of a person, which is unwelcome, unreasonable, and offensive to the recipient, whether done verbally, physically or through the use of technology such as text messaging or electronic mail or through any other forms of information and communication systems.” Safe Spaces Act This Act provides for the following definitions: 1. Catcalling – The unwanted remarks directed towards a person, commonly done in the form of wolf-whistling and misogynistic, transphobic, homophobic, and sexist slurs; (Sec. 3(a), R.A. No. 11313) 2. Ee - Refers to a person, who in exchange for remuneration, agrees to perform specified services for another person, whether natural or juridical, and whether private or public, who exercises fundamental control over the work, regardless of the term or duration of agreement; (Sec. 3(b), R.A. No. 11313) NOTE: For the purpose of this law, a person who is detailed to an entity under a subcontracting or second agreement shall be considered an Ee. 3. Er - Refers to a person who exercises control over an Ee; (Sec. 3(c), R.A. No. 11313) NOTE: For the purpose of this law, the status or conditions of the Ee’s employment or engagement shall be disregarded. 4. Gender - A set of socially ascribed characteristics, norms, roles, attitudes, values, and expectations identifying the social behavior of men and women, and the relations between them; (Sec. 3(d), R.A. No. 11313) 5. Gender-based online sexual harassment - An online conduct targeted at a particular person that causes or likely to cause another mental, emotional or psychological distress, and fear of personal safety, sexual harassment acts including unwanted sexual remarks and comments, threats, uploading, or sharing of one’s photos without consent, video and audio recordings, cyberstalking and online identity theft; (Sec. 3(e), R.A. No. 11313) 6. Gender identity and/or expression - The personal sense of identity as characterized, among others, by manner of clothing, inclinations, and behavior in relation to masculine or feminine conventions. A person may have a male or female identity with physiological characteristics of the opposite sex in which case this person is considered transgender; (Sec. 3(f), R.A. No. 11313) 7. Stalking - A conduct directed at a person involving the repeated visual or physical proximity, non-consensual communication, or a combination thereof that cause or will likely cause a person to fear for one’s own safety or the safety of others, or to suffer emotional distress. (Sec. 3(h), R.A. No. 11313)
- 218. 2024 GOLDEN NOTES 204 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 8. Cyberstalking - A form of stalking that is committed through an electronic medium in which online communication takes place. (Sec. 4(c), IRR of R.A. No. 11313) 9. Homophobic remarks or slurs - Any statements in whatever form or however delivered, which are indicative of fear, hatred, or aversion towards persons who are perceived to be or actually identify as lesbian, gay, bisexual, queer, pansexual and such other persons of diverse sexual orientation, gender identity or expression, or towards any person perceived to or actually have experienced same-sex attraction; (Sec. 4(i), IRR of R.A. No. 11313) 10. Misogynistic remarks or slurs - Any statements in whatever form or however delivered, that are indicative of the feeling of hating women or the belief that men are inherently better than women; (Sec. 4(l), IRR of R.A. No. 11313) 11. Public spaces - Streets and alleys, roads, sidewalks, public parks, buildings, schools, churches, public washrooms, malls, internet shops, restaurants and cafes, transportation terminals, public markets, spaces used as evacuation centers, government offices, common carriers, public utility vehicles (PUVs) as well as private vehicles covered by app-based transport network services, other recreational spaces such as, but not limited to, cinema halls, theaters and spas, bars and clubs, resorts and water parks, hotels and casinos, and all other areas, regardless of ownership, openly accessible or offered to be accessed by the public. (Sec. 4(m), IRR of R.A. No. 11313) 12. Sexist remarks or slurs - Statements in whatever form or however delivered, that are indicative of prejudice, stereotyping, or discrimination on the basis of sex, typically against women. (Sec. 4(n), IRR of R.A. No. 11313) 13. Transphobic remarks or slurs - Any statements in whatever form or however delivered, that are indicative of fear, hatred or aversion towards persons whose gender identity and/or expression do not conform with their sex assigned at birth. (Sec. 4(o), IRR of R.A. No. 11313) NOTE: The Safe Spaces Act does not undo or abandon the definition of sexual harassment under the Anti-Sexual Harassment Law of 1995. The gravamen of the offenses punished under the Safe Spaces Act is the act of sexually harassing a person on the basis of his/her sexual orientation, gender identity and/or expression, while that of the offense punished under the Anti-Sexual Harassment Act of 1995 is abuse of one's authority, influence or moral ascendancy so as to enable the sexual harassment of a subordinate. (Escandor v. People of the Philippines, G.R. No. G.R. No. 211962, 06, Jul. 2020) Gender-Based Sexual Harassment (GBSH) in the Workplace The crime of GBSH in the workplace includes the following: 1. An act or series of acts involving any unwelcome sexual advances, requests or demand for sexual favors or any act of sexual nature, whether done verbally, physically or through the use of technology such as text messaging or electronic mail or through any other forms of information and communication systems, that has or could have a detrimental effect on the conditions of an individual’s employment or education, job performance or opportunities; 2. A conduct of sexual nature and other conduct- based on sex affecting the dignity of a person, which is unwelcome, unreasonable, and offensive to the recipient, whether done verbally, physically or through the use of technology such as text messaging or electronic mail or through any other forms of information and communication systems; 3. A conduct that is unwelcome and pervasive and creates an intimidating, hostile or humiliating environment for the recipient. (Sec. 16, R.A. No. 11313) NOTE: GBSH may also be committed between peers and those committed to a superior
- 219. LABOR LAW ANDSOCIAL LEGISLATIONS 205 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW officer by a subordinate, or to a teacher by a student, or to a trainer by a trainee. (Ibid.) Workplaces include all sites, locations, spaces, where work is being undertaken by an Ee within or outside the premises of the usual place of business of the Er. (Sec. 18, IRR of R.A. No. 11313) Duties of Employers Ers or other persons of authority, influence or moral ascendancy in a workplace shall have the duty to prevent, deter, or punish the performance of acts of gender-based sexual harassment in the workplace. Towards this end, the Er or person of authority, influence or moral ascendancy shall: 1. Disseminate or post in a conspicuous place a copy of this Act to all persons in the workplace; 2. Provide measures to prevent gender-based sexual harassment in the workplace, such as the conduct of anti-sexual harassment seminars; 3. Create an independent internal mechanism or a Committee on Decorum and Investigation (CODI) to investigate and address complaints of gender-based sexual harassment which shall: a. Adequately represent the management, the Ees from the supervisory rank, the rank-and- file Ees, and the union, if any; b. Designate a woman as its head and not less than half of its members should be women; c. Be composed of members who should be impartial and not connected or related to the alleged perpetrator; d. Investigate and decide on the complaints within 10 days or less upon receipt thereof; e. Observe due process; f. Protect the complainant from retaliation; and g. Guarantee confidentiality to the greatest extent possible; 4. Provide and disseminate, in consultation with all persons in the workplace, a code of conduct or workplace policy which shall: a. Expressly reiterate the prohibition on GBSH; b. Describe the procedures of the internal mechanism created under Sec. 17(c) of this Act; and c. Set administrative penalties. (Sec. 17, R.A. No. 11313) NOTE: In case of non-compliance in the public sector by the Er of their duties herein provided, an Ee may file an administrative complaint with the CSC. In case the Er is a presidential appointee, elective official or official of the AFP, an administrative complaint may be filed with appropriate offices with such jurisdictions, such as the Office of the President or Office of the Ombudsman. (Sec. 19, IRR, of R.A. No. 11313) Duties of Ees and Co-Workers Ees and co-workers shall have the duty to: 1. Refrain from committing acts of GBSH; 2. Discourage the conduct of GBSH in the workplace; 3. Provide emotional or social support to fellow Ees, co-workers, colleagues or peers who are victims of gender-based sexual harassment; and 4. Report acts of GBSH witnessed in the workplace. (Sec. 18, R.A. No. 11313)
- 220. 2024 GOLDEN NOTES 206 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Liability of Employers In addition to liabilities for committing acts of GBSH, Ers may also be held responsible for: 1. Non-implementation of their duties under Sec. 17 of the law, as provided in the penal provisions; or 2. Not taking action on reported acts of GBSH committed in the workplace. (Sec. 19, IRR of R.A. No. 11313) Independent Action for Damages Nothing shall preclude the victim of work-related GBSH from instituting a separate and independent action for damages and other affirmative relief. (Sec. 23, IRR of R.A. No. 11313) F. DISCRIMINATORY PRACTICES The State shall afford protection to labor, promote full employment, insure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and Ers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. (Art. 3, LC) Discrimination It is the unequal treatment of employees, which is proscribed as an unfair labor practice by Art. 248(e) (now Art. 259) of the LC. It is the failure to treat all persons equally when no reasonable distinction can be found between those favored and those not favored. (International School Alliance of Educators v. Quisumbing, G.R. No. 128845, 01 June 2000) In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. (Ibid.) 1. AGE (R.A. No. 10911) Prohibited Forms of Discrimination For An Employer 1. Print or publish, or cause to be printed or published, in any form of media, including the internet, any notice of advertisement relating to employment suggesting preferences, limitations, specifications, and discrimination based on age; 2. Require the declaration of age or birth date during the application process; 3. Decline any employment application because of the individual’s age; 4. Discriminate against an individual in terms of compensation, terms and conditions or privileges of employment on account of such individual’s age; 5. Deny any Ee’s or worker’s promotion or opportunity for training because of age; 6. Forcibly lay off an Ee or worker because of old age; or 7. Impose early retirement on the basis of such Ee’s or worker’s age; (Sec. 5, R.A. No. 10911) NOTE: An Er may set age limitations in employment if: a. Age is a BFOQ reasonably necessary in the normal operation of a particular business or where the differentiation is based on reasonable factors other than age; b. The intent is to observe the terms of a bona fide seniority system that is not intended to evade the purpose of this Act; c. The intent is to observe the terms of a bona fide Ee retirement or a voluntary early retirement plan consistent with the purpose of this Act: Provided, that such retirement or voluntary retirement plan is
- 221. LABOR LAW ANDSOCIAL LEGISLATIONS 207 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW in accordance with the LC, as amended, and other related laws; or d. The action is duly certified by the SOLE in accordance with the purpose of R.A. No 10911; (Sec. 6, R.A. No. 10911.) Prohibited Forms of Discrimination For A Labor Contractor Or Subcontractor If any, to refuse to refer for employment or otherwise discriminate against any individual because of such person’s age. (Sec. 5(b), R.A. No. 10911) Prohibited Forms of Discrimination For A Labor Organization 1. To deny membership to any individual because of such individual’s age; 2. To exclude from its membership any individual because of such individual’s age; or 3. To cause or attempt to cause an Er to discriminate against an individual in violation of this Act; (Sec. 5(c), R.A. No. 10911) Prohibited Forms of Discrimination For A Publisher To print or publish any notice of advertisement relating to employment suggesting preferences, limitations, specifications, and discrimination based on age. (Sec. 5(d), R.A. No. 10911) 2. GENDER AND MARITAL STATUS (R.A. No. 9710) Discrimination Against Women It refers to any gender-based distinction, exclusion, or restriction which has the effect or purpose of impairing or nullifying the recognition, enjoyment, or exercise by women, irrespective of their marital status, on a basis of equality of men and women, of human rights and fundamental freedoms in the political, economic, social, cultural, civil, or any other field. It includes any act or omission, including by law, policy, administrative measure, or practice, that directly or indirectly excludes or restricts women in the recognition and promotion of their rights and their access to and enjoyment of opportunities, benefits, or privileges. (Sec. 4(b), R.A. No. 9710) Acts of Discrimination Under the Labor Code It shall be unlawful for any Er to discriminate against any woman Ee with respect to terms and conditions of employment solely on account of her sex. (Art. 133, LC) The following are acts of discrimination under the LC: 1. Payment of a lesser compensation, including wage, salary or other form of remuneration and fringe benefits, to a female Ee as against a male Ee, for work of equal value; and 2. Favoring a male Ee over a female Ee with respect to promotion, training opportunities, study, and scholarship grants solely on account of their sexes. (Art. 133, LC) 3. Stipulating as a condition of employment or continuation of employment that a woman Ee shall not get married, or stipulating expressly or tacitly that upon getting married, a woman Ee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate, or otherwise prejudice a woman Ee merely by reason of her marriage; (Art. 134, LC) 4. Denying any woman Ee the benefits provided in the Code or to discharge any woman employed by him for the purpose of preventing her from enjoying any of the said benefits; 5. Discharging such woman on account of her pregnancy, or while on leave of in confinement due to her pregnancy; and 6. Discharging or refusing the admission of such woman upon returning to her work for fear that she may again be pregnant; and (Art. 135, LC)
- 222. 2024 GOLDEN NOTES 208 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES NOTE: As long as a woman Ee’s ailment is related to her pregnancy, her sickness cannot be a ground for termination because to do so will be a violation of Art. 135 of the LC which prohibits an Er to discharge an Ee on account of pregnancy. (Del Monte Philippines, Inc. v. Velasco, G.R. No. 153477, 06 Mar. 2007) Classification of Certain Women Workers Any woman who is permitted or suffered to work, with or without compensation, in any night club, cocktail lounge, massage clinic, bar or similar establishment, under the effective control or supervision of the employer for a substantial period of time as determined by the Secretary of Labor and Employment, shall be considered as an employee of such establishment for purposes of labor and social legislation. (Art. 136, LC) Measure or Practice of General Application as a Form of Discrimination Any measure or practice of general application is considered as discrimination against women if: 1. It fails to provide for mechanisms to offset or address sex or gender-based disadvantages or limitations of women; 2. As a result, women are denied or restricted in the recognition and protection of their rights and in their access and enjoyment of opportunities, benefits, or privileges; or 3. Women, more than men, are shown to have suffered the greater adverse effects of those measures or practices. (Art. 136, LC) Discriminatory Practices Under R.A. No. 9710 The following are forms of discrimination against women in relation to employment: 1. Failure of the State to increase the recruitment and training of women in government services that cater to women victims of gender-related offenses; 2. Discrimination in the employment in the field of military, police, and other similar services; 3. Expulsion or non-readmission of women faculty due to pregnancy ouside of marriage; (Sec. 13(c), R.A. No. 9710) 4. Failure to provide a woman Ee a special leave benefit of two (2) months with full pay based on her gross monthly compensation following surgery caused by gynecological disorders, provided that said woman Ee has rendered continuous aggregate employment service of at least six (6) months for the last twelve (12) months; and (Sec. 18, R.A. No. 9710) 5. Failure of the State to ensure women migrant worker’s opportunity to undergo skills training before taking a foreign job, gender-sensitive training and seminars, and equal opportunities based on merit and fitness. The Right to Choose Marriage The doctrine of management prerogative gives an employer the right to “regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, the time, place and manner of work, work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of employees.” However, in Capin-Cadiz v. Brent Hospital and Colleges, Inc. (G.R. No. 187417, 24 Feb. 2016), the Court held that it is unlawful for Ers to require as a condition for employment or continuation of employment that a woman employee shall not get married as well as dismissal of a woman employee by reason of her marriage. It is unlawful for employers to require as a condition for employment or continuation of employment that a woman employee shall not get married. (Art. 134, LC) Illegal the dismissal of a woman employee because of a condition in her contract that she remains single during her employment. (Philippine Telegraph and Telephone Company v. NLRC, G.R. No. 118978, 23 May 1997)
- 223. LABOR LAW ANDSOCIAL LEGISLATIONS 209 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW The Right to Bear and Rear a Child Outside of Marriage The Labor Code prohibits the discriminatory act of discharging a woman on account of her pregnancy. In the constitutional right to personal liberty and privacy, the employee and other women similarly situated are free to be single mothers by choice. This cannot be curtailed in the workplace through discriminatory policies against pregnancy out of wedlock. Special Leave Benefit for Women A woman employee having rendered continuous aggregate employment service of at least six (6) months for the last twelve (12) months shall be entitled to a special leave benefit of two (2) months with full pay based on her gross monthly compensation following surgery caused by gynecological disorders. (Sec. 18, R.A. No. 9710) NOTE: Gynecological Disorder refer to disorders that would require surgical procedures such as, but not limited to, dilatation and curettage and those involving female reproductive organs such as the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a competent physician. It shall also include hysterectomy, ovariectomy, and mastectomy. (Sec. 1(b), DOLE D.O. No. 112-11) 3. PREGNANCY (Sec. 23(c), R.A. No. 10354) Discrimination Prohibited Pregnancy or the number of children shall not be a ground for non-hiring or termination from employment. (Sec. 23(c), R.A. No. 10354) 4. ILLNESS (DOLE D.A. No. 05-10; DOLE D.O. No. 73-05) Discrimination against Hepatitis B Prohibited There shall be no discrimination of any form against workers on the basis of their Hepatitis B status consistent with international agreements on non- discrimination ratified by the Philippines. They shall not be discriminated against, from pre- to post- employment, including hiring, promotion, or assign. (DOLE D.A. No. 05-10) NOTE: Prohibition includes based on suspicion, being compelled to disclose their Hepatitis B status and other related medical information and declared unfit to work without appropriate medical evaluation and counseling. Tuberculosis Prevention in the Workplace The TB policy shall be made an integral part of the enterprise’s occupational safety and health program. The workplace health and safety committee shall be responsible for overseeing the implementation of the TB policy (Sec. B-2, DOLE Order 73-05). 5. SOLO PARENTS (Sec. 7, R.A. No. 8972, as amended by R.A. No. 11861) Work Discrimination Prohibited No Er shall discriminate against any solo parent Ee with respect to terms and conditions of employment on account of his/her status. (Sec. 7, R.A. No. 8972) Solo Parent Any individual who falls under any of the following categories: 1. A woman who gives birth as a result of rape and other crimes against chastity even without a final conviction of the offender. Provided, that the mother keeps and raises the child; 2. Parent left solo or alone with the responsibility of parenthood due to death of spouse; 3. Parent left solo or alone with the responsibility of parenthood while the spouse is detained or is serving sentence for a criminal conviction for at least one (1) year;
- 224. 2024 GOLDEN NOTES 210 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 4. Parent left solo or alone with the responsibility of parenthood due to physical and/or mental incapacity of spouse as certified by a public medical practitioner; 5. Parent left solo or alone with the responsibility of parenthood due to legal separation or de facto separation from spouse for at least one (1) year, as long as he/she is entrusted with the custody of the children; 6. Parent left solo or alone with the responsibility of parenthood due to declaration of nullity or annulment of marriage as decreed by a court or by a church as long as he/she is entrusted with the custody of the children; 7. Parent left solo or alone with the responsibility of parenthood due to abandonment of spouse for at least one (1) year; 8. Unmarried mother/father who has preferred to keep and rear her/his child/children instead of having others care for them or give them up to a welfare institution; 9. Any other person who solely provides parental care and support to a child or children; and 10. Any family member who assumes the responsibility of head of family as a result of the death, abandonment, disappearance or prolonged absence of the parents or solo parent. (Sec. 3, R.A. No. 8972) NOTE: A change in the status or circumstance of the parent claiming benefits under Solo Parents Welfare Act of 2000, such that he or she is no longer left alone with the responsibility of parenthood, shall terminate his or her eligibility for these benefits. (Sec. 3(11), R.A. No. 8972) Flexible Work Schedule The employer shall provide for a flexible working schedule for solo parents provided that the same shall not affect individual and company productivity. Provided, further, that any employer may request exemption from the above requirements from the DOLE on certain meritorious grounds. (Sec. 6, R.A. No. 8972) Maternity Leave for Solo Parents The amount of daily allowance is equivalent to 100% of the member’s ADSC for a compensable period of 120 days for solo parents under R.A. No. 8972 or Solo Parents’ Welfare Act. 6. PERSONS WITH DISABILITY (R.A. No. 7277, as amended) Persons with Disability (PWDs) Persons with disability or disable persons are those suffering from restriction of different abilities, as a result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being. (Sec. 4(a), R.A. No. 7277) Impairment It is any loss, diminution, or aberration of psychological, physiological, or anatomical structure or function. (Sec. 4(b), R.A. No. 7277) Disability Disability shall mean: 1. a physical or mental impairment that substantially limits one or more psychological, physiological or anatomical function of an individual or activities of such individual; 2. a record of such an impairment; or 3. being regarded as having such an impairment. (Sec. 4(c), R.A. No. 7277) Handicap It refers to a disadvantage for a given individual, resulting from an impairment or a disability, that limits or prevents the function or activity, that is considered normal given the age and sex of the individual. (Sec. 4(d), R.A. No. 7277)
- 225. LABOR LAW ANDSOCIAL LEGISLATIONS 211 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Sheltered Employment It refers to the provision of productive work for persons with disability through workshops providing special facilities, income-producing projects or homework schemes with a view to giving them the opportunity to earn a living thus enabling them to acquire a working capacity required in open industry. (Sec. 4(i), R.A. No. 7277) Qualified Individual with a Disability An individual with a disability who, with or without reasonable accommodations, can perform the essential functions of the employment position that such individual holds or desires. However, consideration shall be given to the employer's judgment as to what functions of a job are essential, and if an employer has prepared a written description before advertising or interviewing applicants for the job, this description shall be considered evidence of the essential functions of the job. (Sec. 4(l), R.A. No. 7277) Employment Entrance Examination Upon an offer of employment, a disabled applicant may be subjected to medical examination, on the following occasions: 1. All entering Ees are subjected to such an examination regardless of disability; and 2. Information obtained during the medical condition or history of the applicant is collected and maintained on separate forms and in separate medical files and is treated as a confidential medical record. Provided, however, that: a. Supervisors and managers may be informed regarding necessary restrictions on the work or duties of the Ees and necessary accommodations; b. First aid and safety personnel may be informed, when appropriate, if the disability might require emergency treatment; c. Government officials investigating compliance with this Act shall be provided relevant information on request; and d. The results of such examination are used only accordance with this Act. (Sec. 33, R.A. No. 7277) Discrimination on Employment This law prohibits any entity, whether public or private, to discriminate against a qualified PWDs in regard to job application procedures, the hiring, promotion, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment. (Sec. 32, R.A. No. 7277) Discriminatory Acts during Pre-Employment 1. Limiting, segregating or classifying a disabled job applicant in such a manner that adversely affects his work opportunities; and 2. Screening out disabled persons through qualification standards, employment tests or other selection criteria; XPN: Said qualification standards are BFOQ. Discriminatory Acts during Employment 1. Using standards, criteria, or methods of administration that either effectively discriminates on the basis of disability, or perpetuate the discrimination of others who are subject to common administrative control; 2. Providing less remuneration or benefits to a qualified disabled Ee due to his disability, than the amount to which a non-disabled person performing the same work is entitled; 3. Favoring a non-disabled Ee over a qualified disabled Ee with respect to promotion, training opportunities, study and scholarship grants, solely on account of the latter’s disability;
- 226. 2024 GOLDEN NOTES 212 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 4. Re-assigning or transferring a disabled Ee to a job position he cannot perform by reason of his disability; 5. Failing to select or administer in the effective manner employment tests which accurately reflect the skills, aptitude or other factor of the disabled applicant or Ee that such test purports to measure, rather than the impaired sensory, manual or speaking skills of such applicant or Ee, if any; and 6. Excluding disabled persons from membership in labor unions or similar organizations. (Sec. 32, R.A. No. 7277) Discriminatory Acts in Dismissing an Employee Dismissing or terminating the services of a disabled Ee by reason of his disability unless the Er can prove that he impairs the satisfactory performance of the work involved to the prejudice of the business entities. Provided, however, That the Er first sought provide reasonable accommodations for disabled persons. (Sec. 32(g), R.A. No. 7277)
- 227. LABOR LAW ANDSOCIAL LEGISLATIONS 213 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW V. SOCIAL WELFARE BENEFITS A. SSS LAW (R.A. No. 8282, as amended by R.A. No. 11199) Declaration of Policy It is the policy of the State to establish, develop, promote, and perfect a sound and viable tax-exempt social security system suitable to the needs of the people throughout the Philippines which shall promote social justice through savings, and ensure meaningful social security protection to members and their beneficiaries against the hazards of disability, sickness, maternity, old age, death, and other contingencies resulting in loss of income or financial burden. Towards this end, the State shall endeavor to extend social security protection to Filipino workers, local or overseas, and their beneficiaries. (Sec. 2, R.A. No. 11199) NOTE: The enactment of the SSS law is a legitimate exercise of police power. It affords protection to labor and is in full accord with the constitutional mandate on the promotion of social justice. The funds contributed to the System created by the law are not public funds, but funds belonging to the members which are merely held in trust by the Government. (Roman Catholic Archbishop of Manila v. SSS, G.R. No. L-15045, 20 Jan. 1961) As a general rule, the determination of the existence or non-existence of an employer-employee relationship for the purpose of determining the coverage in the SSS shall be within the sole jurisdiction of the Commission. (SSS Office Order 2017-032) SSS Premiums are Not Taxes The funds contributed to the System belong to the members who will receive benefits, as a matter of right, whenever the hazards provided by the law occur. (CMS Estate, Inc. v. SSS, G.R. No. 26298, 28 Sept. 1984) Benefits Received Under SSS Law are Not Part of the Estate of a Member Benefits receivable under the SSS Law are in the nature of a special privilege or an arrangement secured by the law pursuant to the policy of the State to provide social security to the workingman. The benefits are specifically declared not transferable and exempt from tax, legal processes, and liens. (SSS v. Davac, et al., G.R. No. L-21642, 30 July 1966) Effective Date of SSS Coverage EFFECTIVE DATE OF SSS COVERAGE Er On the first day of operation Ee On the first day of employment Self-employed Upon registration with the SSS; registration shall mean payment of first contribution Sea-based OFW First day of employment Land-based OFW covered under BLAs Based on the provisions of the Agreement and its implementing arrangement Land-based OFW NOT covered under BLAs Applicable month and year of the first contribution payment Voluntary coverage of land-based overseas Filipinos Applicable month and year of the first contribution payment. (Rule 15, IRR, R.A. No. 11199) Effect of Separation of the Employee on the Obligation to Contribute and Remit The effects are as follows: 1. His Er’s obligation to contribute arising from that employment shall cease at the end of the month of separation. 2. The separated Ee shall be credited with all contributions paid on his/her behalf and is entitled to the social security benefits in
- 228. 2024 GOLDEN NOTES 214 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES accordance with issued guidelines and the provisions of the Social Security Act of 2018. 3. The separated Ee may continue to pay his/her contributions voluntarily to maintain his/her right to full benefit. (Sec. 11, R.A. No. 11199) 4. Any contribution paid in advance by the Er but not due shall be credited or refunded to said Er. (Sec. 22, R.A. No. 11199) The above rule recognizes the “once a member, always a member” principle. Legal Compensation It is clear in Art. 113 of the LC that no employer, in his own behalf or on behalf of any person, shall make any deduction from the wages of his employees, except in cases where the employer is authorized by law or regulations issued by the SOLE, among others. The Omnibus Rules Implementing the LC, meanwhile, provides that deductions from the wages of the employees may be made by the employer when such deductions are authorized by law, or when the deductions are with the written authorization of the employees for payment to a third person. Thus, any withholding of an employee's wages by an employer may only be allowed in the form of wage deductions under the circumstances provided in Art. 113 of the LC, as well as the Omnibus Rules implementing it. Further, Art. 116 of the LC clearly provides that it is unlawful for any person, directly or indirectly, to withhold any amount from the wages of a worker without the worker's consent. (PLDT v. Estrañero, G.R. No. 192518, 15 Oct. 2014) Effect of the Interruption of Business or Professional Income 1. If the self-employed member realizes no income in any given month, he/she shall not be required to pay his/her contributions for that month. NOTE: No self-employment income, no obligation to pay. 2. A self-employed member may be allowed to continue paying contributions under the same rules and regulations applicable to a separated Ee member. 3. No retroactive payment of contributions shall be allowed. (Sec. 11, R.A. No. 11199) Q: A textile company hires 10 carpenters to repair the roof of its factory which was destroyed by typhoon “Bening.” Are the carpenters subject to compulsory coverage under the SSS Law? Why? A: NO. The employment is purely casual and not for the purpose of the occupation or business of the Er. Their engagement is occasioned by the passage of the typhoon; they are not hired on a regular basis. Q: Don Luis, a widower, lived alone in a house with a large garden. One day, he noticed that the plants in his garden needed trimming. He remembered that Lando, a 17-year-old out-of- school youth, had contacted him in church the other day looking for work. He contacted Lando who immediately attended to Don Luis’ garden and finished the job in three days. (2014 BAR) a) Is there an Er-Ee relationship between Don Luis and Lando? A: YES. There is an Er-Ee relationship between Don Luis and Lando. Firstly, Lando, who was looking for work finally rendered personal services for Don Luis. Secondly, Lando could not have been the master of his time, means and methods under the circumstances. b) Does Don Luis need to register Lando with the SSS? A: NO. Don Luis does not need to register Lando with the SSS because he is a purely casual Ee, hence outside SSS coverage. Neither should he report Lando for SSS coverage under the Batas Kasambahay Law because, although a gardener, he is an occasional or sporadic Ee. Therefore, he is not a kasambahay who is entitled to SSS coverage. (Sec. 2, R.A. No. 10361)
- 229. LABOR LAW ANDSOCIAL LEGISLATIONS 215 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 1. BENEFITS; COVERAGE AND EXCLUSIONS Benefits under the SSS Act 1. Sickness Benefits; 2. Permanent Disability Benefits; 3. Maternity Leave Benefits; 4. Retirement Benefits; 5. Death Benefits; 6. Funeral Benefits; and 7. Unemployment Insurance or Involuntary Separation Benefits. Non-Transferability of Benefits Benefits payable are not transferable and no power of attorney or other document executed by those entitled thereto in favor of any agent, attorney or any other person for the collection thereof on their behalf shall be recognized, except when the payees are physically unable to collect personally such benefits. (Sec. 15, R.A. No. 11199) Q: On her way home from work, Mikaela, a machine operator in a sash factory, decided to watch a movie in a movie house. However, she was stabbed by an unknown assailant. When she filed a claim for benefits under the law, it was denied on the ground that her injury is not work- connected. Is the denial legal? Why? A: NO. It is not necessary for the enjoyment of benefits under the SSS Law that the injury be work- connected. What is important is membership in the SSS and not the causal connection of the work of the Ee to his injury or sickness. NOTE: Claims based on work-connected injuries or occupational diseases are covered by the State Insurance Fund. Sickness benefit It is a daily cash allowance paid by the Er to the member who is unable to work due to sickness or injury for each day of compensable confinement or a fraction thereof, or by the SSS, if such person is unemployed or is self-employed, an OFW, or Voluntary Member (VM) who has been previously covered either as employed, self-employed, OFW and non-working spouse. (Sec. 1, Rule 25, IRR, R.A. No. 11199) Qualifying Conditions (Un-P-U-N) 1. The member is Unable to work due to sickness or injury and is confined either in a hospital or at home for at least four (4) days. 2. The member has Paid at least 3 months of contributions within the 12-month period immediately before the semester of sickness or injury. 3. The member has Used all company sick leaves with pay for the current year and has duly notified his Er. 4. The member must Notify the SSS by filing a sickness benefit application if he is separated from employment, a self-employed or voluntary member, including OFW-member. (Sec. 2, Rule 25, IRR, R.A. No. 11199) NOTE: No contributions paid retroactively by self- employed, voluntary member, or OFWs shall be used in determining his/her eligibility to sickness benefit wherein the date of payment is within or after the semester of contingency.
- 230. 2024 GOLDEN NOTES 216 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Notification Requirement HOSPITAL CONFINE- MENT CONFINE- MENT ELSEWHERE, AS MAY BE DEFINED BY THE SSS SICKNESS OR INJURY THAT OCCURRED WHILE WORKING OR WITHIN THE PREMISES OF THE ER Notification by Ee to Er Not necessary The Ee shall notify the Er of the sickness or injury in the prescribed manner within 5 calendar days after the start of confinement Not necessary Notification by Er to SSS The Er shall inform the SSS of such confinement in the prescribed manner within one 1 year from date of discharge. The Er shall in turn notify the SSS within 5 calendar days after receipt of notice from Ee. The Er shall notify the SSS of such sickness or injury in the prescribed manner within 5 calendar days after onset of sickness or injury (Secs. 3-4, Rule 25, IRR, R.A. No. 11199) Rule on Notification of Self-employed Member GR: The unemployed or SE member, land-based OFW, or voluntary member including non-working spouse, shall directly notify the SSS of the confinement in the prescribed manner within five (5) calendar days after the start of confinement. XPN: When such confinement is in a hospital, notification to the SSS in the prescribed manner shall be within one (1) year from date of discharge. (Sec. 14, R.A. No. 11199) OFWs are given 35 calendar days in filing sickness benefits. This applies only for confinement elsewhere as defined by the SSS. (Sec. 3, Rule 25, IRR, R.A. No. 11199) Amount of Benefit The amount of the member’s daily Sickness Benefit allowance is equivalent to 90% of his Average Daily Salary Credit (ADSC). (Sec. 14, R.A. No. 11199) Limitations on the Grant of Sickness Benefit 1. A member may be granted a maximum sickness benefit of 120 days in one calendar year; 2. The sickness benefit shall be paid for not more than 240 days on account of the same illness or confinement; 3. An unused portion of the allowable 120 days sickness benefit cannot be carried forward nor added to the total number of compensable days allowable in the following year; and 4. Compensable confinement shall begin only after all sick leaves of absence with full pay to the credit of Ee-member shall have been exhausted, if applicable. (Sec. 14, R. A. No. 11199; Sec. 6, Rule 25, IRR, R. A. No. 11199) Compensable Confinement 1. It begins on the 1st day of sickness; and 2. Payment of such allowances shall be promptly made by the Er: a. Every regular payday or on the 15th and last day of each month; and b. In case of direct payment by the SSS - as long as such allowances are due and payable. (Sec. 14(b), R. A. No. 11199)
- 231. LABOR LAW ANDSOCIAL LEGISLATIONS 217 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Requirements for an Employer to Claim Reimbursement of the Sickness Benefit 1. 100% of daily benefits shall be reimbursed by SSS if the following requirements are satisfied: a. Receipt of SSS of satisfactory proof of such payment and legality thereof; and b. The Er has notified the SSS of the confinement within five (5) calendar days after receipt of the notification from the Ee member. 2. Er shall be reimbursed only for each day of confinement starting from the 10th calendar day immediately preceding the date of notification to the SSS if the notification to the SSS is made beyond five (5) calendar days after receipt of the notification from the Ee member. (Sec. 14(c), R.A. No. 11199) Reimbursement by SSS GR: SSS shall reimburse the Er or pay the unemployed member only for confinement within one year immediately preceding the date the claim for benefit or reimbursement is received by the SSS. XPN: Confinement in a hospital, in which case the claim for benefit or reimbursement must be filed within one year from the last day of confinement. (Sec. 14(c), R.A. No. 11199) Instances When the Employer or the Unemployed Member is Not Entitled to Reimbursement 1. Where the Er failed to notify the SSS of the confinement; 2. In the case of the unemployed, where he failed to send the notice directly to the SSS except when the confinement is in a hospital; and 3. Where the claim for reimbursement is made after one year from the date of confinement. (Sec. 14, R.A. No. 11199) NOTE: Sickness and disability benefits may be availed of simultaneously. Requisites 1. Sickness/injury and disability are not related. 2. Member meets all the qualifying conditions for the grant of sickness and disability benefits. (Sec. 6(xii), Rule 25, IRR, R. A. No. 11199) Q: Because of the stress in caring for her four (4) growing children, Tammy suffered a miscarriage late in her pregnancy and had to undergo an operation. In the course of the operation, her obstetrician further discovered a suspicious- looking mass that required the subsequent removal of her uterus (hysterectomy). After surgery, her physician advised Tammy to be on full bed rest for six (6) weeks. Meanwhile, the biopsy of the sample tissue taken from the mass in Tammy's uterus showed a beginning malignancy that required an immediate series of chemotherapy once a week for four (4) weeks. What benefits can Tammy claim under existing social legislation? (2013 BAR) A: Assuming she is employed, Tammy is entitled to a special leave benefit of two months with full pay (Gynecological Leave) pursuant to R.A. No. 9710 or the Magna Carta of Women. She can also claim Sickness Leave benefit in accordance with the SSS Act. Permanent Disability Benefit It is a cash benefit granted to a member who becomes permanently disabled, either partially or totally. (Sec. 1, Rule 23, IRR, R.A. No. 11199) Permanent Total Disability (PTD) The following are deemed permanent total disabilities: 1. Complete loss of sight of both eyes; 2. Loss of two limbs at or above the ankle or wrists; 3. Permanent complete paralysis of two limbs;
- 232. 2024 GOLDEN NOTES 218 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 4. Brain injury resulting to incurable imbecility or insanity; and 5. Such cases as determined and approved by the SSS. (Sec. 13-A(d), R.A. No. 11199) Permanent Partial Disability (PPD) If disability occurs after 36 monthly contributions have been paid prior to the semester of disability, the benefit shall be the monthly pension for permanent total disability payable not longer than the period designated in the schedule in Sec. 3, Rule 23 of the IRR of R.A. No. 11199. The monthly pension benefit shall be given in lump sum if it is payable for less than 12 months. NOTE: For the purpose of adjudicating retirement, death and permanent total disability pension benefits, contributions shall be deemed paid for the months during which the member received partial disability pension. Types of Permanent Disability Benefits 1. Percentage of the lump sum benefit – available if the permanent partial disability occurs before 36 monthly contributions have been paid prior to the semester of disability; 2. Monthly pension – available if the permanent partial disability occurs after 36 contributions, payable in accordance with the schedule. (Sec. 13-A, R. A. No. 11199) NOTE: The monthly pension benefit for PPD will be given in lump sum if it is payable in less than 12 months. (Ungos, 2013) Qualifying Conditions 1. The member has paid at least one month contribution before the semester of disability. 2. To qualify for a monthly disability pension, the member must have paid at least 36 monthly contributions prior to the semester of disability. 3. If less than 36 monthly contributions, he is granted a lump sum amount. (Sec. 13-A, R.A. No. 11199) Amount of Benefit 1. The minimum monthly Disability Pension is: a. P1,000 if the member has less than ten Credited Years of Service (CYS); b. P1,200 if with at least 10 CYS; and c. P2,400 with at least 20 CYS. (Sec. 2, Rule 18, IRR of RA 11199) 2. If qualified, the member is granted a monthly Disability Pension, plus P5,000 monthly Supplemental Allowance. (Sec. 7, Rule 23, IRR, R. A. No. 11199) 3. Dependent’s Pension (for total disability), which is 10% of the member’s basic monthly pension, or P250, whichever is higher. (Sec. 12- A, R.A. No. 11199) NOTE: Only five dependent minor children, beginning from the youngest, are entitled to dependent’s pension. No substitution is allowed. 4. Plus P1,000 additional benefit effective January 2017. (Sec. 12 (c), R.A. No. 11199) 5. 13th month pension, which is payable every December to total disability pensioners; for partial disability pensioners, 13th month pension shall be paid provided that pension duration is at least 12 months. (Sec. 8, Rule 23, IRR, R. A. No. 11199) Effect of the Death of a Pensioner with PTD 1. Primary beneficiaries are entitled to receive monthly pension as of the date of disability. 2. If there are no primary beneficiaries and the pensioner dies within 60 months from the start of his monthly pension – secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pensions corresponding to the balance of the five-year guaranteed period excluding the dependents’ pension. (Sec. 13-A, R.A. No. 11199) Surviving Spouse Entitled to SSS Pension Even if
- 233. LABOR LAW ANDSOCIAL LEGISLATIONS 219 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Marriage Was Contracted After Spouse’s Disability The Court has voided the provision in the Social Security Act that disqualifies as primary beneficiaries those who become the legitimate spouse of the pensioner only after the latter suffered permanent total disability declared void the proviso “as of the date of disability” in Sec. 13-A(c) of R.A. No. 8282, or the Social Security Act of 1997 (Social Security Law), for being contrary to the due process and equal protection clauses of the Constitution The Social Security Law was enacted pursuant to the policy of the State to promote social justice and provide protection to the workers and their beneficiaries against the hazards of contingencies, such as disability and death, resulting in loss of income or financial burden. As a social welfare legislation, the Social Security Law should be liberally construed in favor of the intended beneficiary, for it is only by giving the law a liberal construction that the constitutional policy concerning promotion of social justice is realized, held the Court. Sec. 13-A(c) of the law violates the Constitution’s due process clause. Reiterating its 2004 ruling in GSIS, Cebu City Branch v. Montesclaros, the Court held that retirement benefits, including SSS pension, are protected property interest given that these are compulsory contributions that formed part of one’s compensation, rather than a mere gratuity. (Dolera v. SSS, G.R. No. 253940, 24 Oct. 2023) Effect of Retirement or Death of a Pensioner with a Partial Disability If the pensioner with partial disability retires or dies, the disability pension shall cease upon his retirement or death. (Sec. 13-A, R.A. No. 11199) Maternity Benefit Maternity Leave Benefit is a daily cash allowance granted to female members who gave birth via normal delivery or caesarean section or suffered miscarriage, regardless of civil status or legitimacy of the child. (Sec. 1, Rule 26, IRR, R.A. No. 11199) Qualifying Conditions 1. The member has paid at least three (3) monthly contributions within the 12-month period immediately preceding the semester of her childbirth or miscarriage. 2. If employed, she must have notified her Er of her pregnancy and the probable date of her childbirth. 3. She must directly notify the SSS if she is unemployed, a self-employed or voluntary member, non-working spouse, including OFW- member. (Sec. 14-A, R.A. No. 11199) Amount of Benefit The amount of daily allowance is equivalent to 100% of the member’s ADSC for a compensable period of: 1. 105 days for normal or caesarian section delivery; 2. 120 days for solo parents under R.A. No. 8972 or Solo Parents’ Welfare Act; or 3. 60 days for miscarriage or emergency termination of pregnancy (ETP). (R.A. No. 11210 or the Expanded Maternity Leave Law) NOTE: The Maternity Benefit is granted regardless of member’s civil status and frequency of pregnancy. Q: A, single, has been an active member of the SSS for the past 20 months. She became pregnant out of wedlock and on her 7th month of pregnancy, she was informed that she would have to deliver the baby through caesarean section because of some complications. Can A claim maternity benefits? If yes, how many days can she go on maternity leave? If not, why is she not entitled? (2010 BAR) A: YES. The Expanded Maternity Leave Law applies to all female workers regardless of civil status, as long as the requirements under the law on notices and payment, among others, have been satisfied.
- 234. 2024 GOLDEN NOTES 220 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Since there is no indication that A is a solo parent, she is entitled to 100% of her average salary credit for 105 days. Q: Luisa is an unwed mother with three children from different fathers. In 2004, she became a member of the SSS. That same year, she suffered a miscarriage of a baby out of wedlock from the father of her third child. She wants to claim maternity benefits under the SSS Act. Is she entitled to claim? (2015 BAR) A: YES. Provided that Luisa has reported to her Er her pregnancy and date of expected delivery and paid at least 3 monthly contributions during the 12- month period immediately preceding her miscarriage, then she is entitled to maternity benefits under the Expanded Maternity Leave Act, regardless of frequency. As to the fact that she got pregnant outside wedlock, as in her past three pregnancies, this will not bar her claim because the SSS is non-discriminatory. Retirement Benefit The Retirement Benefit is a monthly pension or lump sum granted to a member who can no longer work due to old age. (Sec. 1, Rule 21, IRR, R. A. No. 11199) Types of Retirement Benefit 1. Monthly Pension – Lifetime cash benefit paid to a retiree who has paid at least 120 monthly contributions to the SSS prior to the semester of retirement. 2. Lump Sum Amount – Granted to a retiree who has not paid the required 120 monthly contributions. Qualifying Conditions 1. A member must have at least 120 monthly contributions prior to semester of retirement; and 2. Age Requirement: a. Optional Retirement – Has reached 60 years old and separated from employment or has ceased to be self- employed. XPNs: i. An underground mineworker whose date of actual retirement is not earlier than 13 Mar. 1998 but not later than 27 Apr. 2016 – at least 55 years old; and ii. An underground or a surface mineworker whose date of actual retirement in not earlier than 27 Apr. 2016 – 50 years old. b. Technical Retirement – At least 65 years old. XPNs: i. An underground mineworker or surface mineworker – At least 60 years old; and NOTE: Effective 27 Apr. 2016 ii. In the case of a racehorse jockey – At least 55 years old. (Sec. 2, Rule 21, IRR of R. A. No. 11199) NOTE: Effective 24 May 2016 Requisites for Entitlement to Lump Sum Benefit 1. At least sixty (60) years old at the time of retirement; 2. Does not qualify for pension benefits under par. (a) of Sec. 12-B; 3. Must be separated from employment; and 4. Is not continuing payment of contribution to the SSS on his own. (Sec. 5, Rule 21, IRR, R. A. No. 11199) Amount of Benefit 1. If qualified, the member is granted a monthly Retirement Plan Pension. 2. The retiree has the option to receive the first 18th months pension in lump sum, discounted at
- 235. LABOR LAW ANDSOCIAL LEGISLATIONS 221 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW a preferential rate to be determined by the SSS. This option can be exercised only upon application of the first retirement claim, and the Dependent’s Pension is excluded from the advanced 18 months pension. (Sec. 3, Rule 21, IRR of R. A. No. 11199) 3. The minimum monthly Retirement Pension is: a. P1,200 if the member has 120 months contribution or at least ten (10) CYS; or b. P2,400 if with at least 20 CYS. 4. Plus P1,000 additional benefit effective Jan. 2017. (Sec. 12(c), R. A. No. 11199) 5. Dependent’s Pension (for total disability), which is 10% of the member’s basic monthly pension, or P250, whichever is higher. (Sec. 12- A, R. A. No. 11199) NOTE: Only five dependent minor children, beginning from the youngest, are entitled to dependent’s pension. No substitution is allowed. 6. 13th month pension, which is payable every December plus additional benefits. (Sec. 4, Rule 21, IRR, R. A. No. 11199) Consequence of the Re-Employment or Resumption to Work of a Retired Pensioner The monthly pension of a retired member who resumes employment and is less than 65 years old will be suspended. He and his Er will again be subject to compulsory coverage. (Sec. 13-A, R.A. No. 11199) Death of a Retired Member Upon the death of a retired member: 1. His/her primary beneficiaries, as of the date of his/her retirement, shall be entitled to receive 100% of the monthly pension. 2. If the retired member has no primary beneficiaries and dies within 60 months from the start of his/her monthly pension, his/her secondary beneficiaries shall be entitled to a lump sum benefit equivalent to the total monthly pension corresponding to the balance of the five-year guaranteed period, excluding the dependent’s pension and additional benefit allowance. 3. If there are no primary and secondary beneficiaries, the lump sum payment in the amount specified in the preceding paragraph shall form part of his/her estate and shall be paid to his/her legal heirs in accordance with the law of succession. (Sec. 8, Rule 21, IRR, R. A. No. 11199) Death Benefit It is a cash benefit either in monthly pension or lump sum paid to the beneficiaries of a deceased member. (Sec. 1, Rule 22, IRR, R. A. No. 11199) Entitlement to Death Benefits 1. Upon death of a member who has paid at least 36 monthly contributions prior to the semester of death: a. Primary beneficiaries shall be entitled to the monthly pension; or b. If there are no primary beneficiaries, secondary beneficiaries shall be entitled to a lump sum benefit equivalent to 36 times the monthly pension. 2. Upon death of a member who has not paid the required 36 monthly contributions prior to the semester of death, the primary or secondary beneficiaries shall receive lump sum benefit, whichever is higher between the equivalent of: a. The monthly pension multiplied by the number of monthly contributions paid to the SSS; or b. 12 times the monthly pension. (Sec. 13, R.A. No. 11199)
- 236. 2024 GOLDEN NOTES 222 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Amount of Benefit 1. Monthly death pension to the member’s primary beneficiary is granted a monthly death pension. 2. Lump sum amount to secondary beneficiaries in the absence of primary beneficiaries, or to legal heirs in the absence of secondary beneficiaries. 3. Dependent’s Pension (for total disability) is 10% of the member’s basic monthly pension, or P250, whichever is higher. (Sec. 12-A, R.A. No. 11199) NOTE: Only five dependent minor children, beginning from the youngest, are entitled to dependent’s pension. No substitution is allowed. 4. Plus P1,000 additional benefit effective January 2017. (Sec. 12(c), R.A. No. 11199) 5. The minimum monthly Death Pension is P1,000 if the member had less than ten CYS; P1,200 if with at least ten CYS; and P2,400 with at least 20 CYS. Cause of Death Must Be an Occupational Disease In order for the beneficiary of an Ee to be entitled to death benefits under the SSS, the cause of death must be a sickness listed as an occupational disease by ECC; or any other illness caused by employment, subject to proof that the risk of contracting the same is increased by the working conditions. (Bañez v. SSS, G.R. No. 189574, 18 July 2014) Funeral Benefit A funeral grant equivalent to P12,000.00 shall be paid, in cash or in kind, to help defray the cost of funeral expenses upon the death of a member or retiree. (Sec. 13-B, R.A. No. 11199) NOTE: Starting 01 Aug. 2015, the amount of the funeral grant was increased to a variable amount ranging from a minimum of P20,000.00 to a maximum of P40,000.00, depending on the member’s paid contributions and CYS. (Sec. 2, Rule 24, IRR, R. A. No. 11199) Qualifying Conditions 1. The Ee-member was reported for coverage by his Er; 2. A self-employed member/OFW/non- working spouse who had at least one contribution payment; 3. A voluntary member who was previously covered either as employed/self- employed/OFW and has at least one (1) contribution payment; 4. The Ee-member was subject to compulsory coverage but was not reported for coverage by Er. Unemployment Benefit Also known as unemployment insurance or involuntary separation benefit, it is a cash benefit granted to covered Ees, including kasambahays and OFWs (sea-based or land-based) who are involuntarily separated from employment. (Sec. 14- B, R.A. No. 11199) Qualifying Conditions 1. Not over sixty (60) years old at the time of involuntary separation, except; a. In the case of underground mineworker or surface mineworker which must not be over 50 years old; or b. In the case of racehorse jockey, not over 55 years old. 2. Has paid at least thirty-six (36) monthly contributions, twelve (12) months of which should be in the eighteen (18) month period immediately preceding the unemployment or involuntary separation; 3. Involuntarily separated from employment provided that such separation did not arise
- 237. LABOR LAW ANDSOCIAL LEGISLATIONS 223 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW from fault or negligence of the Ee and which may be attributed to any of, but not limited to, the following: a. Installation of labor-saving devices; b. Redundancy; c. Retrenchment to prevent loss; d. Closure or cessation of operation; or e. Disease/illness. (Sec. 2, Rule 27, IRR, R. A. No. 11199) Amount of Benefit The benefit is granted through a one- time payment, and the claim must be filed within a year from the date of involuntary separation. The unemployment insurance or involuntary separation benefit is a monthly cash payment equivalent to 50% of the AMSC for a maximum of two (2) months, subject to the rules and regulations that the Commission may prescribe. (Sec. 1, Rule 27, IRR, R. A. No. 11199) Compulsory Coverage 1. All Ees not over 60 years of age and their Ers; 2. Domestic helpers whose income is not less than P1,500 per month and not over 60 years of age and their Ers; NOTE: The minimum wage of domestic workers is now P1,500 to P2,500 in NCR pursuant to Sec. 24 of R.A. No. 10361 or Batas Kasambahay Law. Per R.A. No. 10361, a domestic worker who has rendered at least one (1) month of service shall be covered by the Social Security System (SSS), the Philippine Health Insurance Corporation (PhilHealth), and the Home Development Mutual Fund or Pag-IBIG, and shall be entitled to all the benefits in accordance with the pertinent provisions provided by law. The following rules shall govern the covered Ees with private benefit plans: a. The benefit already earned by the Ees under private benefit plans existing at the time of the approval of the SSS Act shall not be discontinued, reduced or otherwise impaired; b. Private benefit plans which are existing and in force at the time of compulsory coverage shall be integrated with the plan of the SSS, and if the Er's contribution to his/her private plan is more than that required of him/her in the SSS Act: i. He/She shall pay to the SSS only the contribution required of him/her; ii. He/She shall continue his/her contribution to such private plan less his/her contribution to the SSS so that the Er's total contribution to his/her benefit plan and to the SSS shall be the same as his/her contribution to his/her private benefit plan before the compulsory coverage. c. Any changes, adjustments, modifications, eliminations or improvements in the benefits to be available under the remaining private plan shall be subject to agreements between the Ers and Ees concerned; d. The private benefit plan which the Er shall continue for his/her Ees shall remain under the Er's management and control unless there is an existing agreement to the contrary; and e. Nothing in the SSS Act shall be construed as a limitation to the right of Ers and Ees to agree on and adopt benefits which are over and above those provided under the SSS Act. (Sec. 9, R.A. No. 11199; Sec. 2, Rule 13, IRR of R.A. No. 11199) 3. Self–employed persons as may be determined by the Commission. NOTE: A self-employed person is one whose income is not derived from employment, as well as those mentioned in Sec. 9-A of the law (Sec. 8(s), R.A. No. 11199):
- 238. 2024 GOLDEN NOTES 224 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES a. All self-employed professionals; b. Partners and single proprietors of business; c. Actors and actresses, directors, scriptwriters, and news correspondents who do not fall within the definition of the term “employee”; d. Professional athletes, coaches, trainers, and jockeys; and e. Individual farmers and fisherman. (Sec. 9-A, R.A. No. 11199) 4. All sea-based and land-based Overseas Filipino Workers (OFWs) not over 60 years of age. NOTE: Land-based OFWs are compulsory members of the SSS and are considered in the same manner as self-employed persons, until a Bilateral Labor Agreement (BLA) shall have been entered into. (Sec. 9-B(c), R.A. No. 11199) NOTE: Manning agencies are agents of their principals and are considered as Ers of sea- based OFWs. (Sec. 9-B(b), R.A. No. 11199) Exclusions from Coverage The following are excluded from compulsory coverage under the SSS Act: 1. Services where there is no Er-Ee relationship in accordance with existing labor laws, rules, regulations, and jurisprudence; 2. Services performed in the employ of the Philippine Government or instrumentality or agency thereof; 3. Services performed in the employ of a foreign government or international organization, or their wholly-owned instrumentality; and 4. Such other services performed by temporary and other Ees which may be excluded by regulation of the Commission. (Sec. 8, (j), R.A. No. 11199) NOTE: Ees of bona fide independent contractors shall not be deemed Ees of the Er engaging the service of said contractors. Q: The owners of FALCON Factory, a company engaged in the assembling of automotive components, decided to have their building renovated. Fifty (50) persons, composed of engineers, architects, and other construction workers, were hired by the company for this purpose. The work was estimated to be completed in 3 years. The workers contended that since the work would be completed after more than 1 year, they should be subject to compulsory coverage under the Social Security Law. Do you agree with their contention? Explain your answer fully. (2002 BAR) A: NO. Under Sec. 8(j) of R.A. No. 1161, as amended, employment of purely casual and not for the purpose of the occupation or business of the Er is excepted from compulsory coverage. An employment is purely casual if it is not for the purpose of occupation or business of the Er. In the problem given, Falcon Factory is a company engaged in the assembly of automotive components. The 50 persons (engineers, architects, and construction workers) were hired by Falcon Factory to renovate its building. The work to be performed by these 50 people is not in connection with the purpose of the business of the factory. Hence, the employment of these 50 persons is purely casual. They are, therefore, excepted from the compulsory coverage of the SSS law. Voluntary Coverage 1. Spouses who devote full time to managing the household and family affairs; XPN: They are also engaged in other vocation or employment which is subject to mandatory coverage. (Sec. 9(b), R.A. No. 11199); 2. An OFW upon the termination of his/her employment overseas (Sec. 9-B(f), R.A. No. 11199); 3. A covered Ee who was separated from
- 239. LABOR LAW ANDSOCIAL LEGISLATIONS 225 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW employment who continues to pay his/her contributions; 4. Self-employed who realizes no income for a certain month; and 5. Filipino permanent migrants, including Filipino immigrants, permanent residents and naturalized citizens of their host countries. (Sec. 9-B(g), R.A. No. 11199) By Agreement GR: Any foreign government, international organization, or their wholly owned instrumentality employing workers in the Philippines or employing Filipinos outside of the Philippines. XPN: Those already covered by their respective civil service retirement systems. 2. DEPENDENTS AND BENEFICIARIES Dependents The dependents shall be the following: 1. The legal spouse entitled by law to receive support from the member; 2. The legitimate, legitimated or legally adopted, and illegitimate child who is a. Unmarried; b. not gainfully employed; and c. has not reached 21 years of age; or d. if over 21 years of age, he is congenitally or while still a minor has been permanently incapacitated and incapable of self-support, physically or mentally; and 3. The parent who is receiving regular support from the member. (Sec. 8(e), R.A. No. 11199) Primary Beneficiaries The primary beneficiaries of the member are the following: 1. The dependent spouse, until he or she remarries; and 2. The dependent legitimate, legitimated, or legally adopted children and the illegitimate children. (Sec. 12, IRR of the R.A. No. 11199) NOTE: Where there are legitimate or illegitimate children, the former shall be preferred. Dependent illegitimate children shall be entitled to 50% of the share of the legitimate, legitimated or legally adopted children. In the absence of the dependent legitimate, legitimated or legally adopted children of the member, his/her dependent illegitimate children shall be entitled to 100% of the benefits. (Ibid.) Secondary Beneficiaries In the absence of primary beneficiaries, the secondary beneficiaries are as follows: 1. Dependent parents; or 2. In the absence of dependent parents, any other person/s designated and reported by the member to the SSS. (Sec. 8(k), R.A. No. 11199) NOTE: The person designated by the member shall be someone who has a right to claim for support from the deceased member under the Family Code, including dependent children who have reached the age of majority. (Sec. 13, IRR of R.A. No. 11199) Q: John died in an accident while performing his duties as an electrician on board a vessel. At the time of his demise, he was childless and unmarried, predeceased by his adoptive parent Cornelio during his minority, and survived only by his biological parent Bernardina. Bernardina filed a claim for death benefits, but the SSS rejected her claim because she is no longer considered a primary beneficiary, because she is no longer John’s legitimate parent due to his
- 240. 2024 GOLDEN NOTES 226 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES legal adoption by Cornelio. Is the SSS correct? A: NO. The term "parents" in the phrase "dependent parents" ought to be taken in its general sense and cannot be unduly limited to "legitimate parents.” The phrase "dependent parents" should, therefore, include all parents, whether legitimate or illegitimate and whether by nature or by adoption. When the law does not distinguish, one should not distinguish. Plainly, "dependent parents" are parents, whether legitimate or illegitimate, biological or by adoption, who are in need of support or assistance. The biological parent has the right to the benefits stemming from John’s death as a dependent parent given the adoptive parent’s untimely demise during John’s minority. It is true that the adoption decree severed the relation between John and his biological parent, effectively divesting the latter’s status of a legitimate parent, and consequently, that of being a secondary beneficiary. However, it should be noted that parental authority should be deemed to have reverted in favor of the biological parent upon death of the adoptive parent during the adoptee’s minority. Thus, the death benefits under the Ees’ Compensation Program shall accrue solely to the surviving biological parent, John’s sole remaining beneficiary. (Bartolome v. SSS, G.R. No. 192531, 12 Nov. 2014) Dependent for Support The entitlement to benefits as a primary beneficiary requires not only legitimacy but also dependence upon the member Ee. (SSS v. Favila, G.R. No. 170195, 28 Mar. 2011) NOTE: The Court defined a “dependent” as one who derives his or her main support from another. Meaning, relying on, or subject to, someone else for support; not able to exist or sustain oneself, or to perform anything without the will, power, or aid of someone else. Dependent Spouse He/she is the legitimate spouse dependent for support upon the member or pensioner. If a wife is already separated de facto from her husband, she cannot be said to be "dependent for support" upon the husband, absent any showing to the contrary. Conversely, if it is proved that the husband and wife were still living together at the time of his death, it would be safe to presume that she was dependent on the husband for support, unless it is shown that she is capable of providing for herself. (SSS v. Aguas, G.R. No. 165546, 27 Feb. 2006) Q: Bonifacio and Elena Dycaico lived together as husband and wife without the benefit of marriage. In June 1989, Bonifacio was considered retired and began receiving his monthly pension from the SSS. Bonifacio married Elena on 06 Jan. 1997. He continued to receive the monthly pension until he passed away on 19 June 1997. Elena filed with the SSS an application for survivor’s pension, but it was denied on the ground that under Sec. 12-B(d) of the SSS Law, the primary beneficiaries who are entitled to survivor’s pension are those who qualify as such as of the date of retirement of the deceased member. Hence, Elena, who was not then the legitimate spouse of Bonifacio as of the date of his retirement, could not be considered his primary beneficiary. Is Elena entitled to claim survivor’s pension? A: YES. The proviso as of the date of his retirement in Sec. 12-B (d) of R.A. No. 8282, which qualifies the term primary beneficiaries, is unconstitutional for it violates the due process and equal protection clauses of the Constitution. The classification of dependent spouses on the basis of whether their respective marriages to the SSS member were contracted prior to or after the latter’s retirement for the purpose of entitlement to survivor’s pension does not rest on real and substantial distinctions. It is too sweeping because the proviso effectively disqualifies the dependent spouses—whose respective marriages to the retired SSS member were contracted after the latter’s retirement—as primary beneficiaries and unfairly lumps all these marriages as sham relationships or were contracted solely for the purpose of acquiring benefits accruing
- 241. LABOR LAW ANDSOCIAL LEGISLATIONS 227 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW upon the death of the other spouse. The proviso runs afoul of the due process clause as it outrightly deprives the surviving spouses, whose respective marriages to the retired SSS members were contracted after the latter’s retirement, of their survivor’s benefits. There is outright confiscation of benefits due such surviving spouses without giving them an opportunity to be heard. (Dycaico v. SSS, G.R. No. 161357, 30 Nov. 2005) NOTE: The reckoning point in determining the beneficiaries of the deceased should be the time of the latter’s death. (SSS v. De Los Santos, G.R. No. 164790, 29 Aug. 2008) Qualification of Spouse-Beneficiary To ensure a uniform implementation of the Dycaico v. SSS case (G.R. No. 161357, 30 Nov. 2005), the SSS issued the following guidelines: 1. The spouse must have been legally married to the retiree-pensioner at the time of death. 2. If the marriage was celebrated after the retirement of the member, any of the following circumstances is present: a. The spouses were living together as husband and wife without legal impediment to marry each other prior to the retirement of the member; or b. The surviving spouse was reported as beneficiary-spouse in the SSS Forms prior to the retirement of the member; or c. A child was born during the existence of the marriage between the retiree-pensioner and the surviving spouse; or d. Before marriage, a child was born during the time the spouses were living together as husband and wife without legal impediment to marry each other; or e. The marriage between the surviving spouse and retiree-pensioner is established to have been contracted not for any fraudulent purpose. In this regard, the SSS Branch concerned shall conduct an appropriate investigation to satisfy this requirement; and 3. The spouse must have been dependent for support upon the retiree-pensioner during the existence of marriage. (SSS Office Order No. 2010-02) Q: Antonio and Gloria de los Santos, both Filipinos, got married in 1964. In 1983, Gloria left Antonio and went to the United States. In 1986, she filed for divorce against Antonio in California. The divorce was granted. In 1987, Antonio married Cirila de los Santos. For her part, Gloria married Larry Thomas Constant, an American citizen, in the US. In 1999, Antonio died of respiratory failure. Cirila applied for and began receiving his SSS pension benefit. On 21 Dec. 1999, Gloria filed a claim for Antonio’s death benefits with the SSS. Her claim was denied on the ground that she was not a qualified beneficiary of Antonio. She contended that her marriage to Larry Constant was not the subsequent marriage contemplated under SSS Law that would disqualify her as a beneficiary; that the decree of divorce issued by a foreign state involving Filipino citizens has no validity and effect under Philippine law. Is Gloria still qualified as a primary beneficiary of Antonio under the SSS Law? A: NO. Although Gloria was the legal spouse of the deceased, she is still disqualified to be his primary beneficiary under the SSS Law for she fails to fulfill the requirement of dependency upon her deceased husband Antonio. (SSS v. De Los Santos, G.R. No. 164790, 29 Aug. 2008) Q: Rodolfo, an SSS member, was survived by the following: his legal wife Editha, who was now cohabiting with another man; another wife Yolanda, whom Rodolfo married and with whom he had four illegitimate children, who are now over 21 years old; and another common-law wife, Gina, with whom he had two illegitimate minor children. All wives filed a claim before the
- 242. 2024 GOLDEN NOTES 228 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES SSS for death benefits. Who among the claimants are qualified and/or disqualified as beneficiaries? A: Yolanda is disqualified because the marriage between her and Rodolfo was null and void because of a prior subsisting marriage contracted with Editha. Editha is disqualified, because even if she was the legal wife, she was not qualified to the death benefits since she herself admitted that she was not dependent on her deceased husband for support inasmuch as she was cohabiting with another man. Gina is disqualified, being a common-law wife. Since the wives are disqualified and because the deceased has no legitimate child, it follows that the dependent illegitimate minor children of the deceased shall be entitled to the death benefits as primary beneficiaries. The SSS Law is clear that for a minor child to qualify as a “dependent,” the only requirements are that he/she must be below 21 years of age, not married nor gainfully employed. Yolanda’s children are disqualified for being over 21 years old. In this case, the minor illegitimate children of Gina are the only qualified beneficiaries of Rodolfo. (Signey v. SSS, G.R. No. 173582, 28 Jan. 2008) Social Security Law is Not a Law on Succession It is not the heirs of the Ee but the designated beneficiaries who are to receive the social security benefits. It is only when the beneficiary is the estate, or when there is no designated beneficiary, or if the designation of beneficiary is void, that the Social Security System is required to pay the Ee’s heirs. (Ungos, 2013) B. GSIS LAW (R.A. No. 8291) 1. BENEFITS; COVERAGE AND EXCLUSIONS Benefits under the GSIS Act 1. Separation benefits; 2. Unemployment or involuntary separation benefits; 3. Retirement benefits; 4. Permanent disability benefits; 5. Temporary disability benefits; 6. Survivorship benefits; 7. Funeral benefits; 8. Life insurance; and 9. Such other benefits and protection as may be extended to them by the GSIS such as loans. Entitlement of a Member to Separation Benefits A member who has rendered a minimum of three (3) years of creditable service shall be entitled to separation benefits upon resignation or separation under the following terms: 1. A member with at least 3 years of service but less than 15 years – Cash payment equivalent to 100% of the average monthly compensation for every year of service the member has paid contributions: a. Not less than P12, 000.00; and b. Payable upon reaching sixty (60) years of age or upon separation, whichever comes later. (Sec. 11(a), R.A. No. 8291) 2. A member with at least 15 years of service and less than 60 years of age at the time of resignation or separation: a. Cash payment equivalent to 18 times the Basic Monthly Pension (BMP), payable at the time of resignation or separation; and b. An old-age pension benefit equals to the BMP, payable monthly for life upon
- 243. LABOR LAW ANDSOCIAL LEGISLATIONS 229 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW reaching the age of 60. (Sec. 11(b), R.A. No. 8291) Effects of Separation from Service with Regard to Membership A member separated from the service shall continue to be a member and shall be entitled to whatever benefits he/she qualifies for. (Once a member, always a member.) NOTE: A member separated for a valid cause shall automatically forfeit his benefits, unless the terms of resignation or separation provide otherwise. In case of forfeiture, the separated Ee shall be entitled to receive only one-half (1/2) of the cash surrender value of his insurance. Unemployment Benefits It will consist of monthly cash payments equivalent to 50% of the average monthly compensation. A member who has rendered at least fifteen (15) years of service will be entitled to separation benefits instead of unemployment benefits. Conditions for Entitlement to Unemployment Benefits 1. The recipient must be a permanent Ee at the time of separation; 2. His separation was involuntary due to the abolition of his office or position resulting from reorganization; and 3. He has been paying the contribution for at least one (1) year prior to separation. (Sec. 12, R.A. No. 8291) Rationale of Compulsory Retirement The compulsory retirement of government officials and Ees upon reaching the age of 65 years is founded on public policy which aims to maintain efficiency in the government service and at the same time, give the retiring public servants the opportunity to enjoy during the remainder of their lives the recompense, for their long service and devotion to the government, in the form of a comparatively easier life, freed from the rigors of civil service discipline and the exacting demands that the nature of their work and their relations with their superiors as well as the public would impose upon them. (Beronilla v. GSIS, G.R. No. L-21723, 26 Nov.1970) Conditions for Entitlement to Retirement Benefits 1. A member has rendered at least 15 years of service; 2. He is at least 60 years of age at the time of retirement; and 3. He is not receiving a monthly pension benefit from permanent total disability. (Sec. 13-A, R.A. No. 8291) NOTE: Where the Ee retires and meets the eligibility requirements, he acquires a vested right to benefits that is protected by the due process clause. Retirees enjoy a protected property interest whenever they acquire a right to immediate payment under pre- existing law. Thus, a pensioner acquires a vested right to benefits that have become due as provided under the terms of the public Ees’ pension statute. No law can deprive such person of his pension rights without due process of law, that is, without notice and opportunity to be heard. (GSIS v. De Leon, G.R. No. 186560, 17 Nov. 2010) Options of the Retiree with Regard to his or her Retirement Benefits The retiree may get either of the following: 1. Lump sum payment equivalent to 60 months of the BMP payable at the time of retirement and an old-age pension benefit equal to BMP payable for life, starting upon the expiration of the five (5) years covered by the lump sum; or 2. Cash payment equivalent to 18 times his BMP and monthly pension for life payable immediately. (Sec. 13(a), R.A. No. 8291)
- 244. 2024 GOLDEN NOTES 230 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Rule in Case of Extension of Service in Order to be Entitled for Retirement Benefits The Supreme Court held that the head of the government agency concerned is vested with discretionary authority to allow or disallow extension of the service of an official or Ee who has reached 65 years old without completing the 15 years of government service. However, this discretion is to be exercised conformably with the provisions of Civil Service Memorandum Circular No. 27, s. of 1990 which provides that the extension shall not exceed one (1) year. (Rabor v. CSC, G.R. No. 111812, 31 May 1995) Disability Any loss or impairment of the normal functions of the physical and/or mental faculty of a member, which reduces or eliminates his/her capacity to continue with his/her current gainful occupation or engage in any other gainful occupation. (Sec. 2(q), R.A. No. 8291) Total Disability Complete incapacity to continue with present employment or engage in any gainful occupation due to the loss or impairment of the normal functions of the physical and/or mental faculties of the member. (Sec. 2(r), R.A. No. 8291) Types of Permanent Disability 1. Permanent Total Disability (PTD) – Accrues or arises when recovery from any loss or impairment of the normal functions of the physical and/or mental faculty of a member which reduces or eliminates his capacity to continue with his current gainful occupation or engage in any other gainful occupation is medically remote. (Sec. 2(q) and (s), R.A. No. 8291) 2. Permanent Partial Disability (PPD) – Accrues or arises upon the irrevocable loss or impairment of certain portion/s of the physical faculties, despite which the member is able to pursue a gainful occupation. (Sec. 2(u), R.A. No. 8291) Benefits for PTD 1. A member is entitled to the monthly income benefit for life equivalent to the BMP effective from the date of disability when: a. He is in the service at the time of the disability; or NOTE: If at the time of disability, he was in the service and has paid a total of at least 180 monthly contributions, in addition to the monthly income benefit, he shall receive a cash payment equivalent to 18 times his BMP. (Sec. 16(a), R.A. No. 8291) b. If separated from service: i. He has paid at least 36 monthly contributions within 5 years immediately preceding his disability; or ii. He has paid a total of at least 180 monthly contributions prior his disability. (Sec. 16(a), R.A. No. 8291) NOTE: A member cannot enjoy the monthly income benefit for permanent disability and the old-age retirement simultaneously. 2. If the member does not satisfy the conditions above but has rendered at least 3 years of service, he shall be advanced the cash payment equivalent to 100% of his average monthly compensation for each year of service he has paid contributions, but not less than P12,000.00, which should have been his separation benefit. (Sec. 16(b), R.A. No. 8291) Disabilities Deemed as PTD 1. Complete loss of sight of both eyes; 2. Loss of two (2) limbs at or above the ankle or wrist; 3. Permanent complete paralysis of two limbs; 4. Brain injury resulting in incurable imbecility or insanity; and 5. Such other cases as may be determined by the GSIS. (Sec. 16(d), R.A. No. 8291)
- 245. LABOR LAW ANDSOCIAL LEGISLATIONS 231 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Benefits for PPD A member is entitled to cash payment in accordance with the schedule of disabilities to be prescribed by GSIS, if he satisfies the given conditions of either (1) or (2) of Sec. 16(a) of R.A. No. 8291. Disabilities Deemed as PPD 1. Complete and permanent loss of the use of: a. Any finger b. Any toe c. One arm d. One hand e. One foot f. One leg g. One or both ears h. Hearing of one or both ears i. Sight of one eye 2. Such other cases as may be determined by the GSIS. (Sec. 17(b), R.A. No. 8291) Suspension of Payment of Benefits 1. In case a member is re-employed; 2. Member recovers from disability as determined by the GSIS; or 3. Fails to present himself for medical examination when required by the GSIS. (Sec. 16(c), R.A. No. 8291) Instances When Recovery is Precluded If the permanent disability was due to the following acts of the subject Ee: 1. Grave misconduct; 2. Notorious negligence; 3. Habitual intoxication; or 4. Willful intention to kill himself or another. (Sec. 15, R.A. No. 8291) Temporary Total Disability (TTD) It accrues or arises when the impaired physical and/or mental faculties can be rehabilitated and/or restored to their normal functions. (Sec. 2(t), R.A. No. 8291) NOTE: A member cannot enjoy TTD benefit and sick leave pay simultaneously. Benefits for Temporary Disability 1. Member is entitled to 75% of his current daily compensation for each day or fraction thereof of total disability benefit, to start not earlier than the 4th day but not exceeding 120 days in one calendar year after exhausting all his sick leave credits and collective bargaining agreement (CBA) sick leave benefits, if any. Provided, that: a. He was in the service at time of disability; or b. If separated, he has rendered at least 3 years of service and has paid at least 6 monthly contributions in the year preceding his disability. (Sec. 18(a), R.A. No. 8291) 2. TTD benefits shall in no case be less than P70.00 a day. (Sec. 18(b), R.A. No. 8291) NOTE: An application for disability must be filed with the GSIS within four (4) years from the date of the occurrence of the contingency. Persons Entitled to Survivorship Benefits Upon the death of a member or pensioner, his beneficiaries shall be entitled to survivorship benefits. Such benefit shall consist of: 1. The basic survivorship pension which is 50% of the BMP; and 2. The dependent children’s pension not exceeding 50% of the BMP. (Sec. 20, R.A. No. 8291) NOTE: The dependent children shall be entitled to the survivorship pension as long as there are dependent children and, thereafter, the surviving spouse shall receive the basic survivorship pension for life or until he or she remarries.
- 246. 2024 GOLDEN NOTES 232 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Conditions for the Primary Beneficiaries to be Entitled to BMP Upon the death of a member, the primary beneficiaries shall be entitled to: 1. Survivorship pension – Provided, that the deceased: a. Was in the service at the time of his death; or b. If separated from the service, has rendered at least three (3) years of service at the time of his death and has paid 36 monthly contributions within the five-year period immediately preceding his death; or has paid a total of at least 180 monthly contributions prior to his death. 2. The survivorship pension plus a cash payment equivalent to 100% of his average monthly compensation for every year of service – that the deceased was in the service at the time of his death with at least 3 years of service; or 3. A cash payment equivalent to 100% of his average monthly compensation for each year of service he paid contributions, but not less than P12,000.00 – that the deceased has rendered at least three (3) years of service prior to his death but does not qualify for the benefits under item (1) or (2) of this paragraph. (Sec. 21(a), R.A. No. 8291) Secondary Beneficiaries In the absence of primary beneficiaries, the secondary beneficiaries shall be entitled to: 1. The cash payment equivalent to 100% of his average monthly compensation for each year of service he paid contributions, but not less than P12,000.00 – Provided, That the member is in the service at the time of his death and has at least three (3) years of service; or 2. In the absence of secondary beneficiaries, the benefits under this paragraph shall be paid to his legal heir. (Sec. 21(c), R.A. No. 8291) Payment of Survivorship Pension After the end of the guaranteed 30 months, the beneficiaries are still entitled to survivorship benefits. The survivorship pension shall be paid as follows: 1. When the dependent spouse is the only survivor, he/she shall receive the basic survivorship pension for life or until he or she remarries; 2. When only dependent children are the survivors, they shall be entitled to the basic survivorship pension for as long as they are qualified, plus the dependent children’s pension equivalent to 10% of the BMP for every dependent child not exceeding five (5), counted from the youngest and without substitution; or 3. When the survivors are the dependent spouse and the dependent children, the dependent spouse shall receive the basic survivorship pension for life or until he/she remarries, and the dependent children shall receive the dependent children’s pension. (Sec. 21(b), R.A. No. 8291) Benefits that the Beneficiaries are Entitled to upon the Death of the Pensioner 1. Upon the death of an old-age pensioner or a member receiving the monthly income benefit for permanent disability, the qualified beneficiaries shall be entitled to the survivorship pension; and 2. When the pensioner dies within the period covered by the lump sum, the survivorship pension shall be paid only after the expiration of such period. (Sec. 22, R.A. No. 8291) Q: Gary Leseng was employed as a public school teacher at the Marinduque High School. On 27 Apr. 1997, a memorandum was issued by the school principal designating Gary to prepare the
- 247. LABOR LAW ANDSOCIAL LEGISLATIONS 233 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW model dam project, which will be the official entry of the school in the search for Outstanding Improvised Secondary Science Equipment for Teachers. Gary complied with his superior's instruction and took home the project to enable him to finish before the deadline. While working on the model dam project, he came to contact with a live wire and was electrocuted. The death certificate showed that he died of cardiac arrest due to accidental electrocution. Bella (Gary’s common-law wife) and Jobo (his only son) filed a claim for death benefits with the GSIS, which was denied on the ground that Gary’s death did not arise out of and in the course of employment, and therefore not compensable because the accident occurred in his house and not in the school premises. Is Bella entitled to file a claim for death benefits with the GSIS? Why? (1991 BAR) A: NO. Bella is not entitled to receive survivorship benefits because she is not considered as a beneficiary. Bella is a common-law wife and not a legal dependent spouse. The beneficiaries of a member of the GSIS are entitled to the benefits arising from the death of said member. Death benefits are called survivorship benefits under the GSIS Law. Q: Is the cause of death of Gary (cardiac arrest due to accidental electrocution in his house) compensable? Why? A: YES. To be compensable under the GSIS Law, the death need not be work-connected. In the case presented, although the accident happened in Gary’s house, it is still considered work-connected since Gary only heeded to the memorandum issued by the school principal and complied with the instruction of his superior to work on the model dam project. Q: Odeck, a policeman, was on leave for a month. While resting in their house, he heard two of his neighbors fighting with each other. Odeck rushed to the scene intending to pacify the protagonists. However, he was shot to death by one of the protagonists. Zhop, a housemaid, was Odeck's surviving spouse whom he had abandoned for another woman years back. When she learned of Odeck's death, Zhop filed a claim with the GSIS for death benefits. However, her claim was denied because: (a) when Odeck was killed, he was on leave; and (b) she was not the dependent spouse of Odeck when he died. Resolve with reasons whether GSIS is correct in denying the claim. (2005 BAR) A: YES. GSIS is correct in denying the claim. Under the law, a dependent is one who is a legitimate spouse living with the Ee. (Art. 173(i), LC) In the problem given, Zhop had been abandoned by Odeck who was then living already with another woman at the time of his death. Moreover, Odeck was on leave when he was killed. The 24-hour duty rule does not apply when the policeman is on vacation leave. (Employees’ Compensation Commission v. CA, G.R. No. 121545, 14 Nov. 1996) Taking together jurisprudence and the pertinent guidelines of the ECC with respect to claim for death benefits, namely: (a) That the Ee must be at the place where his work requires him to be; (b) That the Ee must have been performing his official functions; and (c) That the injury is sustained elsewhere, the Ee must have been executing an order for the Er, it is not difficult to understand then why Zhop’s claim was denied by the GSIS. (Tancinco v. GSIS, G.R. No. 132916, 16 Nov. 2001) In the present case, Odeck was resting at his house when the incident happened; thus, he was not at a place where his work requires him to be. Although at the time of his death Odeck was performing a police function, it cannot be said that his death occurred elsewhere other than the place where he was supposed to be because he was executing an order for his Er. Q: Luis, a PNP officer, was off duty and resting at home when he heard a scuffle outside his house. He saw two of his neighbors fighting and he rushed out to pacify them. One of the neighbors shot Luis by mistake, which resulted in Luis' death. Marian, Luis' widow, filed a claim with the GSIS seeking death benefits. The GSIS denied the claim on the ground that the death of Luis was not service related as he was off duty when the incident happened. Is the GSIS correct? (2015
- 248. 2024 GOLDEN NOTES 234 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES BAR) A: NO. The GSIS is not correct. Luis, a policeman, just like a soldier, is covered by the 24-Hour Duty Rule. He is deemed on round-the-clock duty unless on official leave, in which case his death outside performance of official peace-keeping mission will bar death claim. In this case, Luis was not on official leave and he died in the performance of a peacekeeping mission. Therefore, his death is compensable. No Presumption of Sham Marriages The present GSIS law does not presume that marriages contracted within three (3) years before retirement or death of a member are sham marriages contracted to avail of survivorship benefits. The law acknowledges that whether the surviving spouse contracted the marriage mainly to receive survivorship benefits is a matter of evidence. It no longer prescribes a sweeping classification that unduly prejudices the legitimate surviving spouse and defeats the purpose for which Congress enacted the social legislation. (Alcantara, Book II; GSIS v. Montesclaros, G.R. No. 146494, 14 July 2004) Funeral Benefits The funeral benefit is in the amount of P18,000. It is intended to defray the expenses incident to the burial and funeral of the deceased member, pensioner, or retiree under R.A. No. 660, R.A. No. 1616, P.D. 1146, and R.A. No. 8291. It is payable to the members of the family of the deceased, in the order which they appear: 1. Legitimate spouse; 2. Legitimate child who spent for the funeral services; or 3. Any other person who can show unquestionable proof that he has borne the funeral expenses of the deceased. Payment of Funeral Benefits Funeral benefits will be paid upon the death of: 1. An active member; 2. A member who has been separated from the service but is entitled to future separation or retirement benefits; 3. A member who is a pensioner (excluding survivorship pensioners); or 4. A retiree who is at the time of his retirement was of pensionable age, at least 60 years old, who opted to retire under R.A. No. 1616. (An act further amending Sec. 12, C.A. 186, as amended, by prescribing two other modes of retirement and for other purposes). Classes of Life Insurance Coverage Under the GSIS Law 1. Compulsory Life Insurance; and 2. Optional Life Insurance. NOTE: The plans may be endowment or ordinary life. Compulsory Life Insurance Coverage All Ees including the members of the Judiciary and the Constitutional Commissioners, but excluding Members of the AFP, PNP, BFP and BJMP, shall, under such terms and conditions as may be promulgated by the GSIS, be compulsorily covered with life insurance, which shall automatically take effect as follows: 1. Those employed after the effectivity of this Act, their insurance shall take effect on the date of their employment; 2. For those whose insurance will mature after the effectivity of this Act, their insurance shall be deemed renewed on the day following the maturity or expiry date of their insurance; and 3. For those without any life insurance as of the effectivity of this Act, their insurance shall take effect following said effectivity. (Sec. 24, R.A. No. 8291)
- 249. LABOR LAW ANDSOCIAL LEGISLATIONS 235 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Optional Life Insurance Coverage 1. A member may at any time apply for himself and/or his dependents an insurance and/or pre-need coverage embracing: a. Life; b. Memorial plans; c. Health; d. Education; e. Hospitalization; or f. Other plans as maybe designed by GSIS 2. Any Er may apply for group insurance coverage for its Ees. (Sec. 26, R.A. No. 8291) Prescriptive Period to Claim the Benefits GR: Four (4) years from the date of contingency. XPNs: Life insurance and retirement (Sec. 28, R.A. No. 8291) Coverage of GSIS The GSIS covers all Ees irrespective of employment status, who are employed with: 1. The national government, its political subdivisions, branches, agencies, or instrumentalities; 2. GOCCs; 3. Government financial institutions with original charters; 4. Constitutional commissions; and 5. The judiciary. Coverage of Life Insurance, Retirement and Other Social Security Protection GR: All members of the GSIS shall have life insurance, retirement, and all other social security protections such as disability, survivorship, separation, and unemployment benefits. (Sec. 3, R.A. No. 8291) XPNs: The members of the following shall have life insurance only: 1. The Judiciary; and 2. The Constitutional Commissions. (Ibid.) Compulsory Coverage of Life Insurance GR: All Ees receiving compensation who have not reached the compulsory retirement age, irrespective of employment status. XPNs: All members of the Armed Forces of the Philippines (AFP) and the Philippine National Police (PNP). NOTE: An Ee who is already beyond the mandatory retirement age of 65 shall be compulsorily covered and be required to pay both the life and retirement premiums under the following situations: 1. An elective official who, at the time of election to public office is below 65 years of age will be more than 65 at the end of his term of office, including the period/s of his re-election to public office thereafter without interruption. 2. Appointive officials who, before reaching the mandatory age of 65, are appointed to government position by the President of the Republic of the Philippines and shall remain in government service at an age beyond 65. 3. Contractual Ees, including casuals and other Ees with an Ee-government agency relationship are also compulsorily covered, provided they are receiving fixed monthly compensation and rendering the required number of working hours for the month. (Chan, 2014) Classification of Members for the Purpose of Benefit Entitlement 1. Active Members a. Still in the service and are paying integrated premiums; covered for the entire package benefits and privileges being extended by GSIS.
- 250. 2024 GOLDEN NOTES 236 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 2. Policyholders a. Covered for life insurance only; b. Can avail of policy loan privilege only; and c. May also apply for housing loans. d. Judiciary and Constitutional Commissions 3. Separated Members a. Former active members who have been separated from the service; b. Still covered by the GSIS under the principle of “once a member, always a member”; c. Entitled to receive future benefits under P.D. 1146 in the event of compensable contingency such as old age (attainment of age 60 years), disability, survivorship and death; and d. Not entitled to any loan privilege. 4. Retired Members a. Former active members who have retired from the service and are already enjoying the corresponding retirement benefits applied for; and b. Not entitled to any loan privilege, except stock purchase loan. (Sec. 2.2, Rule II, IRR of R.A. No. 8291) Exclusions The following are not considered members of the GSIS for purposes of this Act: 1. Ees who have separate retirement schemes under special laws and are therefore covered by their respective retirement laws, such as the members of the Judiciary, Constitutional Commissions, and other similarly situated government officials; 2. Contractual Ees who have no Er-Ee relationship with the agencies they serve; 3. Uniformed members of the AFP, the Bureau of Fire Protection, and the Bureau of Jail Management and Penology (BJMP) whose coverage by the GSIS has ceased effective June 24, 1997; and 4. Uniformed members of the PNP whose coverage by the GSIS has ceased effective 01 Feb. 1996. (Sec. 2.4, IRR of R. A. No. 8291) 2. DEPENDENTS AND BENEFICIARIES Dependents 1. Legitimate spouse dependent for support upon the member or pensioner; 2. Unmarried and not gainfully employed legitimate, legitimated, legally adopted, or illegitimate child, or over the age of majority but incapacitated or incapable of self-support due to mental or physical defect acquired prior to age of majority; and 3. Parents dependent upon the member for support. (Sec. 2(f), R.A. No. 8291) Beneficiaries 1. Primary beneficiaries a. Legal dependent spouse, until he/she remarries; and b. Dependent children. (Sec. 2(g), R.A. No. 8291) 2. Secondary beneficiaries a. Dependent parents; and b. Legitimate descendants, subject to restrictions on dependent children. (Sec. 2(h), R.A. No. 8291)
- 251. LABOR LAW ANDSOCIAL LEGISLATIONS 237 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW C. LIMITED PORTABILITY LAW (R.A. No. 7699) Purpose R.A. No. 7699 was enacted to enable those from the private sector who transfer to the government service or from the government service to the private sector to combine their years of service and contributions which have been credited with the SSS or GSIS, as the case may be, to satisfy the required number of years of service for entitlement to the benefits under the applicable laws. (Chan, 2019) Coverage Applies to all worker-members of the GSIS and/or SSS who transfer from the public sector to private sector or vice-versa, or who wish to retain their membership in both Systems. (Sec. 1, Rule 1, IRR, R.A No. 7699) Portability It refers to the transfer of funds for the account and benefit of a worker who transfers from one system to the other. (Sec. 2(b), R.A. No. 7699) Limited Portability Rule A covered worker who transfers employment from one sector to another or is employed on both sectors, shall have creditable services or contributions on both Systems credited to his service or contribution record in each of the Systems and shall be totalized for purposes of old- age, disability, survivorship, and other benefits in either or both Systems. (Sec. 3, R.A. No. 7699) All contributions paid by such member personally, and those that were paid by his Ers to both Systems shall be considered in the processing of benefits, which he can claim from either or both Systems. (Sec. 4, R.A. No. 7699) NOTE: This is advantageous to the SSS and GSIS members for purposes of death, disability or retirement benefits. In the event the Ees transfer from the private sector to the public sector, or vice- versa, their creditable employment services and contributions are carried over and transferred as well. Totalization It refers to the process of adding up the periods of creditable services or contributions under each of the Systems, SSS or GSIS, for the purpose of eligibility and computation of benefits. (Sec. 2(e), R.A. No. 7699) All services rendered or contributions paid by a member personally or paid by the Ers to either System shall be considered in the computation in the computation of benefits, which may be claimed from either or both Systems. (Sec. 2, Rule V, IRR, R.A. No. 7699) NOTE: The amount of benefits to be paid by one System shall be in proportion to the services rendered/periods of contribution made to that System. (Sec. 2, Rule V, IRR, R.A. No. 7699) Totalization Shall Apply in the Following Instances: 1. If a worker is not qualified for any benefits from both System; 2. If a worker in the public sector is not qualified for any benefits in the GSIS; or 3. If a worker in the private sector is not qualified for any benefits from the SSS. NOTE: For purposes of computation of benefits, totalization shall apply to all cases so that the contributions made by the worker-member in both Systems shall provide maximum benefits which otherwise will not be available. In no case shall the contribution be lost or forfeited. (Sec 3, Rule V, IRR, R.A. N. 7699) Overlapping periods of creditable services in both Systems shall be credited only one for purposes of totalization. (Sec. 7, Rule V, IRR, R.A. 7699) If after the totalization, the worker-member still does not qualify for any benefit, the member will
- 252. 2024 GOLDEN NOTES 238 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES then get whatever benefits correspond to his/her contributions in either or both Systems. (Sec. 4, Rule V, IRR, R.A. No. 7699) Creditable Services 1. For the public sector, the following shall be considered creditable services: a. All previous services rendered by an official/Ee pursuant to an appointment whether permanent, provisional or temporary; b. All previous services rendered by an official/Ee pursuant to a duly approved appointment to a position in the Civil Service with compensation or salary; c. The period during which an official/Ee was on authorized sick leave of absence without exceeding one year; d. The period during which an official or Ee was out of the service as a result of illegal termination of his service as finally decided by the proper authorities; and e. All previous services with compensation or salary rendered by elective officials. (Sec. 1(f), Rule III, IRR, R.A. No. 7699) 2. For private sector, the periods of contribution shall refer to the periods during which a person renders services for an Er with compensation or salary and during which contributions were paid to SSS. (Sec. 1(g), Rule III, IRR R.A. No. 7699) NOTE: A self-employed person shall be considered an Ee and Er at the same time. (Sec. 1(g), Rule III, IRR, R. A. No. 7699) The benefits covered under the law are the following: a. Old-age benefit; b. Disability benefit; c. Survivorship benefit; d. Sickness benefit; e. Medicare benefit, provided that the member shall claim said benefit from the System where he was last a member; and f. Such other benefits common to both System that may be availed of through totalization. (Sec. 1(j), Rule III, IRR, R.A. No. 7699) The System or Systems responsible for the payment of money benefits due to a covered worker shall release the same within 15 working days from receipt of the claim, subject to the submission of the required documents and availability if the complete Ee/Er records in the System. (Sec. 2, Rule IV, IRR, R.A. No. 7699) Q: Luisito has been working with Lima Land for 20 years. Wanting to work in the public sector, Luisito applied for and was offered a job at Livecor. Before accepting the offer, he wanted to consult you whether the payments that he and Lima Land had made to the Social Security System (SSS) can be transferred or credited to the Government Service Insurance System (GSIS). What would you advise? (2014 BAR) A: YES. Under R.A. No. 7699, otherwise known as the Limited Portability Law, one may combine his years of service in the private sector represented by his contributions to the SSS with his government service and contributions to the GSIS. The contributions shall be totalized for purposes of old- age, disability, survivorship and other benefits in case the covered member does not qualify for such benefits in either or both Systems without totalization. D. DISABILITY AND DEATH BENEFITS; LABOR CODE AND CIVIL CODE Employees’ Compensation Program (ECP) The State shall promote and develop a tax-exempt ECP whereby the Ees and their dependents, in the event of work-connected disability or death, may promptly secure adequate income benefit and medical related benefits. (Art. 172, LC)
- 253. LABOR LAW ANDSOCIAL LEGISLATIONS 239 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW The Employees’ Compensation Program (ECP) is a government program that provides a package of benefits to all workers and/or their beneficiaries in the event of a work-related sickness, injury, disability or death. (Handbook Workers’ Statutory Monetary Benefits, 2023) Compensable Disease A sickness is considered compensable if the same is included in the ECC’s List of Occupational Diseases and the conditions for its compensability are met. Increased – Risk Theory If the conditions were not satisfied and/or the claimed ailment is not included in the list, proof must be shown that the risk of contracting the disease is increased by the working conditions. (Handbook Workers’ Statutory Monetary Benefits, 2023) NOTE: The conditions for the compensability of COVID-19 are the following: 1. There must be a direct connection between the offending agent or event and the worker based on epidemiologic criteria and occupational risk; 2. The tasks assigned to the worker would require frequent face-to-face and close proximity interactions with the public or with confirmed cases for healthcare workers; 3. Transmission occurred in the workplace; or 4. Transmission occurred while commuting to and from work. (Handbook Workers’ Statutory Monetary Benefits, 2023) Compensable Injury An injury is considered compensable when the same takes place within the period of employment, at a place where the employee may reasonably be in the performance of his duties, and while he is fulfilling those duties or engaged in doing something incidental thereto, or where he is engaged in the furtherance of the employer’s business. NOTE: An accident may be considered to have risen out of and in the course of employment when it happened: 1. At the workplace; 2. While performing official functions; 3. Outside of the workplace, but performing an order/ instruction of the employer; 4. When going to or coming home from work; while ministering to personal comfort; 5. While in a company shuttle bus; or 6. During a company sponsored activity. (Handbook Workers’ Statutory Monetary Benefits, 2023) No compensation will be allowed to an employee or the dependents if the injury, sickness, disability or death is due to: 1. Drunkenness; 2. Willful intention to injure or kill himself or another; or 3. Notorious negligence. (Handbook Workers’ Statutory Monetary Benefits, 2023) Going and Coming Rule GR: In the absence of special circumstances, an Ee injured in, going to, or coming from his place of work is excluded from the benefits of workmen's compensation acts. (Iloilo Dock & Engineering Co. v. Workmen's Compensation Commission, G.R. No. L- 26341 27 Nov. 1968, 135 PHIL 95-122) XPNs: 1. Where the Ee is proceeding to or from his work on the premises of his Er; 2. 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 also known as the Proximity Rule; 3. 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; and
- 254. 2024 GOLDEN NOTES 240 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 4. Where the Ee, as an incident of the employment, provides the means of transportation to and from the place of employment. (Iloilo Dock & Engineering Co. v. Workmen's Compensation Commission, G.R. No. L-26341, 27 Nov. 1968) Q: Rosa was granted vacation leave by her employer to spend three weeks in Africa with her family. Prior to her departure, the General Manager of the company requested her to visit the plant of a client of the company in Zimbabwe in order to derive best manufacturing practices useful to the company. She accepted the request because the errand would be important to the company and Zimbabwe was anyway in her itinerary. It appears that she contracted a serious disease during the trip. Upon her return, she filed a claim for compensation, insisting that she had contracted the disease while serving the interest of her employer. Under the Labor Code, the sickness or death of an employee, to be compensable, must have resulted from an illness either definitely accepted as an occupational disease by the Employees' Compensation Commission, or caused by employment subject to proof that the risk of contracting the same is increased by working conditions. Is the serious disease Rosa contracted during her trip to Africa compensable? Explain your answer. (2017 BAR) A: NO. For sickness and the resulting disability to be compensable, the sickness must be the result of an occupational disease listed under Annex A of the Amended Rules on Employees’ Compensation with the condition set therein satisfied; otherwise, proof must be shown that the risk of contracting the disease is increased by the working condition. The burden of proof is upon Rosa. No proof was presented by Rosa to substantiate the foregoing. Moreover, it is required that the sickness and the resulting injury must have arisen out of or in the course of employment. In the present case, Rosa contracted the disease while on vacation leave. Consequently, the disease contracted by her in Africa during her vacation leave is not compensable. (De La Rea v. Employees' Compensation Commission, G.R. No. L-66129, 17 Jan. 1986) State Insurance Fund The State Insurance Fund (SIF) is built up by the contributions of Ers based on the salaries of their Ees as provided under the LC. (Chan, 2019) It is exclusively used for payment of the Ee’s compensation benefits and no amount thereof is authorized to be used for any other purpose. (Art. 185, LC) Prohibition Against Er’s Deprivation No contract, regulation or device whatsoever shall operate to deprive the employee or his dependents of any part of the income benefits, and medical or related services, except as otherwise provided. NOTE: Existing medical services being provided by the employer shall be maintained and continued to be enjoyed by his employees. (Sec. 5, Rule VII, Amended Rules on EC) Beneficiaries under the Labor Code 1. Primary Beneficiaries a. The legitimate spouse until he remarries; and b. Legitimate, legitimated, legally adopted or acknowledged natural children, who are unmarried not gainfully employed, not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self-support due to physical or mental defect, which is congenital or acquired during minority. NOTE: A dependent acknowledged natural child shall be considered as a primary beneficiary only when there are no other dependent children who are qualified and eligible for monthly income benefit; provided finally, that if there are two or more acknowledged natural children, they shall be counted from the youngest and without substitution, but not exceeding five (5). (Sec. 1(b), Rule XV,
- 255. LABOR LAW ANDSOCIAL LEGISLATIONS 241 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Amended Rules on Ees’ Compensation (EC)) 2. Secondary beneficiaries a. The legitimate parents wholly dependent upon the Ee for regular support; and b. The legitimate descendants and illegitimate children who are unmarried, not gainfully employed, and not over 21 years of age, or over 21 years of age provided that he is incapacitated and incapable of self- support due to physical or mental defect which is congenital or acquired during minority. (Sec. 1(c), Rule XV, Amended Rules on EC) Prescriptive Period No claim for compensation shall be given due course unless said claim is filed with the System within three (3) years from the time the cause of action accrued. (Sec. 6(a), Rule VII, Amended Rules on EC) Reckoning Date of the Three-Year Prescriptive Period 1. Sickness – from the time the Ee lost his earning capacity. NOTE: The three (3) years have to be counted from the time the Ee lost his earning capacity, not from the time the illness was discovered. (ECC v. Sanico, G.R. No. 134028, 17 Dec. 1999) 2. Injury – from the time it was sustained. 3. Death – from the time of death of the covered Ee. (Sec. 6(a), Rule VII, Amended Rules on EC) Disability Benefits Disability refers to the loss or impairment of a physical or mental function resulting from injury or sickness. (Art. 173(n), LC) Otherwise known as “loss of income benefits,” it is the disability, or the incapacity to work, which is being compensated and not the illness or the injury. (Handbook Workers’ Statutory Monetary Benefits, 2022) The purpose of the law in providing benefits to the injured or sick Ee during temporary disability is to compensate him for what he might have earned during the period while his injury or sickness is being medically treated. (Chan, 2019) Kinds of Disability There are three (3) kinds of disability benefits under the Labor Code: 1. Temporary Total Disability (Art. 197, LC) 2. Permanent Total Disability (Art. 198, LC) 3. Permanent Partial Disability (Art. 199, LC) NOTE: The compensation for the disabilities is not mutually exclusive. For instance, recovery of compensation for temporary total disability or permanent partial disability shall not preclude recovery for permanent total disability. (Chan, 2019) Temporary Total Disability (TTD) A disability resulting from injury or sickness that prevents the Ee from performing his work for a continuous period not exceeding 120 days, or where the injury or sickness still requires medical attendance beyond 120 days but not to exceed 240 days from the onset of disability. (Handbook Workers’ Statutory Monetary Benefits, 2022; Sec. 2(a), Rule VII, Amended Rules on EC) Conditions for Entitlement An Ee shall be entitled to an income benefit for temporary total disability if all the following conditions are satisfied: 1. He has been duly reported to the System; 2. He sustains the temporary total disability as a result of the injury or sickness; and 3. The System has been duly notified of the injury or sickness which caused his disability. NOTE: His Er shall be liable for the benefit if such illness or injury occurred before the Ee is duly reported for coverage to the System. (Sec. 1, Rule X, Amended Rules on EC)
- 256. 2024 GOLDEN NOTES 242 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Period of Entitlement The income benefit equivalent to 90% of his average daily salary credit shall be paid beginning on the first day of such disability. If caused by an injury or sickness, it shall not be paid longer than 120 consecutive days except when such injury or sickness still requires medical attendance beyond 120 days but not to exceed 240 days from onset of disability, in which case, benefit shall be paid. However, the System may declare the total and permanent status at any time after 120 days of continuous temporary total disability as may be warranted by the degree of actual loss or impairment of physical or mental functions as determined by the System. (Sec. 2(a), Rule X, Amended Rules on EC) NOTE: An Ee shall submit to the System a monthly medical report on his disability certified by his attending physician, otherwise, his benefit shall be suspended until such time that he complies with this requirement. (Sec. 5, Rule IV, Amended Rules on EC) Effect of Relapse of Illness After the Ee has fully recovered from an illness as duly certified to by the attending physician, the period covered by any relapse he suffers, or recurrence of his illness, which results in disability and is determined to be compensable, shall be considered independent of, and separate from, the period covered by the original disability in the computation of his income benefit for temporary total disability. (Sec. 2(b), Rule X, Amended Rules on EC) Permanent Total Disability (PTD) A disability resulting from injury or sickness that prevents the Ee from performing any gainful occupation for a continuous period exceeding 120 days, except when the disability not exceeding 240 days from the onset of disability is declared as temporary total disability. (Sec. 2(b), Rule VII, Amended Rules on EC) Permanent Total disability means disablement of an Ee to earn wages in the same kind of work, or work of similar nature that he was trained for or accustomed to perform, or any kind of work which a person of his mentality and attainment could do. (Philippine Transmarine Carriers, Inc. v. NLRC, G.R. No. 123891, 28 Feb. 2001) NOTE: In disability compensation, it is not the injury per se which is compensated but the incapacity to work. (Bejerano v. ECC, G.R. No. 84777, 30 Jan. 1992) Conditions for Entitlement An Ee is entitled to an income benefit for permanent total disability if all of the following conditions are satisfied: 1. He has been duly reported to the System; 2. He sustains the permanent total disability as a result of the injury or sickness; and 3. The System has been duly notified of the injury or sickness which caused his disability. NOTE: His Er shall be liable for the benefit if such illness or injury occurred before the Ee is duly reported for coverage to the System. (Rule XI, Amended Rules on EC) Total Disabilities Deemed Permanent The following total disabilities shall be considered permanent: 1. Temporary total disability lasting continuously for more than 120 days, except as otherwise provided for under the rules on temporary total disability; 2. Complete loss of sight of both eyes; 3. Loss of two limbs at or above the ankle or wrist; 4. Permanent complete paralysis of two limbs; 5. Brain injury resulting in incurable imbecility and insanity; and
- 257. LABOR LAW ANDSOCIAL LEGISLATIONS 243 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 6. Such cases as determine by the System and approved by the Commission. (Sec. 1, Rule XI, Amended Rules on EC) Period of Entitlement The full monthly income benefit shall be paid for all compensable months of disability. (Sec. 2(a), Rule XI, Amended Rules on EC) After the benefit under the EC shall have ceased as provided under the preceding paragraph, and if the Ee is otherwise qualified for benefit for the same disability under another law administered by the System, he shall be paid a benefit in accordance with the provisions of that law. This paragraph applies to contingencies which occurred prior 01 May 1978. (Sec. 2(b), Rule XI, Amended Rules on EC) NOTE: Except as otherwise provided for in other laws, decrees, orders or letter of instructions, the monthly income benefit shall be guaranteed for five (5) years and shall be suspended under any of the following conditions: 1. Failure to present himself for examination at least once a year upon notice by the System; 2. Failure to submit a quarterly medical report certified by his attending physician; 3. Complete or full recovery from his permanent disability; or 4. Upon being gainfully employed. (Sec. 2(c), Rule XI, Amended Rules on EC) Benefit for Dependent Children Each dependent child, not exceeding five (5), counted from the youngest and without substitution, shall be entitled to ten percent of the monthly income benefit of the Ee. This rule, however, shall not apply to causes of action which accrued before 1 May 1978. (Sec. 4, Rule XI, Amended Rules on EC) Permanent Partial Disability (PPD) A disability resulting from injury or sickness in which the Ee suffers a permanent partial loss of the use of any part of his body. (Sec. 2(c), Rule VII, Amended Rules on EC) NOTE: An Ee’s disability may not manifest fully at one precise moment in time but rather over a period of time. It is possible that an injury which at first considered as temporary may later become permanent, or who suffers a partial disability becomes totally and permanently disabled for the same cause. (GSIS v. CA, G.R. No. 117572, 29 Jan. 1998) Conditions for Entitlement An Ee is entitled to an income benefit for permanent partial disability if all of the following conditions are satisfied: 1. He has been duly reported to the System; 2. He sustains the permanent partial disability as a result of the injury or sickness; and 3. The System has been duly notified of the injury or sickness which caused his disability. NOTE: His Er shall be liable for the benefit if such illness or injury occurred before the Ee is duly reported for coverage to the System. An Ee entitled to income benefits shall continue to receive benefits thereunder even if he is gainfully employed and receiving his wages or salary. (Sec. 1(b), Rule XII, Amended Rules on EC)
- 258. 2024 GOLDEN NOTES 244 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Period of Entitlement The monthly income benefit shall be paid beginning on the first month of such disability, but no longer than the designated number of months in the following schedule: (Art. 199, LC) COMPLETE AND PERMANENT LOSS OF THE USE OF NUMBER OF MONTHS One thumb 10 One index finger 8 One middle finger 6 One ring finger 5 One little finger 3 One big toe 6 Any toe 3 One hand 39 One arm 50 One foot 31 One leg 46 One ear 10 Both ears 20 Hearing of one ear 10 Hearing of both ears 50 Sight of one eye 25 A worker who sustained work-related injuries that resulted in functional loss and/or physical loss of any part of this body shall be granted Temporary Total Disability (TTD) and Permanent Partial Disability (PPD) benefits successively. Any earlier compensation for TTD that may have been paid to an injured worker shall not be deducted from the PPD benefit that may be later granted to him. NOTE: Under Sec. 2(b), Art. XII, Amended Rules on EC: 1. Loss of a wrist shall be considered a loss of a hand; 2. Loss of an elbow shall be considered a loss of the arm; 3. Loss of an ankle shall be considered a loss of the foot; 4. Loss of a knee shall be considered a loss of the leg; 5. Loss of more than one joint shall be considered a loss of the whole finger or toe; 6. Loss of only the first joint shall be considered a loss of one-half of the whole finger or toe; and 7. Other permanent partial disabilities shall be determined by the Medical Officer of the System. Death Benefits Compensable death refers to death which is the result of a work-related injury or sickness. (Chan, 2019) Income benefits received by the beneficiaries of the deceased Ee whose death was caused by a work- related injury or sickness. Said income benefits shall be paid at the beginning of the month of death of the member and will continue as long as they are entitled thereto. (Handbook Workers’ Statutory Monetary Benefits, 2023) Conditions for Entitlement The beneficiaries of a deceased Ee shall be entitled to an income benefit if all of the following conditions are satisfied: 1. The Ee has been duly reported to the System; 2. He died as a result of an injury or sickness; and 3. The System has been duly notified of his death, as well as the injury or sickness which caused his death. NOTE: His Er shall be liable for the benefit if such illness or injury occurred before the Ee is duly reported for coverage to the System. If the Ee has been receiving monthly income benefit for PTD at the time of his death, the surviving spouse must show that the marriage has been validly subsisting at the time of his disability. In addition, the cause of death must be a complication or natural consequence of the compensated PTD. (Sec. 1, Art. XIII, Amended Rules on EC)
- 259. LABOR LAW ANDSOCIAL LEGISLATIONS 245 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Period of Entitlement 1. For Primary Beneficiaries a. The monthly income benefit shall be paid beginning at the month of death and shall continue to be paid as long as the beneficiaries are entitled thereto. With respect to the surviving legitimate spouse, the qualification is that he/she has not remarried. For dependent children, the qualifications are that they must be: i. Unmarried; ii. Not gainfully employed; and iii. Over 21 years of age provided he/she is incapable of self-support due to a physical or mental defect which is congenital or acquired during minority. b. The monthly income benefit shall be guaranteed for five (5) years which in no case shall be less than P15,000.00. Thereafter, the beneficiaries shall be paid the monthly income benefit for as long as they are entitled thereto. (Sec. 2(A), Rule XIII, Amended Rules on EC) 2. For Secondary Beneficiaries: The income benefit shall be 60 times the monthly income benefit of a primary beneficiary, which in no case be less than P15,000.00, which shall likewise be paid in monthly pension. (Sec. 2(B), Rule XIII, Amended Rules on EC) NOTE: If the deceased has no beneficiaries at the time of his death, the death benefit shall accrue to the Ees Compensation Fund. (Sec. 2(C), Rule XV, Amended Rules on EC) In relation thereto, the following are the guidelines on the grant of EC death benefits to qualified wives and children beneficiaries of Muslims: 1. The basic monthly pension shall be divided equally among the surviving wives; 2. Upon the death or remarriage of any of the wives, her basic monthly pension shall be equally redistributed to the remaining wives; and 3. The qualified dependent children not exceeding 5 beginning with the youngest and without substitution, who are entitled to dependent’s pension, shall be counted from among the collective number of children of the wives of the Muslim and not counted from the children of each wife of the Muslim. (Board Resolution No. 14-07-34, 29 July 2014) Presumptive Death Under ECC Circular No. 15-01-20, 20 Jan. 2015, the following are the series of events which should be considered in the grant of EC benefits: 1. The word “missing” refers to unknown fate or there is no trace of whereabouts of a worker, Ee, and uniformed personnel while he/she is in the performance of his/her duties during the calamities or fatal events; 2. The worker, Ee, or uniformed personnel was not seen or heard from after the lapse of four years from the occurrence of the incident; 3. The disappearance of the worker, Ee, or uniformed personnel gives rise to presumption of death; and 4. The death of the worker, Ee, or uniformed personnel arises out of and in the course of employment. Period of Filing in Case of Presumptive Death The beneficiaries may file their claims for EC death with funeral benefits within the three-year prescriptive period from the time the missing person has been presumed dead after the lapse of four years from the occurrence of the incident. (Sec. 6(b), Rule VII, Amended Rules on EC)
- 260. 2024 GOLDEN NOTES 246 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES E. CLAIMS OF SEAFARERS; 2010 STANDARD TERMS AND CONDITIONS GOVERNING THE OVERSEAS EMPLOYMENT OF FILIPINO SEAFARERS ON-BOARD OCEAN-GOING SHIPS (Secs. 20, 32 and 32-A) For an occupational disease and the resulting disability or death to be compensable, all of the following conditions must be satisfied: 1. The seafarer's work must involve the risks described in Sec. 32-A of the POEA-SEC; 2. The disease was contracted as a result of the seafarer's exposure to the described risks; 3. The disease was contracted within a period of exposure and under such other factors necessary to contract it; and 4. There was no notorious negligence on the part of the seafarer. (Romana v. Magsaysay Maritime Corporation, G.R. No. 192442, 09 Aug. 2017) Burden of Proof in Disability Claims on the Seafarer The seafarer must still prove his entitlement to disability benefits by substantial evidence of his illness' work-relatedness and that the ailment was acquired during the term of his contract. He must show that he experienced health problems while at sea, the circumstances under which he developed the illness, as well as the symptoms associated with it. (Chan, 2019). Elements of a Compensable Injury 1. The injury or illness is work-related; and 2. It occurred during the term of the seafarer’s contract. (Toquero v. Crossworld Marine Services, G.R. No. 213482, 26 June 2019) Principle of Work-Relatedness Work-related illness pertains to any sickness as a result of an occupational disease listed under Sec. 32-A of this Contract with the conditions set therein satisfied while work-related injury is any injury arising out of and in the course of employment. (2010 POEA-SEC) Kinds of Disability 1. Permanent disability is the inability of a worker to perform his job for more than 120 days, regardless of whether or not he loses the use of any part of his body. 2. Total disability means the disablement of an Ee to earn wages in the same kind of work of similar nature that he was trained for, accustomed to perform, or any kind of work which a person of his mentality and attainments could do. A total disability does not require that the Ee be completely disabled, or totally paralyzed. What is necessary is that the injury must be such that the Ee cannot pursue his or her usual work and earn from it. A total disability is considered permanent if it lasts continuously for more than 120 days. Liabilities of the Employer When the Seafarer Suffers Work-Related Injury or Illness During the Term of His or Her Contract 1. The Er shall continue to pay the seafarer his wages during the time he is on board the ship; 2. If the injury or illness requires medical and/or dental treatment in a foreign port, the Er shall be liable for the full cost of such medical, serious dental, surgical and hospital treatment as well as board and lodging until the seafarer is declared fit to work or to be repatriated. NOTE: However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the Er until such time he is declared fit or the degree of his disability has been established by the company-designated physician;
- 261. LABOR LAW ANDSOCIAL LEGISLATIONS 247 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 3. The seafarer shall also receive sickness allowance from his Er in an amount equivalent to his basic wage computed from the time he signed off until he is declared fit to work or the degree of disability has been assessed by the company- designated physician. NOTE: a. The period within which the seafarer shall be entitled to his sickness allowance shall not exceed 120 days. b. Payment of the sickness allowance shall be made on a regular basis, but not less than once a month. 4. The seafarer shall be entitled to reimbursement of the cost of medicines prescribed by the company-designated physician; 5. In case a seafarer is disembarked from the ship for medical reasons, the Er shall bear the full cost of repatriation in the event the seafarer is declared: a. Fit for repatriation; or b. Fit to work but the employer is unable to find employment for the seafarer on board his former ship or another ship of the employer; and 6. In case of permanent total or partial disability of the seafarer caused by either injury or illness, the seafarer shall be compensated in accordance with the schedule of benefits enumerated in Sec. 32 of the POEA-Standard Employment Contract. (Sec. 20(a) 2010 POEA-SEC) In Case Treatment of the Seafarer is on an Out- Patient Basis as Determined by the Company- Designated Physician 1. The company shall approve the appropriate mode of transportation and accommodation; 2. The reasonable cost of actual traveling expenses and/or accommodation shall be paid subject to liquidation and submission of official receipts and/or proof of expenses; and 3. The seafarer shall submit himself to a post- employment medical examination by a company-designated physician within three working days upon his return. XPN: When he is physically incapacitated to do so, in which case, a written notice to the agency within the same period is deemed as compliance. NOTE: In the course of the treatment, the seafarer shall also report regularly to the company- designated physician specifically on the dates as prescribed by the company-designated physician and agreed to by the seafarer. (Sec. 20-A(3), 2010 POEA-SEC) Effect of Failure to Comply with the Mandatory Reporting Requirement Failure of the seafarer to comply with the mandatory reporting requirement upon return shall result in the forfeiture of his entitlement to disability compensation. (Sec. 20-A(3), 2010 POEA- SEC) Q: L was hired as an assistant cook by C.F. Sharp. Before boarding the vessel, L underwent a Pre- Employment Medical Examination (PEME). When asked whether L had a previous medical condition, including ear trouble and deafness, L ticked the box. Even so, he was found fit to work. On one occasion, L suffered an injury, leading to lower back pain. On another occasion, L went off-balance and fell face down on the floor. L was brought to a clinic due to a severe lower back pain. Eventually, L was repatriated to the Philippines. After undergoing lumbar spine magnetic resonance imaging (MRI) and physical therapies, the attending physician issued a medical certificate stating, among others, that he had Neuromyelitis optica. L then sought the medical opinion of another physician who found that he was unfit for duty as a seafarer in whatever capacity due to herniated disc at L5-S1, thus L’s complaint for permanent total disability benefits.
- 262. 2024 GOLDEN NOTES 248 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES C.F. Sharp submits that L is disqualified from claiming the same because he materially concealed a pre-existing medical condition in his PEME. They claimed that L was earlier diagnosed with acute otitis media and had instituted a claim for disability benefits with his former employee. Is L entitled to his claim? A: YES. L’s acute otitis media does not fall under any of the conditions constituting a pre-existing illness. Under the definition of terms of the 2010 POEA-SEC, an illness shall be considered as pre-existing if prior to the processing of the POEA contract, any of the following conditions are present: (a) The advice of a medical doctor on treatment was given for such continuing illness or condition; or (b) The seafarer had been diagnosed and has knowledge of such an illness or condition but failed to disclose the same during pre-employment medical examination (PEME), and such cannot be diagnosed during the PEME. Here, the first condition was not applicable because it presupposes that the seafarer is advised to undergo treatment for a continuing illness or condition. The specific details on L’s ear illness, whether it was already healed or needed further treatment, are unclear. Due to insufficient evidence, it was doubtful whether L still had acute otitis media with perforated tympanic membrane when he underwent the PEME. The second condition was also not applicable. The phrase "and such cannot be diagnosed during the PEME" excluded L’s acute otitis media as a pre-existing illness. Further, Sec. 20(E) of the 2010 POEA-SEC is likewise inapplicable because L’s prior ear illness is unrelated to his present medical conditions. (Mutia v. C.F. Sharp Crew Mgt., Inc., G.R. No. 242928, 27 June 2022, as penned by J.M.V Lopez) Q: Caraan’s duties as a motorman on board MV Star Loen involved strenuous physical activities for his 18-hour shift, and exposed him to all kinds of noxious gases, harmful fumes and excessive noise while inside the engine room. Due to his working conditions and dietary provision, he experienced pain while urinating and discharged blood in his urine. Eventually, he was declared unfit to work and medically repatriated to the Philippines. Instead of being fetched by his Er, he just went straight home to Bataan. His wife informed Grieg PH that he could not personally report to the office due to his medical condition. Caraan got himself examined, where it was revealed that there is a mass in his left kidney. Upon transfer to the National Kidney and Transplant Institute (NKTI), his left kidney was surgically removed, where it was confirmed that he had renal cell carcinoma. Is Caraan entitled to disability benefits? A: YES. Under Sec. 20(B) of the POEA-SEC, these are the requirements for compensability: (1) the seafarer must have submitted to a mandatory Pre- Employment Medical Examination (PEME) within three working days upon return; (2) the injury must have existed during the term of the seafarer's employment contract; and (3) the injury must be work-related. When he arrived in the Philippines, Caraan was already ill and no longer in good physical condition to go back to Manila for treatment. Immediately, petitioner was subjected to a series of laboratory tests to properly diagnose his ailment. The treatment by the health card-accredited doctors served the equivalent post-employment medical examination to show that petitioner's illness existed during his employment. It is undisputed that Caraan had been with Grieg PH since 2006. Caraan’s illness, renal cell carcinoma, could not have occurred overnight after repatriation. In the case of petitioner, his kidney cancer gradually progressed while he was employed with Grieg PH until it manifested when petitioner complained of pain in urinating and discharging blood in his urine. Hence, at any time during his 8-year employment with Grieg PH, petitioner was already suffering from this illness while at sea. Petitioner had likewise proved that his working conditions aggravated his kidney ailment. As found by the arbitrators, petitioner had sufficiently established that his working conditions on board the vessel increased the risk of contracting kidney disease. Grieg PH failed to dispute this and did not even offer any controverting evidence. (Caraan v. Grieg Philippines, Inc., G.R. No. 252199, 05 May 2021)
- 263. LABOR LAW ANDSOCIAL LEGISLATIONS 249 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Q: Gonzales, while on board the general cargo vessel Star Florida, experienced "shortness of breath, pain in his left leg, fatigue, fever and headaches." The following month, his past symptoms returned with the added symptom of black tarry stools. He was initially diagnosed with "pancytopenia suspect aplastic anemia." This caused his further medical attention as Gonzales was repatriated in the Philippines. The company physicians opined that Gonzales' leukemia was not work-related. He sought a second opinion from an independent physician, Dr. Emmanuel Trinidad, who certified that his leukemia was work-related. Gonzales claimed disability benefits against Grieg Philippines, Inc. but the latter denied the same on the ground that Gonzales was not able to substantially prove the relation between his illness and his former position as an Ordinary Seaman. Can Gonzales claim disability benefits against Grieg Philippines, Inc.? A: YES. Settled is the rule that for illness to be compensable, it is not necessary that the nature of the employment be the sole and only reason for the illness suffered by the seafarer. It is sufficient that there is a reasonable linkage between the disease suffered by the Ee and his work to lead a rational mind to conclude that his work may have contributed to the establishment or, at the very least, aggravation of any pre-existing condition he might have had. Gonzales was able to satisfy the conditions under the Sec. 32-A of the 2000 POEA-SEC and establish a reasonable linkage between his job as an Ordinary Seaman and his leukemia. Gonzales provided his functions as an Ordinary Seaman aboard Star Florida. Among others, his tasks included removing rust accumulations and refinishing affected areas of the ship with chemicals and paint to retard the oxidation process. This meant that he was frequently exposed to harmful chemicals which could have also contributed to Gonzales' leukemia. It is also not disputed that he contracted leukemia only while he was onboard Star Florida since he was certified to be fit for sea duty prior to boarding and his leukemia was not genetic in nature. (Grieg Philippines, Inc. v. Gonzales, G.R. No. 228296, 26 July 2017) Q: Manansala’s services were engaged by Marlow Navigation Phils., Inc, for him to serve as a fitter on a vessel. Before boarding the vessel, Manansala underwent a Pre-Employment Medical Examination (PEME). In his examination, Manansala was required to disclose information regarding all existing and prior medical conditions. Manansala's examination certificate indicates that he denied having hypertension and diabetes, specifically answering "NO." On 30 May 2010, while on board the vessel, Manansala suffered a stroke. Because of this, Manansala was repatriated on 08 June 2010. He was confined at the De Los Santos Medical Center from 10 June 2010 to 23 June 2010, under the primary care of company-designated physician, Dr. Barrairo. While under Dr. Barrairo's care, he "repeatedly denied that he had any past history of diabetes and hypertension." On 21 Oct. 2010, Manansala filed a Complaint against the respondents for total and permanent disability benefits. Two months after he filed his complaint, Dr. San Luis, issued a medical opinion stating that Manansala must be considered permanently disabled. The same opinion indicated that Manansala admitted to having had a long history of hypertension and diabetes. Is Manansala entitled to total and permanent disability benefits occasioned by work-related illnesses? A: NO. Manansala is not entitled to total and permanent disability benefits. Sec. 20(E) of the POEA-SEC bars the compensability of disability arising from pre-existing illness when attended by an Ee’s fraudulent misrepresentation. Petitioner knowingly and fraudulently misrepresented himself as not afflicted with hypertension and diabetes during his PENE and after repatriation while being treated by the company-designated physician. (Manansala v. Marlow Navigation Phils., Inc., G.R. No. 208314, 23 Aug. 2017)
- 264. 2024 GOLDEN NOTES 250 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Q: D applied for shipboard employment with Sulpicio Lines, which directed him to undergo a pre-employment medical examination (PEME) in its accredited clinic. During his examination, D declared that he had no history of any ailment other than a "Varicocelectomy". Thus, D was declared fit to work and was deployed aboard the vessel M/V Costa Concordia. While on duty, D experienced back pain, leading to his repatriation to the Philippines and diagnosis of low back pain secondary to disc protrusion. However, Sulpicio Lines later discovered that Dalisay had previously filed a claim for permanent disability benefits with another employer for the same ailment, and was awarded compensation. Sulpicio Lines discontinued D's medical treatment, alleging malicious concealment of a pre-existing illness. D sought medical attention from other physicians which declared him unfit to work. Accordingly, D filed a complaint for permanent and total disability benefits. Should D be awarded sickness allowance and attorney’s fee despite his concealment of a pre- existing illness? A: NO. Under Sec. 20(A) of the 2010 POEA-SEC, a seafarer is entitled to several compensation and benefits for any work-related illness or injury that he may have suffered during the term of the contract. However, Sec. 20(E) of the 2010 POEA-SEC is likewise explicit that a seafarer who knowingly conceals a pre-existing illness or condition shall be disqualified from claiming any compensation and benefits. Jurisprudence provides that knowing concealment involves bad faith. The falsity or non- disclosure of the truth must be for a malicious purpose or coupled with intent to deceive and to profit from deception. It must also be intentional. Here, D knowingly concealed his pre-existing illness. The fact that he passed the PEME could not excuse his willful concealment nor can it preclude Sulpicio Lines from rejecting his claims. Taken together, D was disqualified from all benefits including sickness allowance. Accordingly, D was not also entitled of attorney’s fee. To award attorney's fees despite the seafarer's malicious concealment would be tantamount to rewarding his fraudulent conduct. (PAL Maritime Corporation v. Dalisay, G.R. Nos. 218115 and 218179, 27 Jan. 2021, as penned by J.M.V Lopez) Q: Julius Ceasar (Ceasar) worked for Atlantic Ocean Manning, Inc. (Atlantic Manning) for 15 years. In 2010, he entered into a nine (9)-month employment contract with Atlantic Manning, on behalf of its foreign principal, Super Tanker Corporation (Super Tanker), to serve as a Fitter onboard the MegaStar Aquarius vessel. Ceasar was found fit when he underwent a pre-medical employment examination. Thus, on January 15, 2010, he boarded MegaStar Aquarius. While onboard the ship, Ceasar was performing an overhaul in the engine and fixing the hydraulic machine when the hose accidentally detached and hit his left eye. He reported the incident to the Chief Engineer, but his request for a medical examination was denied because the vessel was about to leave for the next port. On September 27, 2010, Ceasar collapsed while changing the fuel injector in the engine room, and his supervisor issued an Incident Report regarding the incident. The ship captain referred him to an offshore physician, Dr. Anna Delvey. Ceasar underwent a magnetic resonance imaging (MRI) of his brain with attention to the left eye in Texas, USA. According to the attending doctor, Dr. Joshua Mojica (Mojica), the MRI showed an eye injury to Ceasar. However, Dr. Delvey indicated in the health insurance claim form that Ceasar’s illnesses were not work-related. A few days later Ceasar was repatriated, and he reported to the office of Atlantic Manning two days upon arrival. Ceasar requested for medical treatment but was not referred to a company-designated physician. His requests were repeatedly denied. This prompted him to file a complaint against Atlantic Manning for payment of permanent total disability benefits, sickness allowance, damages, and attorney's fees. Was Ceasar entitled to disability benefits? A: YES. Ceasar is entitled to disability benefits. Citing Sec. 20(A) of the POEA-SEC, there are two
- 265. LABOR LAW ANDSOCIAL LEGISLATIONS 251 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW elements on compensability of a seafarer's injury or illness: 1. The injury or illness must be work-related; and 2. The work-related injury or illness must have existed during the term of the seafarer's employment contract. The grant of permanent total disability benefits does not require a state of absolute helplessness. It is enough that there is an inability to substantially pursue his gainful occupation as seafarer without serious discomfort or pain and without material injury or danger to life. This incapacity, coupled with the company-designated physician's abdication of the duty to declare the seafarer's fitness or unfitness to work within the prescribed periods under the POEA-SEC, converts the latter's disability to permanent and total by operation of law. It is not the injury per se that is compensated but the incapacity to work. In this case, Ceasar’s nine-month employment contract is from January 15, 2010 to October 15, 2010. On September 27, 2010, Ceasar was found unconscious on board the vessel. Before his repatriation , he was brought to an offshore hospital in Texas, USA and the MRI findings indicated an eye injury. There, he was diagnosed to be suffering from posterior retinae partial tear, sinusitis, hyperlipidemia, and acute gastroduodenitis. Clearly, Ceasar suffered from an illness during the term of his employment contract as his condition was not the same as when he boarded MegaStar Aquarius. (Celestino M. Junio v. Pacific Ocean Manning, Inc. et al., G.R. No. 220657, 16 March 2022, as penned by J. M.V. Lopez) When a Seafarer May be Allowed to Pursue an Action for Total or Permanent Disability Benefits 1. The company-designated physician failed to issue a declaration as to his fitness to engage in sea duty or disability even after the lapse of the 120-day period and there is no indication that further medical treatment would address his temporary total disability, hence, justify an extension of the period to 240 days; 2. 240 days had lapsed without any certification issued by the company-designated physician; 3. The company-designated physician declared that he is fit for sea duty within the 120-day or 240-day period, as the case may be, but his physician of choice and the doctor chosen under Sec. 20-B(3) of the POEA-SEC are of a contrary opinion; 4. The company-designated physician acknowledged that he is partially permanently disabled but other doctors who he consulted, on his own and jointly with his Er, believed that his disability is not only permanent but total as well; 5. The company-designated physician recognized that he is totally and permanently disabled but there is a dispute on the disability grading; 6. The company-designated physician determined that his medical condition is not compensable or work-related under the POEA-SEC but his doctor-of-choice and the third doctor selected under Sec. 20-B(3) of the POEA-SEC found otherwise and declared him unfit to work; 7. The company-designated physician declared him totally and permanently disabled but the Er refuses to pay him the corresponding benefits; and 8. The company-designated physician declared him partially and permanently disabled within the 120-day or 240-day period but he remains incapacitated to perform his usual sea duties after the lapse of said periods. (C.F. Sharp Crew Management, Inc. v. Taok, G.R. No. 193679, 18 July 2012) Q: Mabunay was hired by Sharpe Sea as an oiler for a period of nine months. A day after boarding, Mabunay slipped and hit his back on the purifier while he was cleaning. When he awoke, his back was numb and he had difficulty getting up. Despite the persistent pain in his back, Mabunay continued working for two days, until the Chief Engineer allowed him to have a medical checkup when the ship docked in
- 266. 2024 GOLDEN NOTES 252 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Nanjing, China. He was declared unfit to work by his attending physician and was eventually repatriated. On 30 Apr. 2009, Mabunay reported to Sharpe Sea's office and was told to report to a company- designated physician. He was diagnosed with "Cervical Spondylosis; Thoracolumbar Spondylosis; and Mild chronic compression fracture". The doctor recommended that Mabunay undergo a discectomy. On 24 Nov. 2009, Mabunay underwent surgery and was observed that he "tolerated the procedure well." Mabunay filed a complaint against Sharpe Sea, Monte Carlo, and Florem for the payment of his total disability benefits Mabunay sought the opinion of a third doctor who opined that he was unfit to work as a seaman in his present condition. The LA ruled in Mabunay's favor and directed Sharpe Sea to pay him permanent and total disability benefits. It rejected Sharpe Sea's claim that its company-designated physicians assessed Mabunay with a disability rating of Grade 8 since it was not supported by the records. The NLRC upheld the LA's findings that the records were bereft of evidence to support Sharpe Sea's claim. On 29 Nov. 2011, the NLRC modified its decision by reducing the award of US$60,000.00 it earlier granted to Mabunay, to US$16,795.00, corresponding to a Grade 8 disability rating. The NLRC noted that Sharpe Sea attached a medical report dated 18 Aug. 2009 from Dr. Cruz, which supported its claim that a company-designated physician had diagnosed Mabunay with a Grade 8 disability. Is Mabunay entitled to permanent and total disability benefits? A: YES. With the company-designated physicians' failure to issue either a fit-to-work certification or a final disability rating within the prescribed periods, respondent's disability was rightfully deemed to be total and permanent. A company-designated physician is expected to come up with a definite assessment of a seafarer's fitness or lack of fitness to work or to determine the seafarer's degree of disability within a period of 120 or 240 days from repatriation. Clearly, Dr. Cruz, Dr. Castillo, or any other company-designated physician failed to issue respondent either a fit-to-work certification or a final disability rating after his operation and before the lapse of 240 days from his repatriation. Nonetheless, even if this Court accepted petitioners' explanation on the belated submission of the disability rating into evidence, it is worthy to note that Dr. Cruz only issued an interim disability rating. It has been settled in Magsaysay Maritime Corp. v. Cruz (G.R. No. 204769, 06 June 2016) that an interim disability grading is merely an initial prognosis and does not provide sufficient basis for an award of disability benefits. (Sharpe Sea Personnel, Inc. v. Mabunay, Jr., G.R. No. 206113, 06 Nov. 2017) Q: Seafarer Tonio worked for Blue corp. and Red Crew Manila, Inc. since 1998. In February 2011, he was rehired as a Cook AB under a 6-month contract. While on board the vessel, Tonio experienced coughing and excruciating pain in his umbilical and waist area. He was later diagnosed with constipation and umbilical hernia and was repatriated to Manila. Tonio underwent surgery for his umbilical hernia, but his lower back pain persisted but the Company designated physician diagnosed it as something attributable to aging and declared him fit-to- work. Tonio sought medical evaluation from his own physician, who diagnosed him with a "central broad-based disc herniation." Tonio eventually filed a claim for full disability benefits. Can Tonio claim compensation even though it is not connected to the cause of his medical repatriation? A: YES. Under the POEA-SEC, company-designated physician is primarily responsible to determine the disability grading or fitness to work of seafarers. Nonetheless, to be conclusive and binding, the medical assessment or report of the company- designated physician must be complete and definite for the purpose of ascertaining the degree of the seafarer's disability benefits. A final and definite disability assessment must truly reflect the extent of the sickness or injuries of the seafarer, and his, or her capacity to resume work as such. Failing which,
- 267. LABOR LAW ANDSOCIAL LEGISLATIONS 253 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW the disability benefits awarded might not be commensurate with the prolonged effects of the injuries suffered by the seafarer. Here, the company-designated physician only attended to Tonio’s umbilical hernia. Surgery was performed to relieve him of his abdominal pain. However, the company-designated physician completely ignored Tonio’s lower back pain despite his own initial recommendation for the conduct of a lumbosacral MRI, and the subsequent finding that he indeed has back issues consisting of broad-based herniated disc. The issuance of a fit-to-work certification to Tonio’s, without first addressing, or without any definite declaration as to his back ailment, is an abdication of the company-designated doctor's obligation under the POEA-SEC. This effectively transforms the temporary total disability to permanent total disability, regardless of the disability grade. (Blue Manila, Inc. v. Jamias, G.R. Nos. 230919 & 230932, 20 Jan. 2021, as penned by J. M.V. Lopez) Q: Z Shipmanagement, Inc. hired Mark as an oiler. Mark was deployed on board a vessel for a period of nine months. In 2012, Mark felt dizzy and suffered abdominal pain while performing his duties inside the engine room. When the vessel arrived at the port in Chile, Mark vomited blood and was brought to the nearest clinic. It was found that his kidney’s were not functioning well. He had dialysis thrice to restore his normal kidney function. He likewise underwent surgery to remove stones in his bile duct. Mark was confined for more than two months or from March 15 to May 19, 2012. On May 21, 2012, Mark was medically repatriated. In September 2012, Bacabac filed against the NSI, et al. a complaint for total and permanent disability benefits, sickness allowance, reimbursement of medical and hospital expenses. Is Mark entitled to such claim? A: YES. The Court clarified that a seafarer complaints for disability benefits arise from (1) injury or illness that manifests or is discovered during the term of the seafarers contract, which is usually while the seafarer is on board the vessel or (2) illness that manifests or is discovered after the contract, which is usually after the seafarer has disembarked from the vessel. In the case at bar, Mark's contract was from December 8, 2011, to September 8, 2012. On March 11, 2012, Mark suffered pain and symptoms while he is on board the vessel. Mark on May 21, 2012 was medically repatriated and was diagnosed with Severe Acute Cholangitis (SAC) two days after disembarkation. Clearly, his illness manifested or was discovered during the term of his contract. His medical condition is disputably presumed as work- related although not listed as an occupational disease. A bare claim that the illness is not work- related, or that the seafarer is fit for sea duties is insufficient. Considering that the company physician's medical evaluation of the seafarer fell short of the parameters provided by law and jurisprudence, Mark is deemed totally and permanently disabled as of the date of the expiration of the 120-day period counted from his repatriation. There could no longer be any issue on whether his illness is work- related or not. (Bacabac v. NYK FIL Shipmanagement Inc., G.R. No. 228550, 28 June 2021, as penned by J. M.V. Lopez) Rules on the Required Definite Medical Assessment Within 120/240 Days 1. The company-designated physician must issue a final medical assessment on the seafarer's disability grading within a period of 120 days from the time the seafarer reported to him; 2. If the company-designated physician fails to give his assessment within the period of 120 days, without any justifiable reason, then the seafarer's disability becomes permanent and total; 3. If the company-designated physician fails to give his assessment within the 120 days with a sufficient justification (e.g., seafarer required further medical treatment or seafarer was uncooperative), then the period of diagnosis and treatment shall be extended to 240 days. The Er has the burden to prove that the
- 268. 2024 GOLDEN NOTES 254 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES company-designated physician has sufficient justification to extend the period; and 4. If the company-designated physician still fails to give his assessment within the extended period of 240 days, then the seafarer's disability becomes permanent and total, regardless of any justification. NOTE: Case law states that without a valid final and definitive assessment from the company-designated physician within the 120/240-day period, the law already steps in to consider petitioner's disability as total and permanent. Thus, a temporary total disability becomes total and permanent by operation of law. (Gamboa v. Maunlad Trans., Inc., G.R. No. 232905, 20 Aug. 2018) A TTD lasting continuously for more than 120 days, except as otherwise provided, is considered as a total and permanent disability. The exception pertains to a situation when the sickness "still requires medical attendance beyond 120 days but not to exceed 240 days" in which case the temporary total disability period is extended up to a maximum of 240 days. However, for the company-designated physician to avail of the extended 240-day period, he must first perform some significant act to justify an extension; otherwise, the seafarer's disability shall be conclusively presumed to be permanent and total. (Talaroc v. Arpaphil Corporation, G.R. No. 223731, 30 Aug. 2017) Q: Gatchalian had been working as Chief Cook for Doehle-Philman Manning Agency, Inc. (Doehle-Philman), and its principal Doehle (IOM) Ltd. (Doehle) since 2002. Later, he signed a nine-month contract to serve as Chief Cook onboard M/V Independent Endeavor and boarded the vessel on July 17, 2006. He reported to the ship captain that sometime in August 2006, he figured in an accident when his left foot slipped forward causing his right kneecap to hit the iron deck and took the full weight of his fall. Dr. Erven assessed him with "Tear Medial Menuscus Fractured Osteofy" and recommended operation on his knee and declared him unfit for duties on board. He was operated and medically repatriated in December 2006. On February 14, 2007, he was assessed to be fit to work. After almost two years, Gatchalian filed a complaint for total disability benefits against Doehle-Philman, et al. anchoring his claim on a medical certificate issued by Dr. Chua who diagnosed him with Traumatic Arthritis and assessed him with permanent partial disability. Can Gatchalian claim total and permanent disability benefit from Doehle-Philman, et al.? A: NO. Before a seafarer may claim permanent total disability benefits from his employer, it must first be established that the company designated physician failed to issue a declaration as to the seafarer's fitness to engage in sea-duty or disability grading within the 120-day or 240-day period reckoned from the time the seafarer reported to the company- designated physician. In this case, it was undisputed that the company- designated doctor arrived at the assessment that Gatchalian was fit to work after he was subjected to examinations, operations, and therapy over the course of three months. Thereafter, the company- appointed physician issued a final assessment that Jose was fit to work on February 14, 2007, which was well within the 120-day period prescribed by law. Given the timely fit-to-work assessment, there was no basis for Gatchalian to claim total and permanent disability benefits from the Doehle- Philman, et al. (Doehle-Philman Manning Agency, Inc. v. Gatchalian, G.R. No. 207507, 17 Feb. 2021, as penned by J.M.V. Lopez) Q: A, a seafarer, figured in an accident while climbing the stairs on board. A company- designated physician attended his situation and diagnosed A with bone fractures and injuries. He was then removed from the pool of seafarers by his employers. A sought a second medical opinion which found him permanently disabled and unfit to return to sea duty. Is A entitled to permanent and total disability benefits? A: YES. Sec. 20(A)(3) of the POEA-SEC emphasizes that when a seafarer suffers a work-related injury
- 269. LABOR LAW ANDSOCIAL LEGISLATIONS 255 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW or illness in the course of employment, it is the company-designated physician who is obligated to arrive at an assessment of the seafarer's fitness, which would become the basis for seeking monetary benefits. However, the company- designated physician only has limited time to assess the seafarer’s fitness. The Court underscored that the assessment of the company-designated physician of the seafarer's fitness to work or permanent disability within the period of 120 or 240 days must be definite. Failure to observe such a period would entail the seafarer’s disability to be permanent and total. It is incumbent upon the company-designated physician to adequately establish the disability ratings of seafarers in a conclusive medical assessment. In this case, it cannot be considered that the Final Report is definite and conclusive because despite being discharged from a physical therapy program, he was still given home instructions for further treatment. Neither was there a clear indication as to what kind of rehabilitation was necessary, nor a specific period within which to abide with such home instructions. (Reyes v. Magsaysay Mitsui OSK Marine Inc., G.R. No. 209756, 14 June 2021, as penned by J. M.V Lopez) Third-Doctor Referral If the physician appointed by the seafarer disagrees with the company-designated physician's assessment, the opinion of a third doctor may be agreed jointly between the Er and the seafarer to be the decision final and binding on them. (Sec. 20(a) 2010 POEA-SEC) In determining whose decision prevails, a party’s non-availment of his/her right to seek a second or even a third opinion results in the prevalence of the company-designated doctor’s certification. (Gargallo v. Dohle Seafront Crewing, G.R. No. 215551, 17 Aug. 2016) In Leonis Navigation Co., Inc. v. Obrero (G.R. No. 192754, 07 Sep. 2016), the Court clarified that the referral to a third physician in case of contrasting medical opinions between the company-designated physician and the seafarer-appointed physician shall pertain only to the declaration of fitness to work or the degree of disability. It does not cover the determination of whether the disability is work- related. NOTE: The Third Physician Rule has no application when the company-designated physician exceeds the 120-day treatment period without making a final, categorical and definitive assessment. (Alpines v. Elburg Shipmanagement Phil., Inc., G.R. No. 202114, 09 Nov. 2016) Guidelines in Cases Where a Seafarer Claiming Disability Benefits Requests for a Third-Doctor Referral 1. A seafarer who receives a contrary medical finding from his/her doctor must send to the Er, within a reasonable period, a written request to refer the conflicting medical findings to a third doctor, to be mutually agreed upon by the parties, and whose findings shall be final and binding between the parties; 2. The written request must be accompanied by or must indicate the contents of the medical report from his/her doctor. Otherwise, the written request shall be considered invalid and as if none had been requested; 3. In case there was no valid request for a third doctor referral from the seafarer, the Er may opt to ignore the request or to refuse to assent, either verbal or written, to such request without violating the pertinent provision of the POEA-SEC; NOTE: If a complaint is subsequently filed by the seafarer against the Er before the labor tribunal, and the parties, after a directive from the LA pursuant to NLRC En Banc Resolution No. 008-14, fail to secure the services of a third doctor, the labor tribunals shall hold the findings of the company-designated physician final and binding. XPN: unless the same is found to be biased (i.e., lacking in scientific basis or unsupported by the medical records of the seafarer). In such a case, the inherent merits of the respective medical
- 270. 2024 GOLDEN NOTES 256 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES findings shall be considered by the tribunals or court. NOTE: If, however, the parties were able to secure the services of a third doctor during mandatory conference, the latter’s assessment of the seafarer’s medical condition should be considered final and binding. 4. In case of a valid written request from the seafarer for a third doctor referral, the Er must, within 10 days from receipt, send a written reply stating that the procedure shall be initiated by the employer. After a positive response from the Er, the parties are given a period of 15 days to secure the services of a third doctor and an additional period of 30 days for the third doctor to submit his/her assessment. The assessment of the third doctor shall be final and binding; NOTE: In case, however, the parties fail to mutually agree as to the third doctor, a complaint for disability benefits may be filed by the seafarer against the Er. The labor tribunals shall then consider and peruse the inherent merits of the respective medical findings of the parties’ doctors before making a conclusion as to the condition of the seafarer. 5. If, however, the Er ignores the written request of the seafarer, or sends a written reply to the seafarer refusing to initiate the referral to a third doctor procedure, or sends a written reply giving its assent to the request beyond 10 days from receipt of the written request of the seafarer, the Er is considered in violation of the POEA-SEC. The seafarer may now institute a complaint against his or her employer; 6. Upon the filing of the complaint and during the mandatory conference, the LA shall give the parties a period of 15 days to secure the services of a third doctor and an additional period of 30 days for the third doctor to submit his/her reassessment; 7. If the services of a third doctor were not secured on account of the employer’s refusal to give heed to the LA’s request or due to the failure of the parties to mutually agree as to the third doctor, the labor tribunals should make conclusive between the parties the findings of the seafarer’s physician of choice, unless the same is clearly biased, i.e., lacking in scientific basis or unsupported by the medical records of the seafarer. In such a case, the inherent merits of the respective medical findings and the totality of evidence shall be considered by the labor tribunals or courts; NOTE: If, however, the failure to refer the seafarer’s condition to a third doctor after directive from the LA was due to the fault of the seafarer, then the labor tribunals and the courts should make conclusive between the parties the findings of the company-designated physician, except when the company-designated physician’s medical conclusion is found to have been issued with a clear bias in favor of the Er (i.e., lacking in scientific basis, or unsupported by the medical records of the seafarer) as held in Dionio v. Trans-Global Maritime Agency Inc. (G.R. No. 217362, 19 Nov. 2018). When such exception applies, the inherent merits of the respective medical findings shall be considered by the tribunals or court. 8. If, despite the Er’s failure to respond to the seafarer’s valid request for a third doctor, the parties, during mandatory conference, were able to secure the services of a third doctor, and the latter was able to make a reassessment on the seafarer’s condition, the third doctor’s findings should be final and binding between the parties. In such a case, the Er’s refusal to respond to the seafarer’s valid request for a third doctor referral should be considered immaterial. (Bunayog v. Foscon Shipment, Inc., G.R. No. 253480, 04 May 2023) Q: PTCI hired San Juan on several occasions as Chief Cook from 24 Feb. 1992 to 15 May 2008. He was re-hired on 26 Aug. 2009 to work aboard a vessel. Prior to his embarkation, San Juan underwent a routine Pre-Employment Medical Examination where he declared that he suffered from "hypertension treated with medication." He was given cardiac clearance and was certified
- 271. LABOR LAW ANDSOCIAL LEGISLATIONS 257 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW as "fit to work" by PTCI's company-designated physicians. San Juan performed hard manual labor and engaged in strenuous physical activities for 12 hours a day. He suffered fatigue, shortness of breath, and severe headaches. On 23 Jan. 2010, he signed off from the vessel and was medically repatriated to the Philippines. He was referred to the company-designated physicians, who certified on 20 Apr. 2010 and 30 Apr. 2010 that San Juan was fit for duty. However, he was not rehired by PTCI. Hence, he filed a complaint, seeking payment of his permanent disability benefits and sickness allowance. Subsequently, he sought a second medical opinion from Dr. Pascual, who certified that he was "medically unfit to work in any capacity as seaman." Should the contrary findings of San Juan's own physician be upheld over the fit-to-work certifications issued by PTCI's company- designated physicians? A: NO. Settled is the rule that when a seafarer sustains a work-related illness or injury while on board the vessel, his fitness or unfitness for work shall be determined by the company-designated physician, and that "in case of conflicting medical assessments between the company-designated physician and the seafarer's own physician, referral to a third doctor is mandatory. In the absence of a third doctor's opinion, it is the medical assessment of the company-designated physician that should prevail." In this case, San Juan pursued his claim without observing the laid-out procedure. Instead of setting into motion the process of selecting a third doctor, he preempted the mandated procedure by filing the instant complaint for permanent total disability benefits (Philippine Transmarine Carriers, Inc. v. Almario San Juan, G.R. No. 207511, 05 Oct. 2020) Q: Smith Bell Manning hired Esteva as a seafarer for 9 months. He underwent the prescribed medical examination and was pronounced fit to work. While he was onboard the vessel, Esteva began to suffer severe back pains. He underwent x-ray and was diagnosed with lumbar disc prolapse. According to the Injury/Illness Report, his condition required a specialist treatment and possible operation. Dr. Watson declared Esteva to have a temporary total disability and unfit for work and recommended immediate repatriation. Wilhelmsen Ship Management also wrote a letter requesting that Esteva be examined by the company-designated physician in the Philippines. Esteva returned to the Philippines and reported to his Er. The company-designated physician, Dr. Cruz- Balbon, issued a Medical Certificate indicating that Esteva was given medications for Pott's disease, a form of tuberculosis of the spine. She prescribed that Esteva take at least one (1) year of treatment. In the Medical Certificate, Esteva's suggested disability grading was Grade 8, with 2/3 loss of lifting power. Esteva consulted another doctor, Dr. Reyes-Paguia, who issued another Medical Certificate. Esteva consulted another doctor, Dr. Raymundo, an orthopedic surgeon. The physician issued a Medical Report which showed Esteva to be ambulatory but walking with a limp and his condition will no longer allow him to return as an able-bodied seaman. Estava filed a Complaint for total and permanent disability benefits. Is Esteva entitled to total disability benefits? A: YES. The entitlement of an overseas seafarer to disability benefits is governed by law, the employment contract, and the medical findings. Sec. 20(3) of the POEA states that “…if a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Er and the seafarer. The third doctor's decision shall be final and binding on both parties.” As the one contesting the company-designated physician's findings, it is the seafarer's duty to signify the intention to resolve the conflict through the referral to a third doctor. If the seafarer does not contest the findings and fails to refer the assessment to a third doctor, the company can insist on its disability rating even against a contrary opinion by
- 272. 2024 GOLDEN NOTES 258 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES another physician. Securing a third doctor's opinion is the duty of the Ee, who must actively or expressly request it. Here, petitioner failed to signify his intention to resolve the conflicting assessments of the company- designated physician and his chosen physicians. Instead, he immediately filed the claim for permanent disability benefits. Clearly, petitioner failed to comply with the mandatory rule on referral to a third doctor. However, absent a final, definite disability assessment from a company-designated physician, the mandatory rule on a third doctor referral will not apply here. Hence, petitioner cannot be faulted for not referring the assessment to a third doctor at the time he filed his Complaint. There was no medical assessment from a company-designated physician to contest then as it had not been timely disclosed to him. Thus, petitioner's failure to refer the assessment to a third doctor is not fatal to his disability claim. Hence, petitioner is entitled to total and permanent disability benefits (Esteva v. Wilhelmsen Smith Bell Manning, G.R. No. 225899, 10 July 2019) Q: Jara was hired by Orient Hope as an engine cadet on board M/V Orchid Sun. On its way to Oman, M/V Orchid Sun sank off Muscat on 12 July 2007. Jara sustained leg injuries. On 29 May 2008, the company-designated physician suggested that his disability grading is Grade 11. On 06 Mar. 2008, Jara filed a complaint with the Labor Arbiter, insisting that he was entitled to total permanent disability benefits amounting to US$60,000.00. Is Jara entitled to permanent and total disability compensation considering that there was a Grade 11 disability grading given by the company-designated physician? A: YES. The Court finds that the company- designated physician’s failure to issue a final and definitive medical assessment within the 240-day extended period transformed the respondent’s disability to permanent and total. In Island Overseas Transport Corporation v. Beja (G.R. No. 203115, 07 Dec. 2015), this Court clarified that: If the maritime compensation complaint was filed prior to 06 Oct. 2008, the rule on the 120-day period, during which the disability assessment should have been made in accordance with Crystal Shipping, Inc. v. Natividad (G.R. NO. 154798, 20 Oct. 2005), that is, the doctrine then prevailing before the promulgation of Vergara on 06 Oct. 2008, stands; if, on the other hand, the complaint was filed from 06 Oct. 2008 onwards, the 240-day rule applies. (Orient Hope Agencies, Inc. v. Jara, G.R. No. 204307, 06 June 2018) Q: After suffering an Epileptic Seizure with post- fit neurological deficit, Atraje was repatriated to the Philippines and was referred to the company-designated doctor for further medical evaluation and treatment. After completing his treatment, Atraje continued to suffer from shoulder and neck pain. Thus, he consulted an independent specialist who declared him permanently unfit to resume his duties as a seaman. Atraje later filed a complaint for permanent and total disability benefits against his Ers. The latter argued that since Atraje failed to comply with the third doctor rule, the assessment of the company-designated doctor should prevail. Meanwhile, the Panel of Voluntary Arbitrators noted that while Atraje initiated submitting to examination by a third doctor, there was silence on the part of his Ers. Hence, it held that Atraje could not be faulted anymore if the appointment of a third physician was deemed waived in this case. Does non-compliance with the third doctor rule prejudice Atraje’s claim for disability benefits? A: NO. Under Sec. 20-A(3) of the 2010 POEA-SEC, “If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may be agreed jointly between the Er and the seafarer. The third doctor’s decision shall be final and binding on both parties.” The assessment refers to the declaration of fitness to work or the degree of disability, as can be gleaned from Sec. 20-A(3)(1). It presupposes that the company-designated physician came up with a valid, final, and definite assessment on the seafarer’s
- 273. LABOR LAW ANDSOCIAL LEGISLATIONS 259 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW fitness or unfitness to work before the expiration of the 120- or 240-day period. In this case, the third doctor-referral provision does not apply because there is no definite disability assessment from the company-designated physicians. (Magsaysay Mol Marine, Inc. v. Atraje, G.R. No. 229192, 23 July 2018) Q. Teodoro Ventura, Jr. was employed by Crewtech Shipmanagement Philippines, Inc. as Chief Cook on board the vessel MV Maria Cristina Rizzo. Ventura complained that he was having a hard time urinating that was accompanied by lower abdominal pain. He was medically repatriated and referred to the company- designated physician who diagnosed Ventura's illnesses to be "Cystitis with Cystolithiases and Benign Prostatic Hyperplasia (BPH)," which he declared to be not work-related. Prior to the expiration of the 240-day period reckoned from his repatriation, Ventura claimed that he was verbally informed by the company- designated physician that it would be his last check-up session and that subsequent consultations would be for his own account. Ventura was compelled to seek an independent physician of his choice, Dr. Tan, who declared him to be permanently disabled. Ventura filed a complaint for total permanent disability benefits. Crewtech argued that the failure to observe the procedure for the joint appointment of a third doctor negates the claim for the disability benefits. Is Ventura entitled? A. NO. While the seafarer is not irrevocably bound by the findings of the company-designated physician as he is allowed to seek a second opinion and consult a doctor of his choice, Sec. 20-A(3) thereof further provides that any disagreement in the findings may be referred to a third doctor jointly agreed upon by the parties, whose findings shall be final and binding between them. The non- observance of the requirement to have the conflicting assessments determined by a third doctor would mean that the assessment of the company-designated physician prevails. Considering that Ventura failed to observe the conflict-resolution procedure provided under the 2010 POEA-SEC, the Court is inclined to uphold the opinion of the company-designated physician that Ventura's illnesses were not work-related, hence, not compensable. Q: Toquero was employed by Crossworld as a fitter for a vessel for seven months. He underwent a pre-employment medical examination and was declared fit for sea duty. While on board the vessel, Toquero was assaulted by his fellow seafarer, Fong. According to Toquero, he and Fong were instructed by the master of the vessel to check and repair a generator. While repairing, Toquero advised Fong not to remove the flanges which his irked Fong, and recalled their prior altercation and challenged him to a fistfight. He ignored Fong and continued working when suddenly Fong hit the back of his head with a large metal spanner, knocking him unconscious. He was given first aid treatment at the ship clinic, where his vital signs were monitored. Toquero's assessment showed that his physical discomfort was due to trauma and skull defect. His Medical Evaluation Report read that Toquero became incapacitated because of the serious head injury that he incurred on board; he has a large bone defect which may pose further damage to his brain; contusion of the brain tissue also occurred at the site of the skull fracture. At this time, he is no longer allowed to engage in heavy physical activities. The ship's environment is also dangerous to him because of the unsteady state of the vessel when sailing at high seas. Dizziness may set anytime and may result to fall, which may cause further irreparable injury. Because of the impediment, he is permanently unfit to return to work as a seaman in any capacity and considered for total permanent disability. Is Toquero's injury compensable? A: YES. A disability is compensable under the POEA- SEC if two elements are present:
- 274. 2024 GOLDEN NOTES 260 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 1. The injury or illness must be work-related; and 2. The injury or illness must have existed during the term of the seafarer's employment contract. Hence, a claimant must establish the causal connection between the work and the illness or injury sustained. Here, the two (2) elements of a work-related injury are present. Not only was petitioner's injury work- related, but it was also sustained during the term of his employment contract. His injury, therefore, is compensable. Respondents' argument that the claim is precluded because the injury is due to the willful acts of another seafarer is untenable. The POEA-SEC disqualifies claims caused by the willful or criminal act or intentional breach of duties done by the claimant, not by the assailant. It is highly unjust to preclude a seafarer's disability claim because of the assailant's willful or criminal act or intentional breach of duty. (Toquero v. Crossworld Marine Services, G.R. No. 213482, 26 June 2019) Q: Ventis Maritime Corporation (VMC) hired Cayabyab on behalf of its foreign principal, St. Paul Maritime Corporation (SPMC), to work as a wiper on board one of its vessels. Cayabyab underwent a Pre-Employment Medical Examination (PEME) where he was declared fit for sea duty. In fulfilling his work, Cayabyab claimed he skipped meals to assist other crew members. He also experienced erratic sleeping patterns aggravated by poor nutrition. He began talking to himself and recited bible verses out of nowhere. He was then bought to a psychiatric clinic where he was diagnosed with Occupational Stress Disorder and recommended his immediate repatriation on the ground of "acute psychosis.” Upon Cayabyab's arrival in the Philippines, VMC referred him to the company-designated physician, who endorsed him to a psychiatrist at the Philippine General Hospital (PGH). The psychiatrist prescribed him medication for schizophrenia and advised him to return to work. During his follow-up check-up on said date, the psychiatrist declared that Cayabyab had a brief psychotic episode. Subsequently, the company-designated physician issued a Grade 6 Disability Assessment. Cayabyab thus filed a complaint for total and permanent disability benefits. Months after the filing of the complaint, Cayabyab a second opinion from his personal physician, Dr. Elias D. Adamos, who declared him to be suffering from total and permanent disability. The LA awarded Cayabyab total and permanent disability benefits. On the other hand, the NLRC held that VMC is liable to pay Cayabyab only partial disability benefits corresponding to Grade 6 rating under the Amended POEA-SEC. On appeal, the CA upheld the findings of the company-designated physician who classified Cayabyab's mental disorder as a partial disability with a Grade 6 rating; thus, awarding the payment of Grade 6 disability benefits to Cayabyab under their CBA Can Cayabyab claim partial disability benefits under the CBA? A: NO. Cayabyab cannot claim partial disability benefits under the alleged CBA. There are three (3) requisites which a seafarer declared to be suffering from a disability, whether permanent or partial, must prove to establish his or her entitlement to superior disability benefits under the CBA: 1. The existence of the CBA; 2. The seafarer's employment contract is covered by the CBA, i.e., the CBA is in effect or had not yet lapsed at the time of the seafarer's employment; and 3. That the seafarer complied with the conditions stipulated in the CBA, i.e., prove that the seafarer's injury arose from an accident while on board the vessel. Cayabyab cannot claim disability benefits under the CBA owing to the following reasons: (1) He failed to prove its existence; (2) He failed to establish that his employment contract is covered by the supposed
- 275. LABOR LAW ANDSOCIAL LEGISLATIONS 261 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW CBA; and (3) He failed to adduce evidence to show that his disability arose from an accident. The award of compensation and disability benefits cannot rest on speculations, presumptions, and conjectures. While the CBA is a labor contract that must be logically and liberally construed in favor of Filipino seafarers, still the rule is that "justice is in every case for the deserving, to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence. Thus, Cayabyab is entitled to disability benefits corresponding to Grabe 6 disability rating under the Amended POEA-SEC, and not the CBA. (Ventis Maritime Corporation v. Cayabyab, G.R. No. 239257, 21 June 2021, as penned by J. M.V Lopez) Death Benefits GR: The seafarer’s death should occur during the term of his employment. XPN: The seafarer’s death occured after the termination of his employment due to his medical repatriation on account of a work-related injury or illness. (Sec. 20(B), 2010 POEA-SEC) Work-Related Death of the Seafarer During the Term of their Contract The Er shall pay his beneficiaries the Philippine currency equivalent to: 1. The amount of $50,000; and 2. An additional amount of $7,000 to each child under the age of 21 but not exceeding four (4) children, at the exchange rate prevailing during the time of payment. (Sec. 20-B(1), 2010 POEA– SEC) Where Death is Caused by Warlike Activity While Sailing Within a Declared War Zone or War Risk Area The compensation payable shall be doubled. The Er shall undertake appropriate war zone insurance coverage for this purpose. NOTE: The benefits mentioned above shall be separate and distinct from, and will be in addition to whatever benefits which the seafarer is entitled to under Philippine laws from the SSS, OWWA, ECP, PHIC and Home Development Mutual Fund (Pag- IBIG Fund). (Sec. 20-B(3), 2010 POEA–SEC) Other Liabilities of the Employer When the Seafarer Dies as a Result of Work – Related Injury or Illness During the Term of Employment (O-R-B) 1. The Er shall pay the deceased’s beneficiary all outstanding Obligations due the seafarer under this Contract; 2. The Er shall transport the Remains and personal effects of the seafarer to the Philippines at Er’s expense except if the death occurred in a port where local government laws or regulations do not permit the transport of such remains. In case death occurs at sea, the disposition of the remains shall be handled or dealt with in accordance with the master’s best judgment. In all cases, the Er/master shall communicate with the manning agency to advise for disposition of seafarer’s remains; and 3. The Er shall pay the beneficiaries of the seafarer the Philippine currency equivalent to the amount of $1,000 for Burial expenses at the exchange rate prevailing during the time of payment. (Sec. 20-B(4), 2010 POEA-SEC) When is There No Compensation and Benefits to be Payable in Respect of an Injury, Incapacity, Disability or Death of a Seafarer The injury, disability, or death of a seafarer is caused by his: 1. Willful or criminal act; or 2. Intentional breach of his duties. NOTE: The Er must prove that such injury, incapacity, disability, or death is directly attributable to the seafarer.
- 276. 2024 GOLDEN NOTES 262 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Q: Rodolfo L. Racelis was recruited and hired by respondent United Philippine Lines, Inc. (UPL) for its principal, respondent Holland America Lines, Inc. (HAL) to serve as "Demi Chef De Partie" on board the vessel MS Prinsendam. In the course of his last employment contract, Rodolfo experienced severe pain in his ears and high blood pressure causing him to collapse while in the performance of his duties. He consulted a doctor in Argentina and was medically repatriated for further medical treatment. Upon arrival in Manila, he was immediately brought to Medical City, Pasig City, where he was seen by a company-designated physician, Dr. Gerardo Legaspi, and was diagnosed to be suffering from Brainstem (pontine) Cavernous Malformation. He underwent surgery twice for the said ailment but developed complications and died. Rodolfo’s surviving spouse sought to claim death benefits but to no avail. Is petitioner entitled to death benefits? A: YES. The POEA-SEC provides that the beneficiaries of a deceased seafarer may be able to claim death benefits for as long as they are able to establish that (a) the seafarer’s death is work- related, and (b) such death had occurred during the term of his employment contract. While it is true that Brainstem (pontine) Cavernous Malformation is not listed as an occupational disease under Sec. 32-A of the 2000 POEA-SEC, Sec. 20-B(4) of the same explicitly provides that the Er’s liabilities when the seafarer suffers work-related injury or illness include those illnesses not listed in Sec. 32 and are disputably presumed as work related. Also, while the general rule is that the seafarer’s death should occur during the term of his employment, the seafarer’s death occurring after the termination of his employment due to his medical repatriation on account of a work-related injury or illness constitutes an exception thereto. Invalid Side Agreement An agreement that diminishes an Ee’s pay and benefits as contained in the POEA-approved contract is void, unless such subsequent agreement is approved by the POEA. (Azucena, 2016) Prescription of Action All claims arising from this contract shall be made within three (3) years from the date the cause of action arises, otherwise the same shall be barred. (Sec. 30, 2010 POEA SEC) Q: On 28 Feb. 2006, Magsaysay Maritime Corporation (Magsaysay), the local manning agent of Princess Cruise Lines, Limited, hired Bernardine De Jesus as an Accommodation Supervisor for the cruise ship Regal Princess. On 09 Mar. 2006, Bernardine boarded Regal Princess and he eventually disembarked 10 months later, or on 16 Jan. 2007, after his contract of employment ended. Bernardine was soon diagnosed with Aortic Aneurysm and on 15 Mar. 2007, he had a coronary angiography. On 21 Mar. 2007, he underwent a Left Axillofemoral Bypass. He died on 26 Mar. 2007. Cynthia, Bernardine’s widow claimed that her husband suffered chest pains while he was still aboard the Regal Princess. She claimed that he had reported his condition, but he was not provided with medical attention. Furthermore, he had also asked for medical attention upon his repatriation, but his request was once again denied. Is Bernardine’s widow is entitled to death benefits? A: YES. Sec. 32-A of the POEA-SEC acknowledges the possibility of “compensation for the death of the seafarer occurring after the employment contract on account of a work-related illness” if the following conditions are met: 1. The seafarer's work must involve the risks described herein; 2. The disease was contracted as a result of the seafarer's exposure to the described risks;
- 277. LABOR LAW ANDSOCIAL LEGISLATIONS 263 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 3. The disease was contracted within a period of exposure and under such other factors necessary to contract it; and 4. There was no notorious negligence on the part of the seafarer. Both labor tribunals found that Bernardine first experienced chest pains while he was still onboard the cruise ship, i.e., during the term of his employment contract. It was likewise established that while Bernardine requested medical attention when he started to feel ill and upon his repatriation, his requests were repeatedly ignored. This Court concurs with the LA’s observation that it was improbable for Bernardine to have developed and died from a cardio-vascular disease within the two short months following his repatriation. (Magsaysay Maritime Corporation v. De Jesus, G.R. No. 203943, 30 Aug. 2017)
- 278. 2024 GOLDEN NOTES 264UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW VI. MANAGEMENT PREROGATIVE GR: Management prerogative is the right of the Er to regulate all aspects of employment, such as: 1. Freedom to prescribe work assignments; 2. Working methods 3. Processes to be followed; 4. Regulation regarding transfer of Ees; 5. Supervision of their work, lay-off and discipline; and 6. Dismissal and recall of work. (Goya, Inc. v. Goya, Inc, Ees Union-FFW, G.R. No. 170054, 21 Jan. 2013) NOTE: It presupposes the existence of an Er-Ee relationship. (Ibid.) So long as the company’s prerogatives are exercised in good faith for the advancement of the Er’s interest and not for the purpose of defeating or circumventing the rights of the Ees under special laws or under valid agreements, the SC will uphold them. (San Miguel Brewery Sales Force Union v. Ople, G.R. No. 53515, 08 Feb. 1989) An Er is free to regulate, according to his best discretion and best business judgement, all aspects of employment, from hiring to firing, except in cases of unlawful discrimination or those which may be provided by law. (Philippine Telegraph and Telephone Co. v. NLRC, G.R. No. 118978, 23 May 1997) The prerogative accorded management cannot defeat the very purpose for which our labor laws exist: to balance the conflicting interests of labor and management, not to tilt the scale in favor of one over the other, but to guaranty that labor and management stand on equal footing when bargaining in good faith with each other. (Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, 25 Nov. 2004) Q: Little Hands Garment Company, an unorganized manufacturer of children’s apparel with around 1,000 workers, suffered losses for the first time in history when its US and European customers shifted their huge orders to China and Bangladesh. The management informed its Ees that it could no longer afford to provide transportation shuttle services. Consequently, it announced that a normal fare would be charged depending on the distance traveled by the workers availing of the service. Was the Little Hands Garments Company within its rights to withdraw this benefit which it had unilaterally been providing its Ees? (2005 BAR) A: YES. This is a management prerogative which is not due any legal or contractual obligation. The facts of the case do not state the circumstances through which the shuttle service may be considered as a benefit that ripened into a demandable right. There is no showing that the benefit has been deliberately and consistently granted, i.e., with the Er’s full consciousness that despite its not being bound by law or contract to grant it, it just the same granted the benefit. Limitations on Management Prerogative The exercise of managerial prerogative is not unlimited. It is circumscribed by limitations found in law, a CBA, employment contract or the general principles of fair play and justice. The exercise of management prerogative is limited such that: 1. The Er must be motivated by good faith; and 2. It should not be resorted to circumvent the law or must not have been the result of malicious or arbitrary actions. (MERALCO v. Quisumbing, G.R. No. 127598, 22 Feb. 2000) Security of Tenure Vis-à-vis Management Prerogative It is the inherent prerogative of an Er to transfer and reassign its Ees to meet the requirements of its
- 279. LABOR LAW ANDSOCIAL LEGISLATIONS 265 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW business. Be that as it may, the prerogative of the management to transfer its Ees must be exercised without grave abuse of discretion. The exercise of the prerogative should not defeat an Ees's right to security of tenure. The Er’s privilege to transfer its Ees to different workstations cannot be used as a subterfuge to rid itself of an undesirable worker. (Veterans Security Agency v. Vargas, G.R. No. 159293, 16 Dec. 2005) The Ee’s right to security of tenure takes precedence over the Er’s management prerogative. Thus, an Er’s management prerogative includes the right to terminate the services of an Ee, but this management prerogative is limited by the Labor Code, which provides that the Er can terminate an employee only for a just cause or when authorized by law. This limitation on management prerogative is because no less than the Constitution recognizes and guarantees an employee’s right to security of tenure. (Art. 279 [now 294], LC; Sec. 3, Art. XIII, 1987 Constitution) Management prerogative is circumscribed by limitations found in: 1. Law; 2. CBA; 3. Employment contract; 4. Employer policy or practice; and 5. General principles of fair play and justice. Management Prerogative is Inferior to the State’s Police Power Management prerogatives are inferior to the State police power. Such prerogatives and the exercise thereof should be: 1. Without abuse of discretion; and 2. Done in good faith and with due regard to the rights of labor. The Er’s inherent right to discipline is, however, subject to reasonable regulation by the State in the exercise of its police power. (ALU-TUCP v. NLRC, G. R. No. 120450, 10 Feb. 1999) Ineluctably, the exercise of management prerogatives is not absolute. The prerogatives accorded to management cannot defeat the very purpose for which labor laws exist – to balance the conflicting interests of labor and management, not to tilt the scale in favor of one over the other, but to guarantee that labor and management stand on equal footing when bargaining in good faith with each other. A line must be drawn between management prerogatives regarding business operations per se and those which affect the rights of Ees. In treating the latter, management should see to it that its Ees are at least properly informed of its decisions and modes of actions. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the Er’s interest and not for the purpose of defeating or circumventing the rights of Ees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite. (PAL v. NLRC, G.R. No. 85985, 13 Aug. 1993) NOTE: It must be established that the prerogative being invoked is clearly a managerial one. Criterion in the Exercise of Management Prerogative The only criterion to guide the exercise of management prerogative is that the policies, rules, and regulations on work-related activities of the Ee’s must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction. The company's management prerogative shall be exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.
- 280. 2024 GOLDEN NOTES 266 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Q: Is withholding an Ee’s salary a valid exercise of management prerogative? A: NO. Any withholding of an Ee’s wages by an Er may only be allowed in the form of wage deductions under the circumstances provided in Art. 113 of the LC: 1) The worker is insured; 2) For union dues; and 3) In cases authorized by law or regulation issued by the SOLE. In the absence of the following circumstances, withholding thereof is thus unlawful. (SHS Perforated Materials, Inc. v. Diaz, G.R. 185814, 13 Oct. 2010) Q: May a MERALCO Ee invoke the remedy of writ of habeas data available where his Er decides to transfer his workplace on the basis of copies of an anonymous letter posted therein, imputing to his disloyalty to the company and calling for him to leave, which imputation it investigated but fails to inform him of the details thereof? A: NO. The writs of amparo and habeas data will not issue to protect purely property or commercial concerns nor when the grounds invoked in support of the petitions therefore are vague or doubtful. Employment constitutes a property right under the context of the due process clause of the Constitution. The writ of habeas data directs the issuance of the writ only against public officials or Ees, or private individuals or entities engaged in the gathering, collecting, or storing of data or information regarding an aggrieved party’s person, family or home; and that MERALCO (or its officers) is clearly not engaged in such activities. (MERALCO v. Lim, G.R. No. 184769, 05 Oct. 2010) Q: Padilla was hired by Airborne as a security guard. He allegedly rendered continuous service for 24 years, but he was relieved from his post and was advised to wait for his re-assignment order. Later, he received a letter from Airborne directing him to report for assignment. He called Airborne’s office but was told that he had no assignment yet. After more than six (6) months not having been deployed or re-assigned, Padilla filed his Complaint for illegal dismissal against Airborne. Airborne argued that Padilla was placed on floating status for only two (2) months; and he was directed to report to Airborne’s office however, he failed to comply and went on absence without leave instead, thus there was no constructive dismissal. Is Airborne correct? A: NO. Under law, the period of temporary off-detail for security guards must not exceed six (6) months. Beyond this, a security guard’s floating status shall be tantamount to constructive dismissal. Also, the security guard must be assigned to a specific or particular client. A general return-to-work order does not suffice. Here, the series of letters requiring Padilla to report to the head office does not suffice. Jurisprudence is consistent in its disapproval of general return-to-work orders as a justification for failure to timely render assignments to security guards. (Padilla v. Airborne, G.R. No. 210080, 22 Nov. 2017) Compassionate Ground It refers to incidence of death of an immediate member of the seafarer's family which includes his parents, spouse and children if the seafarer is married or his parents if the seafarer is single. (Amended Standard Terms and Conditions Governing the Overseas Employment of Filipino Seafarer On- board Ocean-going Ships) Compassionate Visit When a seafarer is hospitalized and has been confined for at least seven (7) consecutive days, he shall be entitled to a compassionate visit by one (1) family member or a requested individual. The employer shall pay for the transportation cost of the family member or requested individual to the major airport closest to the place of hospitalization of the seafarer. It is, however, the responsibility of the family member or requested individual to meet all visa and travel document requirements. (Ibid.; R.A. No. 8042, as amended by R.A. No. 10022)
- 281. LABOR LAW ANDSOCIAL LEGISLATIONS 267 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW A. OCCUPATIONAL QUALIFICATIONS Bona Fide Occupational Qualification Rule (BFOQ) The Er has the prerogative to impose certain qualifications based on such criteria as race, sex, age, national origin, civil or marital status, physical appearance (such as a requirement on “pleasing personality” or height and weight) and the like. (Chan, 2019) Where the job itself necessarily requires a particular question qualification, then the job applicant or worker who does not possess it may be disqualified on that basis. This will not be unlawful discrimination. (Azucena, 2016) E.g., One whose job is to preach the teachings of a religious sect must himself/herself be a member of that sect; or where the job itself necessarily requires a male, then the female is disqualified as when the job is to haul or saw logs in logging operations. Justifications to BFOQ To justify a BFOQ, the Er must prove two (2) factors: (Fa-Re) 1. That the employment qualification is reasonably Related to the essential operation of the job involved; and 2. That there is a Factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job. (Star Paper v. Simbol, G.R. No. 164774, 12 Apr. 2006) Reasonable Necessity Rule It is also known as the “test of reasonableness of the company policy”. There must be a business necessity for ERs to require certain attributes possessed by a person in relation to the job it is to be done or performed. Accordingly, if the standard qualification is not at all relevant to the job that is to be performed, then one is guilty of discrimination. The petitioner is only a non-teaching personnel; her interaction with SSCW’s students is very limited. It is thus quite impossible that her pregnancy out of wedlock caused such a grave scandal, as claimed by SSCW, as to warrant her dismissal. (Leus v. St. Scholastica’s College Westgrove, G.R. No. 187226, 28 Jan. 2015) SSCW, as Er, undeniably has the right to discipline its Ees and, if need be, dismiss them if there is a valid cause to do so. However, there is no cause to dismiss the petitioner. Her conduct is not considered by law as disgraceful or immoral. Further, the respondents themselves have admitted that SSCW, at the time of the controversy, does not have any policy or rule against an Ee who engages in pre-marital sexual relations and conceives a child as a result thereof. There being no valid basis in law or even in SSCW’s policy and rules, SSCW’s dismissal of the petitioner is despotic and arbitrary and, thus, not a valid exercise of management prerogative. (Ibid.) Q: Fil-Aire Aviation Company (FIL-AIRE) is a new airline company recruiting flight attendants for its domestic flights. It requires that the applicant be single, not more than 24 years old, attractive, and familiar with three major Visayan dialects, viz: Ilongo, Cebuano, and Waray. Lourdes, 23 years old, was accepted as she possessed all the qualifications. After passing the probationary period, Lourdes disclosed that she got married when she was 18 years old, but the marriage was already in the process of being annulled on the ground that her husband was afflicted with a sexually transmissible disease at the time of the celebration of their marriage. As a result of this revelation, Lourdes was not hired as a regular flight attendant. Consequently, she filed a complaint against FIL-AIRE, alleging that the pre-employment qualifications violate relevant provisions of the LC and are against public policy. Is the contention of Lourdes tenable? Discuss fully. (2012, 1995 BAR)
- 282. 2024 GOLDEN NOTES 268 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES A: YES. The contention of Lourdes is tenable. When she was not hired as a regular flight attendant by FIL-AIRE because she disclosed that she got married when she was 18 years old, the airline company violated the provision of the Labor Code, which states: “It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage." The company’s policy of not accepting married women for employment is not only in derogation of the provisions of Art. 136 of the LC on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. (PT&T Company v. NLRC and Grace de Guzman, G.R. No. 118978, 23 May 1997) Age Qualification GR: It shall be unlawful for an Er to set age limitations in employment. XPNs: 1. Age is a BFOQ reasonably necessary in the normal operation of a particular business or where the differentiation is based on reasonable factors other than age; 2. The intent is to observe the terms of bona fide seniority system that is not intended to evade the purpose of the Rules; 3. The intent is to observe the terms of a bona fide employee retirement or a voluntary early retirement plan consistent with the purpose of the Rules; Provided, That such retirement or voluntary retirement plan is in accordance with the LC, and other related laws; or 4. The action is duly certified by the DOLE Secretary after consultation with the stakeholders in accordance with the purpose of the Rules. NOTE: An Er who invokes the qualifications as provided herein, shall submit a report prior to its implementation to the DOLE Regional Office which has jurisdiction over the workplace. The submission of the report shall be a presumption that the age limitation is in accordance with the Rules unless proven otherwise by the court. Failure to submit said report shall give rise to the presumption that the employer is not allowed to set age limitation. (Sec 6, R.A. No. 10911) B. PRODUCTIVITY STANDARDS The Er has the prerogative to prescribe the standards of productivity which may be used as: 1. Incentive scheme - Employees who surpass the productivity standards or quota are usually given additional benefits; and 2. Disciplinary scheme - Employees may be sanctioned or dismissed for failure to meet the productivity standards or quota. (Chan) Q: May an employer impose productivity standards for its workers? A: YES. An Er is entitled to impose productivity standards for its workers. In fact, non-compliance may be visited with a penalty even more severe than demotion. The practice of a company in laying off workers because they failed to make the work quota has been recognized in this jurisdiction. Failure to meet the sales quota assigned to each of them constitutes a just cause for their dismissal, regardless of the permanent or probationary status of their employment. Likewise, failure to observe prescribed standards of work or to fulfill reasonable work assignments due
- 283. LABOR LAW ANDSOCIAL LEGISLATIONS 269 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. (Realda v. New Age Graphics, Inc., G.R. No. 192190, 25 Apr. 2012) This management prerogative of requiring standards may be availed of so long as they are exercised in good faith for the advancement of the Er’s interest. (Leonardo v. NLRC, G.R. Nos. 125303 & 126937, 16 June 2000) C. CHANGE OF WORKING HOURS Employer’s Right to Change Working Hours The working hours may be changed, at the discretion of the company, should such change be necessary for its operations, and that Ees shall observe such rules as have been laid down by the company. (Interphil Laboratories Union-FFW v. Interphil Laboratories, Inc., G.R. No. 142824, 19 Dec. 2001) Management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its Ees. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor. (Royal Plant Workers Union v. Coca-Cola Bottlers Phil., Inc., G.R. No. 198783, 15 Apr. 2013) Q: May the normal hours fixed in Art. 83 of the LC be reduced by the Er? Explain. A: YES. Art. 83 of the LC provides that the normal hours of work of an Ee shall not exceed eight (8) hours a day. This implies that the Er, in the exercise of its management prerogatives, may schedule a work shift consisting of less than eight (8) hours. And following the principle of “a fair day’s wage for a fair day’s labor,” the Er is not obliged to pay an Ee, working for less than eight (8) hours a day, the wages due for eight (8) hours. Nonetheless, if by voluntary practice or policy, the Er, for a considerable period of time, has been paying his Ees’ wages due for eight (8) hours work although the work shift is less than eight (8) hours (e.g., seven hours) it cannot later on increase the working hours without an increase in the pay of the Ees affected. An Er is not allowed to withdraw a benefit which he has voluntarily given. Q: Sime Darby Pilipinas issued a memorandum implementing a new work schedule. It eliminated the 30-minute paid “on call” lunch break of its monthly salaried Ees and instead provided for a 10-minute break time and one hour lunch break. The Ees felt adversely affected by the memorandum and filed before the LA a complaint for unfair labor practice. The LA dismissed the complaint on the ground that the change in the work schedule constituted a valid exercise of management prerogative. Is changing the work schedule of the Ees a valid exercise of management prerogative? A: YES. The right to fix the work schedules of the Ee rests principally on their Er. The petitioner, as the Er, cites as reason for the adjustment the efficient conduct of its business operations and improved production. Management retains the prerogative, whenever exigencies of the service so require, to change the working hours of its Ees. So long as such prerogative is exercised in good faith for the advancement of the Er’s interest and not for the purpose of defeating and circumventing the rights of the Ees under special laws or under valid agreements, this court will uphold such exercise. (Sime Darby Pilipinas v. NLRC, G.R. No. 119205, 15 Apr. 1998) Flexible Working Arrangement (FWA) Flexible Work Arrangements refer to alternative arrangements or schedules other than the traditional or standard work hours, work days, and work week.
- 284. 2024 GOLDEN NOTES 270 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES It is anchored on a voluntary basis and conditions mutually acceptable to both the Er and the Ees (D.A. No. 02-09) Effectivity and Implementation The effectivity and implementation of any of the FWA shall be temporary in nature, subject to the prevailing conditions of the company. (L.A. No. 09, s. 2020) Purposes of Adoption of FWA: 1. To act as a coping mechanism and a remedial measure in times of economic difficulties and national emergencies than resort to outright termination of the Ees’ services or to total closure of the establishment. 2. To reduce business costs and help in saving jobs while maintaining competitiveness and productivity in industry. (D.A. No. 02-09) Q: What are the Alternative Work Schemes to prevent termination of employment or closure of business during the COVID-19 Pandemic? A: As an alternative to termination of employment or closure of business, any or a combination of the following may be adopted: 1. Transfer of employees to another branch or outlet of the same employer; 2. Assignment of employees to other function or position in the same or other branch or outlet of the same employer; 3. Reduction of normal workdays per day or week; 4. Job rotation alternately providing workers with work within the workweek or within the month; 5. Partial closure of establishment where some units or departments of the establishment are continued while other units or departments are closed; and 6. Other feasible work arrangements considering specific peculiarities of different business requirements. The above Alternative Work Schemes/Flexible Work Arrangements are temporary in nature and shall be adopted for as long as the Public Health Crisis exist. (Sec. 4, Labor Advisory No. 17-B, s. 2020) Types of Flexible Working Arrangements Type Definition Compressed Work Week (CWW) One where the normal workweek is reduced to less than six (6) days but the total number of work-hours of 48 hours per week shall remain. The normal workday is increased to more than eight (8) hours but not to exceed 12 hours, without corresponding overtime pay. Reduction of Workdays One where the normal work days per week are reduced but should not last for more than six (6) months. Rotation of Workers One where the Ees are rotated or alternately provided work within the workweek. Forced Leave One where the Ees are required to go on leave for several days or weeks utilizing their leave credits, if there are any. Broken-time Schedule One where the work schedule is not continuous but the work-hours within the day or week remain. Flexi-holidays One where the Ees agree to avail the holidays at some other days, provided that there is no diminution of existing benefits as a result of such arrangement.
- 285. LABOR LAW ANDSOCIAL LEGISLATIONS 271 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW NOTE: The Ers and the Ees are encouraged to explore alternative schemes under any agreement and company policy or practice to cushion and mitigate the effect of the loss of income of the Ees. (D.A. No. 02-09) Work from Home (WFH) or Telecommuting Work Arrangement Establishments are highly encouraged to adopt a WFH or telecommuting arrangement when feasible. Ees are provided with adequate support to perform the assigned task or job. (Sec. 3, Labor Advisory No. 17-B, s. 2020) Entitlement of Separated Employees Ees who are separated from employment due to authorized causes shall be entitled to the final pay without prejudice to other benefits provided for by the law, company policy, or CBAs. (Sec. 6, L.A. 17, s. 2020) D. TRANSFER OF EMPLOYEES Transfer It is a movement from one position to another which is of equivalent rank, level or salary, without break in service. Demotion It involves a situation where an Ee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary. Promotion The advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. Conditions for a Valid Exercise by the Employer of its Right to Transfer Employees The transfer should: 1. Not be unreasonable, inconvenient, or prejudicial to the Ee; and 2. Not involve a demotion in rank, diminution in salaries, benefits and other privileges concerning the transfer. Employer’s Right to Transfer and Reassign Employees In the pursuit of its legitimate business interests, especially during adverse business conditions, management has the prerogative to transfer or assign Ees from one office or area of operation to another provided there is no demotion in rank or diminution of salary, benefits and other privileges and the action is not motivated by discrimination, bad faith, or effected as a form of punishment or demotion without sufficient cause. This privilege is inherent in the right of Ers to control and manage their enterprises effectively. NOTE: The right of Ees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. (Endico v. Quantum Foods Distribution Center, G.R. No. 161615, 30 Jan. 2009) GR: Refusal of an Ee to transfer, when such transfer is valid, is guilty of insubordination or willful disobedience of an Er’s lawful order. (e.g., refusal to transfer due to parental obligations, additional expenses, inconvenience, hardship and anguish) XPNs: Unless the transfer is: (Q-O-P-A-A) 1. A transfer that was directed by the Er under Questionable circumstances; 2. A transfer to Overseas assignment; 3. A transfer consequent to Promotion; 4. A transfer to Avoid conflict of interest; or
- 286. 2024 GOLDEN NOTES 272 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES 5. A transfer from one position to another occasioned by the Abolition of the position. (Chan, 2019) When Transfer is Deemed to be Constructive Dismissal A transfer is deemed to be constructive dismissal when three conditions concur: 1. When the transfer is unreasonable, inconvenient or prejudicial to the Ee; 2. When the transfer involves a demotion in rank or diminution of salaries, benefits and other privileges; and 3. When the Er performs a clear act of discrimination, insensibility, or disdain towards the Ee, which forecloses any choice by the latter except to forego his continued employment. Q: May the employer exercise his right to transfer an employee and compel the latter to accept the same if said transfer is coupled with or is in the nature of promotion? A: NO. There is no law that compels an Ee to accept promotion. Promotion is in the nature of a gift or a reward which a person has a right to refuse. When an Ee refused to accept his promotion, he was exercising his right and cannot be punished for it. While it may be true that the right to transfer or reassign an Ee is an Er’s exclusive right and the prerogative of management, such right is not absolute. (Dosch v. NLRC and Northwest Airlines, G.R. No. 51182, 05 July 1983) Q: Manalo is a faculty member of the Accountancy Department of Ateneo de Naga University's College of Commerce and also, part- time Manager of the Ateneo de Naga Multi- Purpose Cooperative. The Grievance Committee of the University found her in “fraud in issuance of official receipts, collection of cash without documented remittance to the cooperative, use of inappropriate forms of documents cash receipts” and, thus, recommended her dismissal.” Instead of dismissing Manalo, the University President transferred Manalo to teach Economics in another Department. Was Manalo constructively dismissed? A: NO. Transferring Ees, to the extent that it is done fairly and in good faith, is a valid exercise of management prerogative and will not, in and of itself, sustain a charge of constructive dismissal. In this case, the acts committed by Manalo run afoul from the principles of integrity and objectivity governing ethics and education in the accountancy profession as mandated by the International Federation of Accountants. Relevant as it is, ethical behavior takes on even greater significance in the education and training of individuals who are prospective members of the profession. Professionals who concurrently take on the role of educators act as gatekeepers to the esteemed ranks of a profession or as channels of skills and knowledge. (Manalo v. Ateneo De Naga University, et al., G.R. No. 185058, 09 Nov. 2015) Burden of Proving that the Transfer was Reasonable The Er must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the Ee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the Er fail to overcome this burden of proof, the Ee’s transfer shall be tantamount to constructive dismissal. (Blue Dairy Corporation v. NLRC, G.R. No. 129843, 14 Sept. 1999) E. DISCIPLINE OF EMPLOYEES Components to the Right to Discipline 1. Right to discipline; 2. Right to dismiss; 3. Right to determine who to punish; 4. Right to promulgate rules and regulations; 5. Right to impose penalty (proportionality rule); 6. Right to choose which penalty to impose; and 7. Right to impose heavier penalty than what the company rules prescribe. (Chan, 2019)
- 287. LABOR LAW ANDSOCIAL LEGISLATIONS 273 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Employer’s Right to Discipline their Employees The Er has the prerogative to instill discipline in his Ees and to impose reasonable penalties, including dismissal, on erring Ees pursuant to company rules and regulations. (San Miguel Corp. v. NLRC, G.R. No. 78277, 12 May 1989) Company policies and regulations are, unless shown to be grossly oppressive or contrary to law, generally binding and valid on the parties. (China Banking Corp. v. Borromeo, G.R. No. 156515, 19 Oct. 2004) Limitation on the Employer’s Power to Discipline While management has the prerogative to discipline its Ees and to impose appropriate penalties on erring workers, pursuant to company rules and regulations, however, such management prerogative must be exercised in good faith for the advancement of the Er’s interest and not for the purpose of defeating or circumventing the rights of the Ees under special laws and valid agreements. (PLDT v. Teves, G.R. No. 143511, 15 Nov. 2010) The attainment of a harmonious labor- management relationship and the existing state policy of enlightening workers concerning their rights as Ee’s’ demand no less than the observance of transparency in managerial moves affecting Ee’s rights. (Philippine Airlines. Inc. v. NLRC, et al., G.R. No. 85985, 13 Aug. 1993) Rule on Proportionality Infractions committed by an Ee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the employee. (Holcim Philippines, Inc. v. Obra G.R. No. 220998, 08 Aug. 2016) In Sagales v. Rustan's Commercial Corporation (G.R. NO. 166554, 27 Nov. 2008), the dismissal of a Chief Cook who tried to take home a pack of squid heads, which were considered as scrap goods and usually thrown away, was found to be excessive. The Supreme Court took into consideration the fact that the Chief Cook had been employed by the company for 31 years already and the incident was his first offense. Besides, the value of the squid heads was a negligible sum of P50.00 and the company practically lost nothing since the squid heads were considered scrap goods and usually thrown away. Moreover, the ignominy he suffered when he was imprisoned over the incident, and his preventive suspension for one (1) month was enough punishment for his infraction. Q: A, a flight attendant of XYZ Airlines for over 17 years was dismissed for committing serious misconduct by removing company property without authorization, particularly a 1.5L of bottled water and a couple of magazines. Was A illegally dismissed? A: YES. While the company laid down the penalties for violation of its policies. The evaluation of an Ee's infraction should be dealt with fairness and reason. All surrounding circumstances must be considered, and the penalty must be commensurate to the violation committed by an Ee. Termination of the services of an Ee should be the Er's last resort especially when other disciplinary actions may be imposed, considering the Ee's long years of service in the company, devoting time, effort and invaluable service in line with the Er's goals and mission. During A’s span of employment of 17 years, she did not commit any infraction or was ever sanctioned except in the incident subject of the present controversy. To impose a penalty as grave as dismissal for a first offense and considering the value of the property allegedly taken would be too harsh under the circumstances. Therefore, A was illegally dismissed from service. (Salvacion A. Lamadrid v. Cathay Pacific Airways Limited And Vivian Lo, G.R. No. 200658, 23 June 2021) F. GRANT OF BONUSES AND OTHER BENEFITS Bonus A bonus is an amount granted and paid to an Ee or his industry and loyalty which contributed to the success of the Er’s business and made possible the
- 288. 2024 GOLDEN NOTES 274 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES realization of profits. It is an act of generosity granted by an enlightened Er to spur the Ee to greater efforts for the success of the business and realization of bigger profits. GR: The payment of bonus is a management function, not a demandable and enforceable obligation, which cannot be enforced upon the Er who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the Ee’s basic salaries or wages. (Philippine National Construction Corporation v. NLRC, G.R. No. 128345, 18 May 1999) XPNs: Given for a long period of time, provided that: 1. Consistent and deliberate – Er continued giving benefit without any condition imposed for its payment; 2. Er knew he was not required to give benefit; 3. Nature of benefit is not dependent on profit; 4. Made part of the wage or compensation agreed and stated in the employment contract; 5. It was promised to be given without any conditions imposed for its payment in which case it is deemed part of the wage; and 6. It has ripened into practice. (Marcos v. NLRC, G.R. No. 111744, 08 Sept. 1995) NOTE: If one enters into a contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity. (Ibid) Bonus Not Treated as Part of Wages Bonus is not considered part of wages if it is paid only upon realization of profits or amount of production or output. (Atok Big Wedge Mining Co., Inc. v. Atok Big Wedge Mutual Benefit Assn., G.R. No. L-5276, 03 Mar. 1953) Where the bonus is not payable to all but only to some Ees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. (Poquiz, 2012) Heacock Ruling “Even if a bonus is not demandable for not forming part of the wage, salary, or compensation of the Ee, the same may nevertheless be granted on equitable considerations” (Heacock Co. v. NLRC, G.R. No. L- 11135, 30 Apr. 1958) Prohibition Against Elimination or Diminution of Benefits Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of the promulgation of this Code. (Art. 100, LC) NOTE: Ee benefits contemplated by Art. 100 are those which are capable of being measured in terms of money or those privileges to the Ee with monetary equivalents. When a grant of a benefit is made subject to a condition and such condition prevails, the rule on non-diminution finds no application. (Coca-Cola Bottlers Philippines, Inc., v. Iloilo Coca-Cola Plant Employees Labor Union, G.R. No. 195297, 05 Dec. 2018) Elimination or Diminution of Benefits May Constitute Constructive Dismissal or Indicate Demotion. Constructive dismissal is an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a clear discrimination, insensibility or disdain by an Er becomes unbearable to the Ee. (Phil. Wireless Inc. v. NLRC, G.R. No. 112963, 20 July 1999).
- 289. LABOR LAW ANDSOCIAL LEGISLATIONS 275 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Q: The projected bonus for the Ees of Suerte Co. was 50% of their monthly compensation. Unfortunately, due to the slump in the business, the president reduced the bonus to 5% of their compensation. Can the company unilaterally reduce the amount of bonus? (2002 BAR) A: YES. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. An Er cannot be forced to distribute bonuses when it can no longer afford to pay. To hold otherwise would be to penalize the Er for his past generosity. (Producers Bank of the Phil. v. NLRC, G.R. No. 100701, 28 Mar. 2001) G. CLEARANCE PROCESS A standard procedure among public or private Ers of requiring the Ee to return the Er’s real or personal properties before the Ee’s departure. (Chan, 2019). GR: Ers are prohibited from withholding wages from employees. (Art. 116, LC) XPN: Pending the Ee’s return of the Er’s properties, the Er may withhold the former’s terminal pay and benefits. (Milan v. NLRC, G.R. No. 202961, 4 Feb. 2015) H. POST-EMPLOYMENT RESTRICTIONS Types of Restrictive Covenants 1. Non-compete clause – When the Ee is prevented from directly competing or working for a competitor of his former Er, or when the Ee is prevented from setting up a competing business. 2. Non-solicitation clause – When a duty is imposed on the Ee not to approach his former Er’s customers or prospective customers, or when the Ee is prevented from taking customers/clients of his former Er. 3. Non-poaching clause – When the Ee is prevented from enticing his former Er’s staff away from the business, the aim is to prevent the Ee from taking key Ees with him to his new employment or business. Factors to Consider To Enforce a Restrictive Covenant 1. Whether the covenant protects a legitimate business interest of the Er; 2. Whether the covenant creates an undue burden on the Ee; 3. Whether the covenant is injurious to the public welfare; 4. Whether the time and territorial limitations contained in the covenant are reasonable; and 5. Whether the restraint is reasonable from the standpoint of public policy. (Rivera v. Solidbank Corp., G.R. No. 163269, 19 Apr. 2006) Non-Involvement Clause A non-involvement clause is not necessarily void for being in restraint of trade if there are reasonable limitations as to time, trade, and place. In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business akin to respondent’s. (Tiu v. Platinum Plans, Phils., Inc., G.R. No. 163512, 28 Feb. 2007) More significantly, since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in charge of respondent’s Hongkong and Asean operations, she had been privy to confidential and highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, we find the non-involvement clause not contrary to public welfare and not greater than is
- 290. 2024 GOLDEN NOTES 276 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES necessary to afford a fair and reasonable protection to respondent. (Ibid.) Q: TRUE or FALSE. Answer TRUE if the statement is true, or FALSE if the statement is false. Explain your answer in not more than two (2) sentences. An employment contract prohibiting employment in a competing company within one year from separation is valid. (2009 BAR) A: TRUE. An employment contract prohibiting employment in a competing company within a reasonable period of one year from separation is valid. The Er has the right to guard its trade secrets, manufacturing formulas, marketing strategies, and other confidential programs and information. Q: Genesis Fulgencio had been working for Solidbank Corporation since 1977. He later on applied for retirement. Solidbank required Genesis to sign an undated Undertaking where he promised that “he will not seek employment with a competitor bank or financial institution within one (1) year from 28 Feb. 1995, and that any breach of the Undertaking or the provisions of the Release, Waiver and Quitclaim would entitle Solidbank to a cause of action against him before the appropriate courts of law.” Equitable Banking Corporation (Equitable) employed Genesis. Is the post-retirement employment ban incorporated in the Undertaking which Genesis executed upon his retirement unreasonable, oppressive, hence, contrary to public policy? A: NO. There is a clear and obvious distinction between restraints on competitive employment in employment contracts and in pension plans. The strong weight of authority holds that forfeitures for engaging in subsequent competitive employment, included in pension retirement plans, are valid, even though unrestricted in time or geography. The reasoning behind this conclusion is that the forfeiture, unlike the restraint included in the employment contract, is not a prohibition on the employee’s engagement in competitive work but is merely a denial of the right to participate in the retirement plan if he does so engages. (Rivera v. Solidbank Corp., G.R. No. 163269, 19 Apr. 2006)
- 291. LABOR LAW ANDSOCIAL LEGISLATIONS 277 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW VII. POST-EMPLOYMENT A. TERMINATION OF EMPLOYMENT BY EMPLOYER 2-Fold Requirement for Lawful Dismissal 1. Substantive – legality or illegality of the act of dismissal (just and authorized causes) 2. Procedural – legality or illegality of the manner of dismissal (due process; notice and hearing) Employee’s Right to Contest DismissalAny decision taken by the Er shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the NLRC. (Art. 292 (b), LC) Burden of Proof The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. (Art. 292 (b), LC) Principle of Totality of Infractions The totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee. The offenses committed by petitioner should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. (Merin v. NLRC, G.R. No. 171790, 17 Oct. 2008) After all, the record of an Ee is a relevant consideration in determining the penalty that should be meted out since an Ee's past misconduct and present behavior must be taken together in determining the proper imposable penalty. (Cebu People’s Multi-Purpose Cooperative v. Carbonilla, G.R. No. 212070, 27 Jan. 2016) Just Cause vs. Authorized Cause JUST CAUSE AUTHORIZED CAUSE A just cause dismissal implies that the Ee has committed, or is guilty of, some violation against the Er, that is, the Ee has committed some serious misconduct, is guilty of fraud against the Er or he has neglected his duties such as abandonment. Thus, the Ee himself initiated the dismissal process. Payment of separation pay, as a rule, is not required in just cause dismissal. However, where the Ee is dismissed for causes other than serious misconduct or those reflecting on his moral character, separation pay may be allowed as a measure of social justice. (Poquiz, 2012) Authorized cause dismissal is a form of terminating the Er-Ee relationship with a liability on the part of the Er to pay separation pay as mandated by law. It does not necessarily imply delinquency or culpability on the part of the Ee. Instead, the dismissal process is initiated by the Er's exercise of his management prerogative such as installation of labor- saving devices, closure of business, or implementing a retrenchment program. (Jaka Food v. Pacot, G.R. No. 151378, 28 Mar. 2005) NOTE: The existence of any of the just or authorized causes enumerated in Arts. 297 and 298 of the LC does not automatically result in the dismissal of the Ee. The Er must decide whether it would dismiss the Ee, impose a lighter penalty, or perhaps even condone the offense committed by an erring Ee. In deciding, the Er may take into consideration the Ee's past offenses. (Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016) Q: Aldovino and her co-applicants applied for work at Gold and Green Manpower, a local manning agency. Eventually, they were hired as sewers for Dipper Semi-Conductor, a Taiwan- based company. Their respective employment contracts provided an eight (8)-hour working day, a fixed monthly salary, and entitlement to overtime pay, among others. Once Aldovino and
- 292. 2024 GOLDEN NOTES 278 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES her co-workers arrived in Taiwan, Gold and Green Manpower took all their travel documents, including their passports. They were then made to sign another contract that provides that they would be paid on a piece-rate basis instead of a fixed monthly salary. Because they were paid on a piece-rate basis, they received less than the fixed monthly salary stipulated in their original contract. When Aldovino and her co-workers inquired, Dipper Semi-Conductor refused to disclose the schedule of payment on a piece-rate basis. Aldovino and her co-workers filed a Complaint against their Ers, Dipper Semi-Conductor and Sage International before a local court in Taiwan. The parties met before the Bureau of Labor Affairs for a dialogue. There, Dipper Semi- Conductor ordered Aldovino and her co- workers to return to the Philippines as it was no longer interested in their services. All of them returned to the Philippines. They eventually filed before the Labor Arbiter a case for illegal termination, underpayment of salaries, human trafficking, illegal signing of papers, and other money claims. Respondents argued that petitioners were not illegally dismissed and that they voluntarily returned to the Philippines. Were petitioners illegally dismissed? A: YES. Under the LC, Ers may only terminate employment for a just or authorized cause and after complying with procedural due process requirements. Arts. 297 and 300 of the LC enumerate the causes of employment termination either by Ers or by Ees, respectively. In illegal dismissal cases, the burden of proof that Ees were validly dismissed rests on the Ers. Failure to discharge this burden means that the dismissal is illegal. A review of the records here shows that the termination of petitioners' employment was effected merely because respondents no longer wanted their services. This is not an authorized or just cause for dismissal under the LC. Employment contracts cannot be terminated on a whim. Furthermore, petitioners were not accorded due process. A valid dismissal must comply with substantive and procedural due process: there must be a valid cause and a valid procedure. The Er must comply with the two (2)-notice requirement, while the Ee must be given an opportunity to be heard. Here, petitioners were only verbally dismissed, without any notice given or having been informed of any just cause for their dismissal. With their right to substantive and procedural due process denied, petitioners were illegally dismissed from service. (Aldovino v. Gold and Green Manpower, G.R. No. 200811, 19 June 2019) Q: Joy was deployed to work for Taiwan Wacoal, Co. Ltd. on 26 June 1997 for one year. Sameer Overseas Placement Agency claims that on 14 July 1997, Mr. Huwang from Wacoal informed Joy, without prior notice, that she was terminated and that she should prepare for immediate repatriation. Hence, Joy filed a complaint with the NLRC claiming that she was illegally dismissed. The NLRC declared that Joy was illegally dismissed, ruling that Sameer Overseas Placement Agency failed to prove that there were just causes for termination. Sameer Overseas Placement Agency counters that there was just cause for termination because there was a finding of Wacoal of Joy’s inefficiency, negligence in her duties, and failure to comply with the work requirements of her foreign Er. Therefore, it claims that Joy’s dismissal was valid. Was Joy illegally dismissed? A: YES. Security of tenure for labor is guaranteed by our Constitution. With respect to the rights of Overseas Filipino Workers (OFW), we follow the principle of lex loci contractus (law of the place where the contract is made). By our laws, overseas Filipino workers may only be terminated for a just or authorized cause and after compliance with procedural due process requirements. Joy’s dismissal less than one year from hiring and her repatriation on the same day show not only failure on the part of Sameer Overseas Placement Agency to comply with the requirement of the existence of just cause for termination – they patently show that the Ers did not comply with the due process
- 293. LABOR LAW ANDSOCIAL LEGISLATIONS 279 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW requirement. The abruptness of the termination negated any finding that she was properly notified and given the opportunity to be heard. Her constitutional right to due process of law was violated. (Sameer Overseas Placement Agency v. Cabiles, G.R. No. 170139, 05 Aug. 2014) Threefold Liability Rule The "threefold liability rule" holds that the wrongful acts or omissions of a person may give rise to civil, criminal and administrative liability, which may proceed independently of one another, as in fact, the quantum of evidence required in each case is different. (Ramiscal, Jr. v. COA, G.R. No. 213716, 10 Oct. 2017) Q: Rico has a temper and, in his work as Division Manager of Matatag Insurance, frequently loses his temper with his staff. One day, he physically assaulted his staff member by slapping him. The staff member sued him for physical injuries. Matatag insurance decided to terminate Rico, after notice and hearing, on the ground of loss of trust and confidence. Rico claims that he is entitled to the presumption of innocence because he has not yet been convicted. Comment on Matatag’s action in relation to Rico’s argument. (2015 BAR) A: Matatag Insurance does not have to await the result of the criminal case before exercising its prerogative to dismiss. Dismissal is not affected by a criminal case. Under the Threefold Liability Rule, a single act may result in three liabilities, two of which are criminal and administrative. To establish them, the evidence of the crime must amount to proof beyond reasonable doubt; whereas the evidence of the ground for dismissal is substantial evidence only. In this regard, the company has some basis already for withholding the trust it has reposed on its manager. Hence, Rico’s conviction need not precede the employee’s dismissal. 1. JUST CAUSES (Art. 297, LC; DOLE D.O. No. 147-15) It is a termination initiated by the Ee. This is an exercise of management prerogative; however, it must not be exercised with abuse of discretion. While the law provides for a just cause to dismiss an Ee, the Er still has the discretion whether it would exercise its right to terminate the employment or not. (Santos v. Integrated Pharmaceutical, Inc., G.R. No. 204620, 11 July 2016) Basis As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring Ees. An Er cannot be compelled to continue employing an Ee guilty of acts inimical to the Er's interest, justifying loss of confidence in him. (Yabut v. Meralco, G.R. No. 190436, 16 Jan. 2012) Just Causes for Termination 1. Serious misconduct or willful disobedience by the Ee of the lawful orders of his Er or representative in connection with his work; 2. Gross and habitual neglect of duties by the Ee; 3. Fraud or willful breach by the Ee of the trust reposed in him by his Er or duly organized representative; 4. Commission of a crime or offense by the Ee against the person of his Er or any immediate member of the latter’s family or his duly authorized representative; or 5. Other causes analogous to the foregoing. (Art. 297, LC) Serious Misconduct It is an improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious within the
- 294. 2024 GOLDEN NOTES 280 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. (Villamor Golf Club v. Pehid, G.R. No. 166152, 04 Oct. 2005) Requisites of Serious Misconduct 1. There must be misconduct; 2. The misconduct must be of such grave and aggravated character; 3. It must relate to the performance of the Ee’s duties; and 4. There must be showing that the Ee becomes unfit to continue working for the Er. (Sec. 5.2 (a), D.O. No. 147-15) Examples are: a. Sexual harassment; b. Fighting within the company premises; c. Uttering obscene, insulting, or offensive words against a superior; d. Falsification of time records; or e. Gross immorality. Q: Delos Reyes was a university professor and the president of the university’s Faculty and Ees Union, a duly registered labor union. An administrative complaint for grave misconduct was filed against him for using expletives at Paula Mae, a minor student at the university, when the latter was holding the doorknob on her way out of the faculty room, while he held the doorknob on the other side. When Paula Mae stepped aside, Delos Reyes allegedly exclaimed the words “anak ng puta” and walked on without any remorse, causing emotional trauma to Paula Mae. Delos Reyes denied the accusations against him and filed a counter-complaint against Paula Mae for maligning and tarnishing his established reputation in the university. A hearing was held and later, Delos Reyes was issued a Notice of Dismissal. a) Was Delos Reyes validly dismissed? A: YES. A teacher exclaiming, "Anak ng puta" after having encountered a student is an unquestionable act of misconduct. However, whether it is serious misconduct that warrants the teacher's dismissal will depend on the context of the phrase's use. While uttering an expletive out loud in the spur of the moment is not grave misconduct per se, the refusal to acknowledge this mistake and the attempt to cause further damage and distress to a minor student cannot be mere errors of judgment. Petitioner's subsequent acts are willful, which negate professionalism in his behavior. They contradict a professor's responsibility of giving primacy to the students' interests and respecting the institution in which he teaches. In the interest of self-preservation, petitioner refused to answer for his own mistake; instead, he played the victim and sought to find fault in a student who had no ill motive against him. Indeed, had he been modest enough to own up to his first blunder, petitioner's case would have gone an entirely different way. b) Did his dismissal constitute unfair labor practice? A: NO. In Great Pacific Life Ees Union v. Great Pacific Life Assurance Corporation, the Court discussed that if the unfair treatment does not relate to or affect the workers' right to self-organize, it cannot be deemed unfair labor practice. A dismissal of a union officer is not necessarily discriminatory, especially when that officer committed an act of misconduct. In fact, union officers are held to higher standards. In this case, petitioner’s dismissal, which was brought about by his personal acts, does not constitute unfair labor practice as provided under the LC. Dismissing him was not meant to violate the right of the university Ees to self-organize. Neither was it meant to interfere with the Union's activities. Finally, petitioner cannot raise the defense that he was the Union's president; this does not make him immune from liability for his acts of misconduct. (Adamson University Faculty and Employees Union v. Adamson University, G.R. No. 227070, 09 Mar. 2020) Q: Escando, upset at his transfer to the washer section, repeatedly uttered “Gago ka” and
- 295. LABOR LAW ANDSOCIAL LEGISLATIONS 281 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW threatened bodily harm to his superior Mr. Andres. Is the utterance of the obscene words and threats of bodily harm gross and willful misconduct? A: YES. The repeated utterances by Escando of obscene, insulting, or offensive words against a superior were not only destructive of the morals of his co-Ees and a violation of the company rules and regulations, but also constitute gross misconduct, which is one of the grounds provided by law to terminate the services of an Ee. (Autobus Workers Union v. NLRC, G.R. No. 117453, 26 June 1998) Q: Samson made insulting and obscene utterances towards the General Manager saying, “Si EDT bullshit yan, sabihin mo kay EDT yan” among others during the Christmas party. Are the utterances towards the General Manager gross misconduct? A: The alleged misconduct of Samson when viewed in its context is not of such serious and grave character as to warrant his dismissal. Samson made the utterances and obscene gestures at an informal Christmas gathering and it is to be expected during this kind of gatherings, where tongues are often loosened by liquor of other alcoholic beverages, that Ees freely express their grievances and gripes against their Ers. Ees should be allowed wider latitude to freely express their sentiments during these kinds of occasions, which are beyond the disciplinary authority of the Er. (Samson v. NLRC, G.R. No. 121035, 12 Apr. 2000) Q: Cheryll Leus was a non-teaching personnel employed in St. Scholastica’s College Westgrove (SSCW). Cheryll and her boyfriend conceived a child out of wedlock. SSCW dismissed her on the ground that her pregnancy out of wedlock constitutes disgraceful and immoral conduct and ran counter to the moral principles that SSCW stands for and teaches its students. Does pregnancy out of wedlock (without a legal impediment to marry) constitute immoral conduct as a ground for dismissal contemplated by law? A: NO. It is an immoral conduct if such does not conform to what society generally views as respectable or moral. Substantial evidence must be presented to prove that such conduct is considered immoral. The two-step process to determine whether the conduct is immoral: 1. Consideration of the totality of the circumstances surrounding it; and 2. Assessment of said circumstances based on the prevailing norms of conduct. Pre-marital sexual relations between two consenting adults who have no impediment to marry each other, and, consequently, conceiving a child out of wedlock, does not amount to a disgraceful or immoral conduct. The SC further held that “when the law refers to morality, it necessarily pertains to public and secular morality and not religious morality. And [F]or a conduct to be considered disgraceful or immoral, it must be ‘detrimental to those conditions upon which depends the existence and progress of human society’ and not because the conduct is prescribed by the beliefs of one religion or the other.” (Leus v. SSCW, G.R. No. 187226, 28 Jan. 2015) A teacher engaging in an extra-marital affair with another married person is a serious misconduct, if not an immoral act. But a teacher falling in love with her pupil and, subsequently, contracting a lawful marriage with him, though there is a disparity in their ages and academic level cannot be considered as a defiance of contemporary social mores. (Chua- Qua v. Clave. G.R. No. 49549, 30 Aug. 1990) Q: Jose and Erica, former sweethearts, both worked as sales representatives for Magna, a multinational firm engaged in the manufacture and sale of pharmaceutical products. Although the couple had already broken off their relationship, Jose continued to have special feelings for Erica. One afternoon, Jose chanced upon Erica riding in the car of Paolo, a co-Ee and Erica's ardent suitor; the two were on their way back to the office from a sales call on Silver Drug, a major drug retailer. In a fit of extreme jealousy, Jose rammed Paolo's car, causing severe injuries to Paolo and Erica. Jose's flare up also caused heavy damage to the two company-owned cars they were driving. As lawyer for Magna, advise
- 296. 2024 GOLDEN NOTES 282 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES the company on whether just and valid grounds exist to dismiss Jose. (2013 BAR) A: Jose can be dismissed for serious misconduct, violation of company rules and regulations, and commission of a crime against the Er’s representatives. For misconduct to be serious and therefore a valid ground for dismissal, it must be of grave and aggravated character and not merely trivial or unimportant and connected with the work of the Ee. Q: Assuming this time that Magna dismissed Jose from employment for cause and you are the lawyer of Jose, how would you argue the position that Jose's dismissal was illegal? (2013 BAR) A: The offense committed by Jose did not relate to the performance of his duties. For misconduct or improper behavior to be a just cause for dismissal, it: 1. Must be serious; 2. Must relate to the performance of the Ee’s duties; and 3. Must show that the Ee has become unfit to continue working for the Er. Based on the forgoing guidelines, it can be concluded that Paolo was not guilty of serious misconduct. He was not performing official work at the time of the incident. (Lagrosas v. Bristol Myers Squibb, G.R. No. 168637/170684, 12 Sept. 2008) Additionally, there was no compliance with the rudimentary requirements of due process. Q: Rivera, a bus conductor of Genesis, was dismissed on account of a discrepancy in the amount he declared on bus ticket receipts. He reported and remitted the amount of P198.00 instead of the admittedly correct amount of P394.00 worth of bus ticket receipts. He averred that it was an honest mistake, which he was unable to correct because the bus encountered mechanical problems. Contending that this termination was arbitrary and not based on just causes for terminating employment, he filed a complaint for illegal dismissal. Genesis claimed that Rivera's misdeclaration of the amount in the bus ticket receipts and failure to remit the correct amount clearly violated Genesis' policies and amounted to serious misconduct, fraud, and willful breach of trust; thereby justifying his dismissal. Was Rivera terminated with just cause? A: NO. Absent any other supporting evidence, the error in a single ticket issued by petitioner can hardly be used to justify the inference that he has committed serious misconduct or has acted in a manner that runs afoul of his Er's trust. Terminating his employment on these unfounded reasons is manifestly unjust. The social justice suppositions underlying labor laws require that the statutory grounds justifying termination of employment should not be read to justify the view that bus conductors should, in all cases, be free from any kind of error. Not every improper act should be taken to justify the termination of employment. (Rivera v. Genesis Transport Service Inc., and Moises, G.R. No. 215568, 03 Aug. 2015) Willful Disobedience or Insubordination There is willful disobedience when there is wanton disregard to follow orders of the Er. Willful is characterized by a wrongful perverse mental attitude rendering the Ee’s act inconsistent with the proper subordination (Lakpue Drug Inc. v. Belga, G.R. No. 166379, 20 Oct. 2005) The Ee’s disobedience must relate to substantial matters, not merely to trivial or unimportant matters. Disobedience to be considered willful must be resorted to without regard to its consequences. (DOLE Manual; BLTB Co. v. CA, G.R. No. L-38482, 18 June 1976; Family Planning Org. of the Phil. Inc. v. NLRC, G.R. No. 75907, 23 Mar. 1992) Requisites of Willful Disobedience or Insubordination 1. There must be disobedience or insubordination; 2. The disobedience or insubordination must be willful or intentional characterized by a wrongful and perverse attitude;
- 297. LABOR LAW ANDSOCIAL LEGISLATIONS 283 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW 3. The order violated must be reasonable, lawful, and made known to the Ee; and 4. The order must pertain to the duties which he has been engaged to discharge. (Sec. 5.2(b), D.O. No. 147-15) Valid Transfer GR: Management has the right to transfer or reassign an Ee. The right of the Er to transfer the Ees in the interest of the efficient and economic operation of its business cannot be seriously challenged. XPN: Where the transfer is vitiated by improper motive and is merely a disguised attempt to remove or punish the Ee sought to be transferred. (Associated Labor Unions v. NLRC, G.R. Nos. 76916- 17, 31 Mar. 1983) Invalid Transfer The right to transfer personnel should not be used as a subterfuge by the Er to rid himself of an undesirable worker. Nor when the real reason is to penalize an Ee for his union activities and thereby defeat his right to self-organization. (Pocketbell Philippines, Inc. v. NLRC, G.R. No. 106843, 20 Jan. 1995) In case of a constructive dismissal, the Er has the burden of proving that the transfer and demotion of an Ee are for valid and legitimate grounds such as genuine business necessity. Particularly, for a transfer not to be considered a constructive dismissal, the Er must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the Ee; nor does it involve a demotion in rank or a diminution of his salaries, privileges, and other benefits. Failure of the Er to overcome this burden of proof, the Ee's demotion shall no doubt be tantamount to unlawful constructive dismissal. (SIMIFRU v. Baya, G.R. No. 188269, 17 Apr. 2017) Disobeying an Order to Transfer The requisites for willful disobedience must be observed with greater prudence before dismissing an Ee who disobeys an order transferring him from one job or one location to another. The disobedience and the consequent dismissal may or may not be valid depending on the presence of the two requisites. Disobedience of a valid transfer order may justify dismissal; disobedience of an invalid transfer does not. (Azucena, 2016) NOTE: The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an Er. Ees may object to, negotiate, and seek redress against Ers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by competent authority, the Ees ignore or disobey them at their peril. But transfer should not result in demotion of rank, which is tantamount to constructive dismissal. (Manila Pavilion Hotel v. Delada, G.R. No. 189947, 25 Jan. 2012) Disobedience of an Inconvenient Transfer GR: Inconvenience to the Ee does not necessarily invalidate a transfer order. NOTE: The transfer from one city to another within the country is valid if there is no bad faith on the part of the Er. (Homeowners Savings and Loan Association, Inc. v. NLRC, G.R. No. 97067, 26 Sept. 1996) XPN: Inconvenience caused by unreasonableness of the transfer order makes the order itself invalid, and disobedience thereof is not a reason to dismiss the worker. An Er cannot legally be compelled to continue with the employment of a person admittedly guilty of gross negligence in the performance of his duties. In this case, no amount of good intent, or previous conscientious performance of duty, can assuage the damage Mateo caused LBC when he failed to exercise the requisite degree of diligence required of him under the circumstances.(LBC Express v. Mateo. G.R. No. 168215, 09 June 2009) NOTE: The reasonableness and lawfulness of a rule, order, or instruction depend on the circumstances availing in each case. Reasonableness pertains to the kind or character of directives and commands and
- 298. 2024 GOLDEN NOTES 284 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES to the manner through which they are made. (Escobin et al. v. NLRC et al., G.R. No. 118159, 15 Apr. 1998) Q: Is refusal to a promotion by an Ee an act of insubordination or willful disobedience? A. NO. There is no law that compels an Ee to accept a promotion because a promotion is a gift or reward, which a person has the right to refuse. The exercise of the Ee of the right to refuse a promotion cannot be considered in law as insubordination or willful disobedience. (PT&T Corp. v. CA, G.R. No. 152057, 29 Sept. 2003) Q: Escobin’s group were security guards based in Basilan. They were placed in floating status and were asked to report for reassignment in Metro Manila by PISI. Upon failure to report or respond to such directives, they were ordered dismissed from employment by PISI for willful disobedience. Did the failure to report to Manila amount to willful disobedience? A: NO. The reasonableness of the rule pertains to the kind or character of directives and commands and to the manner through which they are made. In this case, the order to report to the Manila office fails to meet this standard. The order to report to Manila was inconvenient, unreasonable, and prejudicial to Escobin’s group since they are heads of families residing in Basilan and they were not given transportation money or assurance of availability of work in Manila. (Escobin v. NLRC, G.R. No. 118159, 15 Apr. 1998) Q: ICT Marketing Services, Inc. hired respondent Mariphil as its Customer Service Representative (CSR) and assigned her to its Capital One account. Later, Mariphil became a regular Ee. Later on, Mariphil wrote to ICT’s Vice President complaining about supposed irregularities in the handling of funds entrusted to ICT by Washington Mutual. However, no action appears to have been taken on her complaint. Mariphil was then transferred to the Bank of America account where she was required to attend a training seminar for six days. On the third day of training, Mariphil was unable to attend. When she reported for training the next day, Mariphil was informed that she could not be certified to handle calls for Bank of America due to her failure to complete the training. From then on, she was placed on "floating status" and was not given any work assignment. After a month, the HR Manager tendered her resignation from work, effective upon receipt of the letter. Hence, Mariphil filed a complaint for constructive dismissal against ICT. Did ICT constructively dismiss Mariphil? A: YES. In causing respondent's transfer, petitioner clearly acted in bad faith and with discrimination, insensibility, and disdain; the transfer was effected as a form of punishment for her raising a valid grievance related to her work. Furthermore, said transfer was obviously unreasonable, not to mention contrary to experience, logic, and good business sense. This being the case, the transfer amounted to constructive dismissal. The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play. (ICT Marketing Services, Inc. v. Mariphil L. Sales. G.R. No. 202090, 09 Sept. 2015) Gross and Habitual Neglect Of Duties It implies a want or absence of or failure to exercise diligence that an ordinary prudent man would use in his own affairs. Significantly, in order to constitute a just cause for the Ees’ dismissal, the neglect of duties must not only be gross but also habitual. Thus, the single or isolated act of negligence does not constitute a just cause for the dismissal of the Ee. (National Bookstore v. CA, G.R. No. 146741. 27 Feb 2002) Degree of Negligence as a Just Cause for Termination GR: Gross and habitual negligence. 1. Gross neglect has been defined as the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to
- 299. LABOR LAW ANDSOCIAL LEGISLATIONS 285 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW avoid them. (NBS v. Court of Appeals. G.R. No. 146741, 27 Feb. 2002) 2. Habitual neglect implies repeated failure to perform one’s duties over a period of time, depending upon the circumstance. (JGB and Associates v. NLRC, G.R. No. 10939, 07 Mar. 1996) XPN: An Ee who was grossly negligent in the performance of his duty, though such negligence committed was not habitual, may be dismissed especially if the grossly negligent act resulted in substantial damage to the company. (LBC Express v. Mateo. G.R. No. 168215, 09 June 2009) NOTE: To justify the dismissal of an Ee for neglect of duties, it does not seem necessary that the Er show that he has incurred actual loss, damage or prejudice by reason of the Ee’s conduct. It is sufficient that the gross and habitual neglect by the Ee of his duties 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, Sec. 4343.01 (27)) Q: Antiola, as assorter of baby infant dress for Judy Phils., erroneously assorted and packaged 2,680 dozens of infant wears. Antiola was dismissed from employment for this infraction. Does the single act of misassortment constitute gross negligence? A: NO. Such neglect must not only be gross but also habitual in character. Hence, the penalty of dismissal is quite severe considering that Antiola committed the infraction for the first time. (Judy Phils. v. NLRC, G.R. No. 111934, 29 Apr. 1998) Q: Dolora and Merlinda are Ees of Rustan’s Makati, assigned as Inventory Specialists at the Cosmetics, Perfumeries & Toiletries (CP & T) stockroom of Rustan’s Department Store. When there was shortage in the inventory of the CP&T merchandise, Rustan’s sent Notices to Explain to Dolora and Merlinda in reference to a report provided concerning the variance in the inventory of concerned beauty cosmetics merchandise. Accordingly, Dolora and Merlinda were required "to explain why they should not be held accountable for the losses of petitioner due to the aforementioned shortage and why no appropriate action should be taken against them." Dolora and Merlinda were initially served with notices of suspension, followed by their termination from employment, allegedly for gross and habitual neglect of duty. Is there just cause for the dismissal of Dolora and Merlinda? A: YES. In any case, while the rule is that a single or isolated act of negligence is not sufficient to constitute a just cause for the dismissal of the Ee, the same, however, is not absolute. An infraction, even if not habitual, may warrant a dismissal under appropriate circumstances. In this case, the Court finds, under the circumstances pertaining herein, that it was just and reasonable for petitioner to dismiss respondents even, assuming, that it was the first time that they committed the infraction. The Court considers two important factors. First is the quantity and the substantial amount or value of the merchandise lost, amounting to P509,044.00. Second, respondents' position is necessarily one of trust and confidence. Petitioner cannot legally be compelled to continue with the employment of respondents who are entrusted with the care, custody, and safekeeping of high-end cosmetic products, but who just committed gross negligence which resulted to missing assigned products amounting to an enormous amount of around half a million pesos. Clearly, respondents' continued tenure is patently inimical to the petitioner's business interest. (Rustan’s Commercial Corporation v. Raysag, G.R. No. 219664, 12 May 2021) Failure in Performance Evaluations As a general concept, “poor performance” is equivalent to inefficiency and incompetence in the performance of official duties. The fact that an Ee’s performance is found to be poor or unsatisfactory does not necessarily mean that the Ee is grossly and habitually negligent of his duties. Gross negligence implies a want or absence of or failure to exercise slight care of diligence or the entire absence or care. He evinces a thoughtless disregard of consequences without exerting any effort to avoid them. (Eastern Overseas Employment Center Inc. v. Bea, G.R. 143023, 29 Nov. 2005)
- 300. 2024 GOLDEN NOTES 286 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES “Unsatisfactory Rating” can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. (Azucena, 2016) Requisites of Poor Performance as a Ground for Termination 1. Er must prove that it has set standards of performance expected of the Ee; 2. The standards must have been made known to the Ee; 3. These standards must be reasonable and in connection with the Ee’s work; and 4. There must be proof that the Ee failed to meet the standards despite the given reasonable opportunity to meet the same. Inefficiency as a Just Cause for Dismissal Failure to observe prescribed standards of work or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. (Buiser v. Leogardo, G.R. No. L-63316, 31 July 1984) This ground is considered analogous to those enumerated under Art. 297. (Skippers United Pacific v. Magud, G.R. No. 166363, 15 Aug. 2006) Q: Gamido was a quality control inspector of VH Manufacturing. Gamido was allegedly caught by the company Pres. Dy Juanco of sleeping and was dismissed from employment. Did Gamido’s act of sleeping on the job constitute a valid cause of dismissal? A: NO. Sleeping on the job as a valid ground for dismissal only applies to security guards whose duty necessitates them to be always awake and watchful. Gamido’s single act of sleeping further shows that the alleged negligence or neglect of duty was neither gross nor habitual. (VH Manufacturing v. NLRC, G.R. No. 130957, 19 Jan. 2000) Abandonment as a Just Cause for Termination It means deliberate and unjustified refusal of an Ee to resume his employment. Requirements for a Valid Finding of Abandonment To establish abandonment, the Er must prove that: 1. The Ee must have failed to report for work or must have been absent without valid or justifiable reason; and 2. That there must have been a clear intention on the part of the Ee to sever the Er-Ee relationship manifested by some overt act. (Philippine National Bank v. Bulatao, G.R. No. 200972, December 11, 2019) How to Prove Abandonment Abandonment is proven when the Er has shown that the Ee deliberately and unjustifiably refused to resume his employment without any intention of returning. There must be a concurrence of the intention to abandon and some overt acts from which an Ee may be deduced as having no more intention to work. The law, however, does not enumerate what specific overt acts can be considered as strong evidence of the intention to sever the Ee-Er relationship. (Sta. Catalina College v. NLRC, G.R. No. 144483, 19 Nov. 2003) NOTE: In case of abandonment, the ER is still required under the law to notify the Ee of his termination. There is still a need to observe the two- notice rule and opportunity to be heard requirement. (New Puerto Commercial v. Lopez, G.R. NO. 169999, 26 July 2010) Q: Mejila, a barber at Windfield Barber Shop, had an altercation with a fellow barber, which resulted in his subsequent turning over the duplicate keys of the shop to the cashier, took away all his belongings therefrom, and worked at different barbershop. Mejila then filed an illegal dismissal case but did not seek reinstatement as a relief. Did Mejila commit abandonment?
- 301. LABOR LAW ANDSOCIAL LEGISLATIONS 287 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW A: YES. Mejila’s acts such as surrendering the shop’s keys, not reporting to the shop anymore without any justifiable reason, his employment in another barber shop, and the filing of a complaint for illegal dismissal without praying for reinstatement clearly show that there was a concurrence of the intention to abandon and some overt acts from which it may be inferred that the Ee concerned has no more interest in working. (Jo v. NLRC, G.R. No. 121605, 02 Feb. 2000) Q: The Ees averred that they were underpaid and filed a complaint for money claims against the Er before the LA. As a result of their complaint, they were relieved from their posts and were not given new assignments despite the lapse of six months. On the other hand, the Er maintains that the Ees were not dismissed but were merely transferred to a new post and voluntarily abandoned their jobs when they failed to report for duty in the new location. Upon termination, the Ee moved to file a joint complaint for illegal dismissal. Is there a valid indication of abandonment from work? A: NO. For abandonment of work to fall under Art. 297 of the LC, as gross and habitual neglect of duties there must be the occurrence of two elements: first, there should be a failure of the Ee to report for works without a valid or justifiable reason and second, there should be a showing that the Ee intended to sever the Er-Ee relationship, the second element being the more determinative factor as manifested by overt acts. The Er cannot simply conclude knowledge that an Ee is ipso facto notified of a transfer when there is no evidence to indicate that the Ee had knowledge of the transfer order. Hence, the failure of an Ee to report for work at the new location cannot be taken against him as an element of abandonment. In addition to these tests for valid transfer, there should be proper and effective notice to the Ee concerned. It is the Er’s burden to show that the Ee was duly notified of the transfer. (Alert Security and Investigation Agency, Inc. v. Pasawilan, G.R. No. 182397, 14 Sept. 2011) Q: Leron was hired as a weaver by Demex. He is paid on a piece-rate basis and is contracted through job orders. He worked from Monday to Saturday, but there were times when he was required to work on Sundays. Leron received his wages at the end of every week but he never received standard benefits such as 13th month pay, service incentive leave, rest day pay, holiday pay, and overtime pay. Later, Leron was dismissed, thus, he filed a complaint for illegal dismissal. Demex justifies Leron’s dismissal on the ground of abandonment, arguing that Leron’s unauthorized absences, non-compliance with the return-to-work notices, and alleged act of crumpling the first return-to-work notice are indicators of his intention to sever his employment. Was there a valid dismissal? A: NO. The dismissal was invalid because Demex’s evidence does not clearly establish a case of abandonment. It failed to prove the second element of abandonment. Abandonment of work has been construed as a “clear and deliberate intent to discontinue one's employment without any intention of returning back." To justify the dismissal of an Ee on this ground, two (2) elements must concur, namely: "(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." Mere failure to report to work is insufficient to support a charge of abandonment. The Er must adduce clear evidence of the Ee's "deliberate, unjustified refusal to resume employment,'' which is manifested through the Ee's overt acts. (Demex v. Leron, G.R. No. 204288, 08 Nov. 2017) Q: Santos and Salmasan were employed by King Chef. On 25 Dec. 2011, Santos rendered only a half day work without prior authorization. Salmasan, on the other hand, did not report at all. They claimed that in view thereof, they were dismissed from employment. They averred that when they tried to report for work, their chief cook told them that they were already terminated. King Chef through his General Manager averred that Santos and Salmasan violated the memorandum informing the Ees of King Chef that no absences would be allowed on Dec. 25, 26, 31 and Jan. 1 unless justified. After
- 302. 2024 GOLDEN NOTES 288 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES petitioners failed to report for work on 25 Dec. 2011, and returned the following day merely to get their share in the accrued tips, they allegedly went on absence without leave (AWOL) for the rest of the Christmas season. Rule on the contention of King Chef’s General Manager on the matter of AWOL. A: The contention of King Chef’s General Manager is unmeritorious. For the claim that Santos and Salmasan went AWOL, the Er must prove that first, the Ee "failed to report for work for an unjustifiable reason," and second, the "overt acts showing the Ee's clear intention to sever their ties with their Er." In the present case, was no showing here that Santos and Salmasan’s absences were due to unjustifiable reason, or that petitioners clearly intended to terminate their employment. Thus, there is no abandonment present. (Santos, Jr. v. King Chef, G.R. No. 211073, 11 Dec. 2020) Gross Negligence vs. Habitual Neglect The former connotes want of care in the performance of one’s duties while the latter implies repeated failure to perform one’s duties over a period of time, depending upon the circumstances. (Azucena, 2016) Fraud Fraud, in its general sense, is deemed to comprise anything calculated to deceive, including all acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidences justly reposed, resulting in damage to another, or by which an undue and unconscientious advantage is taken of another. Deceit is a species of fraud. (Galvez v. CA, G.R. No. 187919, 25 Apr. 2012) Willful Breach of Trust A breach is willful if it is done intentionally, knowingly, and purposely without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, and inadvertently. (Austria v. NLRC, G.R. No. 124382, 06 Aug. 1999) But loss of trust or confidence can be based on gross negligence. (School of the Holy Spirit of Quezon City v. Taguiam, G.R. No. 165565, 14 July 2008) Requisites of Fraud or Willful Breach of Trust 1. There must be an act, omission, or concealment; 2. The act, omission, or concealment involves a breach of legal duty, trust, or confidence justly reposed; 3. It must be committed against the Er or his/her representative; and 4. It must be in connection with the Ee’s work. (Sec. 5.2 (d), DO No. 147-15) Examples are: a. Head supervisor initiating and leading a boycott b. Habitual absence of managerial Ee c. Failure of cashier to account for the shortage of company funds d. Complicity in the attempt to cover up pilferage of the company’s toll collections e. Stealing company property f. Using double or fictitious requisition slips in order to withdraw company materials Loss of Confidence There is loss of confidence when the Er has reasonable ground or has reason to believe that the Ee is responsible for the misconduct and the nature of his participation renders him unworthy of the trust and confidence demanded by his position. Proof beyond reasonable doubt it not required. (Jerusalem v. Keppel Monte Bank, G.R. No. 169564, 06 Apr. 2011)
- 303. LABOR LAW ANDSOCIAL LEGISLATIONS 289 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Requisites of Loss of Confidence 1. There must be an act, omission or concealment; 2. The act, omission or concealment justifies the loss of trust and confidence of the employer to the employee; 3. The employee concerned must be holding a position of trust and confidence; 4. The loss of trust and confidence should not be simulated; 5. It should not be used as a subterfuge for causes which are improper, Illegal, or unjustified; and 6. It must be genuine and not a mere afterthought to justify an earlier action taken in bad faith. (Sec. 5.2 (d), DO No. 147-15) Loss of Trust and Confidence as a Just Cause for Termination 1. It applies only to cases involving: a. Ees occupying positions of trust and confidence (confidential and managerial Ee’s) – To this class belong managerial Ees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline Ees or effectively recommend such managerial actions. Position of trust and confidence is one where a person is entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the Er’s property. (Pandoy v. NLRC, G.R. No. 67664, 20 May 1992) and/or funds. (Gonzales v. NLRC, G.R. No. 131653, 26 Mar. 2001) NOTE: The mere existence of a basis for the loss of trust and confidence justifies the dismissal of the managerial Ee because when an Ee accepts a promotion to a managerial position or to an office requiring full trust and confidence, such Ee gives up some of the rigid guaranties available to ordinary workers. (Manese v. Jollibee Foods Corporation, G.R. No. 1704 54, 11 Oct. 2012) b. Ees routinely charged with the care and custody of the Er’s money or property – To this class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. (Mabeza v. NLRC, G.R. No. 118506, 18 Apr. 1997) 2. The loss of trust and confidence must be based on willful breach. A breach is willful if it is done intentionally, knowingly, and purposely without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently. (Dela Cruz v. NLRC, G.R. No. 119536, 17 Feb. 1997) 3. The act constituting the breach must be “work- related” such as would show the Ee concerned to be unfit to continue working for the Er. (Gonzales v. NLRC, G.R. No. 131653, 26 Mar. 2001) 4. It must be substantial and founded on clearly established facts sufficient to warrant the Ee’s separation from employment. (Sulpicio Lines Inc. v. Gulde, G.R. No. 149930, 22 Feb. 2002) 5. Fraud must be committed against the Er or his representatives. Examples are: a. Falsification of timecards b. Theft of company property c. Unauthorized use of company vehicle NOTE: The treatment of rank-and-file personnel and managerial Ees in so far as the application of the Doctrine of Loss of Trust and Confidence is concerned is different. As regards managerial Ees, such as Caoile, mere existence of a basis for believing that such Ee has breached the trust of his
- 304. 2024 GOLDEN NOTES 290 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Er would suffice for his dismissal. (Caoile v. NLRC, G.R. No. 115491, 24 Nov. 1998) Guidelines for the Doctrine of Loss of Confidence to Apply 1. Loss of confidence should not be simulated (reasonable basis for loss of trust and confidence); 2. Not used for subterfuge for causes which are improper and/or illegal or unjustified; 3. Not arbitrarily asserted in the face of overwhelming evidence to the contrary; 4. Must be genuine, not a mere afterthought to justify earlier action taken in bad faith; and 5. The Ee involved holds a position of trust and confidence. (Ramos v. Court of Appeals, G.R. No. 145405, 29 Jun. 2004) Q: A, a duty manager was dismissed for alleged loss of trust and confidence in his ability to perform his duties. This is based on the fact of his willful concealment of an accidental light-up aircraft and failure to observe the safety guidelines and precautions with respect to aircraft towing, where he allegedly misinformed his immediate supervisor on a report “based on his personal findings.” Was A illegally dismissed? A: YES. The requisites for dismissal on the ground of loss of trust and confidence are: (1) the Ee concerned must be holding a position of trust and confidence; (2) there must be an act that would justify the loss of trust and confidence; and (3) such loss of trust relates to the Ee's performance of duties. In the instant case, petitioners failed to substantially prove the second requisite (i.e., there must be an act that would justify the loss of trust and confidence). The facts that he transmitted in the report were the most precise information that he could gather at that time. He could not immediately conclude that there was an accidental light-up because the same had to be eventually confirmed using a boroscope. (Lufthansa Technik Philippines, Inc. v. Cuizon, G.R. No. 184452, 12 Feb. 2020 Q: Is pecuniary gain a necessary element of termination on account of loss of trust? A: NO. Even the return of misappropriated funds will not negate valid dismissal for breach of trust. The Court has held that misappropriation of company funds, although the shortage has been fully restored, is valid ground to terminate the services of an Ee of the company for losss of trust and confidence. (Santos v. San Miguel Corporation, G.R. No. 149416, 14 Mar. 2003) Q: Mary June CELIZ worked as Chief of Sales concurrent with her position as Senior Operations Manager with CORD, INC. Celiz then asked that she be allowed to resign. However, upon clearance, the Accounting Department said that CELIZ needs to account the unliquidated advances amounting to P713,471.00. She liquidated her advances, but her accounting fell short of P445,272.93. Upon her failure to account her advances, CORD, INC. dismissed CELIZ for serious breach of trust and confidence. CELIZ filed for illegal dismissal. Is the dismissal of CELIZ due to breach of trust and confidence valid? A: YES. The dismissal of CELIZ due to breach of trust and confidence was valid. In cases of dismissal for breach of trust and confidence, proof beyond reasonable doubt of an Ee's misconduct is not required. It is sufficient that the Er had reasonable ground to believe that the Ee is responsible for the misconduct, which renders him unworthy of the trust and confidence demanded by his position. The Court, upon review of the records of the case, found that contrary to CELIZ’s contention, there was substantial evidence showing that the subject cash advances were properly attributed to CELIZ and that she failed to liquidate the same. In short, there was just cause to dismiss her from the service. (Celiz v. Cord Chemicals, Inc., G.R. No. 200352, 20 July 2016)
- 305. LABOR LAW ANDSOCIAL LEGISLATIONS 291 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Q: Is “Attitude Problem” a just cause to dismiss an Ee? A: YES. An Ee’s attitude problem is a valid ground for termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the Er. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the Er. (Azucena, Vol. II, 2016; Heavylift Manila v. CA, G.R. No. 154410, 20 Oct. 2005) Q: Mac was employed as a part-time teacher and comptroller of Elysen College. A committee was created to formulate a new "ranking system for non-academic Ees for school year 2020-2021. He then directed to arrange a salary adjustment schedule for the new ranking system to the committee organized. Later, he obtained his Ee ranking slip which showed his evaluation score and the change of his rank "from office head to middle manager- level IV', this was prepared however without prior approval from the Human Resource Department. On 25 July 2020, Elysen College notified Mac of its decision to terminate his services for serious misconduct and loss of trust and confidence. Upon receipt of the termination letter that reads "For this reason, you are advised to explain or show cause why your employment with Elysen College will not be terminated for Serious Misconduct due to intentional misclassification or miscomputation of your salary and some Ees named hereunder, thereby causing prejudice not only to the school but also to said Ees as well", Mac immediately filed before Executive LA. Was Mac illegally dismissed? A: NO. Mac was validly dismissed based on loss of trust and confidence. Mac was not an ordinary rank- and-file Ee. His position of responsibility on delicate financial matters entailed a substantial amount of trust from respondent. The preparation of the payroll is a sensitive matter requiring attention to detail. The alleged misconduct for loss of trust and confidence is sufficient to warrant the dismissal of fiduciary rank-and-file Ees. However, mere existence of a basis for believing that the Ee has breached the trust and confidence of the Er is sufficient for managerial Ees. A formal hearing only becomes mandatory in termination cases when so required under company rules or when the Ee requests for it. "To be heard" does not mean verbal argumentation alone because one may be heard just as effectively through written explanations, submissions or pleadings. In this case, respondent complied with all the requirements of procedural due process in terminating petitioner's employment, it furnished a show cause memo stating the specific grounds for dismissal and required him to answer the charges by submitting a written explanation. (Yolando Bravo v. Urios College Now Father Saturnino Urios University, G.R. No. 198066, 07 June 2017) Q: Salvacion A. Lamadrid was a cabin crew of Cathay Pacific, serving the airlines for about 17 years. On 19 May 2007, Donald Lal (Lal), Airport Services Officer of Cathay in Sydney Airport, received a report from Customer Officer Mary Greiss (Mary) that some crew members of Cathay flight CX 139, including Lamadrid, were caught in possession of goods after alighting from the aircraft. Mary handed to Lal a plastic bag containing a 1.5 liter Evian water bottle and a pile of magazines confiscated from Lamadrid as well as the photocopy of the latter's passport. Cathay Pacific asked Lamadrid to explain. Lamadrid denied the allegations against her. She claimed that the Hello magazine which was confiscated from her was not Cathay's property. She clarified that she brought and declared the bottle of Evian water as her own. She denied having committed serious misconduct, and demanded that the items taken from her be preserved following a fair and transparent investigation. Cathay then informed Lamadrid of the termination of her services effective immediately for committing serious misconduct by removing company property without authorization. According to Cathay, it could no longer repose its trust and confidence on petitioner considering the seriousness of her violation. Hence, Lamadrid instituted a complaint for illegal dismissal. Was Lamadrid illegally dismissed?
- 306. 2024 GOLDEN NOTES 292 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES A: YES. Lamadrid's position as a Senior Purser is imbued with trust and confidence. Ees can be terminated only for just or authorized cause. Art 297 (now Art. 282) of the LC enumerates the just causes for dismissal, among others, fraud, or willful breach by the Ee of the trust reposed in him by his Er or duly authorized representative. Lamadrid's infraction was clearly a case of misconduct considering that it is a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. It evidently eroded Cathay's trust and confidence in her. However, while the weight of evidence points to Lamadrid's infraction of company policy, it should also be considered that this is Lamadrid's first infraction in her 17 years of service in the airline which involved a mere bottle of water. Concededly, the company laid down the penalties for violation of its policies; however, the evaluation of an Ee's infraction should be dealt with fairness and reason. Simply put, all surrounding circumstances must be considered, and the penalty must be commensurate to the violation committed by an Ee. Termination of the services of an Ee should be the Er's last resort especially when other disciplinary actions may be imposed, considering the Ee's long years of service in the company, devoting time, effort, and invaluable service in line with the Er's goals and mission, as in Lamadrid's case. During Lamadrid's span of employment, she did not commit any infraction or was ever sanctioned except in the incident subject of the present controversy. To impose a penalty as grave as dismissal for a first offense and considering the value of the property allegedly taken would be too harsh under the circumstances. Therefore, Lamadrid was illegally dismissed from service. (Lamadrid v. Cathay Pacific Airways Limited, G.R. No. 200658, 23 June 2021) Commission of a Crime or Offense This refers to an offense committed by the Ee against the person of his Er or any immediate member of his family or his duly authorized representative and thus, conviction of a crime involving moral turpitude is not analogous thereto as the element of relation to his work or to his Er is lacking. Requisites of Commission of a Crime or Offense 1. There must be an act or omission punishable/prohibited by law; and 2. The act or omission was committed by the Ee against the person of the Er, any immediate member of his/her family, or his/her duly authorized representative. (Sec. 5.2(f), D.O. No. 147-15) An Er’s immediate family shall refer to the spouse, ascendants, descendants or legitimate, natural, or adopted brothers or sisters of the Er or of his relative by affinity in the same degrees, and those by consanguinity within the fourth civil degree. (Art. 11(2), RPC) NOTE: A criminal case need not be filed. Commission of acts constituting a crime itself is sufficient. (National Labor Union, Inc. v. Standard Vacuum Oil Company. G.R. No. L-48170, 10 Oct. 1941) Conviction Not a Condition Sine Qua Non The conviction of an Ee in a criminal case is not indispensable to warrant his dismissal by his Er. (Starlite Plastic Industrial Corporation v. NLRC. G.R. No. 78491, 16 Mar. 1989) Rationale: The quantum of evidence needed is merely substantial evidence to terminate an Ee under these grounds. Criminal Complaint Separate and Distinct from the Labor Complaint A reading of Labor Arbiter Madriaga's decision shows that he merely based the resolution of the complaint for illegal dismissal from the verdict of acquittal in the criminal case against Nicolas. This reliance in the result of the criminal case, however, leaves much to be desired. The criminal case for estafa and the complaint for illegal dismissal deal with two different issues cognizable by two different tribunals. Indeed, these two cases respectively require distinct and well-delineated degrees of
- 307. LABOR LAW ANDSOCIAL LEGISLATIONS 293 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW proof. Under the law, proof beyond reasonable doubt is required to sustain a criminal conviction, an inapplicable requirement in a labor complaint. In fact, and as correctly ruled by the NLRC, the judgment in a criminal case has no binding or conclusive effect in a labor case. Conviction of an employee in a criminal case is not indispensible to warrant an employees dismissal. Thus, we feel that the Labor Arbiter erred in basing his decision exclusively on the outcome of the criminal case. The Labor Arbiter is duly bound to make his findings of facts after the presentation and due consideration of all the pertinent circumstances and evidence of the case. And this is precisely what Rule V, Sec. 16 of the NLRC Rules of Procedures requires. We thus find the NLRC's order remanding the case to the Arbitration Branch of origin to thresh out pertinent factual matter no usually renewable in a special civil action for certiorari, as in this case, to be untainted with grave abuse of discretion. (Nicolas v. NLRC, G.R. No. 113948, 05 July 1996) Analogous Causes For an act to be included in analogous cases of just causes of termination, it must be due to the voluntary and/or willful act or omission of the Ee. (Nadura v. Benguet Consolidated, G.R. No. L-17780, 24 Aug. 1962) Requisites of Analogous Cases 1. There must be an act or omission similar to those specified just causes; and 2. The act or omission was voluntary and/or willful on the part of the Ees. (Sec. 5.2 [g], D.O. No. 147-15) NOTE: No act or omission shall be considered as analogous cause unless expressly specified in the company rules and regulations or policies. (Sec. 5.2 [g], D.O. No. 147-15) Examples of Analogous Cases 1. Violation of company rules and regulations; 2. Immorality, Drunkenness or Fighting inside the premise; 3. Gross inefficiency; 4. Illegally diverting Er’s products; 5. Failure to heed an order not to join an illegal picket; 6. Violation of safety rules and code of discipline; 7. Theft of company property; 8. Theft of property owned by co-Ee; 9. Failure to attain work quota; and 10. Attitude problem. (Chan, 2019) NOTE: To fall within the ambit of “analogous cases” the act or omission must have an element like those found in the specific just causes enumerated under Art. 297. (International Rice Research Institute v. NLRC, G.R. No. 97239, 12 May 1993) Past Offenses Previous offenses may be used as a valid justification for dismissal from work only if the infractions are related to the subsequent offense upon which the basis the termination of employment is decreed. (Stellar Industrial Service Inc. v. NLRC, G.R. No. 117418. 24 Jan. 1996) Doctrine of Incompatibility Where the Ee has done something that is contrary or incompatible with the faithful performance of his duties, his Er has a just cause for terminating his employment. (Manila Chauffeur’s League v. Bachrach Motor Co., G.R. No. L-47071, 29 June 1940) Doctrine of Commensurate Penalty or “Proportionality Rule” In this regard, it is a hornbook doctrine that infractions committed by an Ee should merit only the corresponding penalty demanded by the circumstance. The penalty must be commensurate with the act, conduct or omission imputed to the Ee and must be imposed in connection with the disciplinary authority of the Er. (Sagales v. Rustans Commercial Corporation, G.R. No. 166554, 27 Nov. 2008)
- 308. 2024 GOLDEN NOTES 294 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Factors that Can Be Considered 1. Length of service; 2. Gravity of the offense; 3. Nature of the position; 4. Nature of the business; 5. First offense rule; 6. Totality of infractions; 7. Principle of charity, compassion and understanding; and 8. Principle of equity. Q: Mapili works as a bus conductor for Philippine Rabbit Bus Lines, Inc. While on duty en route from Manila to Pangasinan, a PRBLI field inspector caught Mapili extending a free ride to a co-Ee’s wife. Noting that this was already the third time that Mapili committed the said violation, the company terminated his employment. Is Mapili illegally dismissed? A: NO. It is apparent that the bus conductor is aware that the infraction he committed constituted a grave offense, but he persisted in committing the same out of gratitude to the passenger. Hence, there was a deliberate intent on the part of the petitioner to commit the violation. An Ee’s propensity to commit repetitious infractions evinces wrongful intent, making him undeserving of the compassion accorded by law to labor; thus, dismissal of said Ee would be justified. (Jerry Mapili v. Philippine Rabbit Bus Lines, Inc., G.R. No. 172506, 27 July 2011) Guidelines to Determine the Validity Of Termination Validity of termination per se is determined by compliance with two-notice rule, hearing (opportunity to be heard), and the presence of a just or authorized cause. 2. AUTHORIZED CAUSES (Arts. 298-299, LC; DOLE D.O. No. 147-15) Authorized causes are initiated by the Er’s exercise of management prerogative, who shall be liable to pay separation pay as mandated by law. It does not usually require delinquency or culpability on the part of the Ee. Due Process Requirements As defined in Arts. 298 and 299 of the LC, the requirements of due process shall be deemed complied with upon service of a written notice: 1. To the Ee 2. To the appropriate DOLE Regional Office at least thirty days before the effectivity of the termination, specifying the ground or grounds for termination. Authorized Causes of Termination by the Employer 1. Installation of labor-saving devices; 2. Redundancy; 3. Retrenchment ; 4. Closing or cessation of operation of the establishment or undertaking; and 5. Disease. Installation of Labor-Saving Devices or Automation Automation is a management prerogative of replacing manpower with machine power in order to effect more economy and greater efficiency in method of production. Requisites for a Valid Automation 1. There must be introduction of machinery, equipment or other devices; 2. The introduction must be done in good faith; 3. The purpose for such introduction must be valid such as to save on cost, enhance efficiency and other justifiable economic reasons; 4. There is no other option available to the Er than the introduction of machinery, equipment or device and the consequent termination of employment of those affected thereby; and 5. There must be fair and reasonable criteria in selecting Ees to be terminated. (Sec. 5.4 (a), D.O. No. 147-15)
- 309. LABOR LAW ANDSOCIAL LEGISLATIONS 295 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Robotics It is the switch from “men” employment to ‘mechanical’ employment. The purpose for such installation must be valid such as to save on cost, enhance efficiency, and other justifiable economic reasons. (Chan, 2019) Reduction of the number of workers in a company’s factory made necessary by the introduction of machinery in the manufacture of its products is justified. There can be no question as to the right of the manufacturer to use new labor-saving devices with a view to affect more economy and efficiency in its method of production. (Philippine Sheet Metal Workers’ Union v. CIR. G.R. No. L-2028; 28 Apr. 1949) Redundancy It is the superfluity in the performance of a particular work. It exists where the services of an Ee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Redundancy in an Er’s personnel does not necessarily or even ordinarily refer to duplication of work. The characterization of services as no longer necessary or sustainable and therefore properly terminable, was an exercise of business judgment on the part of the Er. The Er has no legal obligation to keep in its payroll more Ees that are necessary for the operation of its business. (Wiltshire File Co., Inc. v. NLRC, G.R. No. 82249, 07 Feb. 1991) NOTE: A position is redundant when it is superfluous. Superfluity is the outcome of some factors: 1. Overhiring of workers; 2. Decline in volume of business; 3. Closure of a particular product line of an economic activity previously engaged by the Er; and 4. Phasing out of service activity priorly undertaken by the business. (Chan, 2019) Requisites of Redundancy 1. There must be superfluous positions or services of Ees; 2. The positions or services are in excess of what is reasonably demanded by the actual requirements of the enterprise to operate in an economical and efficient manner; 3. There must be good faith in abolishing redundant positions; 4. There must be fair and reasonable criteria in selecting the Ees to be terminated; and 5. There must be an adequate proof of redundancy such as but not limited to the new staffing patters, feasibility studies or proposal, on the viability of the newly created positions, job description and the approval by the management of the restructuring. Procedure 1. Written notice served on both the Ees and the DOLE at least one (1) month prior to separation from work; 2. Payment of separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher; 3. Good faith in abolishing redundant position; and 4. Fair and reasonable criteria in ascertaining what positions are to be declared redundant. (SPI Technologies v. Mapua, G.R. No. 191154, 07 Apr. 2014) NOTE: Fair and reasonable criteria may include the following, but not limited to: a. Less preferred status, e.g., temporary Ee b. Efficiency c. Seniority (Golden Thread Knitting Industries, Inc. v. NLRC, G.R. No. 119157, 11 Mar. 1999)
- 310. 2024 GOLDEN NOTES 296 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Q: Matiere SAS hired Acosta as Technical Assistant. Uner the Employment Agreement Acosta was tasked to: (1) Prepare reports regarding Woodfields Consultants, Inc. (WCI) consultants; (2) Be the intermediary between the operators in WCI and the management; (3) Attend coordination meetings; (4) Evaluate billings; (5) Follow the SIT and prepare reports; and (7) Site visits. Later, Matiere SAS sent a letter to Acosta informing him that his employment contract will end on 31 July 2013 due to the cessation of the company’s delivery operations and the diminution of activities and that it cannot find any reinstatement at the office. He also received a calculation of his separation pay. On 26 June 2013, Matiere SAS informed DOLE that it would have to terminate five (5) of its workers which includes Acosta. Matiere SAS also filed an Establishment Employment Report, citing redundancy and the completion of delivery of supplies as its reasons for dismissing its Ees. Acosta filed a complaint to NLRC for illegal dismissal alleging that the declaration of redundancy of his position was not based on fair and reasonable criteria pointing out that he, the most senior engineer, was dismissed while the other engineers remained. Was Acosta validly dismissed on the ground of redundancy? A: NO. Redundancy is recognized as one of the authorized causes for dismissing an Ee under the LC as provided under Art. 298. For the implementation of a redundancy program to be valid, the Er must comply with the following requisites: (1) written notice served on both the Ees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. Matiere SAS complied with the first and second requisites; notifying both Acosta and DOLE at least a month prior planned redundancy and providing Acosta computation of his separation pay. However, the third and fourth requisites are wanting. To establish good faith, the company must provide substantial proof that the services of the Ees are in excess of what is required of the company, and that fair and reasonable criteria were used to determine the redundant positions. Here, Matiere SAS' only basis for declaring Acosta's position redundant was that his function, which was to monitor the delivery of supplies, became unnecessary upon completion of the shipments. However, upon scrutiny, the Employment Agreement itself contradicts Matiere SAS' allegation. Under Acosta's job description listed in his tasks as a technical assistant, there was no mention of monitoring shipments. If his work pertains mainly to the delivery of supplies, it should have been specifically stated in his job description. There was no basis for respondents to consider his position irrelevant when the shipments had been completed. Matiere SAS also failed to show that they used fair and reasonable criteria in determining what positions should be declared redundant. Although Acosta was among the five (5) Ees dismissed, he cannot be similarly situated with the other Ees since his duty is not limited to the monitoring of deliveries. Accordingly, this Court declares petitioner to have been illegally dismissed. (Acosta v. Matiere SAS and Philippe Gouvary, G.R. No. 232870, 03 June 2019) Redundancy in Bad Faith The Ee was terminated on the ground of redundancy. But it was found out that the Er had been hiring new Ees while it was firing the old ones, negating the claim of redundancy. (General Milling Corp., v. V.L. Viajar, G.R. No. 181738, 30 Jan. 2013) NOTE: Jurisprudence provides that “basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same.” By imputing bad faith to the actuations of [the Er], [the Ee] has the burden of proof to present substantial
- 311. LABOR LAW ANDSOCIAL LEGISLATIONS 297 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW evidence to support the allegation of unfair labor practice. (Culili v. Eastern Telecommunications Phil., G.R. No. 165381, 09 Feb. 2011) Q: Pantoja was assigned at SCA Corporation’s Paper Mill No. 4, the section that manufactures the company’s industrial paper products. In a Notice of Transfer, SCA informed Pantoja of its reorganization plan and offered him a position at Paper Mill No. 5 under the same terms and conditions of employment in anticipation of the eventual closure and permanent shutdown of PM No. 4 due to financial difficulties brought about by the low volume of sales and orders. However, Pantoja rejected the offer of transfer. A notice of termination of employment was sent to Pantoja as his position was declared redundant by the closure of PM No. 4. SCA informed the DOLE of its reorganization and partial closure. Petitioner filed a complaint for illegal dismissal assailing his termination as without any valid cause. Was the petitioner illegally dismissed? A: NO. Exercising its management prerogative and sound business judgment, SCA decided to cut down on operational costs by shutting down one of its paper mills. The abolishment of PM No. 4 was a business judgment arrived at in the face of the low demand for the production of industrial paper at the time. Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, SCA, however, did not out rightly dismiss the workers affected by the closure of PM No. 4 but gave them an option to be transferred to posts of equal rank and pay. SCA did not proceed directly to retrench. This is an indication of good faith on SCA’s part as it exhausted other possible measures other than retrenchment. (Pantoja v. SCA Hygiene Products Corporation, G.R. No. 163554, 23 Apr. 2010) NOTE: The losses which the company may suffer or is suffering may be proved by financial statements audited by independent auditor. (Asian Alcohol Corporation v. NLRC, G.R. No. 131108, 25 Mar. 1999) Retrenchment It is the reduction of personnel usually due to poor financial returns to cut down on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. (Poquiz, 2018) Cutting of expenses includes the reduction of personnel; it is a management prerogative, a means to protect and preserve the Er’s viability and ensure his survival. To be an authorized cause it must be effected in good faith and for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the Ee is or otherwise laid-off. (Poquiz, 2018) Two Kinds of Losses Justifying Retrenchment 1. Incurred Losses – refer to losses that have already occurred, thus are reflected in the financial statements 2. Expected or Future Losses – refer to losses that have not yet occurred, thus are not reflected in the financial statements. Thus, in Waterfront Cebu City Hotel v. Jimenez, (G.R. No. 174214, 13 June 2012), the Court held that retrenchment must be reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer. (Sanoh Fulton Phils. v. Bernardo Tagohoy, G.R. No. 187214, 14 Aug. 2012). Proof of actual losses or possible imminent losses is the most singular distinctive requisite of retrenchment, which the installation of labor-saving device and redundancy do not have. (Chan, 2019) Preventive Retrenchment is Allowed “To prevent losses” justifies retrenchment. Such phrase means that retrenchment or termination of the services of some Ees is authorized to be undertaken by the Er sometime before the losses anticipated are sustained or realized. It is not the intention of the lawmaker to compel the Er to stay his hand and keep all his Ees until sometime after losses shall have been materialized. (Lopez Sugar Corporation v. Federation of Free Workers, G.R. Nos. 75700-01 Aug. 1990)
- 312. 2024 GOLDEN NOTES 298 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES Standards of Preventive Retrenchment 1. The losses expected should be substantial and not merely de minimis in extent; The substantial loss apprehended must be reasonably imminent; 2. It must be reasonably necessary and likely to effectively prevent the expected losses; and, 3. Alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence. (Lopez Sugar Corporation v. Federation of Free Workers, G.R. Nos. 75700-01 Aug. 1990) Causes of Retrenchment 1. Lack of Work; 2. Business Recession; 3. Fire; and 4. Conservatorship. Requisites of a Valid Retrenchment 1. Written notice served on both the Ee and the DOLE at least one (1) month prior to the intended date of retrenchment; 2. Payment of separation pay equivalent to at least one month pay or at least one-half (1/2) month pay for every year of service, whichever is higher; 3. Good faith in effecting retrenchment; 4. Proof of expected or actual losses; 5. To show that the Er first instituted cost reduction measures in other measures in other areas of production before undertaking retrenchment as a last resort; and 6. The Er used fair and reasonable criteria in ascertaining who would be retained among the Ees, such as status, efficiency, seniority, physical fitness, age, and financial hardship of certain workers. (FASAP v. PAL, G.R. No. 178083, 02 Oct. 2009) Criteria in Selecting Employees to Be Retrenched There must be fair and reasonable criteria to be used in selecting Ees to be dismissed such as: 1. Less preferred status; 2. Efficiency rating; 3. Seniority (Phil. Tuberculosis Society, Inc. v. National Labor Union, G.R. No. 115414, 25 Aug. 1998) 4. Contribution to income (Talam v. NLRC, G.R. No. 175040, 06 Apr. 2010) “Last In First Out” (L-I-F-O) Rule It applies to termination of employment in the same line of work. What is contemplated in the LIFO rule is that when there are two or more Ees occupying the same position in the company affected by the retrenchment program, the last one employed will necessarily be the first one to go. (Maya Farms Ees Organization v. NLRC, G.R. No. 106256, 28 Dec. 1994) “Last In First Out” Rule Mandatory GR: In cases of installation of labor-saving devices, redundancy and retrenchment, the LIFO rule shall apply. XPN: When an Ee volunteers to be separated from employment. (DOLE D.O. No. 147-15, Series of 2015) Q: Due to mounting losses, the former owners of Asian Alcohol Corporation sold its stake in the company to Prior Holdings. Upon taking control of the company, Prior Holdings, to prevent losses, implemented a reorganization plan and other cost-saving measures including the retrenchment of 117 Ees some of which are members of the union and the majority held by non-union members. Some retrenched workers filed a complaint for illegal dismissal alleging that the retrenchment was a subterfuge for union busting activities. Was the retrenchment made by Asian Alcohol valid and justified? A: YES. Even though the bulk of the losses were suffered under the old management and continued
- 313. LABOR LAW ANDSOCIAL LEGISLATIONS 299 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW only under the new management, ultimately the new management of Prior Holdings will absorb such losses. The law gives the new management every right to undertake measures to save the company from bankruptcy. (Asian Alcohol Corp. v. NLRC, G.R. No. 131108, 25 Mar. 1999) Retrenchment vs. Redundancy Retrenchment involves losses, closures, or cessation of operations of establishment or undertaking due to serious business or financial losses or reverses. Whereas redundancy results from the fact that the position of the Ee has become superfluous, even if the business has not suffered reverses. RETRENCHMENT REDUNDANCY Involves losses, closures, or cessation of operations of establishment or undertaking due to serious business losses or financial reverses. In preventive retrenchment, retrenchment may be undertaken by the Er before losses are sustained. Does not involve losses or the closing or cessation of operations of the establishment. Results from the fact that the position of the Ee has become superfluous, an excess of what is actually needed, even if the business has not suffered reverses. Evidence to Prove Losses Alleged losses if already realized and the expected imminent losses must be proved by sufficient and convincing evidence. (Uichico v. NLRC, G.R. No. 121434, 02 June 1997) Evidence presented in NLRC Proceedings must have modicum of admissibility. (Azucena, 2016) Financial Statements must be audited by independent external auditors, and for GOCCs, financial statements must be audited by the Commission on Audit. (Chan, 2019) Closure of Business A firm which faces serious business decline and losses is entitled to close its business in order to avoid further economic loss, and a court has no power to require such firm to continue operating at a loss. (Unicorn Safety Glass v. Basarte, G.R. No. 154689, 25 Nov. 2004) It must be done in good faith and not for the purpose of circumventing pertinent labor laws. A change of business ownership does not create an obligation on the part of the new owner to absorb the Ees of the previous owner, unless expressly assumed. Labor contracts being in personam, are generally not enforceable against a transferee. (Fernando v. Angat Labor Union, G.R. No. L-17896, 30 May 1962) Closure contemplated is a unilateral and voluntary act on the part of the Er to close the business establishment. Kinds of Closure 1. Partial Closure – although grounded on economic losses, partial closure is a form of retrenchment. The requirements are: a. Written notice to the EE and to the DOLE at least one month before the intended date of termination; b. Separation pay equivalent to at least 1/2 month pay for every year of service; and c. Cessation of business is bona fide in character. 2. Total Closure due to economic reverses or losses The requirements are: a. Written notice to the EE and to the DOLE at least 1 month before the intended date of termination; and
- 314. 2024 GOLDEN NOTES 300 UNIVERSITYOF SANTO TOMAS 2024 GOLDEN NOTES b. Cessation of business is due to serious economic reverses or losses. Requisites of Closure of Business 1. Written notice served on both the Ees and the DOLE at least 1 month prior to the intended date of closure; 2. Payment of separation pay equivalent to at least one month pay or at least 1/2 month pay for every year of service, whichever is higher, except when closure is due to serious business losses; 3. Good faith; 4. No circumvention of the law; and 5. No other option available to the Er. Test for the Validity of Closure or Cessation of Establishment or Undertaking To be a valid ground for termination the following must be present: 1. There must be a decision to close or cease operation of the enterprise by the management; 2. The decision was made in good faith; and 3. There is no other option available to the Er except to close or cease operations. (Sec. 5.4(d), D.O. No. 147, Series of 2015) Examples are: a. Relocation of business b. Sale in good faith Payment of Separation Pay in Case of Closure Payment of separation pay is required only where closure is neither due to serious business losses nor due to an act of government. (North Davao Mining Corp v. NLRC, G.R. No. 112546, 13 Mar. 1996; NFL v. NLRC, G.R. No. 127718, 02 Mar. 2000) Basis for computation: latest salary rate, unless reduced by the Er to circumvent the law, in which case, it shall be based on the rate before its deduction. (Sec. 10, Book IV, Rule I, IRR) No Obligation to Pay Separation Pay 1. When the closure of the business is due to serious business loss; and 2. Where closure of business is by compulsion of law because closure of business is not attributed to Er’s will. (e.g., the land where the building is situated was declared covered by the Comprehensive Agrarian Reform Law) Q: Galaxie Steel Corp. decided to close down because of serious business losses. It filed a written notice with the DOLE informing its intended closure and the termination of employment. It posted the notice of closure on the corporate bulletin board. a) Does the written notice posted by Galaxie on the bulletin board sufficiently comply with the notice requirement under Art. 298 of the LC? A: NO. In order to meet the purpose, service of the written notice must be made individually upon each Ee of the company. However, the SC held that where the dismissal is for an authorized cause, non- compliance with statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. Still, the Er should indemnify the Ee, in the form of nominal damages, for the violation of his right to statutory due process. (Galaxie Steel Workers Union v. NLRC, G.R. No. 165757, 17 Oct. 2006) b) Are Galaxie Ees entitled to separation pay? A: NO. Galaxie had been experiencing serious financial losses at the time it closed business operations. Art. 298 of the LC governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "not due to serious business losses or financial reverses."
- 315. LABOR LAW ANDSOCIAL LEGISLATIONS 301 UNIVERSITY OF SANTO TOMAS FACULTY OF CIVIL LAW Where, the closure then is due to serious business losses, the LC does not impose any obligation upon the Er to pay separation benefits. (Galaxie Steel Workers Union v. NLRC, G.R. No. 165757, 17 Oct. 2006) Obligation of a Transferee to Absorb the Ees of the Old Corporation GR: There is no law requiring a bona fide purchaser of assets of an on-going concern to absorb in its employ the Ee’s of the transferor. XPNs: 1. When the transaction between the parties is colored or clothed with bad faith. (Sundowner Dev’t Corp. v. Drilon, G.R. No. 82341, 06 Dec. 1989) 2. Where the transferee was found to be merely an alter ego of the different merging firms. (Filipinas Port Services, Inc. v. NLRC, G.R. No. 97237, 16 Aug. 1991) 3. Where the transferee voluntarily agrees to do so. (Marina Port Services, Inc. v. Iniego, G.R. No. 77853, 22 Jan. 1990) Successor-Employer Doctrine The Successor Employer Doctrine refers to a sale or transfer in ownership of an entity that has been done in bad faith or to defeat the rights of labor. In such a case, it is as if there have been no changes in Ee-Er relationship between the seller and its Ee. The buyer becomes a "successor employer" and is obliged to absorb the displaced Ees. (Philippine Airlines, Inc. v. NLRC, G.R. No. 125792, 9 Nov. 1998) Asset Sales vs. Stocks Sales In asset sales, the rule is that the seller in good faith is authorized to dismiss the affected Ees, but is liable for the payment of separation pay under the law. The buyer in good faith, on the other hand, is not obliged to absorb the Ee affected by the sale, nor is it liable for the payment of their claims. In contrast with asset sales, in which the assets of the selling corporation are transferred to another entity, the transaction in stock sales takes place at the shareholder level. Because the corporation possesses a personality separate