Yes, they are entitled to their regular

Labor Standards hourly rate on days declared as special

~o~ holidays or when classes are called off
Holidays – Termination of Employment
or shortened.

Producers Bank v. NLRC

HOLIDAYS
The divisor of 314 is arrived at by
Can a person be forced to work during subtracting all Sundays from the total
a holiday? number of calendar days in a year.
The same with instances when required
to work overtime. If you are made to GR: for a 5-day workweek, if the divisor
work, you are paid twice of the daily is 261 and for a 6-day workweek, if the
rate. divisor is 314, then the monthly salary
if the employee already includes
Peculiar situation: teaching personnel payment of the legal holiday. But this
paid per hour depends on the circumstances of each
Refer to Jose Rizal College case.

If two holidays fall on two successive San Miguel Corp. v. CA

days, he must be paid for both days.
BUT you must be present or you must There should be no distinction between
be on leave of absence with pay on the Muslims and non-Muslims as regards
first holiday otherwise you cannot payment of benefits for Muslim
claim the second holiday. holidays.

Jose Rizal College v. NLRC Asian Transmission Corporation v.

CA
Are hourly paid faculty members
entitled to regular holiday pay? Holiday pay is a legislated benefit
enacted as part of the Constitutional
No. Regular holidays specified as such imperative that the State shall afford
by law are known to both school and protection to labor. Unlike a bonus,
faculty members as “no class days,” which is a management prerogative,
certainly the latter do not expect holiday pay is a statutory benefit
payment for said unworked days and demandable under the law.
this was clearly in their minds when
they entered into the teaching Labadan v. Forest Hills Academy
contracts.
The provision that a worker is entitled
Are they entitled to be paid for special to twice his regular rate if he is
holidays and shortened class days due required to work on a holiday implies
to typhoons and the like? that the provision entitling a worker to
his regular rate on holidays applies
even if he does not work.

1
1B 09-10
 SERVICE INCENTIVE LEAVE AND
OTHER LEAVES Imbuido v. NLRC

If the company is giving an employee a An employee is entitled to service

benefit of more than 5 days of SIL, then incentive leave after one period of
the employee will not enjoy the benefit. service (whether continuous or broken)
or its equivalent period, and it is one of
Suppose 15 days of sick leave by virtue the benefits which would have accrued
of a CBA, would employee be entitled to if an employee was not otherwise
SIL? illegally dismissed, it is fair and legal
A: Yes. But if vacation leave, employee than its computation should be up to
will not be entitled because they are of the date of reinstatement as provided
the same nature. Sick leave is of a in Art. 279.
different nature where the employee
cannot work as a consequence of Auto Bus Transport Systems v.
ailment. Bautista

Unlike other leaves granted by law, the What must be ascertained in order to
SIL is commutable and can be resolve the issue of propriety of the
converted to cash. Other leaves grant of service incentive leave to a bus
provided by the CBA not provided for driver-conductor is whether or not he is
by law may be granted out of the policy a field personnel. According to the
or out of agreement. There is no law Labor Code, “field personnel” shall refer
which grants sick and vacation leave. to non-agricultural employees who
regularly perform their duties away
Service charges: amounts which are from the principal place of business or
charged by hotels, restaurants and the branch office of the employer and
like which constitutes 10% of the whose actual hours of work in the field
amount consumed for food. cannot be determined with reasonable
All service charges are pooled together certainty.
and paid to rank-and-file employees.
85% goes to them while 15% goes to The definition of a "field personnel" is
managerial employees. It is paid every not merely concerned with the location
15 days. where the employee regularly performs
his duties but also with the fact that
If the company decides to remove the the employee’s performance is
10% service charge in order to lessen unsupervised by the employer. Field
their prices, dapat ibigay ng employer personnel are those who regularly
yung average na narereceive nung perform their duties away from the
employee na parte ng service charge principal place of business of the
dati. employer and whose actual hours of
work in the field cannot be determined
with reasonable certainty. Thus, in
order to conclude whether an employee

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1B 09-10
is a field employee, it is also necessary
to ascertain if actual hours of work in The difference between the minimum
the field can be determined with wage and the actual salary received by
reasonable certainty by the employer. the employees cannot be deemed as
their 13th month pay and service
A bus driver-conductor, not being a incentive leave pay as such difference
field personnel but a regular employee is not equivalent to or of the same
who performs tasks usually necessary import as the said benefits
and desirable to the usual trade of the contemplated by law.
company’s business, is entitled to the
grant of service incentive leave. Paloma v. PAL

If the employee entitled to service No law provides for commutation of

incentive leave does not use or unused or accrued sick leave credits in
commute the same, he is entitled upon the private sector – commutation is
his resignation or separation from work allowed by way of voluntary endowment
to the commutation of his accrued by an employer through a company
service incentive leave. policy or by a Collective Bargaining
Agreement.
Prescription period: 3 years. It
commences from the time when the Sugue v. Triumph International
employer refuses to pay its monetary
equivalent after demand or In the grant of vacation and sick leave
commutation or upon termination of privileges to an employee, the employer
the employee’s services, as the case is given leeway to impose conditions on
may be. the entitlement to the same as the
grant of vacation and sick leave is not a
Fernandez v. NLRC standard of law, but a prerogative of
management – it is a mere concession
Can the claim for service incentive or act of grace of the employer and not
leave be limited to a certain number of a matter of right on the part of the
years? employee.
No. An employee who has served for
more than one year is entitled to 13th MONTH PAY
service incentive leave. He may use it
as leave days or he may collect its Christmas bonus: provided equal to
monetary value. To limit the award is to 13th month
unduly restrict such right.
13th month is in the nature of wages
JPL Marketing Promotions v. CA therefore no deductions without the
consent of the employee
Service incentive leave is a yearly leave
benefit of 5 days with pay, enjoyed by Are commissions to be included? In the
an employee who has rendered at least case of salesmen, salary +
one year of service. commissions, are commissions

3
1B 09-10
included in the computation of 13th Every employee receiving a commission
month pay? in addition to a fixed or guaranteed
wage or salary is entitled to 13th month
Duplicators case: stencils pay.
Minimum wage + commissions
Q: Can commissions be included? NOTE: Drivers and Conductors are
A: Yes because it is acquired by actual entitled to 13th month pay. The drivers
market transactions and conductors are not paid purely by
what they receive as commission. They
Boie Takeda: Medical Representatives are automatically entitled to basic
Q: Can commissions be considered to minimum pay mandated by law in case
be part of basic wage? the commissions they earned be less
A: No because it is not acquired by than their basic minimum for eight
actual market transaction. They are hours of work. While commissions may
gratuities. be in the form of incentives or
encouragement to inspire drivers and
House of Sarah Lee: they are only given conductors to put more zeal and
to rank-and-file employees. Piece rate industry in their jobs, it is safe to say
workers are also entitled. In the case of that the same are direct renumerations
sea-farers, it would depend in the for services rendered which is the
contract. reason why Vallacar Transit allowed
the drivers and conductors a
Honda Phil Inc v. Samahan ng guaranteed minimum wage.
Malayang Manggagawa sa Honda
Phil. Duplicators, Inc v. NLRC
Payments for sick, vacation and
maternity leaves, night differentials, The salesmen’s commission,
regular holiday pay and premiums for comprising a pre-determined percent of
work done on rest days and special the selling price of the goods sold by
holidays are excluded from the each salesman, were properly included
computation of basic salary. in the term “basic salary” for purposes
of computing their 13th month pay.
Pro-rating an employee’s 13th month
pay is to undermine the wisdom behind
such grant. Boie-Takeda Chemicals Inc v. Dela
Serna
House of Sarah Lee v. Rey
In remunerative schemes consisting of
Only rank-and-file employees are a fixed or guaranteed wage plus
entitled to 13th month pay. commission, the fixed or guaranteed
wage is patently the "basic salary" for
Phil. Agricultural Commercial & this is what the employee receives for a
Industrial Workers Union v. NLRC standard work period. Commissions
are given for extra efforts exerted in
consummating sales or other related

4
1B 09-10
transactions. They are, as such,
additional pay, which this Court has The Labor Arbiter ruled that the
made clear do not form part of the computation was invalid. The petition
"basic salary." Hence, in determining by Honda was also dismissed by the
13th month pay, such commissions Court of Appeals.
should be excluded in the computation.
ISSUE: W/N Honda’s implementation
CASE DIGESTS: of pro-rated 13th month pay, 14th
month pay and financial assistance is
Honda Phils., Inc. v. Samahan ng invalid
Malayang Manggagawa ng Honda
HELD: Petition lacks merit
FACTS: The issue stems from certain
provisions of the CBA between Honda Honda wanted to implement a pro-
Phils and its labor union. The CBA rated computation of the benefits based
provided that the company shall on the "no work, no pay" rule.
maintain the present practice in the According to the company, the phrase
implementation of the 13th month pay, "present practice" as mentioned in the
the company shall grant a 14th month CBA refers to the manner and
pay computed on the same basis as the requisites with respect to the payment
computation of the 13th month pay and of the bonuses, i.e., 50% to be given in
the company agrees to continue the May and the other 50% in December of
practice of granting, in its discretion, each year. Respondent union, however,
financial assistance to covered insists that the CBA provisions relating
employees in December in each year of to the implementation of the 13th
not less than 100% of basic pay. The month pay necessarily relate to the
CBA is effective until 2000. computation of the same.

In lieu of the strikes and bargaining A cursory reading of the provisions of

deadlocks, the company issued a the CBA shows that they did not state
memorandum announcing the new categorically whether the computation
formula for the computation of the 13th of the 13th month pay, 14th month pay
and 14th month pay and the 31 day and the financial assistance would be
long strike shall be considered as based on one full month’s basic salary
unworked days for purposes of of the employees, or pro-rated based on
computing said benefits. According to the compensation actually received.
the new formula, the amount The arbitrator thus properly resolved
equivalent to 1/12 of the employee’s the ambiguity in favor of labor. The
basic salary shall be deducted from Court of Appeals affirmed the
these bonuses with a commitment arbitrator’s finding and added that the
however that in the event that the computation of the 13th month pay
strike is declared legal, Honda shall should be based on the length of
pay the amount deducted. Respondent service and not on the actual wage
union opposed the pro-rated earned by the worker.
computation of the bonuses.

5
1B 09-10
Under the Revised Guidelines on the behalf of the drivers and conductors of
Implementation of the 13th month pay Vallacar Transit on the ground that
provided that the minimum 13th month although the drivers and conductors
pay required by law shall not be less are compensated on a “purely
than one-twelfth (1/12) of the total commission” basis as described in the
basic salary earned by an employee CBA, they are automatically entitled to
within a calendar year. The revised the basic minimum pay mandated by
guidelines also provided for a pro- law should the commission be less
ration of this benefit only in cases of than the basic minimum for eight
resignation or separation from work. As hours work.
the rules state, under these
circumstances, an employee is entitled In Vallacar Transit’s position paper,
to a pay in proportion to the length of they contend that since the drivers and
time he worked during the year, conductors are compensated on a
reckoned from the time he started purely commission basis, they are not
working during the calendar year. The entitled to 13th month pay pursuant to
Court of Appeals correctly held that the exempting provisions enumerated
there being no gap in the service of the in par. 2 of the Revised Guidelines on
workers during the calendar year in the Implementation of the 13th Month
question, the computation of the 13th Pay Law. They further contended that
month pay should not be pro-rated but Sec. 2 of Art. XIV of the CBA expressly
should be given in full. provided that drivers and conductors
paid on a purely commission are not
It has not been refuted that Honda has legally entitled to 13th month pay.
not implemented any pro-rating of the
13th month pay before the instant case. The Labor Arbiter dismissed the
Honda did not adduce evidence to show complaint. The appeal of the petitioner
that the 13th month, 14th month and to the NLRC was also dismissed.
financial assistance benefits were
previously subject to deductions or pro- ISSUE: W/N bus drivers and
rating or that these were dependent conductors are entitled to 13th month
upon the company’s financial standing. pay
It was also the company’s practice to
give the bonuses in its full amount. HELD: Yes, they are entitled to 13th
month pay.
Phil. Agricultural Commercial and
Industrial Workers Union v. National RATIONALE:
Labor Relations Commission
13th Month Pay Law (PD 851)
FACTS: Phil. Agricultural Commercial
and Industrial Workers Union is the Sec. 1 of the 13th Month Pay law
bargaining agent of the rank and file provides that all employers are required
employees of Vallacar Transit. They to pay all their employees receiving
instituted a complaint with the NLRC basic salary of not more than
for the payment of 13th month pay in 1,000/month, regardless of the nature

6
1B 09-10
of the employment, a 13th month pay their basic minimum for eight hours of
not later than Dec. 24 of every year. work. While commissions may be in the
form of incentives or encouragement to
Rules and Regulations of PD 851 inspire drivers and conductors to put
more zeal and industry in their jobs, it
The Rules and Regulations of PD 851 is safe to say that the same are direct
provided that the basic salary shall renumerations for services rendered
include renumerations or earning paid which is the reason why Vallacar
by an employer to an employee for Transit allowed the drivers and
services rendered. conductors a guaranteed minimum
wage.
Memorandum Order 28
Philippine Duplicators v. NLRC
Memorandum Order 28 issued by Pres.
Aquino modified to the extent that all FACTS: The Third Division of the
employers are required to pay all their Supreme Court rendered a decision
rank and file employees a 13th month dismissing the Petition for
pay not later than Dec. 24 of every Certiorari filed by Philippine
year. In connection with the order, the Duplicators or the Duplicators case
Minister of Labor and Employment wherein the Court upheld the decision
issued an Explanatory Bulletin which of NLRC, which affirmed the order of
provides that employees who are paid a the Labor Arbiter directing petitioner to
fixed or guaranteed wage plus pay 13th month pay to private
commission are also entitled to 13th respondent employees computed on the
month pay. basis of their fixed wages plus sales
commissions. It also denied the Motion
Drivers and Conductors are entitled to for Reconsideration.
13th month pay
Phil. Duplicators filed a Second Motion
From the cited provisions, it is clear for Reconsideration. Petitioner invoked
that every employee receiving a the Court’s decision in the consolidated
commission in addition to a fixed or cases of Boie-Takeda and Fuji Xerox
guaranteed wage or salary is entitled to Corp. In the said decision, the Second
a 13th month pay. It is immaterial Division of the Court declared null and
whether the employees concerned are void the second paragraph of Sec.5(a)
paid a guaranteed wage plus of the Revised Guidelines issued by the
commission or a commission with Secretary of Labor. The said paragraph
guaranteed wage. provides that employees who are paid a
fixed or guaranteed wage plus
The drivers and conductors are not commission are also entitled to the
paid purely by what they receive as mandated 13th month pay, based on
commission. They are automatically their total earnings during the calendar
entitled to basic minimum pay year on both their fixed or guaranteed
mandated by law in case the wage and commission. Petitioner
commissions they earned be less than contends that the decision in the

7
1B 09-10
Duplicators case should now be Duplicators for doing their job. The
considered as abandoned by the Boie- Third Division correctly held that the
Takeda decision. Petitioner prays that sales commissions were an integral
the decision rendered in Duplicators be part of the basic salary structure of
set aside and another be entered Phil. Duplicators’ employees-salesmen.
directing the dismissal of the money These commissions are not overtime
claims of Phil. Duplicator’s Employees’ payments, profit-sharing payments nor
Union. The case was then referred to any other fringe benefit. Thus, the
the Supreme Court en banc. salesmen’s commissions, comprising of
a pre-determined percent of the selling
ISSUE: W/N the Duplicators case be price of the goods sold by each
set aside salesman, were properly included in
the term “basic salary” for purposes of
HELD: No computing their 13th month pay.

Doctrine of Stare Decisis In Boie-Takeda the commissions "paid

to or received by medical
The decision rendered in Boie-Takeda representatives of Boie-Takeda
cannot serve as a precedent under the Chemicals or by the rank and file
doctrine of stare decisis because it was employees of Philippine Fuji Xerox Co.,"
decided a month after the Court were excluded from the term "basic
rendered the decision on the salary" because these were paid to the
Duplicators case. The petitioner’s medical representatives and rank-and-
Motion for Reconsideration of the file employees as "productivity
decision was also denied with finality. bonuses." The Second Division
The petitioners did not allege the characterized these payments as
validity of the Revised Guidelines on additional monetary benefits not
the Implementation of the 13th Month properly included in the term “basic
Pay Law either in its Petition for salary” in computing their 13th month
Certiorari or in its Motion for pay.
Reconsideration. In fact, the
petitioner’s counsel relied on these The "commissions" paid by the Boie-
guidelines and asserted their validity in Takeda Company to its medical
opposing the decision rendered by the representatives could not have been
NLRC. "sales commissions" in the same sense
that Philippine Duplicators paid its
Decision in Boie-Takeda is not directly salesmen sales commissions. Medical
opposite or contrary to the Duplicators representatives are not salesmen; they
case do not effect any sale of any article at
all. In common commercial practice,
In the Duplicators case, the sales medical representatives are employees
commissions received for every engaged in the promotion of
duplicating machine sold constituted pharmaceutical products or medical
part of the basic compensation or devices manufactured by their
renumeration of the salesmen of Phil. employer. They promote such products

8
1B 09-10
by visiting identified physicians and benefits, overtime pay or profit-sharing
inform them of the existence and payments, they are properly excluded
chemical composition and virtues of in computing the 13th month pay.
particular products of their company. However, sales commissions which are
They commonly leave medical samples effectively an integral portion of the
with each physician visited; but those basic salary structure of an employee
samples are not "sold" to the physician shall be included in determining his
and the physician is, as a matter of 13th month pay.
professional ethics, prohibited from
selling such samples to their patients. Productivity bonuses and sales
Thus, the additional payments made to commissions may have an incentive
Boie-Takeda's medical representatives effect. Productivity bonuses are
were not in fact sales commissions but generally tied to the productivity or
rather partook of the nature of profit- profit generation of the employer
sharing bonuses. corporation. Productivity bonuses are
not directly dependent on the extent an
The doctrine in Boie-Takeda is that individual employee exerts himself. A
additional payments made to productivity bonus is something extra
employees to the extent they partake of for which no specific additional services
the nature of profit-sharing payments are rendered by any particular
are properly excluded from the term employee and hence not legally
basic salary“ for purposes of computing demandable, absent a contractual
the 13th month pay due to employees. undertaking to pay it.
Such additional payments are not
commissions within the meaning of the Sales commissions, on the other hand,
second paragraph of Sec. 5(a) of the such as those paid in Duplicators, are
Revised Guidelines Implementing 13th intimately related to or directly
Month Pay. proportional to the extent or energy of
an employee's endeavors. Commissions
The Supplementary Rules and are paid upon the specific results
Regulations Implementing PD 851 achieved by a salesman-employee. It is
subsequently issued by Labor Minister a percentage of the sales closed by a
Ople clarified the scope of items salesman and operates as an integral
excluded in the computation of the 13th part of such salesman's basic pay.
month pay. Overtime pay, earnings and
other renumerations which are not part Boie-Takeda Chemicals, Inc. v. De la
of the basic salary shall not be included Serna
in the computation of the 13th month
pay. The particular types of earnings FACTS:
and renumeration are or are not
properly included or integrated in the In Boie-Takeda
basic salary are questions to be
resolved on a case to case basis. In A routine inspection was conducted in
principle, where these earnings and Boie-Takeda Chemicals by Labor and
remuneration are closely akin to fringe Development Officer Reynaldo Ramos

9
1B 09-10
under Inspection Authority. Finding A similar routine inspection was
that Boie-Takeda had not been conducted in Phil. Fuji Xerox Corp. The
including the commissions earned by Notice of Inspection Results noted that
its medical representatives in the there was an underpayment of the 13th
computation of the 13th month pay, month pay. Director Piezas issued an
Ramos served a Notice of Inspection order directing the Senior Labor
Results on Boie-Takeda requiring to Employment Officer to compute the
effect restitution or correction of the deficiency. Fuji appealed the order to
underpayment of 13th month pay the Office of the Secretary of Labor.
within ten (10) calendar days from Undersecretary Trajano denied the
notice. appeal.

Boie-Takeda wrote the Labor ISSUE: W/N the respondent labor

Department contesting the Notice of officials in computing the 13th month
Inspection Results, and expressing the pay committed grave abuse of
view "that the commission paid to our discretion amounting to lack of
medical representatives are not to be jurisdiction by giving effect to Sec. 5 of
included in the computation of the the Revised Guidelines on the
13th month pay since the law and its Implementation of the 13th month pay
implementing rules speak of REGULAR promulgated by Sec. Drilon.
or BASIC salary and therefore exclude
all other remunerations which are not PETITIONER’S CONTENTION
part of the REGULAR salary." It pointed
out that, "if no sales is made under the They maintain that under P.D. 851, the
effort of a particular representative, 13th month pay is based solely on
there is no commission during the basic salary. As defined by the law
period when no sale was transacted, so itself and clarified by the implementing
that commissions are not and cannot and Supplementary Rules as well as
be legally defined as regular in nature. Supreme Court decisions,
remunerations which do not form part
Regional Director Luna Piezas directed of the basic or regular salary of an
Boie-Takeda to appear before his office employee, such as commissions,
but no one appeared from Boie-Takeda. should not be considered in the
The matter was resolved on the basis of computation of the 13th month pay.
the evidence at hand. Director Piezas This being the case, the Revised
ordered Boie-Takeda to pay its medical Guidelines on the Implementation of
representatives the underpayment of the 13th Month Pay Law issued by then
their 13th month pay. Boie-Takeda Secretary Drilon providing for the
appealed the order to Acting Labor inclusion of commissions in the 13th
Secretary Dionisio de la Serna who month pay, were issued in excess of the
affirmed the order with modifications. statutory authority conferred by P.D.
851. Petitioners further contend that
In Fuji Xerox assuming that Secretary Drilon did not
exceed the statutory authority
conferred by P.D. 851, still the Revised

10
1B 09-10
Guidelines are null and void as they such additional payments as bonuses
violate the equal protection of the law and overtime.
clause.
In remunerative schemes consisting of
RESPONDENT’S CONTENTION a fixed or guaranteed wage plus
commission, the fixed or guaranteed
P.D. No. 851, otherwise known as the wage is patently the "basic salary" for
13th Month Pay Law has already been this is what the employee receives for a
amended by Memorandum Order No. standard work period. Commissions
28 issued by President Corazon C. are given for extra efforts exerted in
Aquino so that commissions are now consummating sales or other related
imputed into the computation of the transactions. They are, as such,
13th Month Pay. They add that the additional pay, which this Court has
Revised Guidelines issued by then made clear do not form part of the
Labor Secretary Drilon merely clarified "basic salary."
a gray area occasioned by the silence of
the law as to the nature of In including commissions in the
commissions; and worked no violation computation of the 13th month pay,
of the equal protection clause of the the second paragraph of Section 5(a) of
Constitution, said Guidelines being the Revised Guidelines on the
based on reasonable classification. Implementation of the 13th Month Pay
Law unduly expanded the concept of
HELD: Petition granted, second "basic salary" as defined in P.D. 851. It
paragraph of Sec.5(a) of the Revised is a fundamental rule that
Guidelines on the Implementation of implementing rules cannot add to or
the 13th Month Pay law is null and void detract from the provisions of the law it
is designed to implement.
Memorandum Order no. 28 Administrative regulations adopted
under legislative authority by a
Memorandum Order no. 28 did not particular department must be in
repeal PD 851. It merely modified Sec. harmony with the provisions of the law
1 by removing the 1,000 salary ceiling. they are intended to carry into effect.
The benefit is still to be computed on They cannot widen its scope. An
the basic salary of the employee- administrative agency cannot amend
recipient provided under PD 851. The an act of Congress.
interpretation given to the term “basic
salary” in PD 851 applies equally to EMPLOYMENT OF WOMEN
“basic salary” under Memorandum
Order 28. PT&T v. NLRC

The term "basic salary" is to be The policy of not accepting or

understood in its common, generally- considering as disqualified from work
accepted meaning, i.e., as a rate of pay any woman worker who contracts
for a standard work period exclusive of marriage runs afoul of the test of and
the right against discrimination

11
1B 09-10
afforded all women workers by our visitors, mostly Chinese, who came to
labor laws and by no less than the pray or seek advice before Buddha for
Constitution. While it is true that the personal or business problems;
parties to a contract may establish any arranged meetings between these
agreements, terms and conditions that visitors and Su and supervised the
may deem convenient, the same should preparation of the food for the temple
not be contrary to law, morals, good visitors; acted as tourist guide of
customs, public order or public policy. foreign visitors; acted as liaison with
some goverment offices; and made the
Lakpue Drug Inc v. Belga payment for the temple's Meralco,
MWSS and PLDT bills. Indeed, these
Failure on the part of the employee to tasks may not be deemed activities of a
formally inform the employer of her household helper. They were essential
pregnancy can not be considered as and important to the operation and
grave misconduct directly connected to religious functions of the temple.
her work as to constitute just cause for
her separation. Cuajao v. Chua Lo Tan

EMPLOYMENT OF HOUSEHELPERS Vacation leave of four days a month

entitled to a family driver is deemed
Apex Mining Company, Inc v. NLRC waived if not demanded at its
opportune time and allowed to lapse
Laundrywoman not actually serving the over the years in silence. Privilege of
family of the employer but working in vacation leave can neither be
the staffhouses or within the premises accumulated nor converted to cash.
of the business of the employer is a
regular employee and not a domestic APPRENTICES
helper.
Nitto Enterprises v. NLRC
NOTE: The term househelper shall refer
to any person, whether male or female, In apprenticeship agreements, prior
who renders services in and about the approval by the Department of Labor
employer’s home and which services and Employment of the proposed
are usually necessary or desirable for apprenticeship program is a condition
the maintenance and enjoyment sine qua non before an apprenticeship
thereof, and ministers exclusively of the agreement can be validly entered into.
employer’s family. Where the apprenticeship agreement
has no force and effect, the worker
Barcenas v. NLRC hired as apprentice should be
considered as a regular employee.
The work that petitioner performed in
the temple could not be categorized as Century Canning Corporation v. CA
mere domestic work. Thus, We find
that petitioner, being proficient in the Prior approval from the Technical
Chinese language, attended to the Education and Skills Development

12
1B 09-10
Authority (TESDA) is necessary to offense. The act committed must have
ensure that only employers in the reference to the work.
highly technical industries may employ
apprentices and only in apprenticeable Managerial: belief that the conduct was
occupations. committed is sufficient
Rank-and-file: higher degree of proof is
required; proof of actual involvement
HANDICAPPED WORKERS
Golden Thread Knitting v. NLRC
Bernardo v. NLRC
The characterization of an employee’s
The Magna Carta for Disabled Persons services as no longer necessary or
mandates that a qualified disabled sustainable and therefore properly
employee should be given the same terminable is an exercise of business
terms and conditions of employment as judgment on the part of the employer.
a qualified able-bodied person. It is not enough for a company to
merely declare that it has become
NOTE: In this case, the fact that the overmanned – it must produce
employees were qualified disabled adequate proof that such is the actual
persons necessarily removes the situation in order to justify the
employment contracts from the ambit dismissal of the affected employees for
of Art. 80. Since the Magna Carta redundancy.
accords them the rights of qualified
able-bodied persons, they are covered In selecting the employees to be
by Art. 280 of the Labor Code. dismissed, a fair and reasonable
criteria must be used, such as but not
Nakpil v. Manila Towers limited to:
Development Corporation a. Less preferred status
b. Efficiency
Building owners may be compelled to c. Seniority
provide access ramps for disabled
persons. The utterances by an employee of
obscene, insulting or offensive words
TERMINATION OF EMPLOYMENT against a superior justify his dismissal
for gross misconduct, but the dismissal
Aurelio v. NLRC will not be upheld where it appears
that the employee’s act of disrespect
Loss of confidence as a ground for was provoked by the employer.
dismissal does not require proof
beyond reasonable doubt. The circumstances that an employee
lost no time in filing a complaint for
NOTE: In loss of trust and confidence, illegal dismissal against the employer is
there must be a cause; the employee incompatible with the charge of
must have committed a work-related abandonment.

13
1B 09-10
NOTE: Abandonment is a difficult (3) that the employer pays the
ground to prove. Mere absence does not retrenched employees separation pay
suffice. It is necessary that by the equivalent to one month pay or at least
employee by some overt act manifested 1/2 month pay for every year of service,
that there is no intent to go back to whichever is higher;
work. Complaint of illegal dismissal (4) that the employer exercises its
negates abandonment for as long as prerogative to retrench employees in
there is no re-instatement. Serious good faith for the advancement of its
misconduct is a work-related offense. interest of its interest and not to defeat
or circumvent the employees' right to
Maya Farms Employees Organization security of tenure; and
v. NLRC (5) that the employer used fair and
reasonable
Last In, First Out (LIFO) Rule: when criteria in ascertaining who would be
there are two or more employees dismissed and who would be retained
occupying the same position in the among the employees, such as status
company affected by the retrenchment (i.e., whether they are temporary,
program, the last one employed will casual, regular or managerial
necessarily be the first to go. employees), efficiency,
seniority, physical fitness, age, and
Asian Alcohol Corp. v. NLRC financial hardship for certain workers.

Retrenchment and redundancy are just The phrase “retrenchment to prevent

causes for the employer to terminate losses” means that retrenchment must
the services of workers to preserve the be undertaken by the employer before
viability of the business. losses are actually sustained.

Requirements for valid retrenchment NOTE: In the case of succession

must be proved by clear and convincing employer, when a company is bought
evidence: by another, is the new employer liable
for money claims? Are they bound by
(1) that the retrenchment is reasonably the CBA of the old employer?
necessary and likely to prevent
business losses, which, if already The answer depends on how the
incurred, are not merely de minimis, company was acquired.
but substantial, serious, actual and
real, or if only expected, are reasonably If it is acquired through the sale of
imminent as perceived objectively and shares of stock, the new employer must
in good faith by the respect the CBA and others. On the
employer; other hand, if the sale is not by shares
(2) that the employer served written of stock but by deed of sale you
notice both to the employees and to the enumerate all things to be bought.
Department of Labor and Employment Labor (CBA) contracts are contracts in
at least one month prior to the intend persona so that when parties acted in
date of retrenchment;

14
1B 09-10
good faith, the new employer is not be voluntary and made with the
liable for money claims. intention of relinquishing the office,
accompanied with an act of
North Davao Mining Corp. v. NLRC relinquishment.

Art. 283 of the Labor Code do not Colegio de San Juan de Letran-
obligate an employer to pay separation Calamba v. Villas
benefits when the closure is due to
losses. Misconduct is improper or wrongful
conduct. It is the transgression of some
NOTE: Are companies required to pay established and definite rule of action,
their employees their separation pay a forbidden act, a dereliction of duty,
due to cessation of business willful in character and implies
operations? The answer must be wrongful intent and not mere error of
qualified. Not necessarily required if it judgment.
is due to serious business losses
wherein the company is already In the case at bar, assuming arguendo
bankrupt hence there are no more that the respondent failed to report for
assets to pay employee’s separation work on the agreed date and enroll
pay. However, in the case of Cheniver during the first semester, the most
where the company was not suffering respondent could be charged with was
serious business losses, the company simple misconduct.
must pay the employee’s separation
pay. Jose S. Santos, Jr. v. NLRC

Cheniver Deco Print Technics Corp. To constitute immorality, the

v. NLRC circumstances of each particular case
must be holistically considered and
The phrase “closure or cessation of evaluated in light of prevailing norms of
operation of an establishment or conduct and applicable laws.
undertaking not due to serious
business losses or reverses” under Art. When a teacher engages in extra-
283 of the Labor Code includes both marital relationship, especially when
the complete cessation of all business the parties are both married, such
operations and the cessation of only behavior amounts to immorality,
part of a company’s business. justifying his termination from
employment.
Even though the transfer of a company
plant is due to a reason beyond the NOTE: The rule before is that even
control of the employer, it still has to there is just cause but the employer did
accord its employees some relief in the not complied with the twin
form of severance pay. requirements of due process, the
termination is invalid and the employer
Resignation is inconsistent with the is ordered to reinstate the employee.
filing of a complaint. Resignation must But this was abandoned in Serrano

15
1B 09-10
and modified in Agabon. In the case of NOTE: In this case, since the union
Santos, there was just cause and due and the company did not comply with
process was observed therefore the the twin requirements of notice, the
termination is valid. employee was illegally dismissed.

Viola Cruz v. NLRC Agabon v. NLRC

For a disease to be a valid ground for Minimum penalty for non-compliance

the dismissal of the employee, the with due process but with existence of
continued employment of such valid cause to terminate an employee is
employee is prohibited by law or set at 30,000. It is dependent upon the
prejudicial to his health or the health of circumstances of each case.
his co-employees, and there must be a
certification by a competent public NOTE: SC relaxed in this ruling. In
health authority that the disease is of Wenphil, the SC said that provided the
such nature or at such a stage that it termination was for a just case but
cannot be cured within a period of six there was no due process, the
(6) months, even with proper medical termination is valid but failure to
treatment. comply with due process, the employer
is penalized PhP1,000 for non-
Since the burden of proving the validity compliance with due process.
of the dismissal of the employee rests
on the employer, the latter should In Serrano, if there was no due process
likewise bear the burden of showing given but there is just or authorized
that the requisites for a valid dismissal cause, the employer will be penalized
due to a disease have been complied by backwages from the time of
with. In the absence of the required termination and finality of judgment.
certification by a competent public
health authority, this Court has ruled What are the reliefs available to the
against the validity of the employee's employee who was illegally terminated?
dismissal. Reinstatement without loss of seniority
rights, backwages, attorney’s fees, and
Ferrer v. NLRC damages (nominal, moral, exemplary).
In case of reinstatement, if the position
When good standing with the is no longer available and there is no
employee’s union is a condition for equivalent position available, the relief
employment and such good standing is separation pay in lieu of
was allegedly tainted by an employee, reinstatement.
the latter has the right to due process.
In case the union failed to investigate Roguero v. PAL
on such matter, it is the duty of the
company to conduct an investigation Serious misconduct is defined as "the
on the veracity of such allegations. transgression of some established and
definite rule of action, a forbidden act,
a dereliction of duty, willful in

16
1B 09-10
character, and implies wrongful intent constructive dismissal if an act of clear
and not mere error in judgment." For discrimination, insensibility, or disdain
serious misconduct to warrant the by an employer becomes so unbearable
dismissal of an employee, it (1) must be on the part of the employee that it
serious; (2) must relate to the could foreclose any choice by him
performance of the employee's duty; except to forego his continued
and (3) must show that the employee employment.
has become unit to continue working
for the employer. Alfaro v. Court of Appeals

It is of public knowledge that drugs can Voluntary resignation is defined as the

damage the mental faculties of the act of an employee, who finds himself
user. Roquero was tasked with the in a situation in which he believes that
repair and maintenance of PAL's personal reasons cannot be sacrificed
airplanes. He cannot discharge that in favor of the exigency of the service;
duty if he is a drug user. His failure to thus, he has no other choice but to
do his job can mean great loss of lives disassociate himself from his
and properties. Hence, even if he was employment.
instigated to take drugs he has no right
to be reinstated to his position. He took The claim of petitioner that he was
the drugs fully knowing that he was on illegally dismissed cannot be sustained,
duty and more so that it is prohibited considering that his voluntary
by company rules. Instigation is only a resignation has been indubitably
defense against criminal liability. It established as a fact by the three
cannot be used as a shield against tribunals below. Indeed, illegal
dismissal from employment especially dismissal and voluntary resignation are
when the position involves the safety of adversely opposed modes of
human lives. terminating employment relations, in
that the presence of one precludes that
The order of reinstatement is of the other.
immediately executory.
Intertrod Maritime, Inc v. NLRC
Hyatt Taxi Services, Inc v. Catinoy
Resignation once accepted and being
After the 30-day period of preventive the sole act of the employee may not be
suspension, the employee must be withdrawn without the consent of the
reinstated to his former position employer. The mere fact that they did
because suspension beyond this not accept such withdrawal did not
maximum period amounts to constitute illegal dismissal for
constructive dismissal. acceptance of the withdrawal of the
resignation was the employer’s sole
Constructive dismissal does not always prerogative.
involve forthright dismissal or
diminution in rank, compensation, NOTE: There must be acceptance by
benefit and privileges. There may be the employer of the resignation and

17
1B 09-10
there must be the consent of the In order to enable the employees to
employer if the employee (who has intelligently prepare their explanation
resigned) wants to return to work. and defenses, the notice should contain
a detailed narration of the facts and
San Miguel Corp. v. Del Rosario circumstances that will serve as basis
for the charge against the employees –
An employee who was illegally a general description of the charge will
dismissed is entitled to reinstatement not suffice.
and backwages.
A verbal appraisal of the charges
Association of Integrated Security against an employee does not comply
Force of Bislig-ALU v. CA with the first notice requirement.

An employer may close or cease his NOTE: 24 hours is not ample

business operations even if he were not opportunity to explain. There must be
suffering from business losses or at least 5 days to consult with a lawyer
financial reverses. and prepare an answer. The complaint
against the employee must include the
Heavylift Manila, Inc. v. CA rules violated and the penalty for its
violation. It must also narrate in
An employee’s attitude problem is a particular detail these charges against
valid ground for termination. It is a the employee and should no longer be
situation analogous to loss of trust and in general statements.
confidence that must be duly proved by
the employer. Citibank v. NLRC

What is required is substantial Where the notice of charges given to an

evidence to support the termination on employee is inadequate, the charges
the ground of attitude problems. The being too general to enable the
mere mention of negative feedback employee to intelligently and
from her team members and the letter adequately prepare her defense, the
dated Feb. 23, 1999, are not proof of dismissal could not be in accordance
her attitude problem. The letter did not with due process.
constitute the required notice because
it did not inform her of the specific acts NOTE: if the employee was only
complained of and their corresponding reinstated in the payroll (payroll
penalty. The letter never gave the reinstatement), the employee must
respondent an opportunity to explain reimburse the wages he received if the
herself thus denying her of due SC did not decide in his favor. If the
process. employee was actually reinstated, there
is no need for reimbursement. But this
King of Kings Transport, Inc v. is an empty victory for the employer.
Mamac How could you expect the employee to
return his wages?

18
1B 09-10
Payroll reinstatement is an ancilliary concept of seniority, loyalty and past
remedy. efficiency and treated all cabin
attendants as if they were on equal
Side issue: reinstatement. Is it effective footing, with no one more senior than
immediately? the other.
When the Labor Arbiter rules that the
employee must be reinstated, the order Postigo v. Phil. Tuberculosis Society
is immediately executory. It is the duty
of the employer to reinstate the PTSI is a private corporation thus the
employee. But he has a choice if the petitioners are employees in the private
reinstatement be actual or payroll. sector hence entitled to the benefits of
RA 7641.
Flight Attendants and Stewards
Assoc. of the Phils v. PAL Employees of government-owned and
controlled corporations under the
The law speaks of serious business Corporation Code are governed by the
losses or financial reverses – sliding provisions of the Labor Code.
incomes or decreasing gross revenues
are not necessarily losses, much less Leopard Integrated Services Inc v.
serious business losses within the Macalinao
meaning of the law.
Most contracts for security services
The employer must also exhaust all stipulate that the client may request
other means to avoid further losses the replacement of the guards assigned
without retrenching its employees. to it and a relied and transfer order in
Retrenchment is a means of last resort. itself does not sever employment
The fact that PAL underwent corporate relationship between a security guard
rehabilitation does not automatically and his agency.
justify the retrenchment of its cabin
crew personnel. Yrasuegui v. PAL

The hiring of new employees and The obesity of a cabin crew, when
subsequent rehiring of “retrenched” placed in the context of his work as a
employees constitute bad faith. The flight attendant, becomes an analogous
failure of the employer to resort to cause under Art. 282(e) of the Labor
other less drastic measures than Code that justifies his dismissal from
retrenchment seriously belies its claim service.
that retrenchment was done in good
faith to avoid losses. Bona Fide Occupational Qualification:
employment in particular jobs may not
By discarding the cabin crew be limited to persons of a particular
personnel’s previous years of service sex, religion or national origin unless
and taking into consideration only one the employer can show that sex,
year’s worth of job performance for religion or national origin is an actual
evaluation, PAL did away with the qualification for performing the job.

19
1B 09-10
BFOQ is valid provided that it reflects But this case provides an XPN to the
an inherent quality reasonably second requisite. When the certification
necessary for satisfactory job came from the physician of the
performance employee, the certificate can be relied
on.
Meiorin Test:
a. The employer must show that it
adopted the standard for a
purpose rationally connected to
the performance of the job;
b. The employer must establish that
the standard is reasonably
necessary to the accomplishment
of that work-related purpose; and
c. The employer must establish that
the standard is reasonably
necessary in order to accomplish
the legitimate work-related
purpose

Santos v. Servier Phils

The receipt of retirement benefits does

not bar the retiree from receiving
separation pay. Retirement benefits
and separation pay are not mutually
exclusive unless there is no specific
prohibition against the payment of both
benefits in the retirement plan and/or
in the CBA.

NOTE: in this case, there being a

provision in the Retirement Plan, the
petitioner is entitled only to either the
separation pay under the law or
retirement benefits under the Plan and
not both.

Requirements for valid termination by

reason of ailment:
1. Illness cannot be cured within 6
months
2. Certification by a public health
officer

20
1B 09-10
 FINALS COVERAGE the Bureau of Cooperative
Development and approved by
 What are “Facilities”? the Secretary of Labor; and
e. Farm Tenancy or lease hold.
Facilities include articles or services for
the benefit of the employee or his  Minimum Wage
family.
 Wage distortions
 Difference between wages and
salaries Wage distortion involves four elements:

Wages are compensation paid to blue a. An existing hierarchy of positions

collar workers, i.e., for skilled or with corresponding salary rates
unskilled manual labor paid at stated b. A significant change in the salary
daily, weekly, monthly or seasonal rate of a lower pay class without
periods a concomitant increase in the
salary rate of a higher one
Salaries are paid to white collar c. The elimination of the distinction
workers and denote a higher grade of between the two levels
employment, a superior grade of d. The existence of the distortion in
services and a position of office the same region of the country

 What is a “Living Wage”?  What are the provisions that

protect the wages of
It is one which is as nearly adequate as employees?
is economically feasible to maintain the
minimum standards of living necessary a. Prohibition as to deduction from
for the health, efficiency and general wages without authorization,
well-being of the employees within the except only as authorized by law
framework of the national economic b. Prohibition as to withholding of
and social development program. wages and kickbacks
c. Freedom of disposition of wages
 Who are excluded from the by employees
coverage of Wages? d. Payment of wages in legal tender
e. Direct payment of wages to
a. Persons in the personal service of employee
another; f. Direction as to period of payment
b. Homeworkers engaged in of wages
needlework; g. Direction as to place of payment
c. Workers employed in cottage of wages
industries duly registered in
accordance with law and who  Worker‟s preference in case of
perform the work in their homes; bankruptcy
d. Workers in duly registered
cooperatives as recommended by

21
1B 09-10
Preferential right given to workers original charter because they are
under Art. 110 may be invoked only governed by the Civil Service
during bankruptcy or insolvency Law. XPN: employees of
proceedings against the employer. government owned and
(1) In our jurisdiction, bankruptcy controlled corporations organized
or insolvency (or general judicial under the Corporation Code are
liquidation) proceedings provide covered by the provisions of the
the only proper venue for the Labor Code
enforcement of a creditor’s (2) Managerial Employees
preferential right such as that (3) Managerial Staff
established by Art. 110. (4) Field Personnel
(2) Art. 110 cannot be viewed in (5) Family Members
isolation of, and must always be (6) Domestic Helpers and Persons in
reckoned with, the provisions of the personal service of another
the Civil Code on concurrence (7) Workers paid by Results
and preference of credits, viz.,
Articles 2241 to 2245.  Who are considered as
(3) What Art. 110 of the Labor Code managerial staff?
established is not a lien, but a
preference of credit in favor of (1) Their primary duty consists of
employees. Unlike a lien, a the performance of work directly
preference of credit does not related to management policies of
create a charge upon any their employer
particular property of the debtor. (2) They customarily and regularly
This simply means that during exercise discretion and
bankruptcy or insolvency independent judgment
proceedings against the (3) They regularly and directly assist
properties of the employer, the the managerial employee whose
employees have the advantage of primary duty consists of the
having their unpaid wages management of a department of
satisfied ahead of certain claims the establishment in which they
which may be proved therein. are employed
(4) They execute, under general
 Hours of Work supervision, work along
specialized or technical lines
 Principles in determining requiring special training,
hours of work experience and knowledge
(5) They execute, under general
 Exclusions from hours of work supervision, special assignments
and tasks
GOV-ME-MS-FP-FM-DH-WR (6) They do not devote more than
20% of their hours worked in a
(1) Government employees, work-week to activities which are
including employees of owned or not directly and clearly related to
controlled corporations with

22
1B 09-10
 the performance of their work ensure, at all times, the fundamental
hereinbefore described equality before the law of women and
men
 Holidays
Sec. 3 of Article XIII – requires the
 Service incentive leave State to afford full protection to labor
and to promote full employment and
Yearly leave benefit of five days with equality of employment opportunities
pay, enjoyed by an employee who has for all, including assurance of
rendered at least one year of service. entitlement to tenurial security of all
workers
 Maternity leave
Sec. 14 of Art. XIII – mandates that the
Female employee who has paid at least State shall protect working women
three monthly maternity contributions through provisions for opportunities
in the 12-month period preceding the that would enable them to reach their
semester of her childbirth, abortion or full potential
miscarriage and who is currently
employed shall be paid a daily  Employment of Minors
maternity benefit equivalent to one
hundred percent of her present basic  Househelpers
salary, allowances and other benefits or
the cash equivalent of such benefits for  Difference between apprentices
sixty days subject to the following and learners
conditions (pp.81-82)
 Retirement
 Paternity leave
 Employee-employer
Every male employee in the private relationship
sector shall be entitled to paternity
leave benefits of seven days with full  Labor standards
pay for the first four deliveries by his
lawful spouse under such terms and  Termination of Employment
conditions provided in the rules.

 Service charges ~o~

 13th Month Pay

 What are the constitutional

provisions protecting women?

Sec. 14, Article II – expressly

recognized the role of women in nation-
building and commands the State to

23
1B 09-10
Art. 278 – Coverage employment shall continue while such
Establishments or Undertakings, activity exists.
whether for Profit or Not
Art. 281 – Probationary Employment
Art. 279 – Security of Tenure Not exceed 6 months from the
Regular Employment – employer date the employee started working
shall not terminate the services of an unless it is covered by an
employee except for a just cause or apprenticeship agreement
authorized cause stipulating a longer period.
Unjust dismissal – employee is
entitled to The services of a probationary
1. Reinstatement without loss of employee may be terminated for:
seniority rights and other a. Just cause; or
privileges b. When he fails to qualify as a
2. Full back wages inclusive of regular employee in accordance
allowances computed from the with reasonable standards made
time his compensation was known by the employer to the
withheld from him up to the time employee at the time of his
of his actual reinstatement engagement.

Art. 280 – Regular and Casual An employee who is allowed to work

Employment after a probationary period shall be
Regular Employment – employee considered a regular employee.
has been engaged to perform activities
which are usually necessary or Art. 282 – Termination by Employer
desirable in the usual business or trade
of the employer except where the An employer may terminate an
employment has been fixed for a employment for any of the following
specific project or undertaking the causes:
completion or termination of which has
been determined at the time of the a. Serious misconduct or willful
engagement of the employee or where disobedience by the employee of
the work or service to be performed is the lawful ordered of his
seasonal in nature and the employment employer or representative in
is for the duration of the season. connection with his work;
b. Gross and habitual neglect by
Casual Employment – if not the employee of his duties;
covered by regular employment c. Fraud or willful breach by the
provided that any employee has employee of the trust reposed in
rendered at least one year of service, him by his employer or duly
whether such service is continuous or authorized representative;
broken shall be considered a regular d. Commission of a crime or
employee with respect to the activity in offense by the employee against
which he is employed and his the person of his employer or any
immediate member of his family

24
1B 09-10
 or his duly authorized
representatives; and An employer may terminate the
e. Other causes analogous to the services of an employee who has been
foregoing. found to be suffering from any disease
and whose continued employment is
Art. 283 – Closure of Establishment prohibited by law or is prejudicial to his
and Reduction of Personnel health as well as to the health of his
co-employees provided:
The employer may also terminate the a. He is paid separation pay
employment of any employee due to: equivalent to at least one month
a. Installation of labor-saving salary or to one-half (1/2) month
devices salary for every year of service,
b. Redundancy whichever is greater;
c. Retrenchment to prevent losses b. A fraction of at least six months
or the closing or cessation of being considered as one whole
operation of the establishment or year
undertaking unless the closing is
for the purpose of circumventing Art. 285 – Termination by Employee
the provisions of this Title
a. An employee may terminate
Employer must serve a written notice without just cause the employee-
on the workers and the Ministry of employer relationship by serving
Labor and Employment at least one a written notice on the employer
month before the intended date. at least one (1) month in
advance. The employer upon
In case of termination due to the whom no such notice was served
installation of labor-saving devices or may hold the employee liable for
redundancy, the worker affected shall damages.
be entitled to a separation pay b. An employee may put an end to
equivalent to at least his one month the relationship without serving
pay or to at least one month pay for any notice on the employer for
every year of service, whichever is any of the following just causes
higher. (S-I-C-O):
 Serious insult by the employer
In case of retrenchment (under C), the or his representative on the
separation pay shall be equivalent to honor and person of the
one month pay or at least one half employee;
(1/2) month pay for every year of  Inhuman and unbearable
service, whichever is higher. treatment accorded the
employee by the employer or his
A fraction of at least six months shall representative;
be considered as one whole year.  Commission of a crime or
offense by the employer or his
Art. 284 – Disease as a ground for representative against the person
termination of the employee or any of the

25
1B 09-10
 immediate members of his benefits of employees in the
family; and establishment, an employee upon
 Other causes analogous to any reaching the age of sixty (60) years or
of the foregoing. more, but not beyond sixty-five (65)
years which is hereby declared the
ART. 286 - When Employment not compulsory retirement age, who has
Deemed Terminated served at least five (5) years in the
said establishment, may retire and
The bona-fide suspension of the shall be entitled to retirement pay
operation of a business or undertaking equivalent to at least one-half (1/2)
for a period not exceeding six (6) month salary for every year of service, a
months, or the fulfillment by the fraction of at least six (6) months being
employee of a military or civic duty considered as one whole year.
shall not terminate employment.
Unless the parties provide for broader
In all such cases, the employer shall inclusions, the term „one-half (1/2)
reinstate the employee to his former month salary‟ shall mean fifteen (15)
position without loss of seniority rights days plus one-twelfth (1/12) of the
if he indicates his desire to resume his 13th month pay and the cash
work not later than one month from equivalent of not more than five (5)
the resumption of operations of his days of service incentive leaves.
employer or from his relief from the
military or civic duty. Retail, service and agricultural
establishments or operations employing
Title II – Retirement from the Service not more than ten (10) employees or
workers are exempted from the
Art. 287 – Retirement coverage of this provision.
An employee may be retired upon
reaching the retirement age based in Violation of this provision is hereby
the CBA or other applicable declared unlawful and subject to the
employment contract penal provisions under Article 288 of
this Code.
In case of retirement, the employee
shall be entitled to receive such Implementing Rules
retirement benefits as he may have
earned under existing laws and any Sec. 1 – Coverage
CBA and other agreements: Provided: Applies to all establishments whether
a. That an employee’s retirement operated for profit or not with the
benefits under any collective exception of the Government and its
bargaining and other agreements political subdivision including
shall not be less than those government-owned or controlled
provided therein. corporations

In the absence of a retirement plan or Sec. 2 – Security of Tenure

agreement providing for retirement

26
1B 09-10
If regular employment – employer shall standards of the employer in case of
not terminate except for a just or probationary employment, a written
authorized causes as provided by law notice is sufficient served within a
and subject to the requirements of due reasonable time.
process
Sec. 3 – Reinstatement
If employment covered by contracting
or subcontracting arrangement – no An employee who is unjustly dismissed
employee shall be dismissed prior to from work shall be entitled to
the expiration of the contract between reinstatement without loss of seniority
the principal and the contractor or rights and backwages
subcontractor unless dismissal is for
just or authorized cause or is brought Sec. 4 – Reinstatement to Former
about by the completion of the phase of Position
the contract for which the employee
was engages subject to the Employee – separated without just
requirements of due process or prior cause – reinstated to his former
notice position unless:
a. Such position no longer exists at
In all cases of termination, the the time of reinstatement in
following standards of due process which case he shall be given a
shall be observed: substantially equivalent position
in the same establishment
For termination based on just cause: without loss of seniority rights
a. Written notice specifying the b. In case the establishment ceased
ground/s for termination operations or former position no
b. Hearing longer exists at the time of
c. Written notice of termination reinstatement for reasons not
served attributable to the fault of the
employer, the employee shall be
For termination of employment as entitled to separation pay
defined in Art. 283: equivalent at least to one month
a. Requirement of due process for every year of service,
deemed complied with upon whichever is higher, a fraction of
service of a written notice to the at least six months being
employee and the appropriate considered as one whole year.
Regional Office of the DOLE at
least 30 days before the Sec. 5 – Regular and casual
effectivity of the termination employment
specifying the ground/s for
termination (a) Employment shall be considered to
be regular employment where the
If termination is brought about by the employee has been engaged to perform
completion of a contract or phase or by activities which are usually necessary
failure of an employee to meet the or desirable in the usual business or

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trade of the employer except where the may be terminated only for a just cause
employment has been fixed for a or when authorized by existing laws, or
specific project or undertaking the when he fails to qualify as a regular
completion or termination of which has employee in accordance with
been determined at the time of the reasonable standards prescribed by the
engagement of the employee or where employer.
the work or service to be performed is
seasonal in nature and the employment (d) In all cases involving employees
is for the duration of the season. engaged on probationary basis, the
employer shall make known to the
(b) Employment shall be deemed as employee the standards under which
casual in nature if it is not covered by he will qualify as a regular employee at
the preceding paragraph; Provided, the time of his engagement.
That any employee who has rendered
at least one year of service, whether Sec. 7 – Termination of Employment by
such service is continuous or not, shall Employer
be considered a regular employee with
respect to the activity in which he is The just causes: provided in Article 283
employed and his employment shall of the Code
continue while such activity exists.
The separation from work for a just
(c) An employee who is allowed to work cause does not entitle him to the
after a probationary period shall be termination pay provided in the Code,
considered a regular employee. without prejudice, however, to
whatever rights, benefits, and privileges
Sec. 6 – Probationary employment he may have under the applicable
individual or collective agreement with
(a) Where the work for which an the employer or voluntary employer
employee has been engaged is policy or practice.
learnable or apprenticeable, the
probationary employment period of the Sec. 8 – Disease as a ground for
employee shall be limited to the dismissal
authorized learnership or
apprenticeship period, whichever is Where the employee suffers from a
applicable. disease and his continued employment
is prohibited by law or prejudicial to his
(b) Where the work is neither health or to the health of his co-
learnable nor apprenticeable, the employees, the employer shall not
probationary employment period shall terminate his employment unless there
not exceed six (6) months reckoned is a certification by competent public
from the date the employee actually health authority that the disease is of
started working. such nature of at such a stage that it
cannot be cured within a period of six
(c) The services of an employee who has (6) months even with proper medical
been engaged on probationary basis treatment. If the disease or ailment can

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1B 09-10
be cured within the period, the basis of computation shall be the rate
employee shall not terminate the before its deduction.
employee but shall ask the employee to
take a leave of absence. The employer Sec. 11 – Termination of employment
shall reinstate such employee to his by employee
former position immediately upon the
restoration of his normal health. The just causes for putting an end to
the employer-employee relationship by
Sec. 9 – Termination pay the employee shall be those provided in
Article 286 of the Labor Code.
(a) An employee shall be entitled to
termination pay equivalent to at least Sec. 12 – Suspension of relationship
one month's salary for every year of
service a fraction of at least six (6) In case of suspension of operation of
months being considered as one whole the business or undertaking of the
year, in case of termination of his employer for a period not exceeding six
employment due to the installation of (6) months unless the suspension is for
labor-saving devices or redundancy. the purpose of defeating the rights of
the employees under the Code, and in
(b) Where the termination of case of mandatory fulfillment by the
employment is due to retrenchment to employee of a military or civic duty.
prevent losses and in case of closure or
cessation of operations of The payment of wages of the employee
establishment or undertaking not due as well as the grant of other benefits
to serious business losses or financial and privileges while he is on a military
reverses, or where the employment is or civic duty shall be subject to special
prohibited by law or is prejudicial to his laws and decrees and to the applicable
health or to the health of his co- individual or collective bargaining
employees, the employee shall be agreement and voluntary employer
entitled to termination pay equivalent practice or policy.
to at least one-half month's pay for
every year of service, a fraction of at Sec. 13 – Retirement
least six months being considered as
one whole year. In the absence of any collective
bargaining agreement or other
(c) The termination pay provided in the applicable agreement concerning terms
Section shall in no case be less than and conditions of employment which
the employee's one month pay. provides for retirement at an older age,
an employee may be retired upon
Sec. 10 – Basis of termination pay reaching the age of sixty (60) years.

The computation of the termination pay Sec. 14 – Retirement benefits

- latest salary rate unless the same was
reduced by the employer to defeat the (a) An employee who is retired
intention of the Code, in which case the pursuant to a bona-fide retirement

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1B 09-10
plan or in accordance with the
applicable individual or collective
agreement or established employer
policy shall be entitled to all the
retirement benefits provided therein or
to termination pay equivalent to at
least one-half month salary for every
year of service, whichever is higher, a
fraction of at least six (6) months being
considered as one whole year.

(b) Where both the employer and the

employee contribute to the retirement
plan, agreement or policy, the
employer's total contribution thereto
shall not be less than the total
termination pay to which the employee
would have been entitled had there
been no such retirement fund. In case
the employer's contribution is less than
the termination pay the employee is
entitled to receive, the employer shall
pay the deficiency upon the retirement
of the employee.

(c) This Section shall apply where the

employee retires at the age of sixty (60)
years or older.

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