LABOR LAW Part I

Atty. Paulino Q. Ungos III

March 18, 2023

SCRIBES TEAM: Jomaica Abella, Karla Cera, Quim Ranchez, Faith Rodriguez, Karla Marie Santos
CHECKED BY: HANNAH MORALES (Chairperson for ALD)| LORRAINE SANTOS (Deputy for ALD) | POHL GUARIN (Deputy for ALD)

FUNDAMENTAL PRINCIPLES AND CONCEPTS

Labor Law
● That branch of law that governs and regulates the relationship between employers and
employees.

Are generally classified into:

1. Laws Standards
That branch of labor law that prescribes minimum requirements for hours of
work, wages, monetary benefits, welfare benefits, and occupational health
and safety
2. Labor Relations
That branch of labor law is that branch of labor law that regulates the
activities of labor organization, and prescribes the modes and machinery for
the settlement of labor disputes including collective bargaining, and the
mode and procedure for terminating employment
3. Welfare Laws
Are statutes intended to provide protection to the employee and his
beneficiaries in case of disability, sickness, old age, death and other
contingencies that result in loss of income or financial burden.

Social Legislation
● There is no precise definition for social legislation. Social legislation is so broad
that it covers labor laws, agrarian laws, and welfare laws. Essentially, these are
laws or statutes enacted pursuant to the social justice clause of the Constitution.
The emphasis is more on the aspects of public good and social welfare.

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 A. LEGAL BASIS

1. 1987 CONSTITUTION
● 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.”
○ The state recognizes labor as a social economic force.

● 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.”
○ The state promotes full employment.

● Sec. 10, Art. II, “The State shall promote social justice in all phases of national
development.”
○ The state also promotes social justice.
○ You’ve met this concept of social justice in the case of Calalang v. Williams.
In one case, the supreme court rules that social justice calls for 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. Under the policy of social justice, the law
bends over backwards to accommodate the interest of the working class on
the humane justification that those with less privilege in life should have
more in law.

STATE POLICY TOWARDS LABOR

● 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.

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The State shall promote the principle of shared responsibility between workers
and employers 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 employers, recognizing
the right of labor to its just share in the fruits of production and the right of
enterprises to reasonable returns to investments, and to expansion and growth.”
● Note the state policy towards labor, that state shall afford full
protection to labor. Let us remember too that protection to labor is
intended to raise the worker to equal footing with the employer, but
it is not meant to oppress the employers. It cannot be used as an
excuse to distribute charities at the expense of an employer because
our constitutional government assures the latter against deprivation
of property, except in accordance with the statutes and
supplementary equitable principles.
● In one case, the Supreme Court ruled that, on a final note the court
cannot emphasize enough that its primary role as the vanguard of
constitutional guarantees charges it with a solemn duty of affording
full protection to labor. It is in fact well entrenched in the deluge of
our jurisprudence on labor law and social legislation that the scales
of justice usually tilt in favor of the working man. Such favoritism,
however, has not blinded the court to the rule that justice is, in
every case for the deserving, to be dispensed in the light of the
established facts and applicable law and doctrine. The law does not
authorize the oppression or self-destruction of the employer.
Management also has its own rights, which, as such, are entitled to
respect and enforcement in the interest of simple fair play. After all,
social justice is, in the eloquent words of Associate Justice Jose P.
Laurel, "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.”

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PROTECTION OF WORKING WOMEN
● 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.”
○ The Magna Carta women also mandates decent work standards for women,
with better prospects for personal development and social integration, with
equal opportunity and treatment as their male counterparts.

DUE PROCESS OF LAW

● 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.”
○ Due process of law. Employment is deemed property within the meaning of
constitutional guarantee, hence, an employee cannot be deprived of his job
without due process of law.

NON-IMPAIRMENT OF CONTRACTS
● Sec. 10, Art III, “No law impairing the obligation of contracts shall be passed.”
○ Non-impairment of contracts. A law impairs an obligation when it takes
from a party a right to which he is entitled or deprives him of the means of
enforcing such a right.

FREEDOM OF SPEECH, PRESS AND PEACEFUL ASSEMBLY.

● 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.”
○ Freedom of speech, press and peaceful assembly. Peaceful ticketing is
included within the scope of freedom of speech.

RIGHT TO FORM ASSOCIATION.

● 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.”
○ Right to form associations, note that this is echoed by article 253 of the
labor code of the Philippines.

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RIGHT AGAINST INVOLUNTARY SERVITUDE.
● 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.”
○ Right against involuntary servitude. Note the examples here. Unless falling
under the exceptional circumstances enumerated in the labor code, a
covered employee cannot be compelled to render overtime work or render
service during his rest day because that would run counter to the
constitutional injunction against involuntary servitude. The same holds true
to an employee who voluntarily resigns from his employment without giving
30 day notice to the employer. Said employee cannot be compelled to work
during the 30 day period.

2. CIVIL CODE OF THE PHILIPPINES

● Art. 1700. The relations between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor
and similar subjects.
○ Under the Civil Code of the Philippines, the relations between labor and capital
have ceased to be merely contractual. The became impressed with public interest
that further determination as well as the incidents rising therein other
considerations of moral and social character have to be reckoned with to promote
industrial peace. This is in keeping with the spirit of social justice.
● Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the
interest or convenience of the public.
○ Employees enjoy Security of Tenure in the sense that they cannot be dismissed
without just cause or authorized cause. Security of tenure protects employees not
only against dismissal without valid cause but also against other personal actions
which are calculated to force an employee to give up his job without valid reason.
It must be understood however, that security of tenure is not a guarantee of
perpetual employment. An employer cannot be legally be compelled to continue
with an employment of an employee guilty of misfeasance or malfeasance towards
his employer and whose continuance in the service is patently inimical to his
interest because the law in protecting the rights of employees authorize neither
oppression nor self-destruction of the employer.

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● 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.
○ The code commission has stated that public good requires that this presumption be
established whenever there is some doubt in any labor contract. The safety and
decent living of the toiling classes do not affect them alone but are matters of
deep and immediate concern to the entire nation. When in any nation a large
section of the inhabitants is not afforded a safe and decent life, the economic
progress of the country is impeded and the level of the general wellbeing is pulled
down.
● Art. 1703. No contract which practically amounts to involuntary servitude, under any
guise whatsoever, shall be valid.
○ Involuntary Servitude is frowned upon by the Constitution. Sec. 18, Par. 2, Art III of
the Constitution provides that no involuntary servitude in any form shall exist,
except for punishment for a crime, whereof, the party shall have been duly
convicted.
● 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.
○ In case of an illegal strike, union officers who knowingly participated in the illegal
strike stand to lose their employment status.
○ Dismissal of a union officer who staged an illegal strike is proper. Since the
objective of the Labor Code of the Philippines is to ensure a stable but dynamic,
and just industrial peace, union leaders are duty bound to guide their members to
respect the law.
○ The responsibility of the union officers as main players in an illegal strike is greater
than that of the members, as the union officers have the duty to guide their
members to respect the law.
● Art. 1705. The laborer's wages shall be paid in legal currency.
○ Art. 102 of the Labor code of the Philippines forbids employers from paying wages
by means of promissory notes, vouchers, coupons, tokens, tickets, chips, or any
objects other than legal tender. Even when expressly requested by the employee.
● Art. 1706. Withholding of the wages, except for a debt due, shall not be made by the
employer.
○ Art. 116 of the Labor Code of the Philippines declares it unlawful for any person,
directly or indirectly, to withhold any amount from the wages of the worker or to
induce him to give up any part of his wages by force, stealth, intimidation, threat
or by any other means whatsoever without the worker’s consent.

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 ● Art. 1707. The laborer's wages shall be a lien on the goods manufactured or the work
done.
○ Under Art. 1731 of the Civil Code of the Philippines, one who has executed work
upon a movable has a right to retain it by way of pledge until he is paid.
○ Moreover, claims for laborer’s wages on the goods manufactured or the work done
are considered as special preferred credits with respect to the specific movable
property of the debtor.
● 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.
○ This article applies only to wages as distinguished from salaries, because there’s a
fine distinction between wages and salaries.
○ Wage refers to compensation for manual labor or lower and less responsible
character of employment, while salary is suggestive of a higher and more
important service.
○ Thus, only wages are exempt from execution or attachment for debts incurred for
any purpose other than food, shelter, clothing and medical attendance.
○ Salaries are not exempted because Art. 1708 of the Civil Code of the Philippines
was intended to operate in favor of laboring men and women in the sense that
their work is manual.
○ Persons belonging to this class usually look forward or look to the rewards of a base
labor for immediate or present support and such persons are more in need of the
exemptions than any others.
● Art. 1709. The employer shall neither seize nor retain any tool or other articles belonging
to the laborer.
○ This is intended to protect the livelihood of laborers. To allow the employer to
cease the tools which the laborer uses in pursuing his occupation would certainly
deprive him of his means of support.
● Art. 1710. Dismissal of laborers shall be subject to the supervision of the Government,
under special laws.
○ The Labor Code of the Philippines assures all workers the Right to security of
tenure in a sense that an employer can no longer dismiss an employee without just
and authorized cause.

3. LABOR CODE OF THE PHILIPPINES

● The principal repository of our Labor Laws. It was promulgated on May 1, 1974, and
took effect on November 1, 1974, or 6 months after its promulgation.

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Salient Features
● Reorients labor laws toward development and employment goals;
● It institutionalizes the National Labor Relations Commission to facilitate the speedy
settlement of labor disputes;
● It establishes a system of workmen’s compensation;
● It establishes a system for employment of overseas workers and optimizes national
benefits therefrom, in the form of dollar remittances and improved skills and
technology for our people; and
● It institutionalized voluntary arbitration as a mode of settling labor disputes.

Construction
● How should the Labor Code of the Philippines be construed?
■ Refer to Art. 4. This article applies only when there’s a doubt. When there
is no doubt, there’s no room for interpretation or construction. Where the
evidence is clear that employees are not assets but liabilities that delay
production and set a bad example to their co-workers, the courts should
uphold the validity of their dismissal.
● Why should doubts be resolved in favor of labor?
■ Jurisprudence teaches that this is in line with the principle that those who
have less in life should have more in law. When conflicting interests of labor
and capital are weighed on the scales of social justice, the heavier
influence of the latter must be counterbalanced by sympathy and
compassion. The law must accord the underprivileged worker. A contrary
ruling will be a dilution and emasculation of protection to the labor clause
of the Constitution.
● The doubt contemplated by Art. 4 of the Labor Code pertains not only to
interpretation of the labor code or the implementing rules; it also extends to
doubts into evidence presented by the parties.
● However, a liberal construction of the rules is not license to disregard the evidence
on record or misapply the law. Despite the mandate to construe labor law liberally
in favor of labor, the fundamental principles of due process should sternly be
applied on both the poor and the rich, in order to attain proper justice. Never
should the scales of justice be tilted in favor of the labor if it would result in an
injustice to the employer.

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Applicability
● There are two important points that must be considered in this provisions, namely:
a. The Coverage Clause
■ The phrase “shall apply alike to all workers”
■ The workers referred to in Art. 6 of the Labor Code of the Philippines are
employees in the Private Sector only, which means that the labor code of
the Philippines generally applies only to employees of private
establishments.
■ Except for the provisions on employees’ compensation, the Labor Code of
the Philippines does not apply to employees of the government. Because
government employees are governed by the Civil Service Law
■ Regarding Government Owned or Controlled Corporations (GOCC), the
applicability of the Labor Code of the Philippines will depend upon the
manner of their creation.
● If created by special charter or the law, it is not covered by the
Labor Code of the Philippines.
● If organized under the Corporation Law, GOCCs are covered by the
Labor Code of the Philippines.
● Even though GOCC are organized under the Corporation Law are
covered by the Labor Code of the Philippines, employees thereof can
no longer seek better terms or conditions of employment through
collective bargaining.
● This means that they can no longer organize or join a labor union,
because the GOCC Governance Act of 2011, has provided a
compensation and position classification system for all GOCCs,
chartered or non-chartered.
● Take note that what has been withheld from employees of GOCCs
organized under the corporation law is the right to seek better terms
and conditions of employment through collective bargaining which
includes the right to strike and form labor organizations.
● Other rights and benefits under the Labor Code continued to be
applicable, for instance:
a. The right to retirement pay, separation pay for employees
terminated on authorized causes; and
b. The right to reinstatement with back wages for those illegally
dismissed from employment.

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b. The Exclusionary Clause
■ The phrase “except as may otherwise be provided” stated in Art. 6 of the
Labor Code of the Philippines means that some rights and benefits under the
Labor Code are not available to certain types of employees in the Private
Sector.
■ These rights and benefits are:
● The normal 8-hour work, meal periods, night shift differential,
overtime pay, weekly rest day, premium pay for rest days and
holiday work and service charges are not available to:
a. Managerial employees;
b. Officers and members of the managerial staff;
c. Field personnel;
d. Family members dependent upon the employer for support;
e. Domestic workers, except weekly rest day;
f. Persons in the personal service of another; and
g. Workers paid by results.
● The right to holiday pay is not available to:
a. Employees of retail and service establishments regularly
employing less than 10 workers,
b. Managerial employees,
c. Officers and workers of the managerial staff,
d. Field personnel,
e. Family members dependent upon the employer for support,
f. Persons in the personal service of another,
g. Domestic workers, and
h. Workers paid by results, task or contract basis.
● The right to service incentive leaves is not available to:
a. Employees of establishments regularly employing less than 10
workers;
b. Employees already enjoying at least 5 days’ vacation leave
with pay;
c. Employees who have not rendered 1 year service,
d. Managerial employees;
e. Officers and members of managerial staff;
f. Field personnel;

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 g. Family members dependent upon employer for support;
h. Persons in the personal service of another;
i. Workers paid by results, tasks or contract basis; and
j. Employees of establishments excepted by the Secretary of
Labor and Employment.
● The right to Retirement benefit is not available to:
a. Employees who have not rendered service of at least 5 years;
and
b. Employees of retail, service and agricultural establishments
regularly employing not more than 10 workers.
● Right to form, join or assist in the formation of labor organization or
labor unions is not available to:
a. Managerial employees;
b. Confidential employees who have access to labor relations
matters; and
c. Employees who are members of Cooperatives.

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 EMPLOYER-EMPLOYEE RELATIONSHIP

A. Employer-Employee Relationship
● Labor Law is about employer-employee relationship; thus, the applicability of Labor Laws
is dependent upon the existence of an employer-employee relationship.
● Employer-employee relationship is the jurisdictional foundation for recovering under our
labor laws.
○ This means that if there is an employer-employee relationship, complaints should
be filed with the appropriate agencies.
■ For instance, complaints of employees for illegal dismissal should be filed
with the Labor Arbiters of the National Labor Relations Commission.
○ However, if the relationship is something else other than that of an
employer-employee relationship, the principles of ordinary civil law will apply, and
therefore, complaints arising therefrom should be filed with the regular courts.
■ For instance, complaints for illegal dismissal filed by corporate officers, like
the President of a corporation, should be filed with the designated regional
trial court, because dismissal of a corporate officer is not a labor dispute
but an intra-corporate controversy.

a. Tests to Determine Employer-Employee Relationship

● The Supreme Court has laid down the following tests to be generally considered in
determining the existence of an employer-employee relationship.

1. The Economic Reality Test

● Under this test, when workers possess some attributes of an employee and
of an independent contractor which make them fall within an intermediate
area, they may be classified under the category of employee when the
economic facts of the relation make it more nearly one of employment than
one of independent business enterprise with respects to the ends sought to
be accomplished.
● The determination of the relationship between employer and employee
depends upon the circumstances of the whole economic activity, such as:
a. The extent to which the services performed are an integral part of
the employers business;
b. The extent of the worker’s investment in equipment and facilities
c. The nature and degree of control exercised by the employer;

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 d. The workers opportunity for profit and loss;
e. The amount of initiative, skill, judgment, or foresight required for
the success of the claimed independent enterprise;
f. The permanency and duration of the relationship between the
worker and employer;
g. The degree of dependency of the worker upon the employer’s
continued employment in that line of business.

2. Four-Fold Test
● The following elements are generally considered in determining the
existence of employer-employee relationship:
1. Selection and engagement of the employee
● Under this criterion, the relationship of employer and
employee is created by the act of hiring a person as
an employee.
○ Hiring may be expressed or implied.
● A written contract is not necessary. However, it is
essential that there should be an understanding that
one is to render personal service to the other and the
recognition of the right of one to order and control
the other in the performance of the work and to
direct the manner and method by performance.
2. Payment of wages
● Consideration for its payment.
○ If paid in consideration of the labor being
performed, the compensation is considered as
wages.
○ If paid in consideration of the results or
finished work, the compensation is not
considered as wages.
3. Power of dismissal
● The person hired for disciplinary action are subjected
to the rules of discipline of the employer.
4. Power to control the employees’ conduct

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● Among the four elements of the employer-employee
Relationship, this is the most important that the other
elements may even be disregarded.
● When you say test in determining the existence of the
employer-employee relationship the term control has
a technical meaning.
○ It refers to the authority of the employer to
manage the employee on both the result of the
work to be done and the means by which the
work is to be accomplished.
● Remember that actual exercise of the power to
control is not required. The control test merely calls
for the existence of the right to control the manner or
doing the work, not the actual exercise of the right.
● However, not every form of control may be accorded
the effect of establishing an Employer-Employee
Relationship.
● To fall within the ambit of Employer-Employee
Relationship, control should be on both the means and
the end. If control is limited only to the result of the
work, the employer-employee relationship does not
exist.
● The mere fact that the hiring party imposes certain
rules on the hired party, does not per se indicate that
the power to control is in existence.
● Rules which serve as guidelines towards the
achievement of the mutually desired result are not
indicative of power to control.
● As long as the level of control does not interfere with
the means and methods of accomplishing the assigned
tasks, the rules imposed by the hiring party on the
hired party, do not amount to labor law concept of
control that is indicative of employer-employee
relationship.
● Thus, the power to control cannot be inferred from
the mere fact that the relationship may be terminated

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 for certain specified causes, such as failure to meet
the annual sale quota, inability to make sales
production during a certain period, or conduct
detrimental to the company.
● The reason is because the causes specified have no
relation whatsoever to the means and methods of
work that is ordinarily required of or imposed upon
employees.
● To restate, the significant factor in determining the
relationship of the parties is the presence or absence
of supervisory authority to control the method and the
details of performance of the service being rendered,
and the degree to which the principal may intervene
to exercise such control.
● The presence of such power to control is indicative of
an employment relationship, while absence thereof is
indicative of independent contractorship.

CASES

Ginta-Ason v. JTA Packaging Corp. (Penned by Bar Chair)

Who has the burden of establishing the existence of an Employer-Employee Relationship?

Facts: Gerome alleged that he was hired by JTA Packaging Corp. on December 26, 2014 as
an all-around driver.

He narrated that on September 5, 2016 an officer of JTA maltreated him, prevented him
from leaving the company premises and threatened his life. Gerome no longer reported to
work believing that his continued employment became impossible, unbearable and
unlikely.

Gerome filed a complaint for illegal dismissal against JTA on January 30, 2017.

JTA contended that Gerome was not its employee as established by the following
documents, which never included Gerome’s name. Copies of its Alphalist of employees as
filed with the BIR for the years 2014-2016, payroll monthly reports, and 13 month pay it
paid for the years 2015-2016, reports on SSS contributions of its employees remitted for

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the years 2015-2016, Philhealth remittance reports on contributions of its employees in
2016 and Pag-Ibig fund membership, as well as registration and remittance forms
indicating the names of its employees and their contributions for the period of 2015-2016.

On June 28, 2017, the office of the Labor Arbiter rendered a decision which declared the
existence of an Employer-Employee Relationship between Gerome and JTA. It ruled that
Gerome was constructively dismissed because his continued employment with JTA was
rendered impossible due to fear after the September 5, 2016 incident of maltreatment
and detention.

On appeal, the NLRC reversed and set aside the decision of the office of the Labor Arbiter.
It dismissed the complaint for lack of Employer-Employee Relationship between Gerome
and JTA. One reason was that the payslips submitted by Gerome failed to reveal who
issued the same. The commission also discovered discrepancies on the dates of their issue
and the payslips dated back as early as March 2014 contrary to Gerome’s claim that he was
hired in December of the same year. The other reason was that JTA documentary evidence
showed that Gerome was not among its employees.

The CA affirmed the ruling of NLRC in view of Gerome’s failure to substantiate his claim
that he is an employee of JTA. Gerome elevated this case to the Supreme Court.

Issue: Was Gerome an employee of JTA?

Ruling: The Supreme Court ruled in the negative.

The court reiterated the settled rule that allegations and the complaint must be duly
proven by competent evidence and that the burden of proof is on the party making the
allegation.

In an illegal dismissal case, the onus probandi rests on the employer to prove that its
dismissal of an employee was for a valid cause. However, before a case for illegal dismissal
can prosper, an Employer-Employee Relationship must first be established.

In this regard, the four fold test determines the existence of an Employer-Employee
Relationship — to wit, the selection and engagement of the employee, payment of wages,
power of dismissal, and the power to control the employee’s conduct.

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In the present case the court stressed that since it was Gerome who was claiming to be an
employee of JTA, he had the burden of proving the existence of an Employer-Employee
Relationship. The court found that Gerome failed to discharge this burden. Gerome did not
present any employment contract, or company identification card, to prove his
employment with JTA. According to the court, in a business establishment, an
identification card is usually provided not only as a security measure but mainly to identify
the holder thereof as a bona fide employee of the firm that issues it.

The payslips presented by Gerome bore no indication that the amount he allegedly
received came from JTA. The court pointed out that the payslips submitted by Gerome
even showed that he had been receiving compensation as early as February 2014, when he
had claimed that he was hired by JTA months later, or on December 26, 2014. The court
said that this wide gap between February 2014 and December 2014, was not a trivial
inconsistency.

Furthermore, there were no deductions from Gerome’s supposed salary, such as

withholding tax, SSS, Philhealth or Pag-Ibig fund contributions which were usual
deductions from employees’ salaries.

On the other hand, the following voluminous documentary documents submitted by JTA,
which were duly signed by its authorized representative and stamp received by the
concerned government agencies indubitably showed that Gerome was not among its
employees.

The alphalist of employees submitted to the BIR, or the years during which Gerome claims
to have been employed by JTA. The payroll monthly reports and the remittances made by
JTA of its employee’s monthly contributions to the SSS, Philhealth and Pag-ibig fund. As to
the power of control, the court acknowledged the purported driver’s itineraries presented
by Gerome prescribed the manner by which his work as a driver is to be carried out.
However, the court found that the said driver’s itineraries were not signed by JTA’s
authorized personnel and contained discrepancies of JTA’s name and address. For the
court, that driver’s itineraries were insufficient to establish the elements and control.

The court accordingly denied Gerome’s petition for lack of merit.

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 Parayday v. Shogun Shipping Co., Inc. (Penned by Bar Chair)
(A case illustrating the application of the controlled test)

Facts: Pedrito alleged that he was employed sometime in October 1996 as fitter or welder
by Oceanview, a corporation engaged in the business of shipbuilding.

As a fitter or welder, Pedrito assembled, welded, fitted, installed, and repaired certain
barge components. Pedrito presented a copy of his Oceanview Company ID card,
Certificate of Employment dated February 5, 2011, and Timekeeper report.

Pedrito stated that sometime in 2003, Oceanview changed its corporate name to Shogun,
maintained the same line of business, and retained in its employ Pedrito and other
Oceanview employees.

Pedrito further stated that sometime in May 2006, he was assigned to Lamao, Limay,
Bataan, to do a welding job on one of the Shogun’s barges. On 11 May 2006, an explosion
occurred which caused Pedrito to sustain 3rd degree burns on certain parts of his body.
Pedrito was then hospitalized from 11th of May until 6th June 2006, and had received
financial assistance from Shogun for the duration of his confinement.

Pedrito alleged that Shogun verbally dismissed him from service effective May 1, 2008 due
to lack of work which was why he filed a complaint for illegal dismissal against Shogun.

Shogun denied that it engaged Pedrito as its regular employee. In support of its claim that
no Employer-Employee Relationship existed between them, Shogun pointed out that it was
only incorporated sometime in November 2002, several years after Oceanview engaged
Pedrito as its fitter or welder in 1996.

Furthermore, Shogun maintained that it was a separate and distinct entity from
Oceanview, and that no such change in corporate name occurred.

Shogun alleged that at best, Pedrito was only a helper brought in by its regular employees
on certain occasions when repairs were needed to be done on its barges. It stressed that it
did not engage Pedrito on a regular basis as his work on the barges was merely temporary
or occasional.

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It further stated that Pedrito was free to seek employment elsewhere at any given time.

Issue: Was Pedrito an Employee of Shogun?

Ruling: The Supreme Court declared that an Employer-Employee Relationship existed

between Pedrito and Shogun.

Initially, the court did not give credence to the ID card and Certification of Employment
presented by Pedrito for the said documents were issued by Oceanview, and not by
Shogun. The court also did not consider the timekeeper report presented by Pedrito
because their genuineness and due execution were unverifiable.

Nonetheless, the court found Shogun failed to categorically deny the following
circumstances:
○ Sometime in May 2006, it permitted Pedrito to work on repairs on one of its
barges.
○ It also found that Shogun did not also deny that Pedrito worked for it until
he was supposedly verbally dismissed from employment on 1 May, 2008.
○ Notably, Shogun even admitted that Pedrito was called in to do repairs on
its barges.
○ Pedrito was duly compensated for his work done on the barges. Shogun even
categorically admitted that it provided him with financial assistance when
he was hospitalized from May 11 until June 6, 2006.
○ It also did not disprove Pedrito’s allegation that it continued to pay salaries
after he was discharged from the hospital on June 7, 2006.

Pedrito was verbally dismissed on May 1, 2008. The court noted Shogun’s allegation that
Pedrito only did repair work whenever the same was available. The court viewed that it
was Shogun who determined the cessation of Pedrito’s services.

According to the court, the Rules of Court which supplements that NLRC Rules of
Procedure, provides that allegations which are not specifically denied are deemed
admitted.

The court emphasized that the control test calls merely for the existence of the right to
control the manner of doing the work and not the actual exercise of the right.

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The court added that an employer’s power of control, particularly over personnel working
under the employer, is deemed inferred, more so when said personnel are working at the
employer’s establishment.

In the present case, the court found that Pedrito worked on the barges alongside regular
employees of Shogun, and that Shogun did not deny that he was taking orders from its
engineer as to the required specifications on how the barges of Shogun should be repaired.

For the court, it could thus logically infer that Shogun, to some degree, exercised control
or had the right to control the work of Pedrito.

Pedrito was declared to be an employee of Shogun.

Ditiangkin v. Lazada
(Established doctrines relevant to the topics discussed)

Facts: Chrisden and several other persons alleged that, in February 2016, Lazada
E-Services Phils. Inc. (Lazada), a business which claims to facilitate the sale of goods
between its sellers and buyers, hired them to work as riders. Chrisden and his group were
primarily tasked to pick-up items from sellers and deliver them to Lazada’s warehouse.

Each of them signed an independent contractor agreement which states that they will be
engaged for 1 year and paid a service fee. They were to use their privately owned
motorcycles in their trips.

Chrisden and his group narrated that sometime in January 2017, a Lazada dispatcher told
them that they have been removed from their usual routes and will no longer be given any
schedules. Despite this development, they still went to the office and waited for 3 days to
be given new tasks but no work schedules came. They soon learned that their routes were
already given to other riders.

Aggrieved by the events, Chrisden and his group filed a complaint before the National
Labor Relations Commission against Lazada for illegal dismissal, illegal deduction, money
claims with claims for moral and exemplary damages and attorney’s fees.

20
Lazada denied that Chrisden and his group were its employees. It maintained that
Chrisden and his group were independent contractors, and cannot claim backwages,
separation pay and other benefits, considering that they are not regular employees.

The office of the Labor Arbiter ruled that no employer-employee relationship existed
between Lazada and Chrisden and his group.

The office of the Labor Arbiter found that the respective independent contractor
agreements of Chrisden and his group clearly stated that no employer-employee
relationship existed between them and Lazada.

The said office also determined that Lazada had no control over the means and method of
their work since they provided their own vehicles and were free to choose the means of
transport, delivery routes, and working hours.

The office of the Labor Arbiter added that Lazada only required goods to be delivered
promptly and in good condition, while the said office acknowledged that Lazada gave out
rules and regulations on the delivery of goods. It ruled that this did not amount to control
over the means and method by which Chrisden and his group accomplished their work.
Thus, the office of the Labor Arbiter dismissed the complaint for lack of jurisdiction.

On appeal, the NLRC affirmed the office of the Labor Arbiter’s ruling.

Chrisden and his group filed a petition with the CA, but their petition was dismissed
outright. Chrisden and his group elevated their case to the Supreme Court.

Issue: Were Chrisden and his group regular employees of Lazada?

Ruling: The Supreme Court ruled in the affirmative.

The court reiterated established principles as follows:

○ Consistent with the Constitutional recognition that Labor is a primary social
economic force, full protection to labor is a social policy enshrined in Art.
13, Sec. 3 of the Constitution. The provision guarantees the rights of
workers to security of tenure, among others. One’s employment is property
right which cannot be revoked without due process.

21
 ○ Under Philippine laws, the nature of employment of a worker is prescribed
by law, regardless of what the contract and the parties present it to be.
Furthermore, employment contracts are not ordinary contracts, because
they’re imbued with public interest.
○ The applicable provisions of the law are deemed incorporated into the
contract and the parties cannot exempt themselves from the coverage of
Labor Laws simply by entering into such contracts.
○ Thus, regardless of the nomenclature and stipulations of the contract, the
employment contract must be read consistent with the social policy of
providing protection to labor.

The court then stated that to determine the existence of the EER, it employs the
two-tiered test: the 4 fold test and the economic dependency test.

Under the 4 Fold Test, to establish an employer-employee relationship, four factors must
be proven:
1. Employer’s selection and engagement of the employee;
2. Payment of wages;
3. Power to dismiss;
4. Power to control the employees conduct.

The power of control is the most significant factor in the 4 fold test. The right to control
extends not only over the work done, but over the means and methods by which the
employee must accomplish the work. The power of control does not have to be actually
exercised by the employer as it is sufficient that the employer has a right to wield that
power. However, not all rules imposed upon the worker are an indication of control.
■ When rules are intended to serve as general guidelines to accomplish
the work, this is not an indicator of control.
■ When the control test is insufficient, the economic realities of the
employment are considered to get a comprehensive assessment of
the true classification of the worker.

The determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity such as:
1. The extent to which the service is performed or integral part of the employer’s
business;

22
 2. The extent of the worker’s investment in equipment and facilities;
3. The nature and degree of control exercised by the employer;
4. The worker’s opportunity for profit and loss.The amount of initiative, skill,
judgment, or foresight required for the success of the claimed independent
enterprise;
5. The permanency and duration of the relationship between the employer and the
worker; and
6. The degree of dependency of the worker upon the employer for his continued
employment in that line of business.

In the present case, the court declared that Chrisden and his group were regular
employees of Lazada.

According to the court, Chrisden and his group satisfied the 4 fold-test:
1. Chrisden and his group were directly employed by Lazada, as evidenced by the
independent contractor agreement that they signed.
2. As indicated in the said agreement, Chrisden and his group received their salaries
from Lazada. Chrisden and his group were paid by Lazada the amount of 1,200
pesos for each day of service.
3. Lazada had the power to dismiss Chrisden and his group. In their contract, Lazada
can immediately terminate the agreement for breach of its material provisions.
4. Lazada had control over the means and methods of the performance of the work of
Chrisden and his group as explicitly mentioned in their agreement and as reflected
in the way the work of Chrisden and his group was carried out.
● Lazada required the accomplishment of a route sheet which kept track of
the arrival, departure, and unloading time of the items.
● Chrisden and his group shouldered a penalty of 500 pesos on top of an
item’s actual value should it get lost.
● Chrisden and his group were also required to submit trip tickets and
incident reports to Lazada.

The court added that even if it considered the foregoing factors as mere guidelines, the
circumstances of the whole economic activity between Lazada and Chrisden and his group
nonetheless confirm the existence of an employer-employee relationship.

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Stated otherwise, the court found that Chrisden and his group satisfied the economic
dependence test.

Although Lazada insisted that the delivery of items was only incidental to its business as it
was mainly an online platform where sellers and buyers transact, the court found that the
delivery of items by Chrisden and his group was clearly integrated in the services it
offered.

The court even noticed Lazada’s submission that it had different route managers to
supervise the delivery of the products from the sellers to the buyers. But this only
confirmed that Lazada had taken steps to facilitate not only the transaction of the seller
and the buyer in the online platform, but also the delivery of the items.

The court also looked into the contention of Lazada that it could have left the delivery of
the goods to the sellers and buyers. However, the court disregarded said contention as this
was not the business model it actually implemented.

The court further found that Chrisden and his group were required by Lazada to use their
own motor vehicles and other equipment and supplies in the delivery of the items.
Moreover, Chrisden and his group were found to have no control over their own profit or
loss because they were paid a set daily wage.

They were also found to have no control over their own time and they could not offer their
service to other companies, as Lazada could demand their presence from time to time.

For the court, Chrisden and his group were economically dependent on Lazada for their
livelihood and continued engagement in its line of business.

At this point, the court rejected Lazada’s assertion that the independent contractor
agreements of Chrisden and his group explicitly stipulated the absence of an
employer-employee relationship between them.

According to the court, the protection of the law afforded to labor precedes over the
nomenclature and stipulations of the contract. The independent contractor agreements of
Chrisden and his group were not ordinary as Lazada purported it to be. Thus, it was
patently erroneous for the Labor tribunals to reject an employer-employee relationship

24
simply because the independent contractor agreement stipulated the non-existence of the
employment relations.

The court then rebuffed Lazada’s contention that Chrisden and his group were
independent contractors.
● The court sets forth relevant principles as follows:
○ An independent contractor is defined as one who carries out and on a
distinct and independent business and undertakes to perform the job, work
or service on its own account, and under one’s own responsibility, according
to one’s 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.
● Laws and jurisprudence recognize two types of contractors:
○ Legitimate Job Contractors under Art. 106 of the Labor Code of the
Philippines;
○ Independent contractors who possess unique skills and talent and whose
contracts are governed by the Civil Code of the Philippines.
● The court stressed that when the status of employment is in dispute the employer
bears the burden to prove that the workers are independent contractors rather
than regular employees.
● In the present case, the court ruled that Lazada failed to establish that Chrisden
and his group fell under any of the categories of independent contractors, based on
the following findings:
○ Chrisden and his group were not hired by a contractor or subcontractor, as
both parties submitted that they were directly engaged by Lazada.
○ The work performed by Chrisden and his group did not require special skill
or talent. Picking up and delivering goods from the warehouse to buyers did
not call for a specific expertise.
○ There was also no showing that Chrisden and his group were hired due to
their unique ability or competency.
● The court accordingly declared Chrisden and his group as employees of Lazada.

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 CLASSIFICATION OF EMPLOYMENT

b. Classifications of Employment
● Regular employment
○ Employment where employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer.
○ As to whether the employee is regular or not, it is determined neither by the
employment contract nor the nomenclature given by the employer but by the
nature of the job (Art. 295 or the Labor Code).
○ Primary Standard in Determining whether an employment is regular: The
reasonable connection between the activity performed by the employee and the
nature of the business of the employer.
○ Test to determine whether an employment is regular: whether the activity
performed by the employee is necessary or desirable in the usual business or trade
of the employer.
■ The connection can be determined by considering the nature of the work
and the scheme of the business or trade in its entirety.
■ The necessity and desirability of the service may be indicated by:
1. Continuing need for the services need of the employee; or
2. Repeated or continuously hiring.

● Project Employment
○ A job where the employee was engaged for a specific undertaking, the completion
or termination of which has been determined at the time of the engagement.
○ Article 295 of the Labor Code
■ The term “specific project or undertaking” contemplates at least two
distinguishable types of activity:
1. A job that is within the regular business of the employer but is distinct,
separate, and identifiable as such from the other undertakings of the
company.
● This job begins and ends at a determined or determinable times,
○ Example: A construction company may have 2 or more
distinct identifiable construction projects - 25 storey
hotel in Makati, residential condominium in Baguio,
domestic air terminal in Iloilo City. The scope is made
known to the employee.
26
 2. A job that is NOT within the regular business of the employer but is distinct,
separate, and identifiable as such from the regular business of the
employer.
● This job or undertaking begins and ends at a determined or
determinable time.
○ Example: Instead of engaging in an independent
contractor, the National Steel Corporation opted to
directly hire workers to do the constructions of an
additional building. Here, the employees hired for the
construction of the building are project employees
because the construction of buildings is not the
regular business of National Steel Corporation.
Therefore, employment ends upon completion of the
construction.
■ The mere fact that the employees have worked on a project for more than
1 year does not negate their status as project employees. Project
employment remains to be such that it would take several years to finish
the undertaking.
■ The proviso in Article 295 of the Labor Code that any employee who has
rendered one year shall be considered a regular employee applies to casual
employment not to project employment.
■ Project employment is coterminous with work to which the employee was
assigned. Once the project or any phase thereof is completed, there is no
longer need for the employee services.
○ Since the job depends on the availability of the project, the employment is
coterminous to the work to which they were assigned.
■ RATIONALE: Once a project is completed, it would be unjust to require the
employer to retain the employees in their payroll. To be so, the employees
will become privileged retainers who collect from the employers for work
not done. This is extremely unfair and amounts to labor coddling at the
expense of the employer.
■ Project employees whose employment is terminated by completion of
project or phase thereof are not entitled to separation pay.
■ The employer should report to the nearest public employment office the
fact of termination of project employees. Failure to report is an indication
the job is not a project employment, but regular employment.

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○ There could be project employees on a regular status.
■ Workers who belong to a work pool from which company draws employees
for work assignment: If the same employer continuously, and not
intermittently, rehires them for the same tasks but different projects. This
set up usually applies to regular seasonal employees.
■ The job remains project-based but the status as project employees is
regular. Hence, they cannot be dismissed without just cause.
■ A work pool may exist although the workers do not receive salaries and they
are free to seek other employment during temporary breaks, provided that
the worker shall be available when their call to report for a project. This is
beneficial to both employer and employee. It enables to workers to attain
the status as regular employees.
■ May seek other employment, available when called to report to another
project.
■ What happens to regular project employees when there is no new project?
● They may be laid off while waiting for a new project, but the lay off
must not exceed 6 months. During the period of lay-off, the
employees are not entitled to wages under the no work, no pay
principle. After the lapse of 6 months without a new project, their
employment automatically terminates and they are entitled to
separation pay.

Jovero v. Cerio
(Reiterates principles relating to project employment as against regular
employment)

■ Facts: Employees herein were hired by Sigma Construction, an independent

contractor owned by Eduardo. As cement cutters, the employees were
assigned to work at the site of Phil Geothermal beginning in April 1990.

However, the Philippine Geothermal pre-terminated one of its contracts

With Sigma Constructions in April 1993. Due to this termination, the project
manager issued a notice to all cement-cutters that the contract is effective
only until April 30, 1993.

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 The employees filed a case for Illegal dismissal against Sigma Construction
and Phil Geothermal, arguing that they are regular employees of Sigma
Construction because they are continuously hired and assigned to different
Phil Geothermal projects from 1990 until their termination in 1993.

Eduardo alleged that Sigma Construction was an independent construction

contractor that hired project employees to work in its projects with Phil
Geothermal. Eduardo presented Sigma Constructions service contracts with
Phil Geothermal. According to Eduardo , when Phil Geothermal pre
terminated its contract with Sigma Construction, the latter was forced to
pre-terminate the contract with employees from employment since their
employment is coterminous with the contract with Phil Geothermal.

Eduardo posited that it would be unjust Sigma Constructions to retain

employees in the absence of projects in the absence of projects with
Philippine Geothermal.

Issue: Were the employees project employees of Sigma Construction?

Ruling: No, they are Regular Employees of Sigma Constuction .

■ The principal test to determine whether an employee is a project employee
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
employee 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 employee should be assigned to a project which
begins and ends at determined or determinable times, and be informed
thereof at the time of hiring.
■ In the present case, the Court found no proof that the employees’
engagement as project employees had been predetermined, as required by
law. There was no showing that the employees were informed that they
were to be assigned to a “specific project or undertaking” upon their hiring.
No employment contracts for the specific project signed by the employees
were presented.
■ The Court pointed out that Eduardo only presented Sigma Construction’s
Service Contracts with Philippine Geothermal. According to the Court,

29
 nowhere in the contracts did it show that employees were parties to such
contract. More importantly, the said documents did not prove that
employees were hired for the projects with Philippine Geothermal.
■ For the Court, the presentation of service contracts between Sigma
Construction and Philippine Geothermal (even if it showed the duration of
the project), in lieu of the employees’ individual employment contracts, did
not establish that the latter were project employees.

● Seasonal Employment
○ A job where the employee is engaged to work during a particular time of the year.
■ Example: Workers engaged in a Department store or food manufacturing
company to augment the regular workforce to meet the demands of the
Christmas season; or workers hired by a milling company during harvest
season; or workers engaged by sugar central during season.
○ It is coterminous with duration of season; the employment terminates at the end of
the season.
○ There are Seasonal employees on regular status - if they are repeatedly engaged
every season, they may retain their status as seasonal employees. Hence, they
cannot be dismissed without just cause.

● Casual Employment
○ A job where the activities performed by the employee are not usually necessary or
desirable in the usual business or trade of the employer.
■ Examples: Mechanic engaged by a saw mill to fix an engine (separation of
the mill is not the actual business of the saw mill); carpenter engaged by a
glassware store to repair the damages in the store (the repair is not usually
necessary or desirable in the glassware business)
○ There are casual employees on regular status.
■ They can attain regular status with respect to the employer which they are
employed- when they have rendered at least 1 year of service. Their regular
status attaches on the day after the 1st year of employment.
■ Their job remains casual but their status as employees is regular.
■ They cannot be dismissed without just cause when such activity exists.
■ 1 year of service refers to 12 months, whether continuous or broken,
reckoned from the time or date the employee starts working including
authorized absences and holidays, unless the working days in the

30
 establishment is less than 12 months as a matter of practice or according to
employment contract.

● Fixed Term Employment

○ A job where the parties by free choice have assigned a specific date of
termination.
○ The determinant is not the activities involved but the day certain agreed upon by
the parties for the termination of the employment.
○ The validity of such arrangement of employment is recognized by the Civil Code,
which imposes no restraint on the freedom of the parties to fix the term of
contract whether the object is goods or services.
○ Upon the expiration of the period agreed upon, the employment terminates
without need of notice.

○ Requisite for the Validity of the Contract:

1. Knowingly and voluntarily agreed upon by the parties without any
force, duress, or pressure upon the employee; or
2. It satisfactorily appears that the employer and employee agreed
with each other with no moral dominance whatever be exercised by
the former to the latter.

Palgan v. Holy Name University Case

● Facts: Arlene started working as a Casual or Assistant Clinical Instructor for
two semesters for the school year 1992-1993 in Holy Name University (HNU)’s
College of Nursing while awaiting the results of her Nursing Board Examination.
● In the second semester of the school year 1994-1995, she worked at the
Medical Ward as a full-time Clinical Instructor until the school year 1998-1999.
During the second semester of that school year, she transferred to the
Guidance Center where she worked as a Nursing Guidance Instructor. In the
meantime, she was elected as Municipal Councilor of Carmen, Bohol. She took
a leave of absence from HNU upon her reelection as Municipal Councilor for
the period from 2001 up to 2004.
● Sometime in the year 2004, Arlene rejoined HNU and was given a full-time
load for the school year 2004-2005. For school years 2005-2006 and 2006-2007,
Arlene signed contracts for term/semestral employment.

31
● However, in a notice dated February 28, 2007, HNU informed Arlene that her
contract of employment, which would have expired on March 31, 2007, will no
longer be renewed.
● Arlene filed a complaint for illegal dismissal against HNU. She argued that
since she taught at HNU for more than six consecutive regular semesters, she
already attained the status of a regular employee under the Manual of
Regulations for Private School Teachers. She posited that she was not guilty of
any infractions under the Labor Code of the Philippines or the Manual of
Regulations for Private School Teachers. She concluded that she was illegally
dismissed from employment as no valid or justifiable cause supported the
same.
● On the other hand, HNU stated that for the school years 1995-1996, 1996-1997
and 1997-1998, Arlene received letters of appointment for each semester, with
definite dates of commencement and end of her employment. Thus, HNU
asserted that when her probationary appointment for the period June 1, 1997
until March 31, 1998 expired, that it was not obliged to renew her contract.
With regard to the school years 2004-2005, 2005-2006, and 2006-2007, HNU
contended that Arlene remained as a probationary employee.
● HNU stated that the completion of her probationary period did not
automatically make her a permanent employee since she failed to
satisfactorily comply with all the conditions of her probationary employment.
HNU insisted that Arlene was not dismissed; rather, her contract of
employment merely expired on March 31, 2007.

Issue: Did Arlene attain Regular Status?

Ruling: No. Arlene failed to meet criteria to be considered a permanent employee;
she was considered a fixed-term employee.

● According to the Court, before a private school teacher acquires permanent

status, he or she should satisfy the following requisites:
1) The teacher must have served full-time;
2) He/she must have rendered three consecutive years of service; and
3) Such service must have been satisfactory. In the present case, the
Court found that Arlene failed to meet the required criteria to be
considered as a permanent employee.

32
● Based on evidence, the Court declared Arlene to be a fixed-term employee of
HNU. Jurisprudence that recognizes the validity of fixed-term employment
contracts, as long as such contracts do not circumvent the employee’s right to
security of tenure.
● According to the Court, the criteria under which fixed-term employment could
not be said to be in circumvention of the law on security of tenure are the
following:
○ The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper
pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
○ It satisfactorily appears that the employer and the employee dealt
with each other on more or less equal terms with no moral
dominance exercised by the former or the latter.
● Here, the Court considered Arlene’s part-time status and ruled that 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.
● The Court added that with respect to consent, the fixed-term contracts must
be presumed to be knowingly and voluntarily entered into. It is a basic rule
that “one who alleges defect or lack of valid consent to a contract by reason
of fraud or undue influence must establish by full, clear and convincing
evidence such specific acts that vitiated a party’s consent, otherwise, the
latter’s presumed consent to the contract prevails.”
● In the present case, Arlene merely alleged that she was a regular employee
and that her being a contractual employee was just a lame reason given by
HNU to terminate her without due process. The Court viewed such allegations
as self-serving and unsubstantiated that failed to overturn the presumption
mentioned earlier.
● With regard to the second requisite, the Court found that Arlene was more or
less on equal footing with HNU. According to the Court, Arlene was an honors
graduate, an elected public official, and not a mere run-of-the-mill employee,
who had the capability to be on equal footing in dealing with her employer
when it came to her employment terms.
● The Court concluded that Arlene was validly contracted for a fixed-term, the
expiry of which occurred with her latest contract on March 31, 2007. Such

33
 effectively ended the employee-employer relationship she had with HNU. No
dismissal, whether illegal or not, ever happened. The Court accordingly denied
her claims.

● Probationary Employment
○ A job where employees upon their engagement are made to undergo a trial period
to enable the employer to determine their fitness for regular employment based
on the reasonable standards made known to them at the time of the engagement.

○ Requirements for validity of a probationary employment:

1. There must be a written contract of probationary employment; and
2. The employee must be informed of the standards that he or she should
meet to qualify for regularization.
● Notification of the standards is not necessary if the job is
self-descriptive.
○ For example: maid, cook, driver, messenger, etc.
● Or for matters pertains to basic knowledge and common sence

○ Article 296 of the Labor Code:

■ Probationary period shall be 6 months counted from the date of
appointment up to the same calendar date of the 6th following month.
● The number of days of each month is irrelevant.
■ The company may establish a period longer than 6 months by a company
policy, employment contract,or collective bargaining agreement.
● To prevent abuse, there must be a valid justification for imposing a
longer period.
○ Ex: When a job requires certain qualification, skills, or
experience/training OR when a longer period is required by
the nature of the work
■ Probationary employment may be extended, on or before probationary
period, to give a chance for the employee to improve.
● If the extension was not done before the expiration of the
probationary period, the employee is deemed a regular employee by
operation of law.

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 ● If engaged as a learner or apprentice, such probationary period shall
be considered as the authorized learnership or apprenticeship
period.
○ Thus an employee who is originally engaged as an apprentice
or learner may no longer be put under probationary
employment by the same probationary company where he
trained.
■ May be terminated due to valid causes, or for failure to qualify as regular
employee in accordance with the reasonable standards made known to the
employees.
■ Standard procedure of termination by Employer:
● If termination is due to failure to meet the standards for
regularization:
- Written notice prior to effective date of termination
● If termination is based on just cause:
- Written notice specifying the reason shall be given to the
employee within 5 days;
- Hearing shall be conducted, if necessary, and with assistance
of counsel (if so desired) and
- Written notice of termination, indicating the findings and
conclusion justifying the termination
■ It is not necessary that the entire probationary period should be exhausted
before effecting the dismissal.
● If probationary employee failed to meet the standard of
regularization, he can be dismissed anytime prior to the expiry of
the probationary period.
● Termination must be done before the expiration of probationary
period, otherwise he will be a regular employee.
○ If terminated before expiry of the probationary period, the
employee is not entitled tot he salaries of the unexpired
term.

c. Legitimate Contracting and Subcontracting vs. Labor- Only Contracting

● Contracting or subcontracting is an arrangement whereby an employer (principal)
engages the services of a contractor who undertakes to perform a certain work, task or

35
 job on his own account under his own responsibility free from the control and direction of
his employer (principal) in all matters except as to the result of the work.

● Legitimate Contracting v. Recruitment

RECRUITMENT LEGITIMATE CONTRACTING

The recruitment agency engages a job An employer (principal) engages the

applicant for the purpose of placing him in services of a contractor who undertakes to
an employer. perform a certain work, task or job on his
own account under his own responsibility.

There is a need for a license There is a need for registration

● In Legitimate Contracting, a tilateral relationship exists

● Trilateral Relationship
○ The principal who decides on the job to be contracted
○ The contractor who undertakes to perform the job;
○ The workers who accomplish the job.

● Contracting or subcontracting of a job, work, or service is not illegal per se.

○ Art 106 and 107 of the Labor Code recognizes the right of an employer to engage a
contractor for the performance of a task or job.

● Requisites for Valid Contracting or subcontracting:

1. The contractor must have a distinct and independent business;
■ One who carries on an independent business with sufficient capitalization,
without being controlled by the principal as to how work is to be
accomplished.
■ A person does not become an independent contractor simply because he is
denominated as such. A person who has no capital or money of his own to
pay for his workers cannot be considered as an independent contractor.
There is no genuine independent contractor relationship if the principal
pays the contractor a lump sum representing only the salaris of the
workers.

2. The contractor must have substantial capital or investments in the form of tools,
equipment, machinery or material necessary in the conduct of the business;

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 ■ Contractors are required to have a minimum paid up capital of 5 Million
pesos (in the case of corporations, partnerships, or cooperatives); or a Net
worth of at least 5 Million pesos (in case of sole proprietorship).

3. The contractor must perform the job on his own account under his own
responsibility, under his own manner and method, free from the control of the
direction of the principal (in all matter except as to the results thereof)
■ If the principal controls the means and the method by which a job is to be
accomplished, the relationship is not one of principal contractors but
employer-employee.

● Legal Effect of Valid Contracting or Subcontracting Arrangement:

○ The relationship of Employer-employee is not created between the principal and
the employees of the contractor.
○ The principal is solidarily liable with his contractor for unpaid wages to the extent
of the work performed under their contract (if the contractor fails to pay the
wages of his employees)
○ The principal is subsidiarily (not solidarily) liable for the civil liabilities of his
contractor under the Social Security Law
○ The principal is not solidarily liable for backwages of the contractor's employees.
The only instance where a principal can be solidarily liable for the backwages and
separation pay is when there is proof that the principal conspired with the
contractor in the illegal dismissal of the employees
○ The principal is not solidarily liable for separation pay of the contractor's
employees. This is because there is no employer-employee relationship between
the principal and the contractor's employees.
○ The principal is not liable for damages for acts or omissions of the contractor
○ If the Government or GOCC with special charters enter into a contract with a
private contractor, it can be held liable for unpaid wages of the contractor’s
employees

● Registration of Contractors
○ Registration with the DOLE is a mandatory requirement.
○ Failure to register shall give rise to the presumption that the contractor is engaged
in labor-only contracting.

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 ■ But this presumption is not conclusive it is merely a disputable presumption
which can be overcome by proof that the contractor has a distinct and
independent business with substantial capital or investment, work premises
and necessary equipment to carry out the contracted services and that it
performs the contracted service free from control and direction of the
principal in all matters connected to the performance of the work except as
to the results thereof.
○ Registration merely removes the legal presumption of being a mere-labor only
contractor.
■ It does not bar the party from proving that the contractor is indeed a
labor-only contractor by showing that the contractor merely supplies
workers to the principal, the activities performed by the worker are directly
connected to the main business of the principal, no substantial capital or
investment.

● Contractors who are not required to register:

○ Firms engaged in information technology-enabled services involving an entire
business process, such as knowledge outsourcing, business process outsourcing, or
hardware and software support, and medical transcription.
○ PCAB Licensed Contractors in the Construction Industry

● When is contracting or subcontracting illegal?

○ When entered into with a labor-only contractor.
■ Labor-only contractor is a contractor who does not have substantial capital
or investments in the for of tools, equipment machinery and work premises;
or merely recruits or supplies workers for a principal to perform a job, work
or activity that is directly related to the main business of the principal
employer
○ When the principal farms out work to a "cabo."
■ Cabo - a person or group of persons which under the guise of a labor
organization, cooperative, or any entity supplies workers to employers
without monetary consideration whether in the capacity of an agent or
ostensible independent contractor.
○ When entered into with an in-house agency.
■ In-house agency - a contractor which is owned, managed or controlled
directly or indirectly by the principal or one where the principal owns or

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 represents a share of stock which operates solely or mainly for the
principal.
○ When entered into with an in-house cooperative which merely supplies workers to
the principal.
■ In-house cooperative- one managed or controlled directly or indirectly by
the principal or any of its officers who owns an equity or interest or which
operates solely or mainly for the principal.
○ When contracting was done because of an impending or actual strike or lockout.
■ This is considered a runaway shop, because an employer relocated or
transfer locations in an attempt to evade its obligation to deal with unions.
○ When contracting interferes with the exercise of their right to self-organization.
○ When the contractual employees are required to sign as a precondition to
employment or continued employment:
■ An antedated resignation letter,
■ A blank payroll;
■ A waiver of labor standards, minimum wages, and welfare benefits; or
■ A quitclaim releasing the principal or contractor for future claims.
○ When employees are required to become members of a cooperative.
○ When the employees of the contractor or subcontractor are required to perform
functions which are currently being performed by regular employees of the
principal.
○ When the contractor or sub-contractor repeatedly hires employees under an
employment contract of short duration
○ When the employees of the contractor or subcontractor are required to sign a
contract fixing the period of employment to a term shorter than the term of the
Service Agreement
○ Such other practices, schemes or employment arrangements designed to
circumvent the right to security of tenure

Labor- Only Contracting

● Is an arrangement where the contractor does not have substantial capital or investments
in the form of tools, equipment machinery and work premises merely recruits or supplies
workers for a principal to perform a job, work or activity that is directly related to the
main business of the principal employer.
● Elements:
1. The contractor merely supplies workers only to a principal;

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 2. The activities performed by the workers are directly related to the main business
of the principal;
3. The contractor does not have substantial capital or investment in the form of tools,
equipment, machinery or work premises, to carry out the contracted job or
service.

● Legal Effects:
○ Employees of the labor-only contractor will be considered employees of the
principal (i.e. absorbed by the principal) and accorded benefits given to regular
employees of the principal.
○ Labor-only contractor is merely an agent of the principal contractor.

PRE-EMPLOYMENT

A. Recruitment and Placement of Local and Migrant Workers

1) Definition of Recruitment and Placement

● Recruitment and Placement
○ Any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring
workers, contract services, referrals, promising or advertising for employment, locally or
abroad whether for profit or not.

○ Basic Elements:
1. Offer or promise of employment.
● Without offer or promise of employment, there is no recruitment activity, and
therefore, there can be no illegal recruitment;
2. Material Consideration;
● Money is not an essential element of recruitment and placement.
● Under the legal definition, Recruitment and placement can take place even if the
recruitment was done for free.
3. Referral;
● It is a recruitment activity. Hence, a person who referred an applicant for an
employment to an unlicensed recruitment agent can be held liable for illegal
recruitment.
4. Number of Persons Recruited

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 ● Not an essential element of recruitment. A person will be considered to have
engaged with recruitment and placement even if he dealt with only 1 person.

2) Regulation of Recruitment and Placement of Recruitment Agencies

■ Generally, only public engagement services can engage in recruitment or
placement of workers.
■ Exceptionally, private sectors can be given the privilege to engaged in recruitment
and placement of workers
● Limited to
○ Private employment agency
○ Private recruitment entity
○ Manning agency
■ Basic Requirement to Operate a Recruitment or Manning Agency;
● Recruitment and placement of workers is a regulated activity.
● It is a mere privilege, hence, Recruitment or Manning Agency must first obtain a
License to Recruit from DOLE for recruitment agencies for local employment or
Department of Migrant Workers for recruitment agencies for overseas
employment.

Regulatory Authorities
● DOLE Regional or Field Office (for Local Employment)
● MDW Regional Office (for Overseas Employment)

○ Ban on Direct Hiring Ban on direct hiring (Article 18, Labor Code)
■ Foreign employers cannot directly hire Filipino or Overseas Workers.
● They can hire workers only through public employment offices or through
licensed authorized recruitment agencies or entities.
■ Ban not applicable if hired by:
● Members of the diplomatic corp;
● International organization;
● Heads of state;
● Government officials with the rank of at least deputy minister;
● Government officials with lesser rank, if endorsed by the Philippine Overseas
Labor Office (POLO), or Head of Mission in the absence of the POLO;

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 ● Employers of professionals and skilled workers with duly
executed/authenticated contracts containing terms and conditions over and
above the standards set by the Department of Migrant Workers;
● Relatives who are permanent residents of the host country.

○ Prohibited entities (who are disqualified from operating a recruitment or manning

agency):
■ In general
1. Persons found with probable cause or convicted of illegal
recruitment, trafficking in persons, violation of anti-child labor law,
or crimes involving moral turpitude; and
2. Recruitment agencies whose licenses have been previously canceled
or revoked.
■ Local Employment
1. Cooperatives, even if registered with the Cooperative Act of the
Philippines; and
2. Law enforcers and employees of the Department of Labor and
Employment.
■ Overseas Employment
1. Travel agencies, including their officers., directors, or partners;
2. Airline company sales agents;
3. Persons, partners, directors of an insurance company who propose or
provide compulsory insurance coverage for OFWs;
4. Those with derogatory record;
5. Employees of government agencies directly involved in the
implementation of The Migrant Workers Act including their relatives
within the 4th degree of consanguinity or affinity;
6. Applicants, incorporators, or directors in at least 5 licensed manning
agencies.

PROHIBITED ACTIVITIES
● License of recruitment or manning agencies may be cancelled or suspended for
commission of any prohibited activities mentioned in
○ Artivcle 34 of the Labor Code (in case of local employment); or
○ Section 6 of the Migrant Workers Act of 1995 (in case of overseas employment).

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● Charging Excessive Fees
○ Only recruitment agencies for land-based overseas employment can collect
placement fees from workers in an amount equivalent to one month salary.
○ Therefore, if a recruitment agency for land-based overseas employment charges a
placement fee of more than one month's salary, it can be held liable for illegal
recruitment.
○ Certain recruitment agencies are not allowed to collect placement fees from
workers, specifically:
■ Recruitment agencies for local employment;
■ Companies registered with the Philippine Overseas Contractor Board;
Manning agencies; and
■ Recruitment agencies which deploy workers to countries that do not allow
collection of recruitment or placement fee.
○ This means that no placement fee can be charged against:
■ Seafarers;
■ Domestic workers, both for local and overseas employment;
■ Workers deployed by POCB-registered companies to their projects; and
■ Workers deployed to countries which do not allow collection of recruitment
or placement fees.
○ If these agencies collect or charge placement from the workers that they recruited,
they are liable for illegal recruitment.
○ Even if voluntarily given, the recruitment agency which accepts placement fee in
cases where placement fee is not allowed would still be liable.
■ The recruitment agency cannot evade responsibility by invoking that the
victim is equally guilty for having voluntarily given the placement fee. The
in pari delicto doctrine will not apply.
○ Regulatory fees, airfare, cost of transportation from airport to jobsite, and
insurance premium cannot be charged to the overseas worker or seafarer.
■ But the cost of obtaining the worker’s or seafarer’s personal documents can
be charged to the worker or seafarer.
■ This means that the worker or seafarer will shoulder the cost of obtaining
the passport, or the NBI, police, or barangay clearance, birth certificates,
trade tests, medical examinations, seaman’s or seafarer’s identification and
record book, and seafarer’s registration certificate.

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● Obliging a worker to pay more than the amount of loan or advance
○ Recruitment agencies for overseas employment may charge interest for loans it
extended to an overseas Filipino worker, but the rate of interest should not exceed
eight percent (8%) per annum.
○ In relation to this, recruitment agencies cannot validly require an OFW to issue
(either personally or through a guarantor) postdated checks to guarantee payment
of the said loan.
○ If they do so, they would be held liable for illegal recruitment.

● Publishing false information relative to recruitment or employment

○ This is exemplified by a recruitment agency which advertises job vacancies for
non-existent projects or principals.
○ Included in the prohibition is the act of reprocessing workers through a job order
that pertains to a work different from the actual overseas work, or work with a
different employer, whether registered or not with the POEA.
○ Falsifying or altering travel documents of an applicant worker is also a form of
misrepresentation which may hold the recruitment or manning agency or entity
liable for illegal recruitment.

● Misrepresentation in obtaining the license

○ Exemplified by a recruitment agency which submits falsified documents in support
of its application for license, such as income tax returns or savings account
certificates.

● Inducing a worker already employed to quit his employment

○ The act of inducing or attempting to induce a worker to transfer to another
employer will not be deemed illegal if the intent is to liberate the worker from
oppressive conditions of employment.

● Blacklisting of Workers
○ Included in the prohibition is the act of influencing or attempting to influence any
person or entity not to employ any worker who has formed, joined, supported, or is
supported by any union or worker organization.

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 ● Recruiting Workers in Harmful Jobs
○ This is exemplified by the act of trafficking in persons, that is, the recruitment of
persons for prostitution, forced labor, slavery, servitude, or the removal/sale of
organs.

● Obstructing Inspection
○ The Labor Code empowers the Secretary of Labor and Employment or his duly
authorized representative to inspect premises, books of accounts, and records of
any person engaged in recruitment and placement of workers.

● Failure to File the required Reports

○ The obligation to file reports attaches only when there is a directive from the
Secretary of Labor and Employment. It is the defiance of the directive that will
result in criminal liability.

● Substituting or Altering Employment Contracts Without Approval

○ To fall within the ambit of the prohibition, the alteration should put the worker at
a disadvantage.
○ If the alteration is beneficial to the worker, the prohibition will not apply.
■ The reason is that the parties are not prohibited from entering into a
contract which provides for benefits over and above those required by law.

● Becoming an Officer or Board Member of a Travel Agency

○ This means that officers or agents of recruitment agencies for overseas
employment cannot become an officer, board member, or partner of a travel
agency.

● Failure to Deploy a Worker Without Valid Reason

○ The recruitment or manning agency for overseas employment is obliged to deploy
the workers they recruited or it recruited within 60 days from the date of issuance
of the Overseas Employment Certificate.

3) Illegal Recruitment
● Note the types of Illegal Recruitment:

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 ○ Those acts of recruitment and placement carried out by a person who is not a
holder of a license or authority, including those engaged in recruitment activities
while their license is suspended.
○ Those acts of Recruitment and placement carried out by a person who commits any
of the prohibited practices in Article 34 of the Labor Code, regardless of whether
he is a holder of a license or authority.

ELEMENTS OF THE FIRST TYPE ELEMENTS OF THE SECOND TYPE

(of Illegal Recruitment) (of Illegal Recruitment)

● The offender has engaged in ● Elements of the second type of illegal

recruitment activities such as: recruitment:
○ Canvassing, ○ The offender has engaged in
○ Enlisting, recruitment activities;
○ Contracting, ○ The offender has committed
○ Transporting, any of the prohibited practices
○ Utilizing, enumerated under Article 34 of
○ Hiring, or the Labor Code.
○ Procuring workers,
○ Including referrals, contract
services, promising or
advertising for employment
locally or abroad, whether for
profit or not; and
● The offender is not a holder of license
or authority to engage in recruitment
and placement of workers, or has
engaged in recruitment activities while
his license is suspended.

In this type of illegal recruitment, it is the In this type of illegal recruitment, it is the
lack of the necessary license or permit that commission of the prohibited practices
renders the recruitment activities unlawful or enumerated under law that renders the
criminal. recruitment unlawful or criminal.

● Note the concept of qualified illegal recruitment.

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 ○ If it is committed by a syndicate, or syndicated illegal recruitment, that is, carried
out by a group of three or more persons acting in conspiracy, carries out the illegal
recruitment activity.
○ Anyway going back, we were mentioning something about qualified illegal
recruitment.
○ There is qualified illegal recruitment:
■ If the same is committed by syndicate, or syndicated illegal recruitment,
that is, carried out by a group of three or more persons conspiring or
confederating with one another in carrying out any illegal or unlawful
recruitment activity; or
■ If it is committed in large scale, or large scale illegal recruitment, that is,
carried out against three or more persons individually or as a group.
○ Large Scale or syndicated Illegal Recruitment is considered an offense involving
economic sabotage, hence, a higher penalty is imposed.

● Illegal Recruitment and Estafa

○ Illegal Recruitment is a crime separate and distinct from estafa.
○ Thus, a person can be charged and convicted separately of illegal recruitment and
estafa, because illegal recruitment is malum prohibitum where criminal intent is
not necessary for conviction, while estafa is malum in se where criminal intent of
the accused is necessary for conviction.
○ Moreso, because elements of both crimes are not the same.

4) Liabilities of Local Recruitment Agency and Foreign Employer

● Recruitment or manning agencies are jointly and severally liable with their principal for all
claims and liabilities which may arise from the implementation of the employment
contract.
● However, this rule will not apply:
○ When the recruitment agency had no participation in the recruitment of the
worker; or
○ When the workers themselves dealt directly with the foreign employer without the
participation and consent of the recruitment agency.
● Furthermore, the Migrant Workers and Overseas Filipinos Act, as amended, expressly
provides for joint and solidary liability of corporate directors and officers with the
recruitment or placement agency for all money claims or damages that may be awarded to
the Overseas Filipino Worker.

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● Theory of imputed Knowledge
○ Knowledge by the agent can be imputed to the principal but knowledge by the
principal cannot necessarily be imputed to the agent.
○ If you recall the case of Sunace v. NLRC, here the court found that Sunace neither
knew nor consented to be bound under the contract extension entered into by the
OFW.
■ Sunace was not privy to the said extended contract, thus, the recruitment
agency was not held liable for the claims of the Overseas Filipino Worker
relating to the extended contract.
● Filipinos hired as seafarers are contractual employees whose employment is governed by
their respective contracts with their employers.
○ Their employment is governed by the contracts they sign every time they are
rehired and their employment is terminated when their contract expires.
○ Overseas Filipino Workers who are found to have been illegally dismissed are
entitled to:
■ Salaries for the unexpired portion of the employment contract; and
■ Reimbursement of placement fee and deductions made, plus 12% interest
per annum.
■ In appropriate cases, moral damages may be awarded

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 B. Employment of Non-Resident Aliens

Nonresident aliens
○ Nonresident aliens who will work in the Philippines shall get an Alien Employment Permit.
○ The Alien Employment Permit is required only for nonresident aliens who will engage in
gainful employment in the Philippines.
■ Gainful employment presupposes the existence of employer-employee relationship
between the Philippine-based employer and the foreign national.

○ The application for employment permit will be denied on the following grounds:
■ Misrepresentation of facts;
■ Submission of falsified, tampered, or fraudulent documents;
■ Submission of a visa that is not in accordance with the applicable rules and
regulations;
■ Meritorious objection filed by a Filipino citizen who is competent, able, and willing
to do the job intended for, or being performed by the foreign national;
■ Grave misconduct in dealing with, or ill treatment of workers;
■ Verified information against the employment of the foreign national.

○ The application for employment permit will be approved if the Department of Labor and
Employment finds out that there is no competent Filipino, or permanent resident alien
who is able and willing at the time of application to perform the services for which the
alien is desired.
○ The alien employment permit is effective for one year in general.
■ In no case shall it exceed 3 years.
■ Also it is valid for the position and the company for which it was issued.

○ The alien employment permit may be revoked on the following grounds:

1. Misrepresentation in securing the employment permit;
2. Meritorious objection filed by a Filipino citizen who is competent, able, and willing
to do the job intended for, or being performed by the foreign national;
3. Conviction of a crime or being a fugitive from justice based on verified
information; or
4. Verified information against the employment of the foreign national
5. Grave misconduct in dealing with or ill treatment of workers;
6. Violation and non-compliance with Labor Code, other rules and relevant guidelines;
7. Failure to claim the employment permit card within 10 working days from notice.

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 C. Discriminatory Practices

● Children
○ Children employees are entitled to the same benefits, terms and conditions of
employment as any other kind of employee similarly situated.
○ An employer cannot discriminate against an employee simply because he is a child.
■ Furthermore, remember that the prerogative to choose whom to hire is
subject to the limitations imposed by the Anti-Age Discrimination in
Employment Act, which forbids employers form placing a job
advertisement which suggests age preference or declining an applicant for
employment simply because of age, although employers can validly set age
limitations when age is a Bona-fide Occupational Qualification.
● A Bona-fide Occupational qualification refers to the standard which
employers are allowed to consider in making decisions about hiring
or retention of employees.

● Women
○ Art. 133 of the Labor Code of the Philippines is a realization of the policy of the
state to provide equal employment opportunities for all, and ensure the
fundamental equality before the law of women and men.
○ The law makes it criminal, or a criminal offense, to discriminate against any
female 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;
b. Favoring a male employee over a female employee with respect to
promotion, training opportunities, study and scholarship grants, solely on
account of their sex, or sexes.
○ The law also expressly prohibits an employee from:
1. Requiring as a condition for employment that a female employee shall not
get married;
2. Requiring a female employee to resign upon getting married; or
3. Dismissing or discriminating against a female employee because of her
marriage.

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 ○ It is unlawful for any employer:
1. To deny any woman employee the benefits provided under law, or to
discharge any woman employed by him for the purpose of preventing her
from enjoying any of the benefits provided under law;
2. To discharge such woman on account of her pregnancy, or while on leave, or
in confinement due to her pregnancy; or
3. To discharge or refuse the admission of such woman upon returning to her
work for fear that she may be again pregnant.

● Persons with Disability

○ Section 5 of the Magna Carta for Persons with Disability expressly grants qualified
persons with disability the right to enjoy the same compensation, benefits, and
other terms and conditions of employment that an able-bodied employee enjoys.
○ Moreover, Section 32 of the Magna Carta for Persons with Disability, prohibits
discrimination against a person with disability in regard to hiring, promotion and
other terms and conditions of employment.

● Solo Parents
○ With regard to solo parents, the Expanded Solo Parents Welfare Act provides that
no employer shall discriminate against any solo parent employee with respect to
terms and conditions of employment on account of his or her status.

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 EMPLOYMENT PROPER

A. Management Prerogative

● Managerial Prerogatives
○ Managerial prerogatives are inherent rights of all employers to determine according
to their business judgment all aspects of employment, such as hiring, work
assignment, work methods, tools to be used, processes to be followed, supervision,
transfer, layoff, discipline, and dismissal of employees.
○ The exercise of managerial prerogatives belong solely and exclusively to the
employer.
○ The Labor Code does not authorize the National Labor Relations Commission, or the
Labor Arbiters, to interfere with or substitute their judgment for that of the
employer for the conduct of its business.
■ The wisdom of the employer’s decision is not subject to the discretionary
review of the labor courts.
■ But even though the NLRC and the labor arbiters cannot exercise managerial
prerogatives, it is within their power to inquire on whether the exercise of
managerial prerogatives is tainted with bad faith or grave abuse of
discretion.
■ When it is established that there is bad faith or grave abuse of discretion,
the NLRC or Labor Arbiters can use their corrective powers.
■ Thus, they can reduce excessive penalties meted out to erring employees,
but they cannot absolve employees for their misdeeds.

Let’s mention the prerogatives included in your syllabus.

1. DISCIPLINE
● The prerogative to discipline employees.
○ Despite the employees’ right to self-organization, the employer still retains his
right to discipline employees.
○ The disciplinary prerogative of an employer cannot be nullified by arguing that the
employer is the accuser, prosecutor, and judge at the same time.
○ Note the factors to be considered.
■ As to what type of disciplinary action should be imposed will depend upon
the surrounding circumstances of each case.

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 ● Surely, dismissal would be appropriate for serious offenses, or those
falling under the just causes for dismissal enumerated in the law.
● Regarding offenses that do not clearly fall under the just causes for
dismissal, certain factors should be considered, such as:
1. The nature of the offense;
2. Position of the employee;
3. Degree of damage to the employer;
4. Past record of the employee;
5. Length of service of the employee.

● Nature of the offense

○ Serious offenses necessarily deserve the supreme penalty of dismissal.
○ On the other hand, offenses that are not so serious would merely warrant a penalty
lower than dismissal.
■ It would be cruel and unjust to mete out the drastic penalty of dismissal for
minor offenses, because it is not proportionate to the gravity of the
misdeed.

● Position of the employee

○ Managerial employees, supervisors, and other employees occupying positions of
trust and confidence are subject to a stricter norm of discipline than rank-and-file
workers.
○ Managerial employees, supervisors, and other employees occupying positions of
trust and confidence may be dismissed by the mere existence of a basis for
believing that said employees have breached the trust of their employer.
○ However, when it comes to rank-and-file workers, proof of involvement is needed.
Mere uncorroborated assertions and accusations by the employer will not suffice.

● Degree of damage
○ In some cases, the degree of damage suffered by the employer may be considered
in imposing the proper penalty.
○ Where the offense has not caused serious damage to the employer, dismissal may
be too harsh a penalty.
○ It must be understood however, that in some cases, damage is not a determining
factor.

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 ■ For instance, if the employee has been grossly and habitually neglectful of
his duties, he can be dismissed regardless of whether the employer has
sustained damages or not.
■ The employer should not be expected to wait until he suffers damage or
injury before taking action against the employee. It is enough that the act
tends to damage or prejudice the employer.

● Past records of the employee.

○ Disciplinary actions are primarily intended to correct the employee’s behavior and
attitude towards his work.
■ If previous disciplinary actions do not reform the employee because he
continues to commit similar offenses, it is but appropriate to impose a
harsher penalty.
■ It cannot be validly argued that just because the offenses were already
given appropriate sanctions, they cannot be taken against the employee.
■ Past offenses of similar character are considered not for the purpose of
penalizing the employee anew for past offenses, but for the purpose of
determining the appropriate penalty for the present offense.
● For example, if the employee’s records show that he was or he has
been repeatedly admonished, warned, and suspended for incurring
excessive unauthorized absences during a span of 6 years, dismissal
would be the appropriate penalty for continuing to incur
unauthorized absences, because previous disciplinary actions did not
deter the employee from further committing the same offense.

● Length of service of the employee

○ The length of service of an employee may also be considered in determining the
appropriateness of the penalty.
■ The longer an employee stays in the service, the greater is his responsibility
for knowledge and compliance with the norms of conduct and the code of
discipline of the employer.
● The long years of service of an employee should therefore be taken
against him, or otherwise, it will become a prize for disloyalty,
thereby perverting the meaning of social justice, and undermining
the efforts of labor to cleanse its ranks of undesirables.

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 ■ Conversely, an employee who, as early as three months after he was hired,
had shown his inclination to violate company rules, does not deserve
continued employment. Hence, the employer can validly dismiss him.

● Note the overall considerations.

○ All the foregoing factors — length of service, past record of the employee, degree
of damage inflicted, or position held by the employee — will be overshadowed by
the seriousness of the offense.
○ The law warrants the dismissal of an employee without making any distinction
between the first offender, or a first offender and a habitual delinquent, where the
totality of evidence is sufficient to warrant dismissal.
○ Conversely, the employer can impose sanctions lighter than those specifically
prescribed by the rules.
■ It can even condone completely the violations of its erring employees.
○ It is axiomatic that appropriate disciplinary action is within the purview of
management position.
■ In the implementation of its rules and policies, the employer has the choice
to do so strictly or not, since this is inherent in its right to control and
manage its business effectively.
■ But the mere fact that the numerous infractions of an employee have not
been immediately subjected to sanctions cannot be interpreted as
condonation or waiver of the company to enforce company rules.
■ The prerogative of management to discipline its employees and impose
punishment is a legal right which cannot, as a rule, be implied waived.

● Disciplinary penalties
○ Disciplinary penalties usually take the form of:
■ Warning;
■ Reprimand;
■ Suspension;
■ Demotion; or
■ Dismissal from service.

● The penalty of warning

○ Warning is a disciplinary penalty usually imposed for first offenders who commit a
minor offense.

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 ○ It is a caution for the erring employee to refrain from committing the same offense
in the future under pain of a more severe penalty.

● The penalty of reprimand

○ Reprimand is a bit more severe than warning, in the sense that it is accompanied
by censure, rebuke, or sharp scolding.

● The penalty of suspension

○ Suspension is the temporary separation of an employee from service.
○ This is usually imposed for less serious offenses, or for minor offenses that lighter
sanctions failed to rectify.
○ During the period of suspension, the salaries and benefits of the erring employee
are likewise suspended.
○ The duration of suspension may vary depending upon the surrounding
circumstances of each case.

● The penalty of demotion

○ As a disciplinary penalty, demotion should be imposed only for a just cause, and
after procedural requirements of due process shall have been observed.
○ This means that the employee sought to be demoted should be notified and
afforded ample opportunity to be heard and to defend himself, and only when it is
established that the employee has committed an act that would warrant demotion,
should the sanction be imposed.

● The penalty of dismissal.

○ The right to dismiss an employee stems from the principle that an employer cannot
be compelled to continue with the employment of a person guilty of malfeasance
or misfeasance towards his employer, and whose continuance in the service is
patently inimical to his interest.
○ The law in protecting the rights of an employee authorizes neither oppression nor
self-destruction of an employer.

● Security of tenure
○ This prerogative to dismiss is limited by a right granted to employees — security of
tenure.

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 ○ Security of tenure simply means that an employer cannot dismiss an employee
without just cause or authorized cause.
○ Security of tenure protects an employee not only against dismissal without just
cause, but also against other personnel actions, such as transfer or demotion,
which are calculated to force an employee to give up his employment without valid
reason.
○ Security of tenure principally protects employees who are holding regular
employment.
○ Even though security of tenure principally protects employees who are holding
regular employment, it does not mean that employees holding non-regular
employment are not entitled to security of tenure.
■ They are also entitled to security of tenure in a qualified manner.
■ Thus, project employees, seasonal employees, or fixed-term employees
cannot be dismissed without valid cause prior to the expiration of the term
of their employment.
● Probationary employees can be dismissed only for a valid cause or
for failure to qualify for regular employment.
● Casual employees who have rendered at least one year of service,
whether continuous or broken, cannot be dismissed without valid or
authorized cause, as long as the activity in which they were engaged
still exists.
○ Managerial employees are also entitled to security of tenure, although they are
subject to a stricter norm of discipline than rank-and-file employees.
○ Rank-and-file employees may be dismissed for loss of trust and confidence upon
proof of involvement in the offense in question, but when it comes to managerial
employees, the mere existence of some basis or a reasonable ground to believe
that they are responsible for the misconduct will suffice for their dismissal.

Lamadrid v. Cathay Pacific Airways Limited

Here’s a case penned by the bar chair where the Supreme Court limited the employer’s
prerogative to dismiss an employee.
● Facts: In 1990, Cathay Pacific Airways Ltd. (Cathay) hired Salvacion as cabin crew.
● On May 19, 2007, Cathay received a report that Salvacion and other crew members were
caught in possession of goods, specifically bottled water and magazines, after alighting
from the aircraft.

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 ● After receiving a written explanation from Salvacion, Cathay terminated 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 in Salvacion
considering the seriousness of her violation.
● Hence, Salvacion instituted a complaint for illegal dismissal against Cathay.

Issue: Was Salvacion validly dismissed from employment?

Ruling: No, the Supreme Court ruled that Salvacion was illegally dismissed from employment
● The Court explained that Salvacion’s termination was not commensurate with the
infraction committed.
● There’s loss of trust and confidence when an employee fraudulently and willfully commits
acts or omissions in breach of the trust reposed in him or her by the employer.
● Two requisites must be complied with to justify this ground for termination:
1. The employee must be holding a position of trust; and
2. The employer shall sufficiently establish that the employee’s act that would justify
the loss of trust and confidence.
● The act must be characterized as real, wherein the facts that brought about such act were
clearly established, and that the employee committed the same without any justifiable
reason.
● Cathay has complied or was found to have complied with the two aforementioned
requisites for loss of trust and confidence.
● The court declared that Salvacion’s position was imbued with trust and confidence.
○ The Court then found that the nature of Salvacion’s duties and obligations required
the highest degree of trust and confidence because she had in her control
properties of Cathay.
○ In this regard, the court held that Salvacion’s position was imbued with trust and
confidence.
○ According to the Court, she had in her custody and control company properties
which are of significant value, and she also had the responsibility of informing the
in-flight service manager whether there was defective or missing equipment.
○ Moreover, she had oversight over 2-4 cabin crew members assigned in her section of
the aircraft, and rate their performance for promotion purposes.
○ She had been entrusted with the custody and control of valuable company
properties in the normal and routine exercise of her duties.

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● Likewise, the Court ruled that the airline clearly demonstrated that Salvacion committed
an infraction of company policy that breached its trust and confidence in her.
○ Said that Court, pilferage of company property is an act characterized by fraud and
dishonesty which may be meted with summary dismissal as specifically provided in
Cathay’s disciplinary and grievance policy.
○ The Court stated that Cathay attached a confirmation from the bottled water
brand that the batch number of the bottled water confiscated from Salvacion
belonged to the batch that was exclusively shipped to Cathay.
○ This certainly established that the bottled water confiscated from her was Cathay’s
property.
○ Admittedly, Salvacion transgressed Cathay’s disciplinary and grievance policy by
taking out the bottled water without authorization.
● The Court stressed that Salvacion’s infraction was clearly a case of misconduct, considering
that it is a 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.
○ It evidently eroded Cathay’s trust and confidence in her.
● However, the Court also considered that this was Salvacion’s first infraction in her 17 years
of service in the airline, which involved a mere bottle of water.
● Thus, although Cathay had laid down penalties for violation of its policies, the Court
cautioned that all surrounding circumstances must be considered, and the penalty must be
commensurate with the violation committed by the employee.
● Termination of the services of the employee should be the employer’s last resort especially
when other disciplinary actions may be imposed, considering the employee’s long year of
service in the company, devoting time, effort, and invaluable service in line with the
employer’s goals and mission, as in Salvacion’s case.
● In the present case, the Court found that during Salvacion’s span of employment, she did
not commit any infraction, or was ever sanctioned, except in the incident subject of the
present controversy.
● In this regard, the Court stated that to impose a penalty as grave as dismissal for a first
offense, and considering the value of the property alleged taken, would be too harsh under
the circumstance.
● The Court accordingly concluded that Salvacion was illegally dismissed from service.

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2. PREROGATIVE TO TRANSFER EMPLOYEES
○ Based on its assessment and perception of its employee’s qualifications, aptitudes,
and competence, an employer is free to move its employees around in the various
areas of its business operations in order to ascertain where they will function best
for the benefit of the company.
○ An employer can even transfer employees from one position, or from one location
to another.
■ The right to security of tenure does not give an employee a vested right in
his position so as to deprive the company of its prerogative to change his
assignment or to transfer him where he would be most useful.
○ If the employee refuses to be transferred, he can be validly dismissed on the
ground of willful disobedience.
■ Objection to a transfer that is grounded solely on the employee’s personal
inconvenience or hardship is not a valid reason to disobey an order of
transfer and invoke constructive dismissal as a pretense.
○ While it is true that management has the prerogative to transfer employees, the
exercise of such right should not be motivated by discrimination, made in bad
faith, or effected as a form of punishment or demotion without sufficient cause.
■ When the transfer is unreasonable, unlikely, inconvenient, impossible, or
prejudicial to the employee, it already amounts to constructive dismissal.
■ In constructive dismissal, the employer has the burden of proving that a
transfer and demotion of an employee are for just and valid grounds, such
as genuine business necessity.
■ Should the employer fail to overcome this burden of proof, the employee’s
transfer shall be considered as unlawful, constructive dismissal.

3. PRODUCTIVITY STANDARDS
○ In one case, the Supreme Court ruled that an employer is entitled to impose
productivity standards for its workers, and in fact, noncompliance may be visited
with a penalty even more severe than demotion.
■ 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.

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 ○ This management prerogative of requiring standards may be availed of so long as
they are exercised in good faith for the advancement of the employer’s interest.
■ In fine, an employee’s failure to meet sales or work quotas falls under the
concept of gross inefficiency, which in turn is analogous to gross neglect of
duty. That is a just cause for dismissal under the Labor Code of the
Philippines.
○ However, in order for the quota imposed to be considered a valid productivity
standard and thereby validate the dismissal, the management’s prerogative of
fixing the quota must be exercised in good faith for the advancement of its
interest.
■ The duty to prove good faith rests with the employer as part of its burden
to show that the dismissal was for a just cause.
■ The employer must show that such quota was imposed in good faith.

4. BONUSES
○ A bonus is an amount granted and paid to an employee for his industry and loyalty,
which contributed to the success of the employer’s business and made possible the
realization of profits.
○ It is an act of generosity granted by an employer to spur the employee to greater
efforts for the success of the business and the realization of profits.
○ Remember that a bonus is not a demandable obligation.
■ Generally, a bonus is not a demandable and enforceable obligation. The
granting of a bonus is basically a management prerogative which cannot be
forced upon the employer.
■ A bonus becomes a demandable obligation:
1. If the grant thereof arises from a contract;
2. If it is made part of the wages, that is, if given without any
condition, regardless of whether profits are realized; or
3. If it has ripened into a practice by virtue of its long and regular
concession.

5. PREROGATIVE TO CHANGE WORK SCHEDULE

○ An employer can change the work schedule of its employees whenever the
exigencies of the service so require.

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 ○ If the prerogative is 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, the exercise of such right is valid.

6. BONA-FIDE OCCUPATIONAL QUALIFICATION

○ A bona-fide occupational qualification refers to the standard which employers are
allowed to consider in making decisions about hiring or retaining employees.
○ A bona-fide occupational qualification requires the concurrence of two elements:
1. That the employment qualification is reasonably related to the essential
operation of the job involved;
2. That there is factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of
the job.

7. PREROGATIVE TO PROMULGATE COMPANY RULES AND REGULATIONS

○ Every employer has the prerogative to promulgate rules and regulations, and
punish employees for violating the same.
○ An employee cannot refuse to comply with rules and regulations laid down by the
employer by the simple expedient of challenging their reasonableness, because
that would be disastrous to the discipline and order which both the employer and
his employees are bound to preserve.
○ Until and unless the policies, rules and regulations are declared to be illegal, the
employee must follow them.
○ No spouse employment policy
■ A company policy prohibiting its employees from marrying employees of a
competitor company is valid.
■ Employers have the right to guard their trade secrets, manufacturing
formulas, marketing strategies, and other confidential programs from
competitors.
■ What is sought to be avoided is conflict of interest that may arise out of the
relationship.
○ Non-compete employment policy
■ A contract which prohibits an employee from engaging in a business or
employment competitive with that of his employer after the term of his
employment for a given period is valid.
■ It will not be considered in restraint of trade if:

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 1. The restraint imposed is not greater than what is necessary to afford
reasonable protection to the employer; and
2. The contract provides for a limitation upon either time, or place.
■ The non-compete agreement is reasonable and necessary if imposed against
employees who have an insight into the general scope and details of their
employer’s business.
■ It is but natural for employers to keep their trade secrets from falling into
the hands of competitors.
■ Question: Will this not create an undue burden upon the employee,
especially to his right to earn a living?
● As long as the prohibition is limited to engaging in a similar or
competitive business, or employment for a limited period, it cannot
be said that the non-compete agreement will create undue burden
upon the employee.
■ Will this not be injurious to public welfare, considering that the public is
being deprived of the restricted party’s industry?
● Along the same line, the non-compete agreement cannot be said to
be injurious to the public welfare as long as it provides for a
limitation upon either time or place.
■ Even if the employee admits to having breached the non-compete
agreement, the employer must still prove that it suffered damages and the
amount of damages that he incurred.
● Actual damages cannot be based on mere assertions, speculations,
conjectures or guesswork, but must depend on competent proof on
the best evidence obtainable regarding the actual amount of losses.
● To do away with proof of actual damages, it would be better for the
non-compete agreement to stipulate on liquidated damages.

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 B. Labor Standards

Labor standards
● Labor standards is that branch of labor law that prescribes the minimum requirements for
hours of work, wages, monetary benefits, welfare benefits and occupational health and
safety.

1. CONDITIONS OF EMPLOYMENT
a. Coverage
● Who are entitled to the prescribed working standards?
○ Generally, all employees in all establishments, whether for profit or not, are
entitled to the working standards prescribed by Title I, Book III of the Labor Code.
○ Exceptionally, the following employees are not entitled to the standards prescribed
by Title I, Book III of the Labor Code:
i. Government employees;
ii. Managerial employees;
iii. Officers and members of the managerial staff;
iv. Field personnel;
v. Members of the family of the employer who are dependent on him for
support;
vi. Domestic helpers;
● Remember as for domestic helpers, except for weekly rest day and
service incentive leave
vii. Persons in the personal service of another;
viii. Workers who are paid by results.

● Government employees
○ Refer to those employed by the national or local government and government
owned or controlled corporations or GOCCs.
○ They do not include those employed in GOCCs organized under the Corporation
Law.
○ Government employees are exempted because they are not governed by the Labor
Code. They are governed by a different set of laws, particularly the Civil Service
Law and Administrative Code and by their respective charters, in the case of
GOCCs.

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● Managerial employees
○ Those who primarily engage or primarily manage the establishment or department
or subdivision thereof, customarily and regularly direct the work of two or more
employees and have authority to hire or fire their employees of lower rank or
wherein their suggestions and recommendations as to hiring, firing, promotion, and
other personnel movements are given weight.
○ The philosophy behind the exemption of managerial employees is that such
employees are not usually engaged for every hour.
■ They are engaged because of their special training, experience or
knowledge, which requires the exercise of discretion and independent
judgment, or perform work related to management policies or general
business operations along specialized or technical lines.
■ For these workers, it is not feasible to provide an hourly rate of pay or
maximum hours of labor.

● Officers and Members of the managerial staff are those who:

1. Primarily perform work directly related to management policies, or execute
under general supervision specialized or technical work or special
assignments;
2. Customarily and regularly exercise discretion and independent judgment;
3. Regularly and directly assist a managerial employee;
4. Do not devote more than 20% of their hours worked in a workweek to
activities which are not directly and closely related to the performance of
the work described above.
● The reason for exempting officers and members of the managerial staff from the
working conditions prescribed by Title I, Book III is because they perform work
related to management policies or general business operations along specialized or
technical lines. Hence, it is not feasible to provide them a fixed hourly rate of pay
or maximum hours of work.

● Field personnel
○ Are non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office and whose actual hours of work cannot
be determined with reasonable certainty.
○ The philosophy behind the exemption of field personnel is that this kind of
employees work away from the employer's place of business and therefore are not

65
 subject to the personal supervision of the employer. Hence, the employer has no
way of knowing the number of hours they work in the day.
○ In deciding whether the actual hours of work in the field can be determined with
reasonable certainty, the point to consider is whether the employee's time and
performance is constantly supervised by the employer.
○ The exemption will not apply if time and performance is constantly supervised by
the employer.

● Family members
○ Refer to husband and wife, parents and children, other ascendants and
descendants, brothers and sisters, whether they are full or half-blood.
○ Note that cousins, parents-in-law or children-in-law are not considered as family
members because they do not pertain to the same family.
○ To be exempted from the working conditions prescribed by Title I, Book III, The
family member must be dependent upon his employer for support.
■ The reason for the exemption of the family members is that the employer
already takes care of the sustenance, dwelling, clothing, medical
attendance, or education of that member of the family.

● Domestic helpers
○ Refer to a person who renders service in and about the employer’s home in an
activity which is usually necessary or desirable for the maintenance and enjoyment
of the employer, and ministers exclusively to the personal comfort and enjoyment
of the employer's family.
○ Examples are general househelp, cooks, gardeners, nursemaid, or the laundry
person.
○ The reason for the exemption is the nature of work, plus the fact that domestic
helpers are not employed in a business undertaking.
○ The exemption granted to domestic helpers under Article 82 of the Labor Code has
been modified by the Domestic Workers Act in the sense that domestic workers are
entitled to service incentive leave, though not convertible to cash, and to a weekly
rest day, although they are not entitled to premium pay if they work on their rest
day.

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 ● Persons in the personal service of another
○ Those who minister to the personal comfort, convenience or safety of the employer
as well as members of the employer's household.
○ The reason for the exemption of persons in the personal service of another is the
nature of their work and their peculiar relationship with their employer, which
necessitates that they be freed from certain legal restrictions applicable to
employers engaged in a business undertaking.

● Workers paid by results

○ These are those compensated based on their output regardless of the time spent in
doing their work.
○ The philosophy underlying the exemption of workers paid by results is that their
compensation is not dependent on the time spent in doing the work but on their
output.

b. Hours of Work

Normal Hours of Work

● The prescribed hours of work under normal conditions is eight hours a day.
● Eight hours of work in a day is the maximum.
● The term DAY as used in the law refers to the 24-hour period reckoned from the time the
employee regularly starts work.
● The 8-hour period need not be continuous. It may be staggered. As long as the eight hours
work falls within the 24-hour period.
● Work in excess of 8-hours, within the 24-hour period is overtime work, which entitles the
covered employee to overtime pay.

No-Work-No-Pay Principle
● The age-old rule governing the relation between labor and capital is that of a fair day’s
wage for a fair day’s labor.
● Considering that we follow the principle of no-work-no-pay, it is important for us to know
whether the time spent by an employee is to be considered as hours worked so as to be
compensable.

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● Principles in determining hours work:
1. All hours which the employee is required to give his employer are hours worked,
regardless of whether such hours are spent in productive labor or involve physical
or mental exertion.
○ On waiting time
■ If engaged to wait — this is considered as hours worked, because his
time is already controlled by the employer. Hence, the employee
could no longer effectively use the time spent waiting, for his own
purposes.
■ If waiting to be engaged — not considered as hours worked, because
his time is not yet controlled by the employer, considering that there
has been no engagement yet.

○ On Call time
■ If required to remain on call — considered as hours worked, because
the employee cannot use the time effectively and gainfully for his
own purpose.
■ If not required to remain on call — not considered as hours worked,
because the employee can use the time for his own purpose.
○ Travel time
■ Home-to-work/work-to-home travel — this is not considered as hours
worked because it is a normal incident of employment.
● It can be considered as hours worked if the employee was
required to deviate from his normal home-to-work or
work-to-home travel.
○ Attendance in seminars or meetings after regular working hours.
■ If this is compulsory, then the same should be considered as hours
worked.
■ If not compulsory, then not considered as hours worked.

2. If the work performed was necessary, or it benefited the employer, or the

employee could not abandon his work at the end of his normal working hours
because he had no replacement:
● All time spent for such work shall be considered as hours worked IF the work
was done with the knowledge of his employer or immediate supervisor.

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 ○ Note that what is essential here is knowledge, not approval by the
employer or immediate supervisor about their rendition to work.
○ Even if there's a standing circular prohibiting overtime work without
approval from the department head, any overtime work rendered
without such approval is still compensable if the immediate
supervisor had knowledge about the rendition of overtime work.
■ It's not fair for an employer to benefit from such overtime
work without compensating for it.
○ The mere existence of a rule prohibiting overtime work is not
enough. The employer should enforce such rules and exert every
effort to ensure its compliance.

3. The time during which an employee is inactive by reason of interruptions in his

work beyond control shall be considered as hours worked:
○ If the imminence of the resumption of work requires the employees
presence at the place of work, or
○ If the interval is too short to be utilized effectively and gainfully in the
employee's own interest.
○ Generally, the rules consider work interruptions not exceeding 20 minutes
as a short period.
● Work interruptions caused by a brownout
○ If this happens in 20 Minutes or Less — considered as hours worked.
○ If more than 20 minutes — not considered as hours worked, unless
the employees are instructed not to leave their workplace such that
they cannot use the time effectively for their own interest.

c. Rest Periods
● Coffee Break
○ 20 minutes or less — considered as hours worked
○ more than 20 minutes — not considered as hours worked.

● Rest Period
○ if 20 minutes or less — considered as hours worked
○ more than 20 minutes — not considered as hours worked.

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 NOTE: Remember that an employee need not leave the premises of the
workplace in order that his rest period shall not be counted as hours
worked, it being enough that he stops working, may rest completely
and may leave his workplace, go elsewhere, whether within or outside
the premises of his workplace,

● Meal Periods
○ 20 Minutes or Less — considered as hours worked
○ One-hour meal period — not considered as hours work unless the
employees are not completely relieved of their duties during the
meal period.

Compressed Workweek
● An arrangement whereby:
○ The normal work days per week is reduced;
○ The normal work hours per day is increased to more than eight hours without
overtime pay; and
○ The total number of normal work hours per week remains the same.
● A compressed workweek is beneficial to both the employer and the employees.
○ For the employer, a shortened workweek would mean savings on energy and labor
costs. It would also promote greater efficiency and lower absenteeism.
■ More time will be devoted to maintenance and repair machines and
equipment.
○ On the part of the employees, a shortened workweek would mean savings on cost
of transportation, meals, snacks, longer weekends, or an additional 52 rest days a
year, which can be devoted to rest, leisure, family responsibilities, studies and
other personal matters.
■ It can also spare them from certain inconveniences that are normal
incidents of employment, such as commuting to and from the workplace,
the travel time spent, exposure to dust and motor vehicle fumes, dressing
up for work, etc.
● When an establishment adopts a compressed workweek, the employer need not pay
overtime compensation for the daily overtime work that resulted from the compression.

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But note the conditions for the adoption of a compressed workweek:
1. Consent
○ Majority of the covered employees or their duly authorized representatives must
expressly and voluntarily give their consent.
○ This consent may be expressed through collective bargaining or other legitimate
mechanisms of participation, such as labor management councils, employee
assembly or referendum.

2. Certification
○ The employer must get a certification from an accredited health and safety
organization, or from the firm's safety committee, that work beyond eight hours is
within the threshold limits or tolerable levels of exposure as set forth in the
occupational safety and health standards.
○ Take note that this applies to firms using substances, chemicals, and processes or
are operating under conditions where there are airborne contaminants, human
carcinogens or noise, prolonged exposure which may pose hazards to the
employees health and safety.
3. Notice
○ The employer must notify the Regional Office of the Department of Labor and
Employment having jurisdiction over the workplace about the adoption of the
compressed workweek scheme.
○ What's the effect of failure to comply with the conditions?
● The failure to comply with the conditions for a compressed workweek will
hold the employer liable to pay corresponding overtime pay to the
employees concerned.
● Note that there are firms that cannot adopt a compressed workweek:
○ The construction industry;
○ Health services;
○ Occupations requiring heavy manual labor;
○ Occupations or workplaces where workers are exposed to airborne
contaminants, human carcinogens, substances, chemicals or noise
that exceed the threshold limit values or tolerance levels for an
eight-hour workday as prescribed under the occupational safety and
health standards.

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Overtime Work
● Refers to services rendered beyond eight hours in a day.
○ It does not refer to work rendered during rest days or holidays.
● Can an employee be compelled to render overtime work?
○ Covered employees cannot be compelled to render overtime work because that
would violate the constitutional injunction against involuntary servitude.
○ Only in the following instances can covered employees be required to render
overtime work:
i. In case of war or national or local emergency, actual or impending disaster
or calamity, or urgent work to be performed on machines or installations;
ii. When necessary, to prevent loss or damage to perishable goods, to avail of
favorable weather conditions, and to complete the work started before the
eighth hour.

Overtime Pay
● An additional compensation given to covered employees who render overtime work.
● Rates based on days:
○ On an ordinary day — 25% of the regular wage
○ On a holiday or rest day — 30% of the holiday or rest day rate
○ The right to be compensated for overtime services cannot be waived because that
would be against public policy.
○ However, a claim for unpaid overtime pay can be waived because what is being
compromised is not the right to overtime pay, but the unpaid overtime
compensation.
■ The waiver does not relieve the employer from paying future overtime
compensation.
○ The obligation to pay overtime compensation is mandatory. An employer cannot
agree payment of overtime pay for overtime services rendered on one day by
offsetting it with undertime incurred on another day.
○ Note the burden of proof: the burden of proving a claim for overtime pay devolves
upon the employee.
■ The employee should not only prove that he was not paid overtime pay; he
should further prove that he rendered overtime work.
■ The reason for this is because overtime services are not incurred in the
normal course of business.

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Night Shift Differential
● Additional compensation given to a corporate employee for working between 10 PM and 6
AM of the next day
● Rates: The night shift differential is 10% of the regular wage for each hour of work
rendered between 10 PM to 6 AM.

Rest Day
● The period of inactivity of not less than 24 consecutive hours given to an employee after
rendering service for a week.
● The rest day need not be on a Sunday.
○ Hence, an employer may be open for business on Sundays provided the employees
are given their weekly rest day.
○ A Sunday shall be considered as a rest day if the nature of the work of the
employee is such that he has no regular work days and no regular rest days can be
scheduled.

● Duration:
○ For ordinary employees, it is 24 consecutive hours.
○ For health personnel:
■ 24 consecutive hours in localities with a population of less than 1 million or
in hospitals or clinics with a bed capacity of less than 100.
■ It is 48 hours in localities with a population of at least 1 million or in
hospitals or clinics with a bed capacity of at least 100.
○ Generally, it is the employer who chooses the rest day of the employee. However,
the preference of an employee should be respected if it is based on religious
grounds.
■ Nevertheless, if the preference of the employee will inevitably result in
serious prejudice, or obstruction to the operations of the undertaking, the
employer may schedule the preferred rest day for at least two days in a
month.
■ If the employee chooses a particular day to be his rest day on religious
grounds, he shall inform the employer in writing at least seven days before
the desired affectivity of the preferred rest day.

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● Can an employee be compelled to work on his rest day?
○ As a rule, covered employees cannot be compelled to work on their rest day.
○ Covered employees who do not work during their rest days are not entitled to
compensation under the no-work-no-pay principle.
○ Only in the following exceptional circumstances can COVID employees be
obliged to work on their scheduled rest day:
i. In case of actual or impending emergencies, urgent work to be performed
on machinery or installations, abnormal pressure of work due to special
circumstances.
ii. When necessary, to prevent serious loss of perishable goods or to avail of
favorable weather conditions.
iii. When the nature of work requires employees to work continuously for seven
days in a week.
iv. Where the exigencies of the service so require as determined by the
employer.
v. Health personnel in cities or municipalities with a population of at least 1
million or those employed in hospitals or clinics with a bed capacity of at
least 100 may be required to work on one of their weekly rest days.

● Covered employees who work on their rest day are entitled to additional compensation;
this is called premium pay.

● Rates on Premium Pay:

● If the rest day falls on an ordinary day: additional 30% of the regular wage.
● If the rest day falls on a special working holiday: additional 30% of the regular
wage.
● If the rest of the falls on a special non-working holiday: additional 50% of the
regular wage.
● If the rest day falls on a regular holiday, additional 30% based on the regular
holiday rate of 200 pesos, plus the total compensation for the day would be 260%.
100% holiday pay and 100% for services rendered plus 30% premium pay for working
on a rest day.

● Burden of proof:
○ In a complaint for non-payment of premium pay for rest days, the burden of proof
lies upon the employee. The employee should not only prove that he was not paid

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 the premium pay. He should further prove that he worked on his rest day. The
reason for this is that rest day work is not a normal business occurrence.

d. Holidays

Special Holidays
● Those which the law designates as such are those which the national or local government
governments may declare from time to time.
● Two types:
○ Special working holiday
○ Special non-working holiday.
■ NOTE: Employees who work on a special working holiday receive their salary
for that day. They are not entitled to premium pay because they are
supposed to work on such a day.

National Special Working Holidays (fixed by law):

● Last Monday of January. National Bible Day
● February 4. Phil-American War Memorial Day
● April 27. Lapu-Lapu Day (except in Lapu Lapu City, where it is a non-working holiday)
● September 3. Surrender of the Japanese military forces
● September 8. Feast of the Nativity of the Blessed of the Virgin Mary

National Special Non-working Holidays (fixed by law):

● August 21. Ninoy Aquino Day
● November 1. All Saints Day
● December 8. Feast of the Immaculate Conception
● December 31 (or the last day of the year)

NOTE: Covered employees who do not work during special non working holidays are not entitled
to compensation.

● Premium Pay for working on a Special Non-Working holiday:

○ 30% of the regular wage;
○ If the Special Non-working holiday falls on a rest day — 50% of the regular wage.

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 ● Burden of Proof:
○ In a complaint for non-payment of premium pay for rest days and special
non-working holidays, the burden of proof lies upon the complaining employees.
○ The employees should not only prove that they were not paid premium pay. They
should further prove that they worked on their rest day or on the holiday.
■ The reason is that rest day or holiday work is not a normal business
occurrence.

National Regular Holidays:

● New Year’s Day (January 1)
● Maundy Thursday**
● Good Friday**
● Eid’l Fitr**
● Eid’l Adha**
● Araw ng Kagitingan (April 9)
● Labor Day (May 1)
● Independence Day (June 12)
● National Heroes Day (last Monday of August)
● Bonifacio Day (November 30)
● Christmas Day (December 25)
● Rizal Day (December 30, or Monday nearest to that)
**movable dates

Muslim Regional Regular Holidays (as provided for in Article 169 of the Code of Muslim
Personal Laws of the Philippines)

The following are the Muslim legal holidays:

● Islamic New Year
● The birthday of the Prophet Muhammad
● The nocturnal journey and the ascension of Prophet Muhammad
● Peace holidays
○ Peace holidays are 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 other Muslim provinces and cities that may be
created by virtue of Proclamation No. 1198, which took effect on October 26, 1973

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 ■ Proclamation No. 1198 provides that all private corporations, offices,
agencies and entities or establishments operating within the
aforementioned provinces and cities shall observe the said holidays. Hence,
employees thereat whether Muslims or non-Muslims are excused from
reporting for work without reduction in their usual compensation. There
should be no distinction between Muslims and non-Muslims as regards
payment of benefits for Muslim holidays. Muslim employees working outside
of the Muslim provinces and cities shall also be excused from work during
the observance of the Muslim holidays without diminution or loss of wages.

● NOTE: The no-work-no-pay principle is not applicable to regular holidays. It is because

covered employees are entitled to their wages even if they do not work during regular
holiday. Therefore covered employees who work during a regular holiday are entitled to
200% of their regular daily wage; that is, 100% as compensation for services rendered and
100% as holiday pay.

Rules on Compensation

1. During regular holidays:

● Regular holiday alone, if the employee did not work -> 100% pertaining to holiday
pay.
● If the employee worked on a regular holiday -> 200% (100% as holiday pay and 100%
for services rendered)

2. During Regular holidays falling on a special non working holiday:

● if the employee did not work because it's a non-working holiday -> 100% holiday
pay.
● if the employee worked -> 230% (100% as holiday pay, 100% that's compensation for
services rendered and 30% as premium pay for working on the special non-working
holiday)

3. During Regular holidays falling on a rest day:

● If the employee did not work because it’s his rest day -> 100% of the holiday pay
● If the employee worked -> 230% (100% this holiday pay and 100% compensation for
services rendered, plus 30% as premium paid for working on the rest day)

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 4. Regular holiday falling on a special non-working holiday which is a rest day:
● if the employee did not work, because it is his rest day -> 100% of the holiday pay.
● If the employee worked -> 250% (100% as holiday pay, 100% as compensation for
services rendered, and 50% as premium pay for working on a special non-working
holiday that falls on the rest day)

5. In the case where there are two regular holidays on the same date:
If two regular holidays fall on the same date, (ex. Good Friday, falling on April 9,
which is also Araw ng Kagitingan), the covered employees are entitled to their
holiday pay for both holidays.
● Computation on pay:
○ If the employee does not work, he should be paid 200% ( Ex. 100% for Good
Friday and another 100% for Araw ng Kagitingan)
○ If the employee works, he should be paid 300% (That is, 100% for services
rendered, 200% for holiday pay)

6. Regular holidays while on leave of absence

● if on leave with pay, an employee is entitled to holiday pay
● if on leave without pay, an employee is not entitled to holiday pay.

Effect of Absences on the Right to Holiday Pay

● If the employee was absent without pay on the day before the regular holiday, he is not
entitled to holiday pay.
● If the day before the regular holiday is a non-working day or rest day, the employee shall
be entitled to holiday pay if he worked or went on leave with pay on the day immediately
preceding the non-working day or rest day.
● If there are two successive regular holidays like Maundy Thursday and Good Friday, an
employee will be entitled to holiday pay for both holidays only if he worked or went on
leave with pay on the day immediately preceding the first holiday.

Holiday pay while on disability benefits

● Corporate employees who do not or who are not reporting for work while on disability
benefits under the Social Security law or Employees Compensation law are entitled to
holiday pay
● The amount of pay is the same percentage as the Social Security or Employees
Compensation benefits being enjoyed by the employee.

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Holiday pay when business is temporarily closed
● If the establishment temporarily closes its operations because of usual inventory, repair or
cleaning of machinery, the covered employees are entitled to holiday pay for the regular
holidays that fell during the temporary closure.
● However, if the employer temporarily shuts down or suspends its operations under Article
301 of the Labor Code (that is, because of losses or lack of work), the covered employees
will not be entitled to holiday pay for the regular holidays that fall while the operations
are suspended.

Burden of proof:
The burden of proof of any complaint for non-payment of holiday pay is on the employer,
not the employee. The rationale for this rule is because pertinent personnel files,
payrolls, records and other similar documents are not in the possession of the worker, but
are in the custody and control of the employer.

e. Service charges

Service charges
● Service charges are amounts collected by service establishments, from customers or
amenities that they enjoyed.
● As a rule all employees of establishments collecting service charges are entitled to the
service charges except managerial employees.
○ Managerial employees are persons vested with powers or prerogatives to lay down
and execute management policies or hire, transfer, suspend layoff, recall,
discharge or assign or discipline employees and are to effectively recommend such
managerial actions.
■ Under this definition, supervisory employees are included under the term
managerial employees because supervisory employees are vested with the
power to effectively recommend managerial actions.
● Note the amount to be distributed. 100% of the service charges collected should be
distributed equally to all covered employees.
● Service charges should be distributed not less than once every two weeks or twice a month
at intervals not exceeding 16 days.
● Note the effect of the abolition of service charges.

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 ○ If the service charge is abolished, the share of the corporate employee shall be
integrated into their wages.
○ The amount to be integrated shall be based on the average monthly share of each
employee for the past 12 months immediately preceding the abolition or
withdrawal of such charges.
○ If the minimum wage is increased by law or wage order, the effect is that the wage
increase cannot be taken from the service charges

f. Occupational Safety and Health Standards Law

Occupational Health and Safety

Coverage of occupational safety and health standards:
● All establishments, projects, and sites and other places where work is being undertaken
are covered, including establishments located inside special economic zones and other
investment promotion agencies.
● Utilities engaged in land, sea and air transportation
● industries such as mining fishing, construction, agriculture and maritime
● contractors and subcontractors.

Some Notable Duties of the Employer:

1. Medical Personnel
2. Medical Facilities
3. Safety Officer
4. Safety and Health Committee
5. Measures
6. PPEs
7. Programs and Policies
8. Family Planning Services
9. Worksers’ Welfare Facilities
10. Records/Reports

● Employers are required to have medical personnel, specifically a First Aider, a nurse,
dentist and doctor.
○ As to what type of medical personnel should be employed will depend upon the
number of workers and the type of establishment.

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● Employers are required to have medical facilities in the form of a first aid treatment
room, clinic and hospital.
○ The number of first aid treatment rooms or bed capacity of clinics or hospitals will
depend upon the type of establishment.
○ Employers with more than 300 workers in hazardous workplaces need not put up an
emergency hospital or dental clinic if:
■ It has a written contract for treatment of workers in case of emergency
with the hospital or dental clinic located within five kilometers away from
the workplace in an urban area, or can be reached by a motor vehicle in 25
minutes if the workplace is situated in a rural area.
■ the employer has readily available facilities for transporting a worker to the
hospital or clinic in case of emergency.

● Employers are required to have a safety officer

○ Workplaces are obliged to have trained safety officers who shall enforce the safety
and health program. The required training of safety officers will depend on their
rank, and the number of safety officers will depend upon the type of
establishment.
● Employers are required to have a Safety and Health Committee
○ Employers are obliged to have a safety and health committee who shall plan,
develop, oversee and monitor the implementation of the safety and health
program. The composition of the Occupational Safety and Health Committee will
depend upon the number of workers and the type of establishment.

● There are obligations imposed upon employers in relation to workers who spend long hours
standing
○ employers of workers who by nature of their work, stand for long periods are
obliged to take appropriate control measures to address the risks of safety and
health of said workers, such as:
■ Rest periods, to to break the time spent in standing and walking,
■ Readily accessible seats to be used during rest periods, or even during
working hours provided the employees can perform their duties in this
position without detriment to efficiency.
■ Practical and comfortable footwear should not pinch the toes, be
well-fitted, non-slipping, with adequate cushion and support to the arch of

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 the feet, either flat or with low heels that must be wide based or wedge
type of not higher than one inch
■ Appropriate flooring or mats that will mitigate the impact of frequent
walking and prevent fatigue such as wood or rubber floorings.
■ Tables or work surfaces with adjustable heights to allow workers to
alternately sit and stand while performing their tasks.

● Employers, contractors, or subcontractors are obliged to provide their workers, free of

charge, with protective equipment or their eyes face, hands and feet and lifeline safety
belt, or harness gas, or dust respirators or masks and protective shields whenever
necessary by reason of the hazardous work process or environment, chemical, radiological,
mechanical and other irritants or hazards capable of injury or impairment in the function
of any part of the body through absorption, inhalation or physical contact.

● Employers are required to have the following programs and policies:

1. Occupational health program
● This is required of all establishments with more than 200 employees to be
developed and implemented by the company physician.
● Essentially, the Occupational Health Program is principally aimed at
protecting employees against health hazards in their working environment
through health examinations, diagnosis and treatment of all injuries and
occupational and non-occupational diseases, regular appraisal of sanitation
plans, periodic inspection of premises and all facilities during an evaluation
of the working environment to detect and appraise occupational health
hazards.

2. Drug-free workplace policy and program

● This is mandatory for all private establishments employing at least 10
workers.
● Essentially, the drug free policy and program comprises:
○ Advocacy;
○ Education and training to increase awareness of employees on the
adverse effects of dangerous drugs;
○ Monitoring of employees susceptible to drug abuse;
○ Random drug testing for officers and employees to reduce risk in the
workplace and treatment;

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 ○ Rehabilitation or referral for treatment and rehabilitation.
● A positive finding of drug use may subject the employee concerned to
suspension or dismissal from employment.

3. Workplace policy on prevention and control of HIV and AIDS is mandatory for all
private establishments regardless of the number of employees.
● Essentially, the policy on prevention and control of HIV and AIDS comprises:
○ Advocacy;
○ Information;
○ Education and training to increase awareness of the nature of AIDS;
○ Its causes in the mode of transmission including ways to prevent HIV
infection, diagnosis, treatment; and
○ referral to other services, including confidential counseling and
testing.
● Employees with actual perceived or suspected HIV infection should not be
discriminated against.
○ Job applicants cannot be asked to compel or asked or compelled to
disclose HIV-related personnel information.
○ Compulsory pre-employment HIV testing is unlawful.
○ Actual perceived or suspected HIV infection is not the grounds for
dismissal from employment.

4. Workplace policy and program on Hepatitis B.

● This is mandatory for all private establishments regardless of the number of
employees.
○ Essentially, the policy and program comprises:
■ Advocacy;
■ Information; and
■ Preventive strategies such as personal protective equipment,
adequate hygiene facilities, containment and proper disposal
of infectious and potentially contaminated materials, training
and adherence to universal precautions in the workplace.

● Employees with Hepatitis B infection should not be discriminated against.

○ Job applicants and workers cannot be compelled to disclose their
hepatitis B status and other related medical information.

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 ○ Workers cannot be dismissed on the basis of actual perceived or
suspected Hepatitis B status.

5. Employers in establishments which habitually employ at least 200 employees

are required to have family planning services.
● The family planning clinic may be dispensed with if the establishment has a
contract with the hospital which can adequately provide the minimum clinic
requirements.

6. Employers are required to provide workers welfare facilities

● All establishments, projects, sites and all other places where work is being
undertaken, are obliged to provide the following free welfare facilities:
i. Adequate supply of safe drinking water;
ii. Adequate sanitary and washing facilities;
iii. Suitable living accommodation for workers, as may be applicable;
● This could be applicable in construction, shipping, fishing and
night workers.
iv. Separate sanitary washing and sleeping facilities for all genders, as
may be applicable;
v. Lactation stations, except those establishments as provided for
under DOLE D.O. No. 143-15;
vi. Ramps, railings and the like; and
vii. Other workers welfare facilities, as may be prescribed by the OSH
standards and other issuances.

● Employers are required to maintain and keep a record of any dangerous occurrence and
work accidents or illness resulting in disability accidents or illness resulting in death or
permanent total disability should be reported to the DOLE Regional Office within 14 to 24
hours after occurrence.

Workers the right to know about all types of hazards in the workplace
● The law states that the right to safety and health at work shall be guaranteed.
● All workers shall be appropriately informed by the employer about all types of hazards in
the workplace, provided access to training and education on chemical safety, and to
orientation on the datasheet of chemical safety, electrical safety, mechanical safety, and
ergonomical safety.

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Right of Workers to Refuse Unsafe Work
● Workers have the right to refuse work without threat or reprisal from the employer if:
○ The Department of Labor and Employment (DOLE) determines that 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
employer.

2. WAGES
● It is the remuneration or earnings payable by an employer to an employee for work done,
or to be done, or for services rendered or to be rendered.
● That remuneration should arise from a relationship of employer-employee to determine
whether the compensation falls within the connotation of the term wages.
● The consideration for its payment should be taken into account.
○ if paid in consideration of the labor being performed, it is considered as wages.
○ if paid in consideration of the results or finished work, it is not considered as
wages.

Wage vs. Salary:

WAGES SALARIES

Wages refer to compensation for less Salaries refer to compensation for a higher
responsible character of employment grade of employment and implies a position of
office.

Wages are exempt from execution or As per article 1708 of the Civil Code, salaries
attachment except for debts incurred for are not exempt from execution or attachment.
food, shelter, clothing, and medical Hence, they can be garnished.
attendance.

Facilities and Supplements

● Facilities are items of expense necessary for the employees subsistence.
● Supplements are extra remuneration or benefits given to employees over and above those
provided by law.

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How do we determine whether a benefit is a supplement or a facility?
The criterion for determining whether a benefit is a supplement or a facility is not so
much on the kind of benefit given but its purpose. A benefit will not be considered as a
facility if the purpose is primarily for the benefit of the employer or necessary to the
conduct of the employer’s business.

Remember that facilities are part of wages. As defined by Article 97(f) of the labor code
the term wages includes the fair and reasonable value of facilities customarily furnished
by the employer to the employee. Following the legal definition, facilities will be
considered as part of wages when:
(1) customarily furnished by the employer, and
(2) their value is fair and reasonable. That is, it does not include any profit.

● “Customarily furnished” means long established, constant practice, connoting regularity

or permanency. Hence, if the grant is temporary, even if enjoyed monthly, it cannot be
characterized as customarily given to make it part of wages.

● Considering that facilities customarily furnished by the employer form part of wages, the
employer may deduct the fair and reasonable value of such facilities from the from the
wages of an employee if:
○ Employee voluntarily accepts the facilities, and
○ The employee authorizes that deduction in writing

● On the other hand, supplements are not part of wages.

○ Unlike facilities, supplements are not part of wages.
○ There are benefits precisely given to augment the earnings of an employee and
supplements granted voluntarily and regularly and unconditionally cannot be
reduced, or withdrawn under the principle of non-diminution of benefits.

Concept of Company Practice

● Benefits granted for a long period of time may ripen into a company practice and create a
vested right upon the employees. To be considered as company practice, the grant should
have been done consistently, voluntarily, and deliberately over a long period of time.

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Principle of Non-Diminution of Benefits
Benefits granted voluntarily, regularly and unconditionally become part of the terms and
conditions of employment. Hence, they cannot be reduced or withdrawn.

Situations where there are no violation of the principle:

1. The principle of non-diminution of benefits is not violated if the action does not result in
reduction or elimination of benefits.
● For instance, in an establishment where the employees enjoy a 15-day vacation
leave with pay and 15 days sick leave with pay, the employer and the employees
can agree to eliminate the 15 day sick leave in exchange for a 30-day vacation
leave, which the employees can avail of not only for vacation purposes, but also in
case of sickness.
○ In such a case the employees do not suffer any reduction or benefit because
the 15-day sick leave was merely incorporated in the vacation leave.

2. The principle of non-diminution of benefits is not violated if the employer deducts the fair
and reasonable value of facilities from the wages of an employee.
● Here, there is no violation because the fair and reasonable value of facilities is
actually a part of the employee's wages considering that if they are not so
furnished, the employee would spend it for them anyway.

3. The principle of non-diminution of benefits is not violated if an employer reduces the

bonuses.
● It used to grant its employees, because bonuses are not mandated by law as the
grant of the bonus is dependent or entirely dependent on the profits.

4. The principle of non-diminution of benefits is not violated if the employer withdraws a

benefit that has been granted by mistake.

Wages should be paid in legal tender.

● Legal Tender
○ Legal tender Is that currency made suitable by law for payment of debts.
■ All notes and coins issued by the Bangko Sentral ng Pilipinas (BSP) are legal
tender.

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 ■ Paying wages partly in cash and partly in kind runs counter to Article 102 of
the labor Code even if the said method of payment was requested by the
employee himself.
■ A check is not a legal tender. However, payment of wages by check or
money order is allowable:
● when customary on the date of the effectivity of the labor code
● when stipulated in a collective bargaining agreement
● when there is a bank or other facility for encashment within a radius
of one kilometer from the workplace, provided that the employees
consent to such an arrangement in the absence of a CBA.
○ The employees are given time to cash their check on
company time, and the employer does not receive any
pecuniary benefit from the arrangement.

● On Payment of Wages
○ Payment of wages in a medium other than legal tender will not produce the effect
of payment. It will not discharge the employer from liability for unpaid wages.
○ Wages should be paid at least once every two weeks or twice a month at intervals
not exceeding 16 days.
○ Wages should be paid at or near the place of undertaking.
■ Exceptionally, wages may be paid outside the place of undertaking:
● In case of deterioration of peace and order conditions, or because of
actual or impending emergencies caused by calamity;
● if the employer provides free transportation to the employees back
and forth;
● under any other analogous circumstances provided that the time
spent by the employees and collecting their wages shall be
considered as compensable hours worked.
● Remember that wages should be given directly to the workers to whom they are due.
○ Exceptionally, the employer may release the wages to another person when
authorized in writing by the employee or when authorized by law.
○ Rules of payment in case of death of the employee:
■ In case of death of an employee, the employer can release the unpaid
wages to the heirs upon submission by the heirs of an affidavit attesting to
their relationship with the deceased, and the fact that they are his heirs, to
the exclusion of all other persons.

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● Note the prohibitions on wages.
○ Interference on disposal of wages.
● Art. 112 of the Labor Code gives employees the absolute liberty to use or
spend their wages in any manner they like.
● Employers therefore cannot dictate upon their employees on how to spend
their wages, neither can employers impose upon their employees to buy
goods from a specific store or avail of services of a specific establishment.

● Wage deduction
○ As a rule, employers cannot make any deduction from the wages of their
employees. They can make deductions from employees only when
authorized by law or when authorized by writing by the employee.
○ There are instances where written authorization to deduct is not required.
Written authorization to deduct is not required for:
■ Deductions made in compliance with writs of execution against the
employee.
● This is because the deduction is made due to a court order.
■ Deductions made for due and demandable debt of the employee to
his employer. For instance, the cost of insurance premium paid by
the employer on behalf of an employee who agreed to be insured by
his employer.
● It’s because Art. 1706 of the Civil Code authorizes an
employer to withhold wages for a debt that is due and
demandable.
■ Deductions for income tax, premium contributions, social security
system, Philhealth and Pag-ibig fund.
● It’s because the obligation to deduct is mandated by law.
■ Deductions for labor education activities.
● This is because Art. 250 (o) of the Labor Code authorizes it.
■ Deductions for agency fees assessed by the Collective Bargaining
Agent against non-union members covered by the bargaining unit
who accept the benefits under the Collective Bargaining Agreement.
● This is because Art. 259 (e) of the Labor Code authorizes it.

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● Deduction to ensure employment
○ Even if the employee agrees to such an arrangement, it cannot be given effect
because it is contrary to law, and public policy.

● Withholding of wages and kickbacks

○ An employer cannot validly withhold any amount from the wages of an employee to
pay for an employee’s obligations to a third party.
○ However, an employer can validly withhold the employee’s wages for his due and
demandable debt to his employer.
■ This is allowed under Art. 1706 of the Civil Code which states that
withholding of wages except for a debt due should not be made by the
employer.
■ Hence, an employer can validly withhold the final pay of an employee who
resigned until he is cleared of accountabilities.
○ In cases of unlawful withholding of wages, the employer may be held liable for
attorney’s fees equivalent to 10% of the amount of wages recovered under Art. 111
(a).
■ Entitlement to attorney’s fees under Art. 111 (a) of the Labor Code is not
automatic. The employee should pray for attorney’s fees and justify his
claim.
■ But the employee need not prove that the employer acted maliciously or in
bad faith. A mere showing that the employer has unlawfully withheld the
wages is enough reason to award attorney’s fees.
■ 10% is the maximum.
■ Hence a person who demands or accepts attorney’s fees in excess of 10% is
criminally liable under Art. 111(b) of the Labor Code.

● Deposits for Loss or Damage to Equipment

○ Employers cannot oblige employees to put up a deposit for loss or damage to tools,
materials, or equipment under Art. 114 of the Labor Code.
○ The only instance when an employer can oblige an employee to put up a deposit to
answer for loss or damage to the employer’s tools, materials, or equipment is when
it is an industry practice.
■ Art. 114 contemplates tools, materials, or equipment supplied by the
employer.

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 ○ If the practice of making deposits is recognized, the employer can make deductions
from the deposit only when the following conditions are complied with:
■ The employee must be clearly shown to be responsible for the loss or
damage after due investigation;
■ The deduction must not exceed the actual loss or damage;
■ The deduction must not exceed 20% of the wages in a week.

● Retaliatory measures
○ Dismissing employees who file a complaint for non-payment or underpayment of
wages is a violation of the law.

● False reporting
○ Making false material entries in the payroll or individual time record is a violation
of the law. Requiring employees to sign a blank payroll is covered by this
prohibition.

● Wage Distortion
○ Wage Distortion is a situation where an increase in the minimum wages by law or
wage order results in the elimination or severe contraction of intentional
quantitative differences in wage rates between and among employee groups in the
same establishment within the region, thereby effectively obliterating the
distinction embodied in the wage structure based on skills, length of service, or
other logical bases of differentiation.
○ Note the elements of wage distortion:
■ The establishment must have an existing hierarchy of positions with the
corresponding salary rates;
■ The Regional Tripartite Wages and Productivity Board or Congress has issued
a wage order or law fixing the minimum wage;
■ The new minimum wage resulted in significant increase in the salary rate of
the lower-paid class without a concomitant increase in the salary rate of a
higher one to the extent that the distinction between the two pay classes
has been eliminated or severely contracted;
■ The resulting distortion must be in the same establishment within the
region.
○ Without a grouping or classification of employees establishing wage distinctions
among such employees, there can be no wage distortion because there would be no

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 basis for saying that there was elimination or severe contraction of wage
distinction.

○ The formulation of a wage structure is a management discretion.

■ The employees cannot create their own classification of employees and use
it as a basis to correct wage distortion.
■ Neither can the NLRC, under the guise of rectifying a wage distortion,
unilaterally impose upon the employer a new scheme of classification of
employees where none has been previously established.
○ For wage distortion to exist, the wage increase must result from the
implementation of a minimum wage law or a wage order.
■ Art. 124 of the Labor Code does not contemplate a wage increase brought
about by the implementation of a Collective Bargaining Agreement.
■ Neither does it contemplate a wage adjustment brought about by merit
increase.
■ The quantitative wage distinction need not be obliterated. It is enough that
the wage distinction was severely contracted.
■ The grant of higher wages in the same establishment in one region than in
the same establishment in another region is not wage distortion.
■ The difference in wages between employees in the same pay scale in
different regions is not the mischief sought to be banished by law.
○ Note the procedure for correction of wage distortion.
■ In an unorganized or non-unionized establishment, the employers and
workers shall negotiate to correct such distortions.
● If negotiations fail, the matter should be brought to the National
Conciliation and Mediation Board for conciliation.
● If the NCMB fails to settle the dispute, the matter shall be referred
to the National Labor Relations Commission for compulsory
arbitration.
■ In organized or unionized establishments, the employer and the union shall
negotiate to correct the distortions.
● If negotiations fail, the matter should be brought to the grievance
machinery under their Collective Bargaining Agreement.
● If the grievance machinery fails to settle the dispute, the matter
shall be threshed out through voluntary arbitration.

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■ Wage increases given by employers, either unilaterally, or as a result of
collective bargaining negotiations, is enough to correct wage distortion.
■ In the correction of wage distortion, it is not required that the historical
gap that existed before the implementation of the wage order be restored
in exactly the same amount.
■ The pendency of a wage distortion dispute does not stay the
implementation of the wage order.
■ The fixing of minimum wage is a power that inherently belongs to Congress.
However, Congress has delegated the said power to the Regional Tripartite
Wages and Productivity Board.
● Under the present setup, the minimum wage will vary from region to
region considering the regional disparities and the cost of living and
other socio-economic factors.
● Provinces, particular regions, municipalities within a particular
province, and even industries within a particular city or municipality
can have different minimum wage rates.
● Considering that wage fixing is a mere delegated power, the Regional
Tripartite Wages and Productivity Board cannot set a wage or wage
rate lower than that prescribed by Congress.
● However, the Regional Tripartite Wages and Productivity Board can
validly order that the increase in minimum wages be extended not
only to minimum wage earners but also to those who are already
receiving more than the minimum up to a certain denominated
ceiling.
● Minimum wages are promulgated through wage orders which may be
issued after conducting public hearings and consultations with the
employers and employee groups, local government officials, and
other interested parties.
■ The Regional Tripartite Wages and Productivity Board may issue a wage
order through any of the following means: Could be motu proprio, whenever
conditions in the region, province, or industry so warrant; or By virtue of a
petition filed by any interested party.
■ Wage orders cannot be disturbed for a period of 12 months from effectivity.
This means that no petition for wage increase can be entertained within the
12 month period. However, if supervening conditions transpire, such as
extraordinary increase in prices of oil and basic goods or services, the

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 Regional Tripartite Wage and Productivity Board may exercise its wage-fixing
function even before the expiration of the 12-month period.
■ Wage orders take effect after 15 days from its complete publication in at
least one newspaper of general circulation in the region.
■ Remember that compliance with the minimum wage law is mandatory.
■ Minimum wage cannot be the subject of a compromise.
■ There are sanctions for failure to comply with the prescribed minimum
wage.
● Double indemnity, that is double the unpaid benefits owing to the
employee; and
● Criminal liability or a fine ranging from P25,000 to P100,000 or
imprisonment ranging from 2 years to 4 years; or
● Both, without the benefit of probation.
■ Burden of proof
● In a complaint for non-payment or underpayment of wages, it is
incumbent upon the employer to prove payment rather than on the
employee to prove non-payment, because the pertinent personnel
files, payrolls, records, and other similar documents are not in the
possession of the worker, but are in the custody and control of the
employer.

● 13th month pay

○ 13th month pay is an extra remuneration mandated by PD 851 given to
rank-and-file employees who have rendered at least one month of service, the
amount of which is equivalent to at least 1/12 of the basic salary earned during the
calendar year.
○ Who are entitled to 13th month pay?
■ Rank-and-file employees regardless of their employment status, whether
employed on a full time or part time basis;
■ Piece-rate workers;
■ Domestic workers;
■ Private school teachers and faculty members of universities and colleges;
■ Government employees working part-time in a private enterprise such as
educational institutions, are entitled to 13th month pay from their private
employer.
○ Note those who are not entitled to 13th month pay:

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 ■ Employees who have not yet rendered service for one month;
■ Employees who are paid purely on commission, boundary, or task basis, and
those who are paid a fixed amount for performing specific work irrespective
of the time consumed in the performance thereof;
● Employees who are paid a fixed salary plus commission are entitled
to 13th month pay based on their total earnings during the calendar
year on both their fixed salary and commission;
■ Persons in the personal service of another;
■ Employees already receiving the equivalent of 13th month pay such as
Christmas bonus, mid-year bonuses, cash bonuses, transportation
allowance, year-end productivity bonuses.
○ Note the items that are not equivalent of 13th month pay under jurisprudence:
■ A gift in the amount of 2,000 or a certain amount;
■ Cash or stock dividends;
■ Cost of living allowance and other allowances;
■ Non-monetary benefits such as food, free electricity, and year-end rewards
for loyalty.
○ If the equivalent benefit is less than 1/12 of the employee’s basic salary, the
employer is obliged only to pay for the difference.
○ In computing 13th month pay, only the basic salary is considered.
○ Note the timing of the payment.
■ It should be paid not later than December 24 of each year.
■ However, an employer may opt to give ½ of the 13th month pay before the
opening of a, let’s say, regular school year, and the other half on or before
December 24.
■ Resigned or employees terminated from employment may demand the
payment of their 13th month pay upon their resignation or dismissal subject
to clearance requirements of the employer.
○ Burden of proof.
■ In a complaint for non-payment of 13th month pay, the burden lies upon
the employer to prove payment rather than on the employee to prove
non-payment, again, because the pertinent personnel files, payrolls,
records, and other similar documents are not in the possession of the
worker, but are in the custody and control of the employer.

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3. LEAVES
○ Service Incentive Leave
■ Service incentive leave is akin to vacation leave. It is intended not merely to give
additional salary or bounty but to give the employees a chance to get a much
needed rest in order to replenish their worn-out energies and acquire a new vitality
to enable them to efficiently perform their duties.
■ Service incentive leave is 5 days with pay per year.
■ Note the conditions for entitlement.
● To be entitled to Service Incentive leave, the covered employee must have
rendered at least 1 year of service, whether continuous or broken.
■ If unused, service incentive leave is commutable to cash.
● The employee may choose to either use his service incentive leave or
commute it to its monetary equivalent.
● If the covered employee does not use or commute his service incentive
leave, it will accumulate and the employee will be entitled to all his
accumulated service incentive leave upon his resignation or separation from
work.
■ Claims for service incentive leave prescribe after 3 years.
● Considering that service incentive leave is cumulative, the 3-year
prescriptive period shall be reckoned from the time the employer refuses to
pay its monetary equivalent or from termination of employment.
■ Burden of proof
● In a complaint for non-payment of service incentive leave, the burden lies
upon the employer to prove payment rather than on the employee to prove
non-payment.
● Same basis, considering that the pertinent personnel files, payrolls,
records and other similar documents are not in the possession of the
worker, but are in the custody and control of the employer.

○ Maternity leave for employees in the private sector

■ This is a benefit granted to or granted by the Expanded Maternity Leave
Law to female workers, married or unmarried, regardless of employment
status, to give birth, suffer miscarriage, or emergency termination of
pregnancy. Emergency termination of pregnancy refers to stillbirth or
pregnancy loss on or after the 20th week of gestation.
■ Note the duration of maternity leave.

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 ● For pregnancy or childbirth, it’s 105 days for ordinary employees;
○ 120 days, that is 105 days plus 15 days for solo parents;
● For miscarriage or emergency termination of pregnancy, it’s 60 days.
■ There’s no limit as to the number of times that a female employee can go
on maternity leave.
■ Maternity leave should be enjoyed in a continuous or uninterrupted manner.
It cannot be deferred.
● It may be availed of before or prenatal, or after the actual period of
delivery, postnatal. But the postnatal leave shall not be less than 60
days.
■ In case of live childbirth, the maternity leave may be extended for 30 days
without pay, at the option of the employees, in which case the employees
must notify their employer in writing at least 45 days before the end of the
maternity leave.
● The 45-day notice is not necessary if the extension was brought
about by medical emergency, but the employees must give
subsequent notice.
■ A part of the maternity leave credits may be assigned. Seven days of the
maternity leave benefit may be allocated or assigned to:
● The child’s father if they share the same household, regardless of
whether the father is married to the female worker; or
● To an alternate caregiver in case of death, absence, or incapacity of
the father.
○ The caregiver may be a relative within the 4th degree of
consanguinity, or the current partner of the female worker
who shares the same household.
■ Note the effect of death or permanent incapacity.
● If the employee dies or becomes permanently incapacitated, the
balance of the maternity leave shall accrue to the father of the child
who shares the same household, or to a qualified caregiver.
■ Components of the maternity leave pay.
● The maternity leave pay for the private sector employees is
composed of:
○ The SSS maternity benefit, which is based on the average
daily salary credit to be paid in advance by the employer
subject to reimbursement of the SSS; and

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 ○ Salary differential, that is the difference between the cash
benefit from the SSS and the regular wages of the employee
to be paid by the employer.
■ Note the effect of termination of employment without the employee’s fault.
● If this is through childbirth, miscarriage, or emergency termination
of pregnancy and it takes place within 15 calendar days from
termination of employment, such as voluntary resignation,
retrenchment, redundancy, or illness, the maternity leave benefit
shall still be granted because the right thereto has already accrued.
○ This means that the employer will still advance the SSS
maternity benefit and if not exempted, will still have to pay
the salary differential.
● If childbirth, miscarriage, or emergency termination of pregnancy
took place after 15 calendar days from termination of employment,
the employee will be entitled only to the SSS maternity benefit.
○ The employer is not obliged to pay the salary differential.
■ Note the effect of dismissal on the right to maternity leave pay.
● If there was illegal dismissal, the employer shall pay the employee
the full maternity benefits: 105 days for childbirth, or 60 days for
miscarriage or emergency termination of pregnancy.
○ The employee will further be entitled to the SSS maternity
benefit.
● If there is a valid dismissal, the employee will be entitled only to the
SSS maternity benefit.
○ The employer is not obliged to pay the salary differential.
■ Disputes regarding the grant of maternity leave benefit shall be filed with
the Social Security Commission.
■ Claims for non-payment of salary differential shall be filed with the DOLE
Field, Provincial or Regional office having jurisdiction over the workplace.

● Paternity leave
○ This is a benefit granted by the Paternity Leave Act, to male employees regardless
of employment status, the purpose of which is to allow them to lend support to
their wives while recovering from the effects of childbirth or miscarriage.
○ Who are entitled to paternity leave.

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 ■ All married male employees regardless of employment status are entitled to
paternity leave.
○ Paternity leave is available on occasion of his wife’s childbirth or miscarriage.
○ The duration of paternity leave is 7 days with full pay including allowances and
other monetary benefits.
○ Note the conditions for entitlement.
■ The woman who gave birth or suffered miscarriage must be the legitimate
wife.
■ At the time of the miscarriage or delivery of the child, the male spouse
must be an employee and cohabiting with his lawful wife.
■ The employee must apply for paternity leave with his employer stating the
expected date of delivery.
○ Paternity leave can be availed of only for the first four childbirths or miscarriages
of the legitimate wife.
○ The paternity leave may be enjoyed before, during or after the delivery by his
wife, but not later than 60 days after the date of said delivery.
○ Remember that if this benefit is unused, it is not convertible to cash.

● VAWC leave or Battered Woman leave

○ This is a benefit granted by the Anti-Violence Against Women and their Children Act
to women who personally or her child, whether legitimate or illegitimate, suffered
from or has been threatened with physical, sexual, psychological or economic
abuse by her husband, former husband, or by a person with whom she has or had a
sexual or dating relationship, or by a person with whom she has a common child.
○ The VAWC leave is 10 days, extendible when the necessity arises, as specified in a
protection order.
○ The 10-day VAWC leave can be availed of only for the days when the woman
employee has to attend to medical or legal concerns.
○ The only requirement is a certification from the punong barangay, kagawad,
prosecutor, or the clerk of court where the case for violence against women and
their children is pending.
○ If this benefit is not used, then it is not convertible to cash.

● Parental leave or solo parent leave

○ Parental leave or solo parent leave is a benefit granted by the Solo Parents Welfare
Act to single parents, male or female, who are left alone with the responsibility of

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 parenthood, to enable them to perform parental duties and responsibilities to their
children or dependents.
○ Children or dependents refer to those living with and dependent upon the solo
parent for support, who are unmarried, unemployed, is 22 years old and below, or
over 22 years old but with physical or mental disability.
○ Note the categories of solo parent.
■ A parent who provides sole parental care and support of the child or
children due to birth as a consequence of rape even without final
conviction, death of a spouse, detention or service of sentence of spouse
for at least 3 months, physical or mental incapacity of the spouse as
certified by a public or private medical practitioner, declaration of nullity,
annulment of marriage, or divorce as decreed by court recognized by law,
abandonment by the spouse for at least 6 months, or legal separation or de
facto separation of at least 6 months;
■ The spouse, family member, or guardian of the child or children of an
overseas Filipino worker, if the overseas Filipino worker belongs to the low
or semi-skilled worker category, and is away from the Philippines for an
uninterrupted period of 12 months;
■ Unmarried mother or father who keeps and rears the child or children;
■ Legal guardian, adoptive or foster parent who solely provides parental care
and support to a child or children;
■ The relative within the 4th civil degree of consanguinity or affinity of the
parent or legal guardian who assumes the parental care and support of the
child or children as a result of death, abandonment, disappearance, or
absence of the parents for at least 6 months;
■ Pregnant women to provide sole parental care and support to their unborn
child or children;
○ Note the conditions for entitlement to parental leave.
■ At least 6 months of service;
■ Notice of availment to the employer within a reasonable time period;
■ Presentation of the solo parent identification card.
○ The duration of the parental leave for solo parents is 7 days or 7 working days
every year.
○ The parental leave benefit is available as long as the employee remains to be a
solo parent.

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 ■ If the employee ceases to be a solo parent, the right to parental leave will
terminate.

● Special leave for women employees

○ This is a benefit granted by the Magna Carta of Women to female employees who
undergo surgery because of gynecological disorders.
○ Gynecological disorders refer to maladies involving the female reproductive organs,
specifically the vagina, cervix, uterus, fallopian tubes, ovaries, breast, adnexa or
pelvic floor, that would require surgical procedure, such as dilatation and
curettage, hysterectomy, ovariectomy, and mastectomy.
○ The duration of special leave for women is 2 months with full pay based on gross
monthly compensation.
○ For purposes of determining the period of special leave that will be allowed to a
woman employee, the certification of a competent physician shall control.
○ A woman employee can avail of the special leave for every instance of
gynecological surgery for a maximum total period of 2 months per year.
○ Remember, if unused, the special leave benefit for women is not cumulative and
not convertible to cash.
○ To be entitled to the special leave, the female employee must have:
■ Undergone surgery due to gynecological disorder;
■ Rendered at least 6 months continuous aggregate employment service for
the last 12 months prior to surgery; and
■ Has filed an application for special leave with the employer within a
reasonable time from expected date of surgery, or within such period as
may be provided under company policies or collective bargaining
agreement.
○ If the woman employee had undergone gynecological surgery during her maternity
leave, she is entitled only to the difference between the special leave benefit and
the maternity leave benefit.

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4. SPECIAL GROUPS OF EMPLOYEES

● Women workers.
○ Discrimination against women workers is prohibited.
○ Employers are forbidden from paying lesser compensation or fringe benefits to a
woman employee as against a male employee for work of equal value.
○ Favoring a male employee over a woman employee with respect to promotion,
training opportunities, study, and scholarship grants solely on account of their
sexes. Discriminating against a woman employee simply because she got married.
○ Marriage is not a hindrance to the employment of women.
○ Employers are forbidden from requiring as a condition of employment that a
woman employee shall not get married or resign upon getting married.
○ Pregnancy is not a ground for dismissal of women employees.
■ Employers are forbidden from dismissing a woman employee because of
pregnancy, while on leave due to her pregnancy, or upon returning to work,
for fear that she may again be pregnant.

● Child workers
○ A child refers to a person below 18 years old.
○ The law also covers persons aged 18 years and over but are unable to fully take
care or protect themselves from abuse, neglect, cruelty, exploitation, or
discrimination because of a physical or mental condition.
○ The minimum age for local employment is 15 years old.

○ Children below 15 years old can be employed, but only under the following
circumstances:
■ When the child works directly under his parents or legal guardian, subject
to the following conditions:
1. Only members of his family are employed thereat;
2. The job does not impair the child’s normal development or
endangers life, safety, health and morals;
3. The child is provided with the prescribed primary or secondary
education.

■ When the employment of the child is essential in public entertainment or

information, such as cinema, theater, radio, television, or other forms of
media, subject to the following conditions:

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 1. There must be an employment contract duly approved by the DOLE;
2. The employer must ensure the protection, health, safety, morals,
and normal development of the child, institute measures to prevent
the child’s exploitation or discrimination, and formulate and
implement a continuing program for training and skills acquisition of
the child.

○ If children below 15 years old will be employed, the employer must first obtain a
permit or work permit from the DOLE.
■ The work permit is valid for a maximum period of 1 year.
■ The Regional Director of the Department of Labor and Employment may
cancel the work permit of the child on the following grounds:
1. Fraud or misrepresentation in the application of the work permit;
2. Violation of the terms and condition of the child’s employment
contract;
3. Failure to institute measures to ensure protection, health, safety,
morals, and normal development of the child;
4. Failure to formulate and implement a program for the education,
training, and skills acquisition of the child; or
5. Depriving the child of access to formal, non-formal, or alternative
learning systems of education.

○ There are instances when a child work permit is not needed.

■ Work permit is not needed for children below 15 years old who are engaged
as spot extras, that is those being cast outright on the day of the filming or
taping.
■ A mere notice to the DOLE Regional Office that it will engage children as
spot extras is sufficient.

○ Note the prescribed working hours for children.

■ If below 15 years old, working hours should not be more than 4 hours a day,
and not more than 20 hours a week, and there should be no work between 8
PM and 6 AM.
■ If 15 to 18 years old, the work should not be more than 8 hours a day, or not
more than 40 hours a week, and there should be no work between 10 PM
and 6 AM.

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● Domestic workers, kasambahays
○ The Domestic Workers Act applies only to domestic workers working within the
Philippines.
○ Domestic workers working abroad are governed by the Migrant Workers Act. Note
the meaning of a domestic worker.
○ A domestic worker is a person engaged to work for a household within an
employment relationship.
○ To be considered as a domestic worker, the person should be hired specifically to
perform household work.
○ Note those persons who are not considered as domestic workers.
■ Children or relatives of the domestic worker who live under the employer’s
roof and share the same accommodations provided for the domestic worker
if they were not engaged as such and not required to perform any
substantial household work;
■ Persons who perform domestic work occasionally and not on an occupational
basis;
■ Children under foster family arrangement who are provided access to
education and provided an allowance incidental to education;
■ Family drivers;
■ Workers of service providers like janitorial agencies.
○ The minimum age for employment of domestic workers is 15 years old. Employing
an underaged domestic worker entails criminal liability.
○ Domestic workers may be hired directly or through private employment agencies.
■ Private employment agencies cannot charge recruitment fees or finder’s
fees from the domestic worker.
■ In case the employer fails to pay the wages or benefits of the domestic
worker, the private employment agency is jointly and severally liable with
the employer for the unpaid wages and other benefits due a domestic
worker.
○ Remember that employers should register their domestic worker in the barangay
where the employer’s residence is located.
○ Prior to the commencement of the service, the employer and the domestic worker
must execute an employment contract in a language understood by the domestic
worker.
○ Note the working conditions of domestic workers.
■ Minimum wage.

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 ● This is to be fixed from time to time by the Regional Tripartite Wages
and Productivity Board;
■ 13th month pay, in accordance with the 13th month pay law;
■ Corresponding wage for assignment to non-household work;
■ Additional compensation for temporary service to another household in an
amount not less than the existing minimum wage rate;
■ Free board and lodging, at least 3 adequate meals a day, and humane
sleeping arrangements;
■ Daily rest period of at least 8 hours in a day;
■ Weekly rest period: 24 consecutive hours per week;
■ Service incentive leave of at least 5 days a year.
● Remember that this is not convertible to cash if unused.
■ Medical attendance in case of illness or injuries sustained during service;
■ SSS, Philhealth, and Pag-ibig fund coverage.
○ If the monthly wage of the domestic worker is less than 5,000 pesos, the employer
shoulders the premium contributions of the domestic worker.
■ On the other hand, if the monthly wage of the domestic worker is 5,000
pesos and above, the domestic worker and the employer shoulder their
respective premium contributions.
○ The law provides for rights and privileges of domestic workers.
■ Right to humane treatment.
● Domestic workers should not be subject or subjected to any kind of
abuse or any act that tends to degrade the dignity of the domestic
worker.
● Any abused or exploited domestic worker shall be immediately
rescued by a municipal or city social welfare officer, or a social
welfare officer from the DSWD in coordination with the concerned
barangay officials.
● Private employment agencies are duty bound to cooperate with the
government agencies in the rescue operations and assist the
domestic worker with respect to complaints or grievances against
their employers.
■ Right to education and training.
● The employer shall afford the domestic worker the opportunity to
finish basic education and as far as practicable, higher education or
technical and vocational training.

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 ■ Right to privacy.
● The right to privacy extends to all forms of communication and
personal effects.
■ Right to access to outside communication.
● Domestic workers are entitled to access to outside communication
during free time or even during work time in case of emergency.
● Should the domestic worker make use of the employer’s telephone
or communication facilities, the costs shall be borne by the domestic
worker unless such charges are waived by the employer.
○ Note the obligations of domestic workers.
■ To render satisfactory service at all times;
■ To observe the terms and conditions of the employment contract;
■ To refrain from publicly disclosing any communication or information
pertaining to the employer or any member of the household during and
after employment.
○ Note the prohibited activities.
■ Prohibition against deposits for loss or damage.
● Employers cannot oblige the domestic worker to make deposits to
answer for loss or damage to tools, materials, furniture, and
equipment in the household;
■ Prohibition against debt bondage.
● Employers or any person acting on behalf of the employer are
forbidden from placing the domestic worker under debt bondage.
● Debt bondage refers to the act of requiring the domestic worker to
render service as security or payment for a debt where the length
and the nature of service is not clearly defined, or when the value of
the service is not reasonably applied in the payment of the debt;
■ Prohibition against interference in the disposal of wages.
● Employers are forbidden from interfering with the freedom of the
domestic worker to dispose of his wages.
● The employer cannot oblige the domestic worker to purchase
merchandise, commodities or other properties from the employer or
from any other person, or otherwise make use of any store services
of such employer or any other person.
○ When can the employment of domestic workers be terminated?
■ If there is just cause, anytime.

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 ■ If there is no just cause, at the end of the stipulated period.
● If there’s no stipulated period, by giving 5 days advance notice.
○ Note the just causes for dismissal of the domestic worker. Let’s enumerate:
■ Misconduct or willful disobedience to lawful order;
■ Gross and habitual neglect or inefficiency;Fraud or willful breach of the
trust;
■ Commission of a crime or offense by the domestic worker against the person
of the employer or any immediate member of the employer’s family;
■ Disease prejudicial to the health of the domestic worker or members of the
household;
■ Violation by the domestic worker of the employment contract;
■ Other causes analogous to the foregoing.
○ An employer who dismisses a domestic worker without just cause will be liable to
indemnity equivalent to 15 days’ wage.
○ Note the grounds for quitting employment:
■ Verbal or emotional abuse by the employer or any member of the
household;
■ Inhuman treatment of the employer or any member of the household;
■ Commission of a crime against the domestic worker by the employer or any
member of the household;
■ Disease prejudicial to the health of the domestic worker or members of the
household;
■ Violation by the employer of the employment contract;Other causes
analogous to the foregoing.
○ What’s the effect if the domestic worker quits employment without just cause?
■ If the domestic worker quits employment without just cause, she will forfeit
unpaid wages to the extent of 15 days.
■ If the quitting was done within 6 months from hiring, the domestic worker
will be liable for deployment expenses.

● Homeworkers
○ Homeworkers are employees who perform industrial work in their respective homes
on behalf of persons who deliver to them the goods to be processed or fabricated
into a finished product.
○ Note the meaning of industrial work.

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 ■ Industrial work is a system of production under which work for an employer
or contractor is carried out by the worker at his home.
■ It differs from regular factory production because it is a decentralized form
of production where there’s ordinarily very little supervision in the methods
of work.
○ There are instances where industrial homework is not allowed.
■ Homework is not allowed in the manufacture or processing of explosives,
fireworks, and similar articles, drugs and poisons, and other articles the
processing of which requires exposure to toxic substances.
○ The employer of the homeworkers is the person or his agent:
■ Who delivers or causes the delivery of materials for processing in a home in
accordance with his directions and thereafter gets the finished product; or
■ Sells the goods or materials for processing in a home, then rebuys the
finished product.

● Nightworkers
○ These are employees whose job requires performance of work at night for a period
of not less than 7 consecutive hours including the interval from midnight to 5
o’clock in the morning.
○ Note those who are not considered as night workers. Those employed in
establishments engaged in agriculture, stock raising, fishing or maritime transport.
Transportation facilities for night workers.
○ If public transportation is not available for 24 hours, employers of night workers
are obliged to provide transportation facilities from work premises to the nearest
point of their residence when the night work falls within 12 midnight and 5 AM.
■ As an alternative to transportation facilities, the employer can provide
properly ventilated temporary sleeping or resting quarters, separate for
male and female workers.
○ Night workers can request for assessment of their health free of charge before
taking up an assignment as a night worker at regular intervals during such
assignment, or if they experience health problems because of night work.
○ Pregnant women and nursing mothers may be allowed to perform night work only
upon certification of fitness to render night work from a competent physician, not
the company physician.
■ The certification should certify the period of pregnancy that they can safely
work.

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 ■ Pregnant workers or pregnant night workers found unfit for night work may
be given the following alternatives:
● They may transfer to day work if possible; or
● Extend the maternity leave.
■ What’s the course of action if alternatives are not feasible? Here the
employer may do the following:
● Allow the worker to take a leave of absence if the health reason is
temporary in character, that is, it can be cured within 6 months as
certified by a competent public health authority.
○ Upon restoration of his normal health, he should be
reinstated his former position immediately;
● The worker could be terminated from employment with separation
pay under Art. 299 if a competent public health authority certifies
that the health reason cannot be cured within a period of 6 months.

● Apprentices and learners

○ An apprentice is a person undergoing training for an approved apprenticeable
occupation during an established period assured by an apprenticeship agreement.
○ To qualify as an apprentice, a person should be at least 14 years old.
○ Apprentices can be hired only in apprenticeable occupations.
■ An apprenticeable occupation is a job officially endorsed by a tripartite
body and approved for apprenticeship by the TESDA.
○ Note the basic requirements for hiring apprentices:
■ An apprenticeship program approved by the TESDA; and
■ The apprenticeship agreement.
● Without an approved apprenticeship program, the person hired will
not be considered as an apprentice.
● He will be considered as a regular employee even if an
apprenticeship agreement has been executed between them.
■ Only employers in highly technical industries can establish an
apprenticeship program.
● A highly technical industry is a trade, business, enterprise, industry,
or other activity which utilizes the application of advanced
technology.
○ Apprenticeship program, this is a voluntary undertaking, there is no obligation on
the part of the employers to establish an apprenticeship program.

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 ■ However, an employer can be obligated to setup an apprenticeship program
under the following circumstances:
● When there is a critical shortage of trained manpower and national
security or economic development so demands;
● Where foreign technicians are utilized by private companies in
apprenticeable trades.
○ Apprenticeship agreement
■ Without an apprenticeship agreement, the person so hired cannot be
considered as an apprentice, even if the employer has an approved
apprenticeship program.
○ The minimum wage of apprentices is 75% of the statutory minimum wage.
■ The rule that apprentices should be compensated in an amount equivalent
to 75% of the statutory minimum wage doesn’t apply to those who undergo
apprenticeship for purposes of complying with academic requirements for
graduation, or government requirements for board examinations.
○ The duration of the apprenticeship is 6 months.
■ Remember that the employer is not obliged to hire the apprentice as a
regular employee after the 6-month apprenticeship period.
○ Learnership
■ Learners are persons hired as trainees in semi-skilled or non-apprenticeable
occupations which can be learned through practical training on the job in a
relatively short period not exceeding 3 months.
■ Employers can hire learners only when:
● The job is semi-skilled or non-apprenticeable and can be learned in a
practical way within a period of not more than 3 months;
● There are no available experienced workers;
● The employment of learners necessary to prevent curtailment of
employment opportunities; and
● The employment of learners does not create unfair competition in
terms of labor costs or impair or lower working standards.
■ The minimum requirement for learners is 15 years old.
■ Note the basic requirements for employment of learners:
● A learnership program approved by the TESDA; and
● The learnership contract.

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 ○ Without an approved learnership program, the person hired
cannot be considered as a learner even if a learnership
contract has been executed between them.
○ He will be considered as a regular employee.
○ Conversely, without a learnership contract, the person hired
cannot be considered as a learner even if the employer has
an approved learnership program.
■ The minimum compensation of learners is 75% of the statutory minimum
wage.
■ The duration of learnership is 3 months.
● If the learner completes the 3-month training, the employer must
absorb the learner as its regular, not probationary, employee.
○ The purpose of this is to prevent the use or abuse of
learnership as a cheap source of labor.
○ The employer cannot circumvent the law by terminating the
service of the learner on the second month of the
employment.
○ If the employer terminates the services of the learner
without just cause on the second month of training, the
learner will be considered as a regular employee.

● Persons with disabilities

○ Persons with disability are those suffering from restriction to perform an activity
because of a mental, physical, or sensory impairment.
○ Discrimination against persons with disability is prohibited.
■ The basic policy in hiring a person with disability is non-discrimination.
■ The law prohibits discrimination against a person with disability in regard to
hiring, promotion, and other terms and conditions for employment.
■ Persons with disability are entitled to enjoy the same compensation,
benefits, and other terms and conditions of employment that an
able-bodied employee enjoys.
■ But persons with disabilities can also be hired as apprentices and learners.
There is no prohibition under the law if their handicap does not effectively
impede the performance of job operations for which they are hired.
○ Note the incentives for employers of persons with disability.

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 ■ The employers of workers with disability are entitled to additional
deduction from their gross income equivalent to 25% of the total amount
paid as salaries and wages to persons with disability.
● To enjoy the incentive, the following conditions must be complied
with:
○ The employer must get a certification from the DOLE that he
employs persons with disability;
○ The disabled employee must be accredited by the
Department of Labor and Employment and the Department of
Health as to his disability, skills, and qualifications.

5. SEXUAL HARASSMENT IN THE WORK ENVIRONMENT

○ Sexual harassment is the act of demanding or requesting sexual favor by a person
having authority or moral ascendancy over another regardless of whether the
demand or request was accepted or not.
○ Under the Anti-Sexual Harassment Act, sexual harassment can be committed only
when there is a superior-subordinate relationship because sexual harassment is not
about a man taking advantage of a woman because of sexual desire.
■ It is about power being exercised by a superior officer over his subordinates.
■ The power emanates from the fact that the superior can remove the
subordinate from his workplace if the latter would refuse his amorous
advances.
■ The gravamen of the offense of sexual harassment is not the violation of
sexuality, but the abuse of power by the superior.
■ To fall within the ambit of sexual harassment, it is not necessary that the
request for sexual favor be articulated in a categorical, oral, or written
statement.
● It may be discerned with equal certitude from the acts of the
superior.
● It is not even essential that the request be made as a condition for
continued employment, or for promotion.
● It is enough that the sexual advances or request for sexual favor
resulted in creating an intimidating, hostile, or offensive
environment for the employee.
○ Sexual harassment can be committed in a work-related, or employment
environment, or in an education or training environment.

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 ■ In a work-related or employment environment, the victim can be an
employee or an applicant for employment.
● In a work-related or employment environment, sexual harassment is
committed:
○ When sexual favor is made as a condition for hiring,
reemployment, or continued employment, or for granting
favorable terms, conditions, or privileges;
○ When sexual advances result in an intimidating, hostile, or
offensive environment for the employee; or
○ When refusal to grant the sexual favor results in
discrimination, deprivation, or diminution of employment
opportunities, or otherwise adversely affects said employee.
○ Safe Spaces Act
■ If there is no superior subordinate relationship, the employee can still be
liable for serious misconduct or for violation of the Safe Spaces Act, which
prohibits gender-based sexual harassment in the workplace.
■ The Safe Spaces Act contains a provision on gender-based sexual harassment
in the workplace.
■ Unlike in the Anti-Sexual Harassment Act, the Safe Spaces Act does not
require superior-subordinate relationship.
■ Gender-based sexual harassment in the workplace under the Safe Spaces
Act includes:
● Unwelcome sexual advances or request for sexual favors;
● Unwelcome, unreasonable, and offensive conduct of sexual nature;
● Unwelcome, pervasive conduct that creates an intimidating, hostile,
or humiliating environment for the recipient.
■ These acts may be done verbally, physically, or through technology, such as
text messaging, electronic mail, or any other forms of information and
communication systems.
■ Employers are obliged to create a committee on decorum to investigate and
address complaints for sexual harassment.
● The committee shall be composed of representatives from
management, the supervisors, rank-and-file employees, and the
union, if any.
● At least one-half of its members should be women, and the
committee should be headed by a woman/women.

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 — Q and A —

Q: As discussed earlier, the preference of the employee regarding his rest day should be respected
if it’s based on religious grounds. Does this mean that as long as the 7-day notice is complied
with, an employee may raise such preference and the employer cannot compel him to choose
another rest day?

A: Good question. That was also asked to me a few days ago, but my stand would be to follow the
request on religious grounds. Anyway, the notice requirement is just that, a notice. For sure,
most likely, I’m just guessing, most likely, an arrangement can be made. We’re not talking about
absolutes here in that if this doesn’t happen, if the employer does not agree, then that’s it. Most
likely there will be an arrangement that could be reached for the preference, or for the choice of
rest day based on religious grounds.

Q: Thank you attorney, and their follow up is if it would be possible to hold that employer liable
for refusing to respect that preferred rest day based on religious grounds.

A: Oh I’m not aware right now of a violation against that, I will check again.

– END –

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