LABOR STANDARDS AZUCENA NOTES:

Labor legislation statues, regulations &

jurisprudence governing relations bet capital &
labor, by providing for certain standards of
terms & conditions of EENT or providing a legal
framework w/in w/c these terms & conditions &
the EENT relationship may be negotiated,
adjusted & administered.
2 Divisions of Labor Legislation
1. Labor Standards sets out the minimum terms,
conditions & benefits of EENT that EERS must
provide or comply w/ & to w/c EES are entitled
as a matter of legal right.
minimum
requirements
prescribed by existing laws, rules & regulations
relating to wages, hrs of work, cost-of-living
allowance and other monetary & welfare
benefits, including occupational safety &
health standards.
processed

material

or

substance

to

be

2. Labor Relations defines the status, rights &

duties and the institutional mechanisms, that
govern the indiv & collective interactions of
EERS, EES, or their representatives.
substance

- mechanism that processes the

Labor physical toil although it does not

necessarily exclude the application of skill
(thus skilled & unskilled labor)
Skill the familiar knowledge of any art/science,
united
w/
readiness
&
dexterity
in
execution/performance or in the application of
the art/science to practical purposes.
Work (broader than labor) covers all forms of
physical/mental exertion, or both combined,
for the attainment of some obj other than
recreation/amusement per se.
Worker (broader than EE) may refer to selfemployed people & those working in the
service & under the control of another,
regardless of rank, title, or nature of work.
- any member of the labor force whether
employed/unemployed
Employee a salaried person working for another
who controls or supervises the means, manner
or method of doing the work.
Labor Law & Social Legislation
Social legislation includes laws that provide
particular kinds of protection/benefits to
society in furtherance of social justice.

Labor laws are necessarily social legislation

Social Justice as the Aim

Social justice humanization of laws & the
equalization of social & economic forces by the
State so that social justice in its rational &
objectively secular conception may at leas be
approximated
- promotion of the welfare of the
ppl, the adoption by the Govt of measures
calculated to insure economic stability of all
the component elements of society through
the maintenance of proper economic & social
equilibrium in the interrelations of the
members of the community, constitutionally,
through the adoption of measures legally
justifiable, or extra-constitutionally, through
the exercise of powers underlying the
existence of all govts.
1987 Consti: protects the rights of workers &
promote their welfare
Basic rights of
Constitution

workers

guaranteed

by

the

1. to organize themselves
2. to
conduct
collective
bargaining/negotiation w/ mgt;
3. to engage in peaceful concerted activities,
including to strike in accordance w/ law;
and
4. to participate in policy & decision-making
processes affecting rights & benefits
Other Consti provisions that protect
Rs/promote the welfare of workers

the

R to form unions, assocs or societies for

purposes not contrary to law
R of self-org even for govt EES.. No
officer/Ee of the Civil Service shall be
removed/suspended

for
cause.
Temporary EES of the Govt shall be given
such protection as may be provided by law
Regular farmworkers shall have the R to
own directly/collectively the lands they till.
Landless farmworkers may be resettled by
the govt in its own agri estates.
Continuing program of urban land reform
& housing
Protection for working women taking into
acct their maternal functions, etc
Labor sector is entitled to seats to party
list
Goal: more equitable distribution of
opportunities, income & wealth.
Agency to promote the viability & growth
of cooperatives as instruments for social
justice & economic devt
Govt shall increase the salary scales of the
other officials & EES
1

Career civil service EES shall be entitled to

separation pay & retirement benefits, OR
may be considered for reemployment in
the govt

Consti

prol-labor,
but
recognizes
the
indispensable role of the private sector,
encourages private enterprise and provides
incentives to needed investments
Police Power as the Basis
-

the power of the govt to enact laws, w/in

Constitutional limits to promote the order,
safety, health, morals & general welfare of
society
power inherent in govt to protect itself &
all its constituents, & for this purpose to
hold the govt immune so far as necessary,
from any limitatins imposed in the past.
An imposition of restraint upon liberty or
property in order to foster the common
good.

7. There shld be popular participation in

national policy-making through what is
now called tripartism.

Some Labor Laws before the Passage of the Code

Birth of the LC
Blas Ople - father of the LC
LC designed to be a dynamic & growing body of
laws w/c will reflect continually the lessons of
practical application & experience
7 Principles Underlying the code
1. Labor relations must be made both
responsive & responsible to national devt
2. Labor laws/labor relations during a period
of national emergency must substitute
rationality for confrontation; strikes or
lockouts give way to a rational process w/c
is arbitration
3. Laggard justice in the labor field is
injurious to the workers, the EERS & the
public; labor justice can be made
expeditious w/o sacrificing due process.
4. Manpower devt & EENT must be regarded
as a major dimension of labor policy, for
there can be no real equality of bargaining
power under conditions of severe mass
unemployment.
5. There is a global labor market available to
qualified Filipinos, esp those who are
unemployed or whose EENT is tantamount
to unemployment bcoz of their very little
earnings.
6. Labor laws must command adequate
resources & acquire a capable machinery
for effective & sustained implementation;
when labor laws cannot be enforced, both
EERS & the workers are penalized, & only
a corrupt few (those who are in charge of
implementation) may get the reward they
dont deserve.

Act #1874: EERS Liability Act,

Act #2549: prohibited payment of wages
in non-cash form
Act #2071: prohibiting slavery/involuntary
servitude
R #1054: requiring emergency medical
treatmt for EES
CA # 444: 8-hr labor law
CA #103 created the Court of Industrial
Relations (CIR)
Pd #21 created the NLRC ( to investigate,
decide & settle all disputes bet EERS &
EES
RA # 875: The Industrial Peace Act (the
Magna Carta of Labor)
RA #946: Blue Sunday Law forbids
commercial, industrial or agri enterprises
to open on any Sunday, Xmas Day, New
Years Day, Holy Thurs & Good Friday.
RA #1787: The Termination Pay Law
enumerated
the
just
causes
for
terminating an EENT w/o a definite period
and allowed EERS to separate an EE by
serving a 15-day notice per yr of service
or, by paying an equivalent separation
pay.

Significance of Other Laws

1. Foreign
Decisions

numerous
LC
provisions are substantially similar to the
Industrial Peace Act
2. The Civil Code describes the nature of
labor mgt relations:
The relations bet capital & labor are not
merely contractual. They are so impressed
w/ public interest that labor contracts
must yield to the common good. such
contracts are subj. to the special laws on
labor unions, collective bargaining, strikes
& lockouts, closed shop, wages, working
conditions, hrs of labor & similar subjs.
Art 1700
Neither capital nor labor shall act
oppressively against the other, or impair
the interest or convenience of the public
Art 1701.
3. RPC punishes the use of violence or
threats by either EER or EE.
4. Special Laws (SSS law, GSIS law,
Agrarian Reform law, the 13th-month pay
law, the Magna Carta for Public Health
Workers)

Art 3. [Declaration of Basic Polici] The State

shall afford protection to labor, promote
full
EENT,
ensure
equal
work
opportunities regardless of sex, race or
creed, and regulate the relations bet
workers & EERS. The State shall assure
the rights of workers to self-org,
collective bargaining, security of tenure,
and just & humane conditions of work.

workers,
whether
agricultural.
-

Balanced Approach shared responsibility.

Worker & EER sectors are interdependent.

Art4. [Construction in Favor of Labor] All doubts in

the implementation & interpretation of the
provisions of this Code, including its IRRs, shall
be resolved in favor of labor.
Interpretation & Construction policy is to extend
the decrees applicability to a greater number
of EES to enable them to avail of the benefits
under the law (Liberal approach is adopted)
Concern for the Lowly Worker SC reaffirms its
concern for the lowly worker who, often at his
EERs mercy, must look up to the law for his
protection. (Reason: the EER stands on higher
footing than the EE: (1,) There is greater
supply than demand for labor; (2) the need for
EENT by labor comes from vital & even
desperate necessity.)
Mgt Rights entitled to respect & enforcement in
the interest of simple fair play.
1. R to manage, control, and use his property
& conduct business in a manner
satisfactory to himself (just discrimination
in the rate of wages paid to the skillful &
to the unskillful, to the efficient &
inefficient.)
2. R to prescribe rules (they become part of
the contract of EENT)
3. R to select EES & to decide when to
engage them, except as restricted by
statute or valid contract, at a wage &
under conditions agreeable to them.
4. R to transfer & discharge EES in order to
minimize expenses & to insure stability of
the business & even to close the business,
provided it is done in good faith & due to
causes beyond control.
Art 5. [Rules & Regulations] the DOLE & other
govt agencies charged w/ the administration &
enforcement of this Code or any of its parts
shall promulgate the necessary IRRs. Such RRs
shall become effective 15 days after
announcement of their adoption in the
newspapers of gen. circulation.

Art 6. [Applicability] All Rs & benefits granted to

workers under this Code shall, except as may
otherwise be provided herein, apply alike to all

agricultural

or

non-

also applies to a govt corp incorporated

under the Corporation Code.
Test WON a govt-owned/-controlled corp is
subj to CS Law is the manner of its
creation. Govt corps created by special
charter are subj to its provisions, while
those incorporated under the gen Corp
Law are not w/in the coverage of the CS
law.
PNOC-EDC incorp under the Corp Law
subj to LC
NHA incorp under Act 1459, the former
corp law LC
Govt agencies Ees covered by CS Law

CH. 2: EMANCIPATION OF TENANTS

Art 7 [Statement of Objectives] it has become
imperative to start reformation w/ the
emancipation of the tiller of the soil from his
bondage.
Art 8: [Transfer of Lands to Tenant-workers]
tenant-farmers on private agri lands primarily
devoted to rice & corn under a sys of share
crop or lease tenancy whether classified as
landed estate or not shall be deemed owner of
apportion constituting a family-size farm of 5
hectares if not irrigated & 3 hectares if
irrigated..
In all cases, the landowners may retain an
area of not more than 7 hectares if such
landowner is cultivating such area or will now
cultivate it.
Art 9. [Determination of Land Value] For the
purpose of determining the cost of the land to
be transferred to the tentant-farmer, the value
of the land shall be equivalent to 2 & times
the average harvest of 3 normal crop yrs
immediately preceding the promulgation of PD
27 (OCT 21, 1972).
The total cost of the land, including
interest at the rate of 6% per annum, shall be
pd by the tenant in 15 yrs of 15 equal annual
amortizations.
In case of default, the amortizations due
shall be pd by the farmers cooperative in w/c
the defaulting tenant-farmer is a member, w/
the coop having a right of recourse against
him.
The
govt
shall
guarantee
such
amortizations w/ shares of stock in govt-owned
& -controlled corps.
Art 10. [Conditions of Ownership] No title to the
land acquired by the tenant-farmer under PD
3

27 shall be actually issued to him unless &

until he has become a full-fledged member of
a duly recognized farmers coop.
Title to the land acquired pursuant to PD
27 or the Land Reform Program of the Govt
shall not be transferable except by hereditary
succession or to the Govt in accdance w/ the
provisions of PD 27, the Code of Agrarian
Reforms & other existing laws & regulations.
Art 11. [Implementing Agency] The Dept of
Agrarian
Reform
shall
promulgate
the
necessary rules & regulations to implement
the provisions of this Chapter.
*Land for the landless battlecry dramatizing the
increasingly
urgent
demand
of
the
dispossessed for a plot of earth as their place
under the sun.
*CARP Law signed by Cory, declaring full land
ownership in favor of the beneficiaries of the
PD 27.
Share tenancy abolished, put the agricultural
leasehold sys in its stead, geared towards
eventual ownership of land by its tillers

Homestead Act gives a needy citizen a

piece of land where he may build a
modest house for himself & family & plant
what is necessary for subsistence & for
the satisfaction of lifes other needs.
- superior over the rights of
tenants
2. Residential Subdivisions not considered
agricultural. An agricultural leasehold cannot
be established on land w/c has ceased to be
devoted to cultivation or farming bcoz of its
conversion into a residential subd.
3. Livestock, poultry & Swine raising lands: Sec 2
of RA 6657 w/c includes private agri lands
devoted to commercial livestock, poultry &
swine raising in the definition of commercial
farms is invalid. They are covered by the
agrarian reform prog of the State.
The Greatest BlessingThe Worst Crime
Frederick Taylor
-

Consti - State shall undertake an Agrarian Reform

Program, and encourage & undertake the just
distribution of all agri lands, subj to such
priorities & reasonable retention limits as the
Congress may prescribe,
Compensation scheme: Sec 18 of CARP: Title to
all expropriated properties shall be transferred
to the State only upon full payment of
compensation of their respective owners.
Retention Limits provided for by RA 6657 : as
otherwise provided.. no person may own/retain
directly/indirectly, any public/private agri land,
the size of w/c shall vary accdg to factors
governing a viable family-sized farm, such as
commodity produced, terrain, infrastructure, &
soil fertility as determined by the Presidential
Agrarian Reform Council (PARC).
3 hectares may be awarded to each child of
the landowner, subj to the ff qualifications: (1.)
he is at least 15 y/o, and (2) he is actually
tilling the land or directly managing the farm;
Provided, that landowners whose lands have
been covered b PD 27 shall be allowed to keep
the area originally retained by them
thereunder; Provided further, that orig
homestead grantees or direct compulsory heirs
who still own the org homestead at the time of
the approval of this Act shall retain the same
areas as long as the continue to cultivate said
homestead.
Lands not covered
1. Lands
obtained
patent:

an increased output invariably gives more

work to more men, & never in the history
of the world has it more than temporarily,
and then for only a very short time,
diminished by the number of men at work
in any trade

The Greatest Exploiter Blas Ople

-

unemployment is the greatest exploiter of

labor. Mass unemployment tends to leave
the EER all-powerful and the worker
defenseless

More Capital Means More Jobs Adam Smith

-

2 kinds of funds: (1) the Revenue w/c is

over & above what is necessary for the
maintenance; and (2) the Stock w/c is
over & above shat is necessary for the
EENT of their masters.
The demand for those who live by wages
necessarily increases w/ the increase of
the revenue & stock of every country and
cannot increase w/o it. The increase of
revenue & stock is the increase of national
wealth.

An Exploited Class J. Reynato Puno

-

Overseas workers constitute an exploited

class. Their unfortunate circumstance
makes them easy prey to avaricious EERs.
They will work under subhuman conditions
& accept salaries below the minimum.

9% of Filipinos are Based OverseasPh Star

through

homestead

RA 6657
Program

Comprehensive

Agrarian

Reform
4

Aim: A more equitable distribution & ownership of

land, w/ due regard to the rights of landowners
to just compensation & to the ecological needs
of the nation
Basis: the R of farmers & regular farm workers,
who are landless, to own directly or collectively
the lands they till or, in the case of other farm
workers, to receive a share of the fruits thereof
The State:
-

shall respect the R of small landowners &

shall provide incentives for voluntary landsharing
shall recognize the R of farmers, farm
workers & landowners, as well as
cooperatives & other independent farmers
org, to participate in the planning, org, &
mgt of the program & shall provide
support to agriculture though tech &
research
&
financial,
production,
marketing & other support services
may resettle landless farmers & farm
workers in its own agricultural estates
shall
encourage
the
formation
&
maintenance of economic-sized family
farms to be constituted by indiv
beneficiaries & small landowners
shall protect the Rs of subsistence
fishermen to the preferential use of
communal marine & fishing resources both
inland & offshore
shall provide support to such fishermen
thru
appropriate
tech
&
research,
adequate
financial,
production
&
marketing assistance
shall protect offshore fishing grounds of
subsistence fishermen against foreign
intrusion. Fisherworkers shall redeive a
just share from their labor in the utilization
of marine & fishing resources
owners of agri land have the oblig to
cultivate directly or thru labor admin the
lands they own & thereby make the land
productive.
Shall provide incentives to landowners to
invest the proceeds of the agrarian reform
prog to promote industrialization, EENT &
privatization of pub sector enterprises
May lease undeveloped lands of pub
domain to qualified entities for the devt of
capital-intensive farms, traditional &
pioneering crops esp those for export
(subj. to Rs of beneficiaries)

Definitions
1. Agrarian Reform the redistribution of
lands, regardless of crops/fruits produced,
to farmers & regular farm workers who are
landless,
irrespective
of
tenurial
arrangemt, to include the totality of
factors & support services designed to lift
the economic status of the beneficiaries
and all other arrangemts alternative to the

physical redistribution of lands (production

or profit-sharing, labor admin, distribution
of shares of stock)
2. Agriculture, Agricultural Enterprise or
Agricultural Activity the cultivation of the
soil, planting of crops, growing of fruit
trees, incl. the harvesting of such farm
products, & other farm activities
3. Agricultural land land devoted to
agricultural activity, and NOT classified as
mineral, forest, residential, commercial or
industrial land
4. Agrarian Dispute any controversy
relating to tenurial arrangements, whether
leasehold,
tenancy,
stewardship
or
otherwise, over lands devoted to agri
- including disputes
concerning farm workers assocs, or
representation of persons in negotiating,
fixing, maintaining, changing or seeking to
arrange terms of conditions of such
tenurial arrangements
- including controversy
relating to compensation of lands acquired
under this Act & other terms & conditions
of transfer of ownership from landowners
to farm workers, tenants & other agrarian
reform beneficiaries
5. Idle / Abandoned Land any agricultural land
not cultivated, tilled or developed to produce
any crop nor devoted to any specific economic
purpose continuously for a period of 3 yrs
immediately prior to the receipt of notice of
acquisition by the govt
- but does NOT include land that
has become permanently or regularly devoted to
non-agricultural purposes
- does NOT include land w/c has
become unproductive by reason of force majeure
or F event
6. Farmer a natural person whose primary
livelihood is cultivation of land or the
production of agri crops either by himself, or
primarily w/ the assistance of his immediate
farm household, whether the land is owned by
him, or by another person under a leasehold or
tenancy agreement
7. Farmworker a netural person who renders
service for value as an EE or laborer in an
agricultural enterprise or farm
8. Regular Farmworker a natural person who is
employed on a permanent basis by an
agricultural enterprise or farm
9. Season Farmworker a natural person who is
employed on a recurrent, periodic or
intermittent basis by an agricultural enterprise
or farm
5

h. Cooperatives orgs composed primarily of

small agri producers, farmers, farmworkers or
other agrarian reform beneficiaries who
voluntarily organize themselves for the
purpose of pooling land, human, technological,
financial or other economic resources &
operated on the principle of one member, one
vote. ( a juridical person may be a member of
a coop, w/ the same Rs & duties as a natural
person.

shall be null & void. Provided, that those

executed prior to this Act shall be valid
only when registered w the Reg of Deeds
w/in 3 months after effectivity.

Presidental Agrarian Reform Council (PARC) shall

provide the implementing rules

Scope: all public & private agricultural lands, incl.

other lands of the pub domain suitable for
agriculture

- upon recommendation by the

Provincial
Agrarian
Reform
coordinating
Committee,
may
declare
certain
provinces/regions as priority land reform areas

1. All alienable & disposable lands of the pub

domain devoted to or suitable for
agriculture
2. All lands of the pub domain in excess to
the specific limits as determined by
Congress
3. All other lands owned by the Govt devoted
to or suitable for agri
4. All private lands devoted to or suitable for
agri regardless of the agri products
raised/can be raised thereon

Multinational Corps all lands of the pub domain

leased, held, or possessed by multi corps or
assocs, and other lands owned by the govt, or
govt-owned/-controlled
corps,
assocs,
institutions or entities, devoted to existing &
operational agribusiness or agro-industrial
enterprises, operated by multicorps shall be
programmed for acquisition & distribution
immediately upon effictivity

Schedule of Implementation: w/in 10 yrs from

effectivity
Retention Limits: no person may own or retain,
directly, any pub or private agricultural land,
the size of w/c shall vary accdg to factors
governing a viable family-sized farm
-

landowner may retain only 5 hectares.

3 hectares: each child of landowner, that
is 15y/o, and is actually tilling the land or
directly managing the farm
landowners whose lands have been
covered by PD 27 shall be allowed to keep
the area originally retained by them
thereunder
the original homestead grantees or direct
compulsory heirs who still own the orig
homestead shall retain the same areas as
long as they continue to cultivate said
homestead
the R to choose the area to be retained
belongs to the landowner. However: (a)
in case the area selected by landowner is
tenanted, the tenant shall have the option
whether to remain therein, be a
beneficiary of the same, or another agri
land w/ similar/comparable features; (b) in
case the tenant chooses to remain in the
retained ares, he shall be considered a
leaseholder & shall lose his R as a
leaseholder to the land retained by the
landowner. The tenant must exercise this
option w/in 1 yr fr the time the landowner
manifests his choice of the area for
retention.
Upon
Acts
effectivity,
any
sale,
disposition, lease, mgt contract or transfer
of position of private lands executed by
the orig landowner in violation of this Act

Ancestral Lands shall include, but not limited to,

lands in the actual, continuous & open
possession & occupation of the community and
its members, provided that the Torrens System
shall be respected
-

shall be protected to ensure their

economic, social & cultural well-being
in the autonomous regions, the respective
legislature may enact their own laws on
ancestral domain subj to the provisions of
the Consti, this Act and other national
laws.

Exemptions & Exclusions

1. Lands actually, directly & exclusively used
for parks, wildlife, forest reserves,
reforestation,
fish
sanctuaries
and
breeding
grounds,
watersheds
and
mangroves
2. Private
lands
actually,
directly
&
exclusively used for prawn farms &
fishponds (provided that said prawn farms
& fishponds have not been distributed and
Cert of Land Ownership Award issued to
ARP.
3. Lands actually, directly & exclusively used
& found to be necessary for national
defense, school sites & campuses, incl
experimental farm stations operated by
pub/private
schools
for
educational
purposes, seeds and seedlings research
and pilot production center, church sites &
convents apputenat therety, mosque sites
& Islamic centers appurtenant thereto,
communal burial grounds & cemeteries,
penal colonies & penal farms actually
worked by inmates, got & private research
& quarantine centers and all lands w/ 18%
6

slope and over, except those already

developed
Procedure for Acquisition of Private Lands
1. After having identified the land, the
landowners & beneficiaries, DAR shall
send its notice to acquire the land to the
owners;
2. w/in 30 days from date of receipt,
landowners shall inform the DAR of his
acceptance/rejection of the offer;
a. if landowner accepts the offer, the
LBP shall pay the landowner of the
purchase price of the land w/in 30
days after he executes & delivers a
deed of transfer in favor of the
Govt and surrenders the Cert of
Title
b. in case of rejection or failure to
reply, DAR shall conduct summary
admin proceedings to determine
compensation of the land
3. upon receipt of the landowner of the
payment, or in case of rejection or no
response fr the landowner, upon the
deposit w/ an accessible bank or the
compensation,
the
DAR shall take
immediate possession of the land & shall
request the Register of Deeds to issue a
TCT in the name of the RP.
4. Any party who disagrees w/ the decision
may bring the matter to the court

Transferability of Acquired lands by beneficiaries

may not be sold, transferred or conveyed
except thru hereditary succession, or to the
govt, or to the LBP, or to other qualified
beneficiaries for 10 yrs
*Provided, that the children/spouse of the
transferor shall have a R to repurchase the
land fr the govt/LBP w/in 2 yrs

Standing crops at the time of acquisition shall

be retained by the landowner, Dar shall give a
reasonable time to harvest the same

Corporate Farms
-

in case land cannot be divided directly,

shall be owned collectively by the workerbeneficiaries who shall form a workers
cooperative or assoc w/c will deal w/ the
corp
indiv members of the coop shall be
provided w/ homelots or small farmlots for
their family use taken fr the land owned by
the coop

Production-sharing - pending final land transfer

Support Services

Determination of Just Compensation

-

cost of acquisition of the land

current value of like properties,
its nature, actual used and income
the sworn valuation by the owner,
tax declarations
assessment made by the govt assessors

1. irrigation facilities
2. infrastructure devt & pub works projects
3. govt subsidies for the use of irrig facilities

RA 9700 Act Strengthening the CARP, extending

the acquisition & distribution of all agricultural
lands, instituting necessary reforms, amending
for the purpose certain provisions of RA 6657

Incentives for voluntary offers of sale addtl 5%

cash

Priority of Qualified Beneficiaries

1.
2.
3.
4.
5.
6.

Agricultural lessees & share tenants

Regular farmworkers
Seasonal farmworkers
Other farm workers
Actual tillers/occupants of public lands
Collective or cooperatives of the above
beneficiaries
7. Others directly working on the land
*Provided: children of landowners who are
qualified shall be given preference in the
distribution of the land of their parents
*Provided further: actual tenant-tillers in the
landholding shall not be ejected/removed
therefrom.

State shall protect Filipino enterprises

against unfair foreign competition & trade
practices
State recognizes that there is not enough
agricultural land to be divided &
distributed to each farmer & regular
farmworker so that each one can own his
economic-size family farm.
Answer: simultaneous industrialization
aimed at developing a self-reliant &
independent national economy effectively
controlled by Filipinos
State may, in the interest of national
welfare or defense, establish & operate
vital industries
Implementation of the prog shall be
community-based
State shall recognize & enforce the Rs of
rural women to own & control land
7

State
shall
provide
incentives
to
landowners to invest the proceeds of the
agrarian
reform
prog
to
promote
industrialization, EENT & privatization of
the pub sector enterprises

Added Definition
1. Rural women women who are engaged
directly/indirectly in farming and/or fishing
as their source of livelihood, whether paid
or unpaid, regular or seasonal, or in food
preparation, managing the household,
caring for the children, & other similar
activities
2. Landless beneficiary one who owns less
than 3 hectares of agri land

kasulatan thru w/c he surrendered his

tenancy rights for a consideration of P3,000.
On the same day as the execution of the
1987 kasulatan, the lands were sold by the
Aragons for P50,000 to respondent Felix Sia,
who in turn converted the same to a
residential subd w/o a DAR clearance and
ejected the petitioners therefrom.
Peitioners filed a protest before the DAR
alleging that they are the tenants of the
lands and claimed that they are entitled to a
disturbance compensation. They alleged that
they were fooled into signing over their
tenancy rights thru the machinations of the
Aragons.
The respondents in their answer, denied such
allegation and added that the petitioners are
barred by estoppel, laches and prescription

Added Exception to Retention Limits

Issue 1: WON petitioners are tenants of the land

- Provincial, city & mun govt units acquiring

private agri lands by expropriation to be used
for actual, direct & exclusive pub purposes,
such as roads & bridges, pub markets, school
sites, resettlement sites, local govt facilities,
pub parks & brgy plazas or squares consistent
shall not be subj to the 5-hectare retention
limit

Held: A tenant is defined as a person who, himself

and w/ the aid available from w/in his
immediate farm household, cultivates the land
belonging to, or possessed by another, w/ the
latters consent for purposes of production,
sharing the produce w/ the landholder under
the share tenancy system, or paying to the
landholder a price certain or ascertainable in
produce or in money or both, under the
leasehold tenancy system

Order of Priority
-

3 hectares each to the 1st 2 beneficiaries

only when these beneficiaries have rcvd 3
hectares each, shall the remaining portion
of the landholding, if any, be distributed to
other beneficiaries

Payment by Beneficiaries payable to LBP in 30

annual amortizations at 6% interest per annum
Support shall be extended equally to women &
men beneficiaries

Landicho v Sia
Facts:

3 parcels of land were originally owned by

the Aragons, tenanted by the late Arcadio
Landicho from 1949 until his death in 1972,
afterwhich, his tenancy rights were succeded
by his son, petitioner Francisco Landicho (the
other
petitioners
were
Buenaventura
(Franciscos son), and Federico (Franciscos
brother), helped him cultivate the land
in 1976, Francisco voluntarily surrendered his
tenancy Rs over the land to the Aragons
through a notarized kasulatan for a
consideration of P1,000, but petitioners
continued cultivating the land until 1987
when Francisco executed another notarized

For a tenancy relationship to exist, all of the ff

essential requisites must be present:
1)
2)
3)
4)
5)
6)

the parties are the landowner & the tenant

the subj matter is agricultural land
there is consent bet the parties
the purpose is agricultural production
there is personal cultivation by the tenant
there is sharing of the harvests bet the
parties

Under the definition, only Francisco possesses

the requisites of a tenant. Petitioners
Federico and Buenaventura are not tenants
because consent (#3) by the landowners is
lacking. They are merely farm helpers of
Francisco as part of his immediate farm
household. There was also no evidence to
show that they gave a share of their
harvest to the Aragons (#6).
Issue 2: WON the respondents took advantage of
Franciscos old age & illiteracy and employed
fraudulent schemes in order to deceive him
into signing the Kasulatans
Held: As the legal tenant of the lands, Francisco
had voluntarily surrendered his tenancy rights
when he knowingly & freely executed the 1987
Kasulatan. There was no showing of foul play,
because the Kasulatan was in Filipino, a
language spoken & understood by Francisco
and was couched in plain and clear terms.
Such kasulatan was also duly notarized and
are considered as public documents executed
8

w/ all the legal formalities which afford it the

legal presumption of regularity and legality
abent full, clear and convincing evidence to
the contrary.
Final ruling: Petitioners have no cause of action
and the same has prescribed.

Portuguez v GSIS Family Bank and CA

Facts:

Petitioner
was
employed
by
the
respondent bank as utility clerk in 1971.
Since then, he had been promoted
repeatedly up to 1998 when he was
temporarily assigned as caretaker of the
bank and designated as Acting Asst. VP
and OIC in June of 1998.
Respondent bank is a banking institution
originally known as Royal Savings Bank. In
1983-84, it underwent serious liquidity
problems
and
was
placed
under
receivership by the Central Bank, which
ordered its closure in July of 1984. After 2
months, the respondent bank was
reopened under the control & mgt of
Comsavings Bank.
In 1987, the GSIS acquired the interest of
the respondent bank and took over the
control & mgt of the bank and renamed it
as GSIS Family Savings Bank.
The designation of the petitioner as OIC &
caretaker was recalled, however his
appointment as Acting Asst VP was
retained.
In line w/ its policy to attain financial
stability, the respondent bank adopted
measures, one of w/c is an early
retirement program.
In april of 2001, petitioner opted to avail
himself of this retirement package,
(supposedly under protest) & received the
amt of P1,342M as retirement pay.
In july 2002, petitioner filed a complaint
against resp bank for constructive
dismissal & underpayment of wages, 13 th
month pay & retirement benefits before
the
Labor
Arbiter.
He
alleged
discrimination & unfair treatment, and
intense pressure on the part of the resp
bank forced him to retire at the prime of
his life

Issue 1: WON there was constructive dismissal

Held: No.
Constructive dismissal quitting because
continued EENT is rendered impossible,
unreasonable or unlikely, as an offer involving
a demotion in rank & a dimunition in pay. May
also mean an act of clear discrimination,
insensibility or disdain by an EER may become
so unbearable on the part of the EE so as to

foreclose any choice on his part except to

resign
Petitioner claims he was discriminated against as
new hires were given higher salaries than he
was receiving.
Discrimination failure to treat all persons
equally when no reasonable distinction can be
found bet those favored & those not favored. It
must be clearly established that (1) there is no
reasonable distinction for classification that
can be obtained bet persons belonging to the
same class, and (2) persons belonging to the
same class have not been treated alike
Petitioner failed to established that he possessed
the same skills, competencies & expertise as
those newly hired to eliminate the possibility of
substantial distinction that may warrant
unequal treatment bet them.
Petitioner contends that in cases of constructive
dismissal, the burden of proof rests on the EER
to show that the EE was dismissed on a valid &
just cause. But this legal principle presupposes
that there is indeed an involuntary separation
from EENT & the facts attendant to such forced
separation was clearly established, w/c the
petitioner failed to do. It was him who availed
of the voluntary retirement program. And
absent the showing of duress, the presumption
is that it was done by him voluntarily.
While the state promotes the utmost protection of
labor against capital, it does not mean that the
working class is upheld in all labor dispute. The
law also recognizes the rights of management.

PRE-EMPLOYMENT
Art 12. It is the policy of the State:
1. to promote and maintain a state of full
employment through improved manpower
training, allocation and utilization;
2. to protect every citizen desiring to work
locally/overseas by securing for him the
best possible terms and condition of
employment;
3. to facilitate a free choice of available
employment by persons seeking work in
conformity with the national interest;
4. to facilitate & regulate the movement of
workers in conformity w/ the national
interest;
5. to regulate the employment of aliens,
including
the
establishment
of
a
registration and/or work permit system;
6. to strengthen the network of public
employment offices and rationalize the
participation of the private sector in the
recruitment and placement of workers,
locally and overseas, to serve national
development objectives;
9

7. to insure careful selection of Filipino

workers for overseas employment in order
to protect the good name of the PH
abroad.
The DOLE
-

by Administrative Code of 1987 (EO 292)

the primary policy-making, programming,
coordinating and administrative entity of
the Executive branch of the govt in the
field of labor and employment

Its Primary responsibilities:

1. The
promotion
of
gainful
EENT
opportunities and the optimization of the
devt & utilization of the countrys
manpower resources;
2. The advancement of workers welfare by
providing for just and humane working
conditions and terms of EENT;
3. The maintenance of industrial peace by
promoting harmonious, equitable and
stable EENT,
relations that assure
protection for the Rs of all concerned
parties.

RECRUITMENT & PLACEMENT OF WORKERS

Art 13. Definitions
Worker any member of the labor force whether
employed or unemployed.
Recruitment & placement any act of canvassing,
enlisting, contracting, transporting, utilizing,
hiring, or procuring workers and includes
referrals, contract services, promising or
advertising for EENT, locally or abroad,
whether for profit or not: provided, that any
person or entity w/c, in any manner, offers or
promises for a fee EENT to 2/more persons
shall be deemed engaged in recruitment &
placement
Private fee-charging EEnt Agency any person/
entity engaged in the recruitment & placement
of workers for a fee w/c is charged
directly/indirectly
from
the
workers
or
employers or both
License a document issued by the DOLE
authorizing a person/entity to operate a
private EENT agency
Private recruitment entity any person/assoc
engaged in the recruitment & placement of
workers, locally/overseas without charging,
directly/indirectly any fee from the workers or
employers.
Authority a document issued by the DOLE
authorizing a person/assoc to engage in
recruitment & placement activities as a private
recruitment entity

Seaman any person employed in a vessel

engaged in maritime navigation
Overseas EENT EENT of a worker outside the PH
Emigrant any person, worker or otherwise, who
emigrates to a foreign country by virtue of an
immigrant visa or resident permit to its
equivalent in the country of destination
Art 14. EMPLOYMENT PROMOTION
The Sec of Labor shall have the power &
authority:
1. to organize & establish new EENT offices
in addition to existing EENT offices under
the DOLE as the need arises;
2. to organize & establish a nationwide job
clearance & information system to inform
applicants registering w/ a particular EENT
office of job opportunities in other parts of
the country as well as job opportunities
abroad;
3. to develop & organize a program that will
facilitate occupational industrial and
geographical mobility of labor and provide
assistance in the relocation of workers
from one area to another; and
4. to require any person, establishment, org,
or institution to submit such EENT
information as may be prescribed by the
Sec of Labor.
Bureau of Local Employment (BLE) assigned the
effective allocation of manpower resources in
local
Ph Overseas Employment Administration (POEA)
for overseas employment

Art 15. BUREAU OF EMPLOYMENT SERVICES (now

BLE)
-

primarily responsible for developing &

monitoring
a
comprehensive
EENT
program.

Powers & Duties:

1. To formulate & develop plans & programs
to implement the EENT promotion
objectives of this Title;
2. To establish & maintain a registration
and/or licensing system to regulate private
sector participation in the recruitment &
placement of workers, locally & overseas,
and to secure the best possible terms &
conditions of EENT for Filipino contract
workers and compliance therewith under
such rules & regulations as may be issued
by the DOLE;
3. To formulate & develop EENT programs
designed to benefit disadvantaged groups
& communities;
10

4. To establish & maintain a registration

and/or work permit system to regulate the
EENT of aliens;
5. To develop a labor market information
system in aid of proper manpower and
development planning;
6. To develop a responsible vocational
guidance & testing system in aid of proper
human resources allocation; and
7. To maintain a central registry of skills,
except seamen
Original & Exclusive Jurisdiction
regional offices of DOLE
-

of

the

over all matters/cases involving EE-EER

relations including money claims, arising
out of or by virtue of any law or contracts
involving Filipino workers for overseas
EENT except seamen: Provided, thet the
Bureau of Employment Services (BES)
(now BLE) may, in the case of the NCR,
exercise such power, whenever the DOLE
deems it appropriate.

The decisions of the regional offices of the

BES if so authorized by the Sec of DOLE shall
be appealable to the NLRC upon the same
grounds provided in Art 233 hereof.
The decisions of the NLRC shall be final &
unappealable.
Minister of Labor has the power to impose &
collect fees, based on rates recommended by
the BES. Such fees shall be deposited in the
National Treasury as a special acct of the
General Fund, for the promotion of the
objectives of the BES, subj to the provisions of
Sec 40 of PD 1177.

PD 850 replaced BES w/ BLE, and

created POEA
AO 186 made licensing of local
recruitment agencies and the issuance of
work permits to non-resident aliens and
EENT registration certificates to resident
aliens a function of the regional offices of
DOLE
RA 8795 required the establishment of a
Public Employment Service Office (PESO)
in capital towns, cities and other strategic
areas
o PESO - serves as EENT service &
information center
- Regularly obtains lists of job
vacancies
from
EERS,
publicizes them, invites and
evaluates applicants, and
refers them for probable
hiring
- Provides
training
and
educational guidance and
EENT counseling services
- Also
renders
special
services to the public such

as
holding
of
jobfairs,
livelihood
and
selfemployment bazaars
- Special credit assistance for
placed overseas workers
- Special program for EENT of
students
(SPES)
during
summer or semestral breaks
- Work appreciation seminars
& conferences and
- Hiring
of
workers
in
infrastructure
projects
(WHIP)
Ra 6885 created WHIP, a program w/c
requires the DPWH and private contractors
to hire 30% of skilled and 50% unskilled
labor requirements from the area where
the project is being undertaken

Art 16. PRIVATE RECRUITMENT:

GR: No person/entity other than the public EENT
offices, shall engage in the recruitment &
placement of workers.
: Exceptions
1.
2.
3.
4.
5.
6.
7.
8.

Public EEnt offices

Private recruitment entities
Private EENT agencies
Shipping
or
manning
agents
or
representatives
The POEA
Construction contractors if authorized to
operate by DOLE and the Construction
Industry Authority
Members of the diplomatic corps although
hirings done by them have to be
processed through the POEA
Other
persons/entities
as
may
be
authorized by the Sec of DOLE

Art 17. OVERSEAS EMPLOYMENT DEVT BOARD

POEA has taken over the functions of the
Overseas Employment Development Board
(OEDB) and the National Seamen Board (NSB)
OFW a Filipino worker who is to be engaged, is
engaged or has been engaged in a
renumenerated activity in a country of which
he/shee is not a legal resident
2 Classifications
1. Land-based contract workers other than
a seaman including workers ingaged in
offshore activities whose occupation
requires
that
majority
of
his
working/gainful hrs are spent on land
2. Sea-based those employed in a vessel
engaged in maritime navigation
Principal Functions of the POEA
11

1. Formulation,
implementation
and
monitoring of overseas employment of
Filipino workers;
2. Protection of their rights to fair and
equitable employment practices;
3. Deployment of Filipino workers through
govt-to-govt hiring
Regulatory Functions
1. Regulate private sector participation in the
recruitment & overseas placement of
workers
through
its
licensing
and
registration system;
2. Formulate & implement, in coordination w/
appropriate entities concerned, when
necessary, a system for promoting and
monitoring the overseas EEnt of Filipino
workers taking into consideration their
welfare and the domestic manpower
requirements;
3. Inform migrant workers not only of their
rights as workers but also of their rights as
human beings;
4. Instruct and guide the workers how to
assert their rights and provide the
available mechanism to redress violation
of their rights;
5. In the recruitment & placement of workers
to service the requirements for trained
and competent Filipino workers of foreign
govts and their instrumentalities, and such
other employers as public interest may
require, deploy only to countries:
a. Where the PH has concluded
Bilateral labor agreements or
arrangements;
b. Observing and/or complying w/ the
international laws and standards of
migrant workers;
c. Guaranteeing to protect the rights
of Filipino migrant workers.
Adjudicatory Functions
1. Administrative cases involving violations
of licensing rules & regulations and
registration of recruitment and EEnt
agencies/entities; and
2. Disciplinary action cases and other special
cases w/c are administrative in character,
involving
employers,
principals,
contracting partners and Filipino migrant
workers.
Jurisdiction of POEA
1. all cases w/c are administrative in
character, involving or arising out of
violations of rules & regulations relating to
licensing & registration of recruitment and
employment agencies/entities; and
2. disciplinary action cases and other special
cases w/c are administrative in character,
involving EERS, principals, contracting
partners and Filipino migrant workers

3. NO
jurisdiction
to
enforce
foreign
judgment (must be brought before the
regular courts). POEA is an administrative
(not a court), exercising adjudicatory or
quasi-judicial functions
4. NO jurisdiction over torts
Grounds for Disciplinary Action
1. Commission of a felony punishable by Ph
laws or by the laws of the host country;
2. Drug addiction/possession or trafficking of
prohibited drugs;
3. Desertion or abandonment;
4. Drunkenness, esp where the laws of the
host country prohibit intoxicating drinks;
5. Gambling, esp where the laws of the host
country prohibits the same;
6. Initiating/joining a strike or work stoppage
where thelaws of the host country prohibit
strikes or similar actions;
7. Creating trouble at the worksite or in the
vessel;
8. Embezzlement of company funds or of
moneys and properties of a fellow worker
entrusted for delivery to kins or relatives
in the PH;
9. Theft/robbery;
10. Prostitution;
11. Vandalism
or
destroying
company
property;
12. Gunrunning or possession of deadly
weapons;
13. Unjust refusal to depart for the worksite
after
all
employment
and
travel
documents have been duly approved by
the approp govt agency/ies; and
14. Violation/s of the laws and sacred
practices of the host country and
unjustified breach of govt-approved EENT
contract by a worker
COMPROMISE AGREEMENT
-consistent w/ the policy encouraging amicable
settlement of labor disputes Sec 10 of RA 8042
allows resolution by compromise of cases filed w/
the NLRC
- any compromise agreement on money claims
inclusive of damages shall be paid w/in 4 months
from the approval of the settlement
Penalties for Non-compliance
mandatory period for resolution of cases

of

the

1. The salary of such official who fails to

render his decision/resolution w/in the
prescribed pd shall be, or caused to be,
withheld until such official complies
therewith;
2. Suspension for not more than 90 days;
or
3. Dismissal w/ disqualification to hold
any appointive public office for 5 yrs

12

EER/EE Relations Cases

Millares & Lagda v NLRC: SC: seafarers are
contractual EES
Premature Termination of Contract
If EE is terminated before end of contract w/o just
cause, EERS will be ordered to pay their
salaries corresponding to the unexpired portion
of their EENT contract
Pretermination Under RA 8042
A worker dismissed from overseas EENT w/o just
cause as defined by law/contract is entitled to
full reimbursement of his placement fee w/
interest at 12% per annum, plus the salary for
the unexpired portion of their EENT contract.
Due Process required to terminate employment
Ex: in case of seamen must be given written
notice of the charges against him, and
afforded a formal investigation where he can
defend himself or thru a representative before
he can be dismissed & disembarked. The EER
is required to furnish him w/ 2 notices: (1)
written notice of charge; and (2) written notice
of dismissal
Contracted but not Deployed: Perfected Contract
Death benefits of Seafarers
- entitled to death and other benefits under
w/c ever is higher (foreign law or Ph law)
- entitled to death benefits if death occurs
during the term of his contract of
employment, even if death is not workrelated death is caused by their own
doing
Disability loss or impairment of a physical or
mental function resulting from injury/sickness
Permanent disability the inability of a worker to
perform his job for more than 120 days,
regardless of WON he loses the use of any part
of his body
Total Disability disablement of an EE to earn
wages in the same kind of work of similar
nature that he was trained for or accustomed
to perform, or any kind of work w/c a person of
his mentality and attainments could do. It does
not mean absolute helplessness.
In disability compensation, it is not the injury w/c
is compensated, but rather it is the incapacity
to work resulting in the impairment of ones
earning capacity
Disability benefits by seamen a matter
governed not only by medical findings but by
law & contract
- shall be paid beginning on the 1 st day of
such disability. If caused by an injury/sickness
it shall not be paid longer than 120 consec
days except where such injury/sickness still

requires medical attendance beyond 120 days

but not to exceed 240 days from onset of
disability in w/c case benefit for temporary
total disability shall be paid.
In case of differing medical assessment
a.) when a seafarer sustains a work-related
illness/injury
while
on
board,
his
fitness/unfitness
to
work
shall
be
determined by the company-designated
physician.
b.) If the physician appointed by the seafarer
disagrees w/ the company-designated
physicians assessment, the opinion of a
3rd doctor may be agreed jointly bet the
EER and the seafarer to be the decision
final and binding on them
Agencies Given the Duty to promote the welfare
& rights of migrant workers:
1. DFA
2. DOLE
3. POEA
4. OWWA Overseas Workers Welfare
Administration provides social & welfare
services including insurance coverage,
legal assistance, placement assistance
and remittance services to Filipino
overseas workers. Under RA8042, it shall
provide the Filipino migrant worker & his
faily assistance in the enforcement of
contractual obligs by agencies, entities
and/or their principals;
5. RPM - Re-Placement and Monitoring Center
develops livelihood programs for the
returning workers to reintegrate the
returning migrant workers to the Ph
society;
6. NLRC

tasked
w/
the
settlement/adjudication of labor disputes

Art 18: BAN ON DIRECT HIRING

GR: Direct hiring of Filipino workers for overseas
EENT is not allowed
Exceptions:
1. Members of Diplomatic corps;
2. International organizations;
3. Other employers as may be allowed by
DOLE; and
4. Name hires individual workers who are
able to secure contracts for overseas EENT
on their own efforts and representations
w/o assistance/participation of any agency.
Their hiring nonetheless, shall pass
through the POEA for processing purposes
Rationale of the Prohibition
1. To assure the best possible terms &
conditions of work to the EE; and
2. To assure the foreign EER that he hires
only qualified Filipino workers
Art 19: COMMISSION ON FILIPINO OVERSEAS
13

CFO attached to the DFA; replaced the Office of

Emigrant Affairs.
- assists in the formulation of policies
affecting Filipinos overseas and formulates
an integrated program that promotes the
welfare of Filipinos overseas
Art
21.
FOREIGN
SERVICE
ROLE
AND
PARTICIPATION
- necessary to monitor the status of OFWs
in their respective areas of assignment
and insure that they are not exploited or
abused by their foreign principal EERS
Art 22. MANDATORY REMITTANE OF FOREIGN
EXCHANGE EARNINGS
- All OFWs are required to remit a portion of their
foreign exchange earnings ranging from 50% 80% depending on the workers kind of job, to
their
families,
dependents,
and/or
beneficiaries.
Seamen/Mariners 80%
Workers for Filipino Contractors & Construction
companies 70%
Professionals whose EENT contract provide for
lodging facilities 70%
Professionals w/o Board & Lodging 50%
Domestic and other service workers 50%
Exceptions to Mandatory Remittance
1. Fil servicemen working in US military
installations;
2. Where the workers immediate family
members, dependents, or beneficiaries are
residing w/ him abroad;
3. Immigrants and Fil professionals and EEs
working w/ UN agencies or specialized
bodies
Effects of Failure to Remit
1. Workers who fail to comply w/ the
mandatory remittance reqment shall be
suspended/excluded from the list of
eligible workers for overseas EENT.
Subsequent violations shall warrant his
repatriation.
2. EERS who fail to comply shall be excluded
from the overseas EENT program. Private
EENT
agencies/entities
shall
face
cancellation or revocation of their licenses
or authority to recruit, w/o prejudice to
other liabilities under existing laws and
regulations
CH 2: REGULATION OF
PLACEMENT ACTIVITIES

RECRUITMENT

&

Art 25: PRIVATE SECTOR PARTICIPATION IN THE

RECRUITMENT & PLACEMENT OF WORKERS
Private Sectors that can participate
1. Private EENT agencies;
2. Private recruitment agencies;
3. Shipping or manning agencies;
4. Such other persons as may be authorized
by the Sec of DOLE; and

5. Construction contractors w/ a duly issued

authority to operate private recruitment
entities
Qualifications for Participation
1. Citizenship requirement
a. Filipino citizens; or
b. Corporations,
partnerships
or
entities at least 75% of the
authorized and voting capital stock
of w/c is owned & controlled by
Filipino citizens.
2. Capitalization
a. Private EENT agency for local EENT
i. For single proprietorship or
partnership minimum net
worth of 200k pesos
ii. For
corporations

a
minimum paid up capital of
5ook pesos
b. Private recruitment or manning
agency for overseas EENT
i. For single proprietorship or
partnership P2M minimum
capital
ii. For corps P2M minimum
paid up capital, Provided,
that
those
w/
existing
licenses shall, w/in 4 yrs
from
effectivity
hereof,
increase their capitalization
or paid-up capital, as the
case may be, to P2M at the
rate of 250K every yr.
3. Those not otherwise disqualified by law or
other govt regulations to engage in the
recruitment & placement of workers for
overseas EENT
Disqualified from Recruitment & Placement of
Workers for Overseas EEnt whether for profit or
not
1. Travel agencies & sales agencies of airline
companies;
2. Officers/members of the board of any corp
or members in a partnership engaged in
the business of a travel agency;
3. Corps & partnerships, when any of its
officers, members of the board or
partners, is also an officer, member of the
board or partner of a corp or partnership
engaged in the business of a travel agency
(interlocking officers)
4. Persons, partnerships or corps which have
derogatory records, such as but not
limited to:
a. Those certified to have derogatory
record/info by the NBI or by the
Anti-illegal Recruitment Branch of
the POEA;
b. Those against whom probable
cause or prima facie finding of guilt
for illegal recruitment or other
related cases exists;
c. Those convicted of cases and/or
crimes involving moral turpitude;
14

d. Those agencies whose licenses

have been previously cancelled or
revoked by POEA for violation of RA
8042, PD 442 as amended and
their IRR as well as the Labor
Codes IRR
e. Officials/EES of the DOLE or other
govt agencies directly involved in
overseas EENT program and their
relatives w/in the 4th degree of
consanguinity or affinity; and
f. Those whose License have been
previously cancelled o revoked
Art 29: NON-TRANSFERABILITY OF LICENSE
AUTHORITY
1. It may be used only b the one in whose
favor it was issued; hence, it cannot be
assigned, conveyed or transferred to any
other person/entity.
2. It must be used only in the place stated in
the license. Thus, could only undertake
recruitment & placement activities in the
region where the license was granted.
3. The recruitment & placement activities
must be undertaken at their authorized
official addresses.
4. Provincial recruitment and/or job fairs may
be allowed only when authorized by POEA
in writing.
* Change of ownership of single proprietorship
licensed to engage in overseas EENT shall
cause the automatic revocation of the license.
Art 30: BONDS
The Sec of Labor shall promulgate a schedule of
fees for the registration of all applicants for
license or authority.
Art 31. BONDS
All applicants for license/authority shall post such
cash and surety bonds as determined by the
Sec of Labor including escrow deposits.
Purposes:
1. To guarantee compliance w/ prescribed
recruitment
procedures,
rules
&
regulations, and terms & conditions of
EENT; and
2. To ensure prompt & effective recourse
against such companies when held liable
for applicants/workers claim
Exemption from Garnishment
Cash bond filed by applicants for
license/authority
is
not
subj
to
garnishment by a judgment creditor of the
agency.
Should the bond/deposit in escrow or any
part thereof be garnished, the same
should be replenished by the agency w/in
15 days from notice from the POEA. Failure
to replenish the same w/in the said pd
shall cause the suspension of the license
Note: POEA has the power to enforce liability
under cash & surety bonds.
Art 32: FEES TO BE PAID BY WORKERS

The applicant can be charged w/ fees only

after he has obtained EENT or has actually
commenced EENT
Fees paid shall always be covered w/ the
approp receipt clearly showing the amount
paid.
POEA has the power to:
1. Suspend/cancel the license; and
2. Order the refund/reimbursement of such
illegally collected fees
Prohibition on Charging Fees
1. Placement fees cannot be collected from a
hired worker until he has signed the EENT
contract & shall be covered by receipts
clearly showing the amt paid
2. Manning agencies shall not charge any fee
from seafarer-applicants for its recruitment
& placement services. All expenses for
hiring seamen shall be shouldered by
foreign shipping principals.
3. No
other
fees/charges,
including
processing fees shall be imposed against
any worker.
Art 34 & Section 6 RA 8042: PROHIBITED
PRACTICES:
It shall be unlawful for any indiv, entity, licensee
or holder of authority:
1. To charge greater amt than that specified
in the schedule of allowable fees (illegal
exaction);
2. To furnish any false info in relation to
recruitment/EENT (false information);
3. To give any false notice, testimony, etc. or
commit any act of misrepresentation to
secure a license or authority (false
statements);
4. To induce or attempt to induce a worker to
quit his job in lieu of another offer unless it
is designed to liberate the worker from
oppressive terms of EENT (pirating);
5. To influence of attempt to influence any
person/entity no to employ any worker
who has not applied for EENT through his
agency (influencing not to employ);
6. To engage in the recruitment/placement of
jobs harmful to public health, morality or
to the dignity of the PH (harmful jobs);
7. To obstruct or attempt to obstruct
inspection by the Labor Sec or his
authorized reps (obstruct inspection);
8. To fail to file reports on the status of EENT,
placement, etc. and such other matters as
may be required by the Sec of Labor
(failure to comply w/ rules & regulations);
9. To substitute or alter EENT contracts w/o
the approval of the Sec of Labor
(alteration of contracts);
10. To become an officer or member of the
board of any corp engaged in the mgt of a
travel agency; and
11. To withhold travel docs from applicant
workers before departure for unauthorized
monetary
considerations
(withholding
documents).
15

Art 35: SUSPENSION AND/OR CANCELLATION OF

LICENSE OR AUTHORITY
Non License or Non-Holder of Authority any
person/corp/entity w/c has not been issued a
valid license or authority to engage in
recruitment & placement by the Sec of Labor,
or whose license or authority has been
suspended, revoked or cancelled by the POEA
and the Secretary.
Grounds for Revocation of License
1. Incurring an accumulated 3 counts of
suspension by an agency based on final
and executor orders w/in the validity
period of its license;
2. Violation/s of the conditions of license;
3. Engaging in acts of misrepresentation for
the purpose of securing a license or
renewal thereof; and
4. Engaging in the recruitment or placement
of workers to jobs harmful to the public
health or morality or to the dignity of the
RP
Grounds for Suspension/Cancellation of License
1. The acts prohibited under Art 34;
2. Charging a fee before the worker is
employed or in excess of the authorized
amt;
3. Doing recruitment in places outside its
authorized area;
4. Deploying workers w/o processing through
the POEA; and
5. Publishing job announcements w/o POEAs
prior approval
Jurisdiction
The DOLE Sec and the POEA Admin have
concurrent jurisdiction to suspend or cancel a
license
Liability of Recruitment Agency
Solidarily liable w/ the foreign principal for
unpaid salaries of a worker it recruited.
Before recruiting, the agency is required to
submit a doc containing its power to sue
and be sued jointly and solidarily w/ the
principal or foreign-based employer for
any of the violations of the recruitment
agreement,
and
the
contracts
of
employment
Note: The recruitment agency may still be
sued even if agency agreement bet
recruitment agency & principal is already
severed if no notice of the termination was
given to the EE
Exception to Liability of Recruitment agency
When workers themselves insisted for the
recruitment agency to send them back to
their foreign EER despite their knowledge
of its inability to pay their wages

Contract by Prncipal
Even if it was the principal of the manning
agency who entered into contract w/ the
EE, the manning agent in the PH is jointly
& solidarily liable w/ the principal
Suability of Foreign Corps
A foreign corp that, thru unlicensed
agents, recruits workers in the country
may be suid in and found liable by Ph
courts
CH 3: MISCELLANEOUS PROVISIONS (as amended
by RA 8042)
Illegal Recruitment any act of (CETCHUP)
canvassing,
enlisting,
transporting,
contracting, utilizing, or procuring workers and
includes (CRAP) contract services, referrals, or
advertising, promising for employment abroad,
whether for profit or not, when undertaken by
a non-licensee or non-holder of authority;
Provided that any such non-licensee or nonholder of authority who in any manner, offers
or promises for a fee employment abroad to 2
or more persons shall be deemed so engaged.
Also includes the act of reprocessing workers
through a job order that pertains to
nonexistent work, work different from the
actual overseas work, or work w/ a different
EER whether registered or not w/ the POEA
It shall likewise include the commission of
the ff prohibited acts whether committed
by a non-licensee or non-holder of
authority or a licensee or a holder of
authority:
1. Those
prohibited
practices
under Art 34;
2. Failure to actually deploy w/o
valid reason as determined by
DOLE;
3. Failure to reimburse expenses
incurred by the worker in
connection
w/
his
documentation & processing for
purposes of deployment, in
cases where the deployment
does not actually take place w/o
the workers fault; and
4. Recruitment
&
placement
activities
of
agents
or
representatives appointed by a
licensee, whose appointments
were not previously authorized
by the POEA shall likewise
constitute illegal recruitment.
Elements of Illegal Recruitment
1. The offender is a licensee/non-licensee or
holder/non-holder of authority engaged in
the recruitment & placement of workers;
and

16

2. The offender undertakes either any

recruitment activities devided under Art
13 (b) or any prohibited practices in Art 34

Note: Max penalty if the person illegally recruited

is less than 18 y/o or committed by a nonlicensee or non-holder of authority

Simple Illegal Recruitment Where a person:

1. undertakes
any
recruitment
activity
defined under Art 13(b) or any prohibited
practice enumerated under Arts 34 & 38 of
the LC; and
2. does not have a license or authority to
lawfully engage in the recruitment &
placement of any workers.

Absence of receipts evidencing payment, not

fatal to prosecutions case for illegal
recruitment as long as the witnesses can
positively show through their respective
testimonies that the accused is the one
involved in prohibited recruitment

Illegal Recruitment in Large Scale further

requires a 3rd element:
3. The offense is committed against 3/more
persons, individually or as a group

Illegal Recruitment as Economic Sabotage:

1. When illegal recruitment is committed by
a syndicate (when 3/more persons
conspire or confederate w/ one another in
carrying out an unlawful or illegal
transaction, enterprise or scheme);
2. When illegal recruitment is committed in a
large scale (if committed against 3/more
persons individually or as a group
Consequences of Conviction
1. Automatic revocation of license/authority;
2. Forfeiture of the cash & surety bonds;
3. Conviction for the crime of estafa, if found
guilty thereof
Illegal Recruitment vs Estafa
Illegal recruitment is malum prohibitum,
whereas estafa is malum in se (criminal
intent necessary for conviction)
a person may be charged & convicted for
both
Acts Constituting Estafa
- the accused represented themselves to
complainants to have the capacity to send
workers abroad although they did not have any
authority or license, enabling them to obtain
placement fee
Venue of criminal action arising from Illegal
Recruitment
The complainant may, at his option file at the RTC
of the province/city:
a.) where the offense was committed; or
b.) where the offended party resides at the
time of the commission of the offense
Prescriptive Period
Fine
Simple
5 yrs
P1-2M
Economic Sabotage
20 yrs
P2-5M

Imprisonment
12-20 yrs
Life

Liability of Local EEnt agency solidarily liable w/

the foreigh principal for unpaid salaries of a
worker recruited. Before recruiting, the agency
is required to submit a doc containing its
power to sue and be sued jointly and solidarily
w/ the principal or foreign-based EER for any of
the violations of the recruitment agreement
and the contracts of EEnt
Liability of Company Engaged in Illegal
Recruitment may be held as principal,
together his EER, if it is shown that he actively
&
consciously
participated
in
illegal
recruitment
Issuance of search warrant/warrant of arrest
Art 38 is unconstitutional inasmuch as it
gives the Sec of Labor the power to issue
search or arrest warrants
The exception is in cases of deportation
whom the President or the Commissioner
of Immigration may order arrested,
following a final roder of deportation
Note: the Sec of Labor may order closure of
illegal recruitment establishments because
it is only administrative & regulatory in
nature
TITLE 2: EMPLOYMENT OF NON-RESIDENT ALIENS
Alien Employment Permit (AEP) required for
entry into the country for employment
purposes and is issued after determination of
the non-availability of a person in the pH who
is competent, able and willing at the time of
application to perform the services for w/c the
alien is desired
All foreign nationals who intend to engage
in gainful EENT in the PH shall apply for
AEP
Employment Permit Required
1. all foreign nationals seeking admission to
the PH for the purpose of EENT;
2. all non-resident foreign nationals already
working in the PH;
3. non-resident foreign nationals admitted to
the PH on non-working visas and who wish
to seek EENT; and
4. missionaries or religious workers who
intend to engage in gainful EENT.
Note: AEP should be secured regardless of the
source of compensation and duration of the
EENT, whether the EENT is part-time or
temp
An AEP is issued based on the ff:
17

1. Compliance by the applicant EER or the

foreign national w/ the substantive &
documentary requirements;
2. Determination of DOLE Sec that there is
no available Filipino national who is
competent, able and willing to do the job
for the EER; and
3. Assessment of the DOLE Sec that the
EENT of the foreign national will redound
to national benefit
Note: Understudy Training Program is no
longer a requirement in the issuance of AEP
and the EEr has now the option to
implement transfer of technology
Requisite for EENT of Resident Aliens:
Immigrants & resident aliens are not
required to secure a working permit. They
are required to secure their Alien
Employment Registration Cert (AERC)
Exemption from Permit
1. All members of the Diplomatic service and
foreign govt officials accredited by and w/
reciprocity arrangement w/ the Ph govt;
2. Officers and staff of international orgs of
w/c the PH is a member, and their
legitimate spouses desiring to work in the
PH;
3. Foreign nationals elected as members of
Governing Board who do not occupy any
other position, but have only voting rights
in the corp;
4. All foreign nationals granted exemption by
law;
5. Owners & representatives of foreign
nationals whose companies are accredited
by the POEA who come to the PH for a
limited period and solely for the purpose
of interviewing Filipino applicants for EENT
abroad;
6. Foreign nationals who come to the PH to
teach, present and/or conduct research
studies in univs and colleges as visiting,
exchange or adjunct professors under
formal agreements bet the univs or
colleges in the PH an foreign univs or
colleges; or bet the Ph govt and foreign
govt; provided that the exemption is on a
reciprocal basis; and
7. Resident foreign nationals.
Grounds for denial of Application of AEP
1. Misrepresentation
of
facts
in
the
application;
2. Submission of falsified docs;
3. The foreign national has a derogatory
record; or
4. Availability of a Fil who is competent, able
and willing to the job intended for the
alien.
Grounds for suspension of AEP
1. The continued stay of the foreign national
my result in damage to the interest of the
industry of the country; and

2. the EENT of the alien is suspended by the

EER or by the order of the court
Grounds for revocation of AEP
1. Non-compliance
w/
any
of
the
requirement/conditions for w/c the AEP
was issued;
2. Misrepresentation
of
facts
in
the
application;
3. Submission of falsified docs;
4. Meritorious
objection
or
information
against the EENT of foreign national as
determined by the Regional Dir;
5. Foreign national has a derogatory record;
and
6. EER has terminated the EENT of the
foreign national.
Validity of EENT Permit
1 yr, unless the EENT contract,
consultancy services or other modes of
engagement provides otherwise, w/c shall
in no case exceed 5yrs
fine for working w/o or with an expired AEP
P10K for every year or a fraction thereof.
Rule on Nationalized Business
GR: Foreigners may NOT be employed in certain
nationalized business.
Anti-Dummy Law 2-A prohibits the EENT of
aliens in entities engaged in business whose
exercise or enjoyment is reserved only to Fils
or to corporations or assocs whose capital
should be at least 60% Fil-owned
Exceptions:
1. Where the Sec of Justice specifically
authorizes the EEnt of technical personnel;
2. Aliens who are members of the Board of
directors of corps in proportion to their
allowable participation in the capital of
such entities; and
3. Enterprises registered under the Omnibus
Investment Code in case of technical,
supervisory or advisory positions, but for a
limited pd.
Art 41. PROHIBITION AGAINST TRANSFER OF EENT
1. Aliens shall not transfer to another job or
change his EER w/o prior approval of the
Sec of Labor;
2. Non-resident aliens shall not take up EENT
in violation of the provisions of the Code.
Note: Violations of the abovementioned acts
will subj the alien to the punishment in Art
289 & 290 and to deportation after service
of sentence
BOOK 2: HUMAN RESOURCES
TITLE 1: NATIONAL MANPOWER DEVT PROGRAM
CH 1: NATIONAL POLICIES & ADMINISTRATIVE
MACHINERY FOR THEIR IMPLEMENTATION
Art 43-56 TECHNICAL EDUCATION AND SKILLS
DEVT AUTHORITY (TESDA)
- replaced the National Manpower & Youth Council
under RA 7796
18

Statement of Goals & Objectives

1. To attain international competitiveness;
2. To meet demands for quality middle-level
manpower;
3. To disseminate scientific & technical
knowledge base;
4. To
recognize
&
encourage
the
complementary roles of pub & private
institutions; and
5. To inculcate desirable values.
Middle-level Manpower
1. Those who have acquired practical skills &
knowledge through formal or non-formal
educ & training equivalent to at least a
secondary educ but preferably a postsecondary educ w/ a corresponding
degree/diploma; or
2. Skilled workers who have become highly
competent in their trade or craft as
attested by industry.
TITLE 2: TRAINING & EMPLOYMENT OF SPECIAL
WORKERS
CH1: TYPES OF SPECIAL WORKERS
1. Apprentice
2. Learner
3. Handicapped
Art 57 STATEMENT OF OBJECTIVES FOR THE
TRAINING & EENT OF SPECIAL WORKERS
1. To help meet the demand of the economy
for trained manpower;
2. To establish a national apprenticeship
program; and
3. To establish apprenticeship standards for
the protection of apprentices.
Art 58: DEFINITION OF TERMS
Apprenticeship practical training on the job
supplemented
by
related
theoretical
instruction, for a highly skilled or technical
instruction for a period of 3-6 months
Apprentice a person undergoing training for an
approved apprenticeable occupation during an
established
period
assured
by
an
apprenticeship agreemt
Apprenticeable Occupation an occupation
officially endorsed by a tripartite body and
approved for apprenticeship by the TESDA (no
longer the Sec of Labor)
Apprenticeship Agreement an EENT contract
wherein the EER binds himself to train the
apprentice and the apprentice in turn accepts
the terms of training
On-the-job training practical work experience
through actual participation in productive
activities given to or acquired by an apprentice
Highly technical industries a trade, business,
enterprise, industry or other activity, w/c is
engaged in the application of advanced
technology

1. At least 15 y/o, provided that if below 18

y/o, he shall not be eligible for hazardous
occupation;
2. Physically fit for the occupation in w/c he
desires to be trained;
3. Possess vocational aptitude and capacity
for
the
particular
occupation
as
established through appropriate tests; and
4. Possess the ability to comprehend and
follow oral & written instructions.
Note: Total physical fitness is not required of
the apprentice-applicant unless it is
essential to the expeditious and effective
learning of the occupation. Only physical
defects w/c constitute real impediments to
effective perf as determined by the plant
apprenticeship committee may dispqualify
an applicant
Art 60: EMPLOYMENT OF APPRENTICES
Qualifications to be met by EER:
1. Only EERS in highly technical industries
may employ apprentices; and
2. Only in apprenticeable occupations as
determined by the TESDA.
Requisites for a Valid apprenticeship
1. Qualifications of apprentice are met;
2. Apprentice earns not less than 75% of the
prescribed minimum salary;
3. Apprenticeship agreemt duly executed &
signed;
4. Apprenticeship program must be approved
by the TESDA; otherwise the apprentice
shall be deemed a regular EE;
5. Period of apprenticeship shall not exceed 6
months
Note: at the termination of the apprenticeship,
the EER is not required to continue the
EENT
There is no valid apprenticeship if:
1. The agreemt submitted to the TESDA was
made long after the workers started
undergoing apprenticeship;
2. The work performed by the apprenticeship
was different from those allegedly
approved by TESDA;
3. The workers undergoing apprenticeship
are already skilled workers;
4. The workers were required to continue
undergoing apprenticeship beyond 6mos.
Art
61:
CONTENTS
OF
APPRENTICESHIP
AGREEMENT
1. Full name & address of the contracting
parties;
2. Date of birth of the apprentice;
3. Name of trade, occupation or job in w/c
the apprentice shall be trained and the
dates on w/c such training will begin and
will proximately end;
4. Approp number of hrs of OJT w/
compulsory theoretical instruction w/c the
apprentice shall undergo during his
training;

Art 59: QUALIFICATIONS OF APPRENTICES

19

5. Schedule of the work processes of the

trade/occupation in w/c the apprentice
shall be trained and the approx. time to be
spent on the job in each process;
6. Graduated scale of wages to be paid to
the apprentice;
7. Probationary pd of the apprentice during
wc either party ay summarily terminate
their agreemt; and
8. A clause that if the EER is unable to fulfill
his training oblig, he may transfer the
agreemt, w/ the consent of the apprentice
to any other EER who is willing to assume
such oblig.
Working Hrs shall not exceed the max number
of hrs prescribed by law, if any, for a worker of
his age and sex. Time spent in compulsorily
theoretical instruction shall be considered hrs
of work. An apprentice not otherwise barred by
law from working 8hrs may be requisted by his
EER to work overtime and paid accordingly.
Art 62: SIGNING OF APPRENTICESHIP AGREEMENT
Who signs:
1. The apprentice, if of age, otherwise, by his
parent or guardian, or in the latters
absence, by an authorized rep of TESDA;
and
2. EER or his duly authorized rep
Art 63: VENUE OF APPRENTICESHIP PROGRAM
1. Within the sponsoring firm, establishment
or entity; or
2. Within a DOLE training center or other
public training institutions; or
3. Initial training in trade fundamentals in a
training center or other institutions w/
subsequent actual work participation w/in
the sponsoring firm or entity during the
final stage of training.
Art 64: SPONSORING OF APPRENTICESHIP
PROGRAMS
BY:
1. The plant, shop or premises of the EER or
firm concerned if the apprenticeship
program is organized by an indiv EER or
firm;
2. The premises of one or several firms
designated for the purpose by the
organizer of the program if such organizer
is an assoc of EERS, civic group and the
like; and
3. DOLE Training Center or other public
training institutions w/ w/c the TESDA has
made approp arrangements.
Art 65-67: VIOLATION
AGREEMENT

OF

APPRENTICESHIP

Art 65: Investigation of violation of apprenticeship

agreement
1. Either party to an agreemt may terminate
the same after the probationary pd only
for a valid cause.

2. Action may be initiated upon complaint of

any interested person or upon DOLEs own
initiative.

Valid Cause to terminate agreement

1. By the EER:
a. Habitual absenteeism in OJT and
related theoretical instructions;
b. Willful disobedience of company
rules or insubordination to lawful
order of a superior;
c. Poor physical condition, permanent
disability or prolonged illness w/c
incapacitates the apprentice from
working;
d. Theft or malicious destruction of
company
property
and/or
equipment
e. Poor efficiency or perf on the job or
in the classroom for a prolonged
period despite warnings duly given
to the apprentice; and
f. Engaging in violence or other forms
of gross misconduct inside the
EERs premises
2. By the apprentice:
a. Substandard or deleterious working
conditions w/in the EERs premises;
b. Repeated violations by the EER of
the terms of the apprenticeship
agreemt;
c. Cruel or inhumane treatment by
the EER or his subordinates;
d. Personal problem s/c in the opinion
of the apprentice shall prevent him
from a satisfactory perf of his job;
and
e. Bad health or continuing illness.
Art 66: Appeal
The decision of an authorized agency of
the DOLE may be appealed to the Sec of
Labor w/in 5 days form rcpt of the adverse
decision.
The decision of the Sec of Labor shall be
final & executor.
Art 67 Exhaustion of Administrative Remedies
1. The exhaustion of administrative remedies
is a condition precedent to the institution
of action.
2. The plant apprenticeship committee shall
have initial responsibility for settling
differences arising out of apprenticeship
agreements.
Art 68: APTITUDE TESTS
ANTONIO M. SERRANOVS.GALLANT
SERVICES, INC.

MARITIME

FACTS:
20

Petitioner Antonio Serrano was hired by

respondents Gallant Maritime Services, Inc. and
Marlow Navigation Co., Inc., under a POEAapproved contract of employment for 12 months,
as Chief Officer, with the basic monthly salary of
US$1,400, plus $700/month overtime pay, and 7
days paid vacation leave per month.
On the date of his departure, Serrano was
constrained to accept a downgraded employment
contract upon the assurance and representation
of respondents that he would be Chief Officer by
the end of April 1998.
Respondents did not deliver on their promise to
make Serrano Chief Officer.
Hence, Serrano refused to stay on as second
Officer and was repatriated to the Philippines,
serving only two months and 7 days, leaving an
unexpired portion of nine months and twentythree days.
Upon complaint filed by Serrano before the Labor
Arbiter (LA), the dismissal was declared illegal.
On appeal, the NLRC modified the LA decision
based on the provision of RA 8042.
Serrano filed a Motion for Partial Reconsideration,
but this time he questioned the constitutionality
of the last clause in the 5th paragraph of Section
10 of RA 8042.
ISSUES:
1. Whether or not the subject clause violates
Section 10, Article III of the Constitution on nonimpairment of contracts;
2. Whether or not the subject clause violate
Section 1, Article III of the Constitution, and
Section 18, Article II and Section 3, Article XIII on
labor as a protected sector.
HELD:
On the first issue.
The answer is in the negative. Petitioners claim
that the subject clause unduly interferes with the
stipulations in his contract on the term of his
employment and the fixed salary package he will
receive is not tenable.
The

subject

clause

may

not

be

declared

unconstitutional on the ground that it impinges

on the impairment clause, for the law was
enacted in the exercise of the police power of the
State to regulate a business, profession or calling,
particularly the recruitment and deployment of
OFWs, with the noble end in view of ensuring
respect for the dignity and well-being of OFWs
wherever they may be employed.
On the second issue.
The answer is in the affirmative.
To Filipino workers, the rights guaranteed under
the foregoing constitutional provisions translate
to economic security and parity.
Upon cursory reading, the subject clause appears
facially neutral, for it applies to all OFWs.
However, a closer examination reveals that the
subject clause has a discriminatory intent
against, and an invidious impact on, OFWs at two
levels:
First, OFWs with employment contracts of less
than one year vis--vis OFWs with employment
contracts of one year or more;
Second, among OFWs with employment contracts
of more than one year; and
Third, OFWs vis--vis local workers with fixedperiod employment;
The subject clause singles out one classification
of OFWs and burdens it with a peculiar
disadvantage.
Thus, the subject clause in the 5th paragraph of
Section 10 of R.A. No. 8042 is violative of the
right of petitioner and other OFWs to equal
protection.
The subject clause or for three months for every
year of the unexpired term, whichever is less in
the 5th paragraph of Section 10 of Republic Act
No. 8042 is DECLARED UNCONSTITUTIONAL.
People of the Philippines (petitioner)
Jamilosa (repondent)
GR No. 169076 January 23, 2007
Callejo, Sr.,:

FACTS:
Sometime in the months of January to
February, 1996, representing to have the
capacity, authority or license to contract, enlist
and deploy or transport workers for overseas
21

employment, did then and there, willfully,

unlawfully and criminally recruit, contract and
promise to deploy, for a fee the herein
complainants, namely, Imelda D. Bamba,
Geraldine M. Lagman and Alma E. Singh, for work
or employment in Los Angeles, California, U.S.A.
in Nursing Home and Care Center.
Prosecution presented three witnesses,
namely Imelda Bamba, Geraldine Lagman and
Alma Singh.
According to Bamba, she met the
appellant on a bus. She was on her way to SM
North Edsa where she was a company nurse.
Appellant introduced himself as a recruiter of
workers for employment abroad. Appellant told
her he could help her get employed as nurse.
Appellant gave his pager number and instructed
her to contact him is shes interested. Sometime
in January 1996, appellant fetched her at her
office, went to her house and gave him the
necessary documents and handed to appellant
the amount of US$300.00 and the latter showed
her a photocopy of her supposed US visa.
However, the appellant did not issue a receipt for
the said money. Thereafter, appellant told her to
resign from her work because she was booked
with Northwest Airlines and to leave for USA on
Feb, 1996. On the scheduled departure, appellant
failed to show up. Instead, called and informed
her that he failed to give the passport and US
visa because she had to go to province because
his wife died. Trying to contact him to the
supposed residence and hotel where he
temporarily resided, but to no avail.
Winess Lagman testified that she is a
registered nurse. In January 1996, she went to SM
North Edsa to visit her cousin Bamba. At that time
Bamba informed her that she was going to meet
to appellant. Bamba invited Lagman to go with
her. The appellant convinced them of his ability to
send them abroad. On their next meeting,
Lagman handed to the latter the necessary
documents and an amount of US$300.00 and 2
bottles of black label without any receipt issued
by the appellant. Four days after their meeting, a
telephone company called her because her
number was appearing in appellants cell phone
documents. The caller is trying to locate him as
he was a swindler. She became suspicious and
told Bamba about the matter. One week before
her scheduled flight, appellant told her he could
not meet them because his mother passed away.
Lastly, Alma Singh, who is also a
registered nurse, declared that she first met the
appellant at SM North Edsa when Imelda Bamba
introduced the latter to her. Appellant told her
that he is an undercover agent of FBI and he
could fix her US visa. On their next meeting, she
gave all the pertinent documents. Thereafter, she
gave P10,000 to the appellant covering half price
of her plane ticket. They paged the appellant
through his beeper to set up another
appointment but the appellant avoided them as
he had many things to do.
The accused Jamilosa testified on direct
examination that he never told Bamba that he

could get her a job in USA, the truth being that

she wanted to leave SM as company nurse
because she was having a problem thereat.
Bamba called him several times, seeking advices
from him. He started courting Bamba and went
out dating until latter became his girlfriend. He
met Lagman and Singh thru Bamba. As
complainants seeking advice on how to apply for
jobs abroad, lest he be charged as a recruiter, he
made Bamba, Lagman and Singh sign separate
certifications, all to effect that he never recruited
them and no money was involved. Bamba filed an
illegal recruitment case against him because they
quarreled and separated.
RTC rendered judgment finding accused
guilty beyond reasonable doubt of illegal
recruitment in large scale.
ISSUE: Illegal Recruitment in a large scale?
HELD: Recruitment and placement" refers to
any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring, or procuring
workers, and includes referrals, contract services,
promising or advertising for employment, locally
or abroad, whether for profit or not. Provided,
That any person or entity which, in any manner,
offers or promises for a fee employment to two or
more persons shall be deemed engaged in
recruitment and placement.
Illegal recruitment shall mean any act of
canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers and includes
referring,
contract
services,
promising
or
advertising for employment abroad, whether for
profit or not, when undertaken by a non-licensee
or non-holder of authority. Provided, That any
such non-licensee or non-holder who, in any
manner, offers or promises for a fee employment
abroad to two or more persons shall be deemed
so engaged.
To prove illegal recruitment in large scale,
the prosecution is burdened to prove three (3)
essential elements, to wit: (1) the person charged
undertook a recruitment activity under Article
13(b) or any prohibited practice under Article 34
of the Labor Code; (2) accused did not have the
license or the authority to lawfully engage in the
recruitment and placement of workers; and (3)
accused committed the same against three or
more persons individually or as a group. As
gleaned from the collective testimonies of the
complaining witnesses which the trial court and
the appellate court found to be credible and
deserving
of
full
probative
weight,
the
prosecution mustered the requisite quantum of
evidence to prove the guilt of accused beyond
reasonable doubt for the crime charged. Indeed,
the findings of the trial court, affirmed on appeal
by the CA, are conclusive on this Court absent
evidence
that
the
tribunals
ignored,
misunderstood, or misapplied substantial fact or
other circumstance.
The failure of the prosecution to adduce in
evidence any receipt or document signed by
appellant where he acknowledged to have
received money and liquor does not free him
from criminal liability. Even in the absence of
22

money
or
other
valuables
given
as
consideration for the "services" of appellant,
the latter is considered as being engaged in
recruitment activities.
It can be gleaned from the language of
Article 13(b) of the Labor Code that the act of
recruitment may be for profit or not. It is
sufficient that the accused promises or offers
for a fee employment to warrant conviction for
illegal recruit
CONDITIONS OF EMPLOYMENT
WORKING CONDITIONS & REST PERIODS
Art 82. COVERAGE
a. ALL
employees
in
all
establishments
&
undertakings
whether for profit or not
b. Such standards apply only if there
exists EER-EE relationship
EXCEPTIONS on Conditions of EEnt
i.
Government
employees
EES of govt agencies
& govt corps
ii.
Managerial employees
those whose primary duty
consists of the mgt of the
establishment in w/c they
are employed or of a
dept/subd thereof, and to
other officers/members of
the managerial staff
- under the direct supervision of the EER,
and assist in the planning, organizing,
staffing,
directing
controlling,
communicating and in making decisions in
attaining the companys set goals &
objectives
a. Includes
supervisiors (only
as regards Art 82)
likewise
responsible for the
effective & efficient
operation of their
respective depts
iii.
Field personnel nonagricultural
employees
who
regularly
perform
their duties away from the
principal place of business
or branch office of the
employer
and
whose
actual hours of work in the
field
cannot
be
determined w/ reasonable
certainty
c. those whose performance of their
job/service is not supervised by the ER
or his rep, the workplace being away
from the principal office and whose
hours & days of work cannot be
determined w reasonable certainty;
hence they are paid specific amount for
rendering specific service or performing
specific work.

a.
drivers
that
are
required to be at specific
places at specific times are
not field personnel
b. in case of fishermen
although performing nonagri work away from the
office, the fact that they
have no choice but to
remain on board the vessel,
they are still under constant
supervision by the ER thru
the vessels patron/master
iv.

Employers
family
members
who
are
dependent on him for
support
v.
Domestic helpers
house personnel hired by a ranking
company official, a foreigner, but paid for
by the company itself, to maintain a staff
house provided for the officialregular EE
vi.
Persons in the personal
service of another
vii.
Workers paid by result
per piece/per task
- laborer/EE w/ no fixed salary, wag, or
renumeration
but
receiving
a
compensation from his ER an uncertain &
variable amount depending upon the work
done or the result of said work (piece
work), irrespective of the time employed
EER-EE Relationship is not dependent upon the
agreement of the parties. The characterization
by law prevails over that in the contract. the
existence of an EER-EE relshp is not a matter
of stipulation but a question of law
d. depends on the facts of each case
Core/Non-core Jobs
e. EER-EE
relship
may
comver
core/non-core activities of the
EERs business.
f. The kind of work is not the
definitive test of whether the
worker is an EE or not.
Employer any person, natural or juridical,
domestic or foreign, who carries on in the PH
any trade, business, industry, undertaking or
activity of any kind and uses the services of
another person who is under his order as
regards employment
Employee any person who performs services for
an EER in w/c either or both mental & physical
efforts
are
used
and
who
receives
compensation for such services, where there is
an EER-EE relationship
TESTS OF EENT Relship:
i.
Right of Control Test where the
person for whim the services are
performed reserves a right to control
not only the end to be achieved but
23

also the means to be sued in reaching

such end.
Plus: the courts added the existing economic
conditions prevailing bet the parties (like
payrolls) in determining the existence of EEREE Relship.
ELEMENTS OF EE-EER RELSHIP (Four-fold Test)
i.
the selection and engagement of the
EE;
ii.
the payment of wages;
iii.
the power of dismissal;
iv.
the employers power to control the EE
w/ respect to the means & methods by
w/c the work is to be accomplished
(most important)
Independent contractors can employ others to
work & accomplish contemplated result w/o
consent of contractee, while EE cannot
substitute another in his place w/o consent of
his EER.
2. The Economic Dependence Test observes the
need to consider the existing conditions bet
the parties
Best approach: Apply the two-tiered test
involving:
1. the putative employers power to control
the EE w/ respect to the means and
methods by w/c the work is to be
accomplished; and
2.the underlying economic realities of the
activity or relationship
a. the extent to w/c the services
performed are an integral part of
the employers business;
b. to the extent of the workers
investment in equipment and
facilities;
c. the nature and degree of control
exercised by the employer;
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 the employer; and
g. the degree of dependency of the
worker upon the employer for his
continued employment in that line
of business
Standard of economic dependence whether the
worker is dependent on the alleged employer
for his continued employment in that line of
business
Evidence
i.
ii.
iii.
iv.

of employment
id card
vouchers of salaries
sss registration
memorandum

Absence of EEs name in payroll does not mean

he is not an EE
Mode of Compensation not a test of EEnt
status; pakyaw basis does not mean workers
are independent contractors
Independent contractors- generally rely on their
own resources
* Unions and unregistered associations can be
EERs of the persons who work for them
GR: An employee is not a contractor; a contractor
is not an employee.
GR: While EE-ER relationship exists bet a job
contractor and the workers that he hires, no
such relationship exists bet those workers and
the job contractee, the contractors client.
Labor-only contractor serve as an agent of
the true employer by merely recruiting &
supplying people (prohibited).
Conditions of Employment laid down by law or
by contract concluded individually w/ an EE or
collectively w/ a group
may also arise from established
practice in the enterprise
2 Kinds of Employment Conditions
a. Statutory provided for by law
b. Voluntary initiated by the ER
unilaterally or by contractual
stipulation
An employer is free to regulate, accdg to his own
discretion & judgment, all aspects of EENT,
including hiring, work assignments, working
methods, time, place and manner of work,
tools to be used, processes to be followed,
supervision of workers, working regulations,
transfer of EES, work supervision, lay-off of
workers and discipline, dismissal and recall of
workers.
Employers have the right to
exercise management prerogatives
to
strengthen
his
business
competitiveness

unlawful/
unjust/unfair; so long as they are
exercised
in
GF
for
the
advancement of his interest and
not
for
the
purpose
of
defeating/circumventing the Rs of
the EES
a. May devise & implement
new salary scales applicable
only to future EES. (salary
distortion)
Members/Officers of the Managerial Staff: Duties
& Responsibilities
1. Their primary duty consists of the
performance of work directly related to
mgt policies of their ER;
2. They customarily & regularly exercise
discretion and independent judgment;
3. They regularly & directly assist the
managerial EE whose primary duty
consists of the mgt of a dept of the
24

establishment
in
w/c
they
are
employed;
4. They execute, under gen supervision,
work along specialized/technical lines
requiring special training, experience
or knowledge;
5. They execute, under gen supervision,
special assignments and tasks; and
they do not devote more than 20% of
their hours worked in a work-week to
activities w/c are not directly & clearly
related to the performance of their
work
Art 83. NORMAL HOURS OF WORK
shall not exceed 8 hrs/day
Purpose of 8-hr Labor law not only to safeguard
the health & welfare of the laborer/EE, but in a
way to minimize unemployment by forcing
ERs, in cases where more than 8-hr operation
is necessary, to utilize different shifts to
laborers/EEs working only for 8 hrs each
Part-time Work not prohibited. (What the law
regulates is work exceeding 8hrs)
GR: Wage & benefits of a part-timer are in
proportion to the number of hrs worked.
Work hrs of Health Personnel
Health personnel shall include, but not limited
to, resident physicians, nurses, nutritionists,
dieticians, pharmacists, social workers, lab
technicians,
paramedics,
psychologists,
midwives, attendants, and all other hospital &
clinic personnel like medical secretaries
Resident physicians customary practice to work
for 24 hrs a day violates the limitations in Art
83. when they are under training
program/agreement bet the residents and the
hospital accredited by the govt
Hospital EEs are entitled to a full weekly salary
w/ apid 2 days off if they have completed the
40hr/5day workweek (7days pay for 5 days
work)
Health personnel in Govt service covered by RA
7305
12-hr Workshift with Overtime
- through a contract freely entered into, workshift
may exceed 8hrs w/ corresponding overtime
pay.
Art 84. HOURS WORKED shall include:
1. all time during w/c an EE is required to be
on duty or to be at a prescribed
workplace, and
2. all time during w/c an EE is suffered or
permitted to work
Rest periods of short duration during work
hrs shall be counted as hours worked

Principles in Determining Hours Wrked

1. All hrs are hrs worked w/c the EE is
required to give to his ER, regardless of
WON such hrs are spent in productive
labor
or
involve
physical/mental
exertion;
2. An EE need not leave the premises of
the workplace in order that his rest
period shall not be counted, it being
enough that he stops working, may
rest completely and may leave his
workplace, to go elsewhere, whether
w/in or outside the premises of his
workplace;
3. If the work performed was necessary,
or it benefited the ER, or the EE could
not abandon his work at the end of his
normal working hrs because he had no
replacement, all time spent for such
work shall be considered as hrs
worked, if the work was w/in the
knowledge
of
his
ER/immediate
supervisor;
4. The time during w/c an EE is inactive
by reason of interruptions in his work
beyond his control shall be considered
time either if the imminence of the
resumption of work requires the EEs
presence at the place of work or if the
interval is too brief to be utilized
effectively & gainfully in the EEs own
interest.
Pre/Postliminary Activities
Preliminary (before work) and
postliminary (after actual work)
activities are deemed performed
during working hrs, where such
activities are controlled/required by
the ER and are pursued necessarily
& primarily for the ERs benefit
Waiting Time
whether waiting time constitutes working
time depends on the circumstances on
each particular case
controlling factor is WON time spent in
idleness is so spent predominantly for the
ERs benefit or for the EEs
1. Engaged to Wait waiting time
spent by EE shall be considered
as working time if waiting is
considered an integral part of
his work or if the EE is
required/engaged by an ER to
wait
2. Waiting to Engage idle time is
not work time
Working While Eating
GR: EE must be completely relieved from duty for
the purpose of eating regular meals. The meal
time is not compensable if he is completely
25

free from duties during his meal period even

though he remains in the workplace.
EE is not relieved if he is required to perform
his duties whether active/inactive, while eating
(ex. Stand-by for emergency work)
Working While Sleeping
GR: Sleeping time may be considered working
time if it is subj to serious interruption or takes
place under conditions substantially less
desirable than would be likely to exist at the
EEs home.
if there is an opportunity for comparatively
uninterrupted sleep under fairly desirable
conditions, event though EE is required to
remain on or near the ERs premises and must
hold himself in readiness for a call to action
ENT.
depends upon the express/implied
agreement of the parties, or in
absence of an agreement, upon the
nature of the service and its
relation to the working time.
On Call
although EE can rest completely and may
not be actually at work, if they are
required to be in their place of work
before/after the regular working hrs and
w/in the call of their ERs, the time they
stay in the place of work sould not be
discounted from their working hrs
EE cannot use the time effectively for his
own purposes is working while on call.
Not on call: EE is not required to remain on
the ERs premises but is merely required
to leave work at his home or w/ company
officials where he may be reached
Public health workers On call status refers
to a condition when public health workers
are called upon to respond to urgent or
immediate
need
for
health/medical
assistance
or
relief
work
during
emergencies such that he/she cannot
devote the time for his/her own use.
With Cellular phone or Other Contact Device
if EE is kept w/in reach through a
cell phone, he is NOT on call
Travel Time time spent walking, riding, or
traveling to/from place of work
a. Travel from home to work not
worktime when EE receives an
emergency call outside his regular
working hrs and is required to travel
to his regular place of business or
some other worksiteworking time
b. Travel that is all in a days work
time spent by an EE in travel as part
of his principal activityhrs worked
c. Travel away from home travel that
keeps an EE away from home
overnight worktime when it cuts
across the EEs workday

Lectures, Meetings and Training Programs not

worktime if:
a. Attendance is outside of the EEs
regular working hrs;
b. Attendance is in fact voluntary; and
c. The EE does not perform any
productive
work
during
such
attendance.
* must meet all criteria
Grievance Meeting time spent in adjusting
grievance bet ER & Ee during the time the EEs
are required by the ER to be on the
premiseshrs worked
if a bona fide union is involved depends
on the CBA or the custom practice under the
CBA
Semestral Break hrs worked by teachers in
private schools
WORK HOURS OF SEAMEN
they need not leave the boat in
order that his rest period not be
counted
Requisites for non-counted rest period
a. he ceases to work
b. may rest completely
c. leave or may leave at his will the
spot where he actually stays while
working, to go somewhere else,
whether w/in or outside the ship
HOURS WORKED: EVIDENCE & DOUBT
GR: When an ER alleges that his EE works less
than the normal hrs of ENT as provided for in law,
he bears the burden of proving his allegation w/
clear & satisfactory evidence
Art 85. MEAL PERIODS
must be at least 60minutes timeoff for regular meals
GR: not compensable
Exceptions:
1. where the lunch period or mealtime is
predominantly spent for the ERs
benefit (considered overtime) ;or
2. where it is less than 60 minutes (but
not less than 20minutes) must be with
full pay when:
where work is non-manual
(does not involve strenuous
physical exertion);
where
the
establishment
regularly operates not less than
16hrs a day
3. in cases of actual or impending
emergencies or there is urgent work to
be
performed
on
machineries,
equipment or installations to avoid
serious loss w/c the ER would
otherwise suffer;
4. where the work is necessary to prevent
serious loss of perishable goods
26

If less than 20 minutes it

becomes only a rest period and
is thus considered work time
Note: Meal periods during overtime work is not
given to workers performing OT bcoz OT is
usually for a short period
Shortened Meal Break Upon EEs request
EEs may request that their meal pd
be shortened so that they can
leave
work
earlier
not
compensable
Requisites
1. EEs voluntarily agree in writing and waive their
OT pay;
2. No diminution in the salary and other fringe
benefits of the EEs already existing;
3. Work is not physically strenuous and they are
provided w/ adequate coffee breaks in the
morning & afternoon;
4. Value of benefits is equal to the compensation
due them;
5. OT pay will become due and demandable if
they are permitted/made to work beyond 4:30
pm; and
6. The arrangement is of temporary duration.
Note: The 8-hr work period does not include the
meal break. EEs may leave the company
premises as long as they return to their posts
on time.
Art 86 NIGHT SHIFT DIFFERENTIAL
- at least 10% of his regular wage for each hr
of work performed bet 10PM and 6AM
- given as premium for working at a time for
sleep & rest
- in addition to the exceptions in Art 82,
NSD is n/a to EEs of retail and service
establishments regularly employing 5
employees and below
- if work done from 10pm-6am is OT work,
then the 10% night shift differential should
be based on the OT rate
- not waivable (founded on public policy)
- the receipt of OT pay will not preclude
payment of NSD pay
- burden of proof of payment of NSD - ER
Art 87. OVERTIME WORK
Overtime Pay additional compensation for work
performed beyond 8hrs w/in the workers 24-hr
workday regardless whether the work covers 2
calendar days
Basis cash wage only, w/o any deduction
Rates
1.OT on a regular work day at least 25%
thereof
2.OT on a holiday or rest day at least 30%
thereof
* CBA may stipulate higher OT pay rate
Actual Work Days as Divisor
PALEA v PAL (1976) PALEA & PAL Supervisors
Assoc (PALSA), commenced an action v PAL in

the CIR praying that the latter be ordered to

revise the method of computing the basic daily
& hourly rates of its monthly-salaried EEs and
necessarily to pay them their accrued salary
differentials
PALs Formula:
monthly salary x 12/365 days in a yr = Basic
daily rate
basic daily rate/8 Basic hourly rate
Proposed Formula:
Monthly salary x 12/actual working days =
BDR
BDR/8 = BHR

Paid Unworked days of a monthly-paid EE

- ER may stipulate that EEs monthly salary
constitutes payment for all the days of the
month incl rest days & holidays if when
converted into its daily equivalent would
still meet minimum wagelegal
How work day is counted
A day the 24-hr period w/c commences from the
time the EE regularly starts to work
- regardless of the day of the week or hr of
the day
- any work in excess of the 8hrs w/in the 24hr pd is considered as OT regardless of
whether the work covers 2 calendar days
- any work in excess of 8 hrs not falling w/in
the 24-hr pd is not considered as OT work
a. Broken Hrs of Work the minimum normal
working hrs
need not be continuous to
constitute as the legal working day of 8 hrs as
long as the 8 hrs is w/in a work day
b. Work in Different Shifts in a Work day work in
excess of 8hrs w/in a work day is considered as
OT regardless of whether this is performed in a
work shift other than at w/c the EE regularly
works
EEs shift is 10pm-6am. He is asked to take
a shift of another EE who is absent from
2pm-10pm (his regular work day would be
from 10pm-10pm) the 2nd shift is
considered OT because it is still w/in his
work day
GR: An express instruction from the ER to the EE
to render OT work is not required for the EE to
be entitled to OT pay. It is sufficient that the EE
is permitted or suffered to work. Neither is an
express approval by a supervisor needed.
: On rest days & holidays, written authority
after office hrs is required for the EE to be
entitled to compensation
A verbal instruction to render OT work
prevails over a memorandum prohibiting
such work.
OT claim is not justified for days where no
work was required and no work could be
27

done (i.e. brownout, machine repair, lack

of rawmats)
OT Work of Seamen whether or not the sailors
are entitled to OT pay is not whether they were
on board and cannot leave ship beyond the
regular 8 working hrs a day, but whether they
actually rendered service in excess of 8 hrs
OT work must be proven by factual & legal
basis
Action to Recover Compensation
- estoppel & laches cannot be invoked
against EEs bcoz that would be contrary to
the spirit of the 8-hr Labor Law, under w/c
the laborers cannot waive their R to extra
compensation
- OT pay in arrears retroacts to the date when
services were actually rendered
GR: Waiver or quitclaim not a waiver of OT pay.
Any stipulation in the contract that the laborer
shall work beyond the regular 8 hrs w/o addtl
compensation for the extra hrs is contrary to
law and null and void
Waiver of OT Pay
GR: OT pay cannot be waived expressly or
impliedly. Any contrary stipulation is null and
void.
Exeptions
1. When the waiver is made in consideration of
benefits & privileges w/c may be more than
what will accrue to them in OT pay; and
2. Compressed workweek (CWW) the number of
work days is reduced but the number of work
hrs in a day is increased to more than 8, but no
OT pay may be claimed.
Requisites of Compressed Workweek to be
valid:
1.The scheme is expressly and voluntarily
supported by majority of the EEs affected;
2.In firms using substances, or operating in
conditions that are hazardous to health, a
certification is needed from an accredited
safety org or the firms safety committee
that work beyond 8hrs is w/in the
limits/levels of exposure set by DOLEs
occupational safety & health standards;
3.The DOLE Regional Office is notified.
Effects of a Compressed Workweek
1. Unless there is a ore favorable practice
existing in the firm, work beyond 8hrs
will not be compensable by OT
premium, provided the total number of
hrs worked per day shall not exceed
12hrs. (Work performed beyond 12hrs a
day or 48hrs a weekOT)
2. EEs under a CWW scheme are entitled
to meal periods of at least 60 minutes.
The R of EEs to restday, holiday pay,
rest day pay or leave in accdance w/
law/CBA/company practice shall not be
impaired.
3. Adoption of the CW scheme shall in no
case result in diminution of existing

benefits. Reversion to the normal 8-hr

work day shall not constitute diminution
of benefits. (Reversion is considered a
legitimate exercise of mgt prerogative,
provided that the ER shall give the EEs
prior notice of such reversion w/in a
reasonable period of time.
* EE may validly waive the R to OT under a
CWW program, provided he did so
voluntarily, w/ full understanding of what
he was doing and in consideration for the
quit claim is credible & reasonable.
Note: EEs promoted from rank-and-file to
supervisory lose their OT pay and other
benefits under Art 82-96
Illustrations of OT Computations
1.Regular Workdays
Reg Basic Wage + 25% thereof
2.Legal or Regular Holidays
Holiday Wage Rate (200%) + 30% thereof
3.Rest Days or Special Holidays
Rest day/Special Holiday wage rate
(130%) + 30% thereof
4.Scheduled Rest Day w/c is also a Special
Holiday
Rest day & special holiday wage rate
(150%) + 30% thereof
5.Scheduled rest day w/c is also a legal or
regular holiday
Rest day & legal holiday wage rate (260%)
+ 30% thereof
6.Double holiday
Double holiday wage rate (400%) + 30%
thereof
EE will receive 200% of his regular
daily wage when both regular
holidays fall on the same day and he
does not work (Law provides that he
shall get his regular daily wage of
each regular holiday)
100% of Araw ng Kagitingan, 100%
Good Friday. If he works on that day,
he gets 400%
OT
pay
integrated
in
Basic
Salary

(composite/package pay/all-inclusive salary)

not illegal nor unusual for executives or
managers
But for non-managerial EEs, there must be:
1.A clear written agreement
2.Agreed legal wage rate and OT pay
computed separately are equal or higher
than the separate amounts legally due
FLEXIBLE WORK ARRANGEMENTS
- alternative work arrangements or schedules
other than the traditional or standard work
hrs, workdays or workweek. ERs may
adopt them after due consultation w/ EEs,
taking into acct the adverse consequence
of the situation on the performance and
financial condition of the company.
- Its effectivity and implementation shall be
temporary.
- Should be threshed out by the ER and EE
- DOLE Reg Ofc must be notified prior to
implementation
28

- In addition to CWW, the FWAs include:

1. Reduction of workdays where
normal workdays per week are
reduced but should not last for
more than 6 months
2. Rotation of workers where the
EEs
are
rotated/alternately
provided work w/in the workweek
3. Forced leave EEs are required to
go on leave for several days or
weeks, utilizing their leave credits
if there are any
4. Broken-time schedule the work
schedule is not continuous but the
number of hrs w/in the day or
week is not reduced
5. Flexi-holiday schedule Ees agree
to avail themselves of the holidays
at some other days, provided that
there is no diminution of existing
benefits as a result of such
arrangement
Art 88. UNDERTIME NOT OFFSET BY
OVERTIME
- Whether on the same day or any other day
is prohibited by law
- Permission given to the EE to go on leave o
some other day of the week shall not
exempt ER from paying the addtl
compensation
Reason: EEs hourly rate is not equivalent to
OT rate
Proper method: Deduct the UT from the
accrued leave, if any
Art 89. EMERGENCY OT WORK
GR: EEs cannot be compelled to render OT work
against their will
Exceptions:
1.In times of war or any national or local
emergency declared by Congress/Chief
Exec;
2.To prevent loss or damage to life or property
due to emergencies and force majeure;
3.When there is urgent work needed on
machines & equipment;
4.When work is necessary to preserve
perishable goods;
5.To prevent serious obstruction or prejudice
to the business or operations of the ER;
and
6.When it is necessary to avail of favorable
weather or environmental conditions
where performance or quality f work is
dependent thereon.
Art
90.
COMPUTATION
OF
ADDTL
COMPENSATION
cash wage excludes noncash value of facilities
- if only cash wage is the basis of OT rate, it
is unfair to the worker because as defined
in Art 97, wage includes the value of
facilities, hence the value of facilities
should not be excluded when computing
OT pay

- OT rate should be based on the regular

wage (include the value of facilities)
Ch. 2 WEEKLY REST PERIODS
Art 91. RIGHT TO WEEKLY REST DAY
Duration: at least 24 consecutive hrs after every
6 consecutive normal work days
- all establishments & enterprises may operate or
open for business on Sundays & holidays
provided that the EEs are given the weekly rest
day & the benefits provided under the law
Who Determines: The ER determines and
schedules the weekly rest period subj to the ff:
1.CBA;
2.Rules & regulations issued by the Sec of
Labor; and
3.EEs preference based on religious grounds.
(When such preference will prejudice the
business of the ER, and no other remedial
measures are available, the weekly rest pd
may be scheduled to meed the EEs choice
for at least 2 days a month
Art 92. WHEN THE ER MAY REQUIRE WORK
ON A REST DAY
GR: The ER may not require the EEs to work on a
rest day
: Exceptions
1.In cases of urgent work to be performed on
the machinery, equipment or installation;
2.To prevent loss or damage to perishable
goods;
3.In case of actual/impending emergencies
caused by force majeure to prevent loss of
life and property, or imminent danger to
public safety;
4.Where the nature of work requires
continuous operations and the stoppage of
work may result in irreparable injury/loss
to the ER;
5.In the event of abnormal pressure of work
due to special circumstances, where the
ER cannot ordinarily be expected to resort
to other measures; and
6.Under the circumstances analogous to the
foregoing as determined by the Sec of
Labor.
Note: The failure to work during an EEs rest day
does not justify disciplinary sanction of
outright dismissal, more so when justifiable
grounds exist for the said failure.
Note: When an EE volunteers to work on his rest
day under other circumstances, he may be
allowed to do so, provided he expresses such
desire in writing and he is paid the addtl
compensation for working on his rest day
Art 93. COMPENSATION FOR
SUNDAY OR HOLIDAY WORK

REST

DAY,

Premium pay or Differential compensation addtl

compensation for work rendered by the EE on
days when normally he should not be working
such as special holidays and weekly rest days
29

Note: This article does not prohibit a CBA

stipulation for higher benefits
Formulas to Compute Wages on Holidays
1.For REGULAR HOLIDAYS
a. If it is an EEs regular workday
i.
If unworked 100%
ii.
If worked
1. 1st 8hrs 200%
2. excess of 8hrs Plus
30% of hourly rate of
said day
b. if it is an EEs rest day
i.
if unworked 100%
ii.
if worked
1. 1st 8hrs plus 30% of
200%
2. excess of 8 hrs plus 30%
of hourly rate of said day
2. For declared SPECIAL DAYS such as Special
Non-Working Day, Special Public Holiday,
Special National Holiday and nationwide
special days
1. If unworked no pay, unless
there is a favorable company
policy, practice or CBA granting
payment of wages on special
days even if unworked
2. If worked
a. 1st 8hrs plus 30% of
the daily rate of 100%
b. excess of 8hrs plus
30% of hourly rate on
said day
3. Falling on the EEs rest day and
if worked
a. 1st 8hrs plus 50% of
the daily rate of 100%
b. excess of 8hrs plus
30% of hourly rate on
said day
3. For those declared as SPECIAL WORKING
HOLIDAY
- for work performed an EE is entitled only
to his basic rate
List of Special Days Proc. 459
A. Regular Holidays
1. New Years Day
2. Maundy Thursday
3. Good Friday
4. Araw ng Kagitingan
5. Labor Day
6. Independence Day
7. National Heroes Day
8. Bonifacio Day
9. Christmas Day
10. Rizal Day
B. Special (Non-working)Days
1. Black Saturday
2. Ninoy Aquino Day
3. All Saints Day
4. Nov 2
5. Dec 24

6. Last Day of the Year

C. Special Holiday (for all schools)
EDSA Revolution Anniversary
D. Local Holiday
Those declared by law or ordinance
Regular Holiday
Compensable even
if unworked subj to
certain conditions
Limited to the list
enumeration

Rate is 200% of the

regular
rate
if
worked

Special Day
Not compensable if
unworked
Not exclusive since
a law or ordinance
may provide
for
other
special
holidays
Rate is 130% of the
regular
wage
if
worked

Addtl Compensation for Work on a Rest day,

Sunday or Holiday
Day
Rate
of
Addtl
Compensation
Work
on
a 30% of regular wage
scheduled rest day
No
regular 30% of regular wage
workdays and no for work performed
specific rest days
on
Sundays
&
holidays
Work on Sunday 30%
when
it
is
his
established rest day
Work on special 30%
holiday
Work on special 50%
holiday falling on
scheduled rest day
Work on regular 260%
of
regular
holiday falling on wage
scheduled rest day
Art 94. RIGHT TO HOLIDAY PAY
Holiday pay a days pay given by law to an EE
even if he does not work on a regular holiday.
- It is limited to the regular/legal holidays
listed by law.
- EE should not have been absent w/o pay on
the working day preceding the regular
holiday
Note: In addition to the Exceptions in Art 82,
Holiday pay is n/a to EEs of retail and service
establishments regularly employing 10 workers
or less
Rule on Compensability compensable whether
worked or unworked subj to certain conditions.
Legal holiday falling on a Sunday does
not create an addtl oblig for the ER to
pay extra, aside from the usual holiday
pay to its montly paid EEs
Holiday pay of Monthly paid EEs
30

GR: for the company w/ a 6-day working

schedule, the divisor 314 already means that
the legal holidays are included in the monthly
pay of the EE. The divisor is arrived at by
subtracting all Sundays from the total number
of calendar days in a yr
GR: for a company w/ a 5-day working schedule,
the divisor 261 means that the holiday pay is
already included in the montly salary of the EE
Holiday pay of Teaching Personnel Paid per
Lecture Hr
- not entitled to payment of holiday pay since
they are paid by the hrs worked; and no
class days means no work for them
- entitled to their regular hourly rate on days
declared as special holidays or when
classes are called off or shortened on acct
of typhoons, floods rallies, and the like
Double Holiday Pay (Araw ng Kagitingan & Good
Friday on the same day)
1.200% of the basic wage
a. entitled even if said holiday is
unworked
b. to give EE only 100% would reduce
the number of holidays under the
law
2.400% if he worked on 2 regular holidays
falling on the same day
3.520% if he worked on 2 regular holidays
falling on the same day and at the same
time falling on a scheduled rest day
Single Holiday Rule: provided that the EE
1.worked;
2.was on leave w/ pay; or
3.was on authorized absence on the day prior
to the regular holiday.
Successive Regular Holidays: to be entitled to 2
successive holidays, the EE must:
1.be present on the day immediately
preceding the first holiday; or
2.be on leave w/ pay.
Otherwise, he must work on the first
holiday to be entitled to holiday pay on
the second regular holiday
Effects of Business Closure on Holiday Pay
If regular holiday occurs during:
1.Temporary or periodic shutdown and
temporary cessation of work of an
establishment the regular holidays
falling
w/in
the
period
shall
be
compensated.
2.Cessation of operation of an enterprise due
to business reverses as authorized by the
Sec of Labor the regular holiday may not
be paid by ER
Ch 95. RIGHT TO SERVICE INCENTIVE LEAVE
(SIL)
Concept: 5 days leave w/ pay for every EE who
has rendered at least 1 yr of service

1 yr of service service w/in 12 months, whether

continuous or broken, reckoned from the date
the EE started working including authorized
absences and paid regular holidays unless the
number of working days in the establishment
as a matter of practice/policy is less than 12
months
SIL is N/A to the ff:
1.EEs of the Govt
2.Domestic helpers
and persons in the
personal service of another;
3.Managerial EEs
4.Field personnel whose performance is
unsupervised or those who are paid a
fixed amt for performing work irrespective
of the time consumed in the performance
thereof
5.Those already enjoying the said benefits
6.Those already enjoying vacation leave w/
pay for at least 5 days;
7.Those employed in establishments regularly
employing less than 10 EEs
* EEs engaged on task/contract basis or paid
purely commission basis are not automatically
exempted from the SEL unless they fall under
the classification of field personnel.
Conversion to Monetary Equivalent
SIL is COMMUTABLE or convertible to cash if not
used or exhausted at the end of the yr
Basis of conversion: the salary rate at the date of
commutation
ALSO Entitled to SIL
1.EE illegally dismissed
2.Part-time workers
3.Piece-rate workers:
a. Working inside the premises of ER
& thus are under direct supervision
of the ER entitled
b. Working outside the premises of
the ER whose hours of work cannot
be ascertained w/ reasonable
certainty and thus are not under
the direct supervision of the
ERnot entitiled
EEs w/ salaries above Min Wage: the difference
bet the min wage and the actual salary
received by the EEs cannot be deemed as their
13th month pay and SIL pay
Vacation & Sick Leave
- not statutorily required but is a matter of
management discretion or CBA
GR: Benefits are non-cumulative and noncommutative; must be enjoyed by the EE w/in
1yr otherwise forfeited
: when the labor law contract or the
established practice of the ER provides
otherwise

SIL

VL/SL
31

Mandatory Art 95
Intended
to
alleviate
the
economic condition
of the workers for it
acts as replacement
for regular income
that would not be
earned during such
instance
Cannot be waived

Commutable

Voluntary
grant
(ERs policy or CBA)
Intended to afford a
laborer a chance to
get a much needed
rest to replenish his
energy and renew
his efficiency

Must be demanded
in
its
opportune
time;
silence
is
waiver
Not commutable

Parental (Solo-parent) Leave

- not more than 7 working days every yr
- rendered to an EE who has rendered service
at least 1yr
- no ER shall discriminate against any solo
parent EE w/ respect to terms & conditions
of ENT on acct of his/her status
- a change in the status/circ of the parent
claiming benefits under this Act such that
he/she is no longer alone w/ responsibility
of parenthood shall terminate his/her
eligibility for these benefits
- not convertible to cash unless otherwise
agreed
Battered woman leave
- female EE who is a victim of violence is
entitled to paid leave of 10 days in
addition to other paid leaves.
- Extendible when necessity arises
- EE has to submit certification from the
punong brgy, kagawad, prosecutor or clerk
of court than an action under RA 9262 has
been filed and is pending
Maternity & Paternity Leave
Art 96. SERVICE CHARGES
Concept: All service charges collected by hotels,
restaurants, and similar establishments shall
be distributed as follows:
1.85% for all covered EEs to be equally
distributed among them
2.15% for disposition by mgt to answer for
losses and breakages and distribution to
EEs receiving more than P2k amonth at
the discretion of the mgt in the latter case
Coverage: only to hotels, restaurants, and similar
- all EEs are covered, regardless of their
position,
designation,
ENT
status,
irrespective of the method by w/c their
wages are paid, except managerial EEs
Distribution distributed to paid EEs at least once
every 2 weeks or 2x a month at interval of at
least 16 days
Rule in case of abolition

- in case the service charge is abolished, the

share of the covered EEs shall be
considered integrated in their wages
- the basis of the amt to be integrated shall
be the average share of each EE for the
past 12 months immediately preceding
the abolition
Pooled Tips
- where an establishment does not collect service
charges but has a practice/policy of pooling
tips given voluntarily by its customers, the
pooled tips should be monitored, accounted for
and distributed in the same manner as the
service charges
Title 2 WAGES
Ch 1
Art 97. Definitions
Person an individual, partnership, assoc, corp,
business trust, legal rep, or any organized
group of persons
Employer any person acting directly/indirectly in
the interest of an ER in relation to an EE &
shall include the Govt & all its branches, subd,
& instrumentalities, all govt-owned/-controlled
corps & institutions, as well as non-profit
private institutions/orgs.
Employee - any indiv employed by an ER
Agriculture includes farming in all its branches,
and among other things, includes the
cultivation & tillage of soil, dairying, the
production, cultivation, growing & harvesting
of any agricultural & horticultural commodities,
the raising of livestock or poultry, and any
practices performed by a famer on a farm as
an incident to or in conjunction with such
farming operations, but does not include the
manufacturing or processing of sugar,
coconuts, abaca, tobacco, pineapples or other
farm products.
Employ includes to suffer or permit to work
Wage paid to any EE; shall mean the
renumeration
or
earnings,
however
designated, capable of being expressed in
terms of money, whether fixed or ascertained
on a time, task, piece, or commission basis, or
other method of calculating the same, w/c is
payable by and ER to an EE under a
written/unwritten contract of ENT for work
done or to be done, or for services rendered
and includes the fair and reasonable value, as
determined by the Sec of Labor, of board,
lodging,
or
other
facilities
customarily
furnished by the ER ro the EE.
Includes
commissions

the
recompense compensation/reward of an
agent, salesman, executor, trustee,
receiver, factor, broker or bailee, when
the same is calculated as a percentage
on the amt of his transactions or on the
profit of the principal

Sonco v NLRC: Zuelig was made to

pay the terminated EE (due to
32

retrenchment), separation pay based

not only on the basic salary, but also on
the commissions, transpo & emergency
living allowances.
Even if commissions were in the form of
incentives or encouragement, still these
commissions are direct renumerations
for services rendered w/c contributed to
the increase of income of the ER. The
nature of work of a salesman & the
reason for such type of renumeration
for services rendered demonstrate that
commissions are part of their wage or
salary. (Some salesmen do not receive
any basic salary but depend on
commissions
&
allowances
or
commissions alone, although an EE-ER
relationship exists).

Includes facilities or commodities fair

& reasonable value of board, lodging, or
other facilities customarily furnished by
the ER to the EE.
An ER may provide, for instance, food &
housing to his EEs but he may deduct
their values from the EES wages to be
determined by the Sec of Labor.
Snacks
70% - deducted from wages (must be
authorized in writing)
30% - subsidized by the ER
Lodging facility the cost of
operation & maintenance, including
adequate depreciation plus amt of
capital invested by the ER, provided
that if the total is more than the fair
rental value ( or the fair price of the
commodities or facilities offered for
sale)
Fair rental value -shall be the
reasonable cost of the operation &
maintenance.
Rate of depreciation & depreciated amt
those arrived at under good
accounting practices
Good accounting practices shall NOT
include accounting practices w/c have
been rejected by the BIR for IT
purposes
Depreciation
obsolescence

shall

include

In order that the cost of facilities

furnished by the ER may be charged
against an EE, his acceptance of such
facilities must be voluntary
Excludes allowances -

Fair & reasonable value

profit to the ER or to
the ER
WAGES
Compensation
for
manual
labor,
skilled/unskilled,
paid at stated times,
and measured by
the
day,
week,
month, or season
Indicates
considerable pay for
a lower and less
responsible
character of ENT

shall NOT include any

any person affiliated w/
SALARY
Denotes a higher
degree of ENT, or a
superior grade of
services,
and
implies a position or
office
Suggestive
of
a
larger and more
permanent or fixed
compensation
for
more
important
service
Compensation
of
clerks, officers of
pub corps, and pub
offices

Has a less extensive

meaning
than
salary;
being
ordinarily restricted
to sums paid as hire
or
reward
to
domestic or menial
servants
and
to
sums
paid
to
artisans, mechanics,
laborers, and other
EEs of like class
In many situations, however, and as the
SC
states,
they
are
in
essence
synonymous
FACILITIES
Include articles or
services
for
the
benefit of the EE or
his family but shall
NOT include tools of
the trade or articles
or service primarily
for the benefit of
the ER or necessary
to the conduct of
the ERs business
Wage-deductible

SUPPLEMENTS

Not
wagedeductible
Benefit/privilege
Benefit/privilege
part of the laborers given to the EE w/c
basic wages,
constitutes an extra
renumeration above
& over his basic or
ordinary earning or
wage
The distinction bet a facility & a
supplement is in the purpose, (not the
kind) of the item.
State Marine Corp & Royal Line, Inc. v Cebu
Seamens Assoc, inc: The vessel crew were
provided w/ free meals by the ship owners
(petitioner), not part of their wages but as a
necessary matter in the maintenance of the
health & efficiency of the crew during the
voyage. They should not be deducted from
33

their wages. The deductions should be

returned to them.
Atok-Big Wedge Assoc v Atok-Big Wedge:
Supplements constitute extra renumeration or
special privileges or wages, while facilities on
the other hand, are items of expense
necessary for the laborers & his familys
existence & substinence, so that by express
provision of law, they form part of the wage
and when furnished by the ER are deductible
therefrom, since if they are not so furnished,
the laborer would spend and pay for them just
the same.
Requirements for Deducting Value of
Facilities
1. Proof must be shown that such facilities
are customarily furnished by the trade (ex.
Company policy or guideline showing that
the meal & lodging are part of the salary);
2. The provision of deductible facilities must
be voluntarily accepted in writing by the
EE;
3. Facilities must be charged at fair &
reasonable value.

Mabeza v NLRC: The ER failed to meet any of

the requirements. More significantly, the food
& lodging or the electricity & water consumed
by the EE were not facilities, but supplements.
Hotel workers are required to work different
shifts and are expected to be available at
various odd hours, their ready availability is a
necessary matter in the operations of
respondents hotel.
Gratuity - Given freely or w/o recompense; a gift;
something voluntarily given in return for a
favor or services; a bounty; a tip.
- gratuity pay is not intended to pay a
worker for actual services rendered. It is a
money benefit given to the workers whose
purpose is to reward EEs who have
rendered satisfactory & efficient service to
the company.
- Not mandatory & not part of labor
standard law
A fair days wage for fair days labor. if
there is no work performed by the EE, there
can be no wage or pay unless the laborer
was able, willing and ready to work but was
prevented by the mgt or was illegally locked
out, suspended or dismissed.
Equal pay for equal work. EEs working in
the PH, if they are performing similar functions
& responsibilities under similar working
conditions, should be paid under the principle
of equal pay for equal work.
International School Alliance of Educators v
Quisumbing: IS hires as members of the
faculty, 1)foreign-hires and 2) local-hires. The
school grants foreign-hires salary of 25% more
than that of local-hires due to a) the

dislocation factor, and b) limited tenure. SC: If

an ER accords EEs the same position & rank,
the presumption is that these EEs perform
equal work. There is no showing that foreignhires perform 25% more efficiently or
effectively than the local-hires. Both groups
have similar functions & responsibilities w/c
they perform under similar working conditions.
The dislocation factor and limited tenure
cannot serve as valid bases for the distinction
in
salary
rates,
and
are
adequately
compensated by certain benefits accorded
them w/c are not enjoyed by local-hires
(housing, transpo, shipping, taxes, home leave
allowance).
Agricultural Work
Work on the soil and
its harvests

Lower rate
(Agricultural EEs)

Industrial Work
When the harvests
are processed into
finished product or
transformed
to
another product
Higher rate
(industrial EEs)

Agricultural Activities
Preparation of the soil, planting of
ramie stalks and transporting them to
the stripping sheds, stripping the fibers
w/ the use of decorticating machines
run by electricity, drying the wet fibers,
passing them through the brusher to
cleanse them of impurities and baling
the fiers for the market
Planting & harvesting sugar cane &
other chores incidental to ordinary
farming operations
Tillage of the soil, raising of crops
including discovery of plant pests and
their
eradication
by
means
of
insecticides
Fishpond business
farmhands employed to cultivate the
vegetable garden of a non-agricultural
corp are not agricultural workers
Art 98. This title shall NOT apply to:
1. Farm tenancy or leasehold;
2. Domestic service
3. Persons working in their respective
homes in needle work or
4. In
any
cottage
industry
duly
registered in accordance w/ law.
Ch 2 MINIMUM WAGE RATES
Art 99. The minimum wage rates for
agricultural and non-agricultural EEs and
workers in each and every region of the
country shall be those prescribed by the
Regional
Tripartite
Wages
and
Productivity Boards

34

Statutory Minimum Wage the lowest wage

rate fixed by law that an ER can pay his
workers. Compensation w/c is less than such
minimum rate is considered an underpayment
that violates the law.
- determined for each region by the regional
wage boards
- provided w/ margin to take care of
contingencies, such as increase of prices of
commodities and increase in wants and to
provide means for a desirable improvement
in EEs mode of living (A persons needs
increase as his means increase.)
Effects:
1. benefits all wage earners by setting a
floor below w/c their pay cannot fall
2. raises the standard of competition
among ERs, since it would protect the
fair-minded ER from the competition of
the ER who pays his workers a wage
below subsistence;
3. is a prereq to the adoption of the SSS,
w/c requires contributions from EEs
themselves
Ability to pay immaterial
- ER cannot exempt himself from liability to
pay minimum wages because of poor
financial condition of the company
- Lack of funds is not a valid defense
because the payment of minimum wage is
a mandatory statutory obligation
EEs not estopped to sue for difference in amount
of wages
- the acceptance by an EE of the wages paid him
w/o objection does not give rise to estoppel
precluding him from suing for the difference
bet the amt received and the amt he should
have received pursuant to a valid minimum
wage law
Exemptions to the coverage of the Rule on
minimum wages
1. Household or domestic helpers, including
family drivers and persons in the personal
service of another;
2. Homeworkers engaged in needle-work;
3. Workers employed in any establishment
duly registered w/ the National Cottage
Industries
and
Devt
Authority
in
accordance w/ RA 3470 provided that such
workers perform the work in their
respective homes;
4. Workers in any duly registered cooperative
when so recommended by the Bureau of
Cooperative Devt and upon approval by
the Sec of DOLE, provided however, that
such recommendation shall be given only
for the purpose of making the cooperative
viable and upon finding and certification of
said Bureau supported by adequate proof,
that the cooperative cannot resort to other
remedial measures w/o serious loss or
prejudice to its operation except through
its exemption from the requirements of
the Rules. The exemption shall be subj to
such terms & conditions and for such

period of time as the Sec of Labor may

prescribe.
5. Barangay Micro Business Enterprises
(BMBE) (under RA 9178/BMBE Law),
provided that all EEs covered under this
Act shall be entitled to the same benefits
given to any regular EE such as social
security and health care benefits. BMBEs
are also exempt from income tax.
BMBE any business entity or enterprise
engaged in the production, processing
or manufacturing of products or
commodities,
including
agroprocessing, trading and services, whose
total assets including those arising from
loans but exclusive of the land on w/c
the particular business entitys office,
plant and equipment are situated, shall
not be more than P3M. (comprises no
less than 90% of Ph ERs)
6. Retail Service Establishments (by virtue of
RA 6727/Wage Rationalization Act)
a. regularly employing not more than
10 workers; and
b. upon application w/
and as
determined by the Regional Board
in accordance w/ the RRs of the
Commission.
If not granted, EEs shall receive the
approp compensation due them + 1%
interest per month retroactive to the
effectivity of the Act.
Burden of proving such exemption
rests on the ER.
7. Other exemptions by provisions of Wage
Orders by the Regional Tripartite Wage &
Productivity Board

Art
100.
ELIMINATION
BENEFITS
So

PROHIBITION
AGAINST
OR
DIMINUTION
OF

that the rule against diminution of

supplements/benefits may apply, it must be
shown that:
1. The grant of the benefit is founded on a
policy or has ripened into a practice over a
long period;
2. The practice is consistent and deliberate;
3. The practice is not due to error in the
construction or application of a doubtful or
difficult question of law; and
4. The diminution or discontinuance is done
unilaterally by the ER.

Food/Meal Allowance
Cebu Autobus Co v United Cebu Autobus
EEs Assoc: the company used to pay its
drivers and conductors, aside from their
regular salary, a certain percentage of
their daily wage, as allowance for food.
35

Discontinued by ER upon effectivity of

Minimum Wage Law. CIR:
company practice
Nonconributory Retirement Plan
Nestle PH Inc. v NLRC: The fact that the
retirement plan is noncontributory, does
not make it a nonissue in the CBA
negotiations. The EEs have a vested right
over the existing benefits voluntarily
granted to them by their ER. The latter
may not unilaterally withdraw, eliminate
or diminish such benefits.
Monthly Emergency Allowance
R. Tiangco & V. Tiangco v Hon. Leogardo:
ERs, fishing operator and fishbroker,
discontinued paying the batillos (who
work by unloading the fish from the
vessels dependent on arrival of the
vessels, hence they work only a few days
a month averaging 4 hrs a day) a fixed
monthly emergency allowance (which
they had been paid as a matter of
practice/verbal agreement) illegal.
Full 13th month pay
Arco Metal Products v Samahan ng
Manggagawa: ER cannot shrink away
from its responsibility by merely claiming
that its acts of giving full 13 th month pay
to EEs who have not worked for the full
year is a mistake. It has become practice.

Exceptions to the Non-Diminution Rule

1. Correction of error;
2. Negotiated benefits;
3. Wage order compliance;
4. Benefits on reimbursement basis;
5. Reclassification of position;
6. Contingent benefits or conditional bonus;
and
7. Productivity incentives.

Not established practice; Mistake in

App of Law
Globe Mackay v NLRC: ER had been
computing the COLA by multiplying
P3/day by 30 days. Upon effectivity of
Wage Order #6, and in virtue thereof, it
used 22 days or actual days of work.
Union disagreed and claimed 30 days
basis as company practice. SC: Not
voluntary company practice. To be
considered as such, it should have been
practiced over a long pd of time, and
must be shown to have been consistent
& deliberate and not merely an
erroneous application of the law.
Samahang Manggagawa sa Top Form v
NLRC: Granted that the ER had granted
an across-the-board wage increase
pursuant to RA 6727, that single instance
may not be considered an established
company practice.
Negotiated benefits benefits initiated
through negotiation bet ER & EEs, such as

CBAs, are not w/in the prohibition of Art 100

because, as products of bilateral contract,
they can only be eliminated or diminished
bilaterally. What the law forbids is
elimination/modification done unilaterally
by the ER.
Wage Order Compliance the giving of
across-the-board salary increases so as to
rectify a salary distortion caused by
compliance w/ a wage order cannot be said
to have ripened into a company practice.

Pag-asa Steel Works v CA: To ripen into a

company practice that is demandable as a
matter of right, the giving of the increase
should not only be by reason of a strict legal
(as Wage Order) or contractual oblig (CBA),
but by reason of an act of liberality on the
part of the ER.
Benefit on Reimbursement Basis
o Per diem allowance a daily
allowance given for each day when
an EE is away from his home base;
intended to cover their cost of
lodging & subsistence when on
duty outside of their permanent
stationif the EE did not leave his
permanent station and spent
nothing for meals & lodging outside
thereof, then he is not entitled to
per diem as there is nothing to be
reimbursed
o Monthly ration of gas given to
certain managerial EEs is not part
of their basic salary. its
temporary revocation does not
constitute a diminution of the EEs
fringe benefits.
o The elimination of an existing
benefit in exchange for an equal or
better one does not violate Art 100.
Reclassification
of
Position;
Promotion
o from rank-and-file to supervisory the position holders lose OT pay
and other benefits but Art 100 is
not violated.
But,
promotion
&
position
reclassification must be done in GF.
National Sugar Refineries Corp v NLRS
& NBSR Union: ER implemented a Job
Evaluation
program
affecting
all
EEs.
Respondents were reclassified from rank-andfile
to
supervisory/managerial
positions.
Because of that, they lost their OT, rest day &
holiday pay but it was also shown that they
received upward adjustments in basic pay &
allowances. SC: This reclassification is in
essence a promotion w/c is one of the
jurisprudentially
recognized
exclusive
prerogatives of mgt, provided in is done in GF.
Union failed to prove BF on the part of the ER.
Promotion the advancement from one
position to another with an increase in duties &
36

responsibilities as authorized by law and

usually accompanied by an increase in salary

Contingent/Conditional
Benefits;
Bonus
- Art 100 is n/a to a benefit whose grant
depends on the existence of certain
conditions, so that the benefit is no
demandable if those preconditions are
absent.
Bonus an amt granted & paid to an EE for his
industry & loyalty w/c contributed to the
success of the ERs business and made
possible the realization of profits. It is an act of
generosity.
- it is not a demandable and enforceable
oblig. BUT! It is so when it is made a part of
the wage/salary. In such a case, the latter
would be a fixed amt and the former would be
a contingent one dependent upon the
realization of profit
WON bonus forms part of wages: depends on
the circs and conditions for its payment.
a. If it is an addtl compensation w/c the
ER promised and agreed to give w/o
any conditions imposed for its payment,
such as success of business or greater
production or output, then it is part of
the wage.
b. If it is paid only if profits are realized on
a certain amt of productivity achieved,
it cannot be considered part of the
wages.
c. Where it is not payable to all but only to
laborers and only when the laborer
becomes more efficient or more
productive, it is only an inducement for
efficiency, a prize therefor, not a part of
the wage.
Luzon Stevedoring Corp case: An ER
cannot be forced to distribute bonuses
w/c it can no longer afford to pay. To
hold otherwise would be to penalize the
ER for his past generosity.
American Wire & Cable Daily Rated EEs
Union v AWC Co Inc & the CA: For a bonus to
be enforceable, it must have been promised by
the ER and expressly agreed by the parties, or
it must have had a fixed amt and had been a
long and regular practice on the part of the ER.

Equity or Long Practice as Basis of

Bonus
- Ph Education Co. Inc v CIR: even if a
bonus is not demandable for not being part
of the salary of the EE, the bonus may
nevertheless be granted on equitable
consideration.
- Marcos v NLRC:if one enters into a
contract of ENT under an agreemt that he
shall be paid a certain salary by the week
or some other stated period and, in
addition, a bonus, in case he serves for a
specified length of time, there is not reason
for refusing to enforce the promise to pay

the bonus, if the EE has served during the

stipulated time, on the ground that it was a
promise of mere gratuity.
Services Rendered as Basis of Bonus
EEs whose ENT has been terminated may
still demand paymt of service under
company policy and of the bonuses. The R
is not defeated by a release & quitclaim
LG Marcos v NLRC & Insular Life: The
fact that an EE has signed a satisfaction
receipt for his claims does not necessarily
result in the waiver thereof. The law does
not consider as valid any agreement
whereby a worker agrees to receive less
compensation than what he is entitled to
recover. A deed of release or quitclaim
cannot bar an EE from demanding benefits
to w/c he is legally entitled.
No Profit, No Bonus
Traders Royal Bank v NLRC: The matter
of giving the EEs bonuses over & above
their lawful salaries & allowances is entirely
dependent on the profits, if any, realized by
the bank from its operations during the
past year. Since the fiscal condition having
declined, the bank may not be forced to
distribute bonuses w/c it can no longer
afford to pay and, in effect, be penalized
for its past generosity to its EEs.
Productivity Incentives - bonus that comes
from productivity gain, or improved output
without increasing input
RA 6971: EEs share is in the nature of
salary bonus proportionate to increases in
current productivity over the average for
the preceding 3 consecutive yrs
Not gratuitous; it is a benefit claimable only
on the basis of predefined output level
Contingent/conditional; if they are not
given because the preconditions are
absent, Art 100 is not violated except
perhaps if there is contractual commitment
to the contrary.

PD 851: 13TH MONTH PAY

- adds 1-month pay to the usual 12-month
earnings. BUT, does not change the EEs
basic wage. Hence, OT pay, restday pay,
SSS contributions & other roll-up or add-on
payroll costs do not increase.
- Requires at least 1 month service during
the calendar yr
- SCOPE: all rank-and-file EEs, regardless or
salary rate. managerial & supervisory
EEs
- EXCEPTION: ERs who are already paying
their EEs a 13thMP or its equivalent are
not covered by the decree. (the intent of
the law was to grant addtl income to EEs
not already rcving the samenot to all EEs
but only to the unfortunate ones who are
not paid a 13thmonth salary or what
amounts to it, by whatever name called)
its Equivalent shall include Xmas bonus, midyear bonus, profit-sharing payments and other
cash bonuses amounting to not less than 1/12
37

of the basic salary. When an ER pays less than

1/12 of the EEs basic salary, the ER shall pay
the difference. - Dole PH Inc v Leogardo
shall not include cash & stock dividends,
COLAs, & all other allowances regularly
enjoyed by the EEs, as well as nonmonetary
benefits (food, free electricity, etc)
Framanlis Farms Inc. v Minister of Labor:
Such benefits in the form of food or free
electricity are not the proper substitute for the
13thMP required by law. Neither may year-end
rewards for loyalty & service be considered in
lieu of 13thMP
If the bonus was included in or considered as
the equivalent of the 13thMP, there would be
no need for a specific provision of such bonus
in the CBA. But if the CBA did provide for a
bonus in graduated amts depending on the
length of service, for example, the intention is
clear that the bonus provided in the CBA was
meant to be in addition to the legal
requirement of 13thMP.
13thMP deemed incorporated in the CBA,
employment contract. The absence of an
express provision obligating the ER to pay
13thMP to the EEs is immaterial
14th MP basically a bonus, and gratuitous;
- mgt prerogative & cannot be forced upon
the ER; not legally demandable
Exclusions in the Computation of 13th MP
13thMP = 1/12 of the basic salary of the EE w/in a
calendar year
Q: What does basic salary include?
A: Basic salary shall include all renumerations or
earnings paid by an ER to an EE for services
rendered
Not included (fringe benefits)
COLAs granted pursuant to PD 525/LOI
174,
profit-sharing payments and all allowances
and
monetary benefits w/c are not considered
or integrated as part of the regular or basic
salary of the EE
OT Pay
Fringe benefits all allowances & monetary
benefits w/c are not considered/integrated
as part of the basic salary
The items excluded by the decree may be
included through established practice or
agreement binding on the ER
Q: Are commissions included in the computation?
A: It depends.
1. If the commissions may properly be
considered part of the basic salary, they
should be included in computing the
13THMP
Ph Duplicators Inc v NLRC: the sales
commission earned by the sales men
constitute part of their compensation,

considering that the ER pays them a

small fixed/guaranteed wage; the
greater part being composed of the
sales/incentive commissions earned on
actual sales closed by them
Sales commissions are intimately related
or directly proportional to the extent or
energy of an EEs endeavors; paid upon the
specific results achieved by a salesman-EE;
it is a percentage of the sales closed by a
salesman & operates as an integral part of
such salesmans bsic pay.

2. If they are NOT integral part of the

basic salary, then they shld be
excluded.
Boie-Takeda Case: the commissions
paid to medreps were excluded from
the term basic salary because these
were paid to them as productivity
bonuses. They are generally tied to the
productivity or capacity for revenue
production of a corp; such bonuses
closely
resemble
profit-sharing
payments and have no clear direct or
necessary relation to the amt of work
actually done by each indiv EE.
The commissions pd by Boie to its
medreps could not have been sales
commissions.
Medreps
are
not
salesmen; they do not effect any sale of
any article at all. They are EEs engaged
in the promotion of pharmaceutical
products or med devices manufactured
by their ER. They promote such
products
by
visiting
identified
physicians & inform such physicians
orally/w/ the aid of brochures, of the
existence & chem composition of the
pharma product. The addts payments
given to them were not in fact
commissions but rather in the nature of
profit-sharing bonuses.

Guaranteed wage/commission EEs whose

income is guaranteed by way of wages and/or
commissions are entitled to a 13thMP based on
their earnings that include commissions.
Ph Agricultural Commercial & Industrial
Workers Union v NLRC: the bus drivers &
conductors of respondent transic co. (allegedly
paid on purely commission basis) are entitled
to 13thMP on both their fixed & guaranteed
wage and commission
in the case of a bus conductor paid on
commission only as supported by his pay slips
w/c indicated the varying amount of
38

commissions he received
included in 13THMP

each

trip

not

Q: Is Teachers Overload Pay Included?

A: Yes. It is considered part of their basic pay for
the purposes of computing 13thMP
GR: Payments for overload work w/in 8 hrs form
part of the basic wage, & therefore are to be
included in the computation of 13thMP.
Overload the load in excess of the normal load
of private school teachers as prescribed by the
DECS or the policies, rules & standard of
particular private schools.
Normal load- 8hrs per working day
Overload work Overtime work
Overtime work
Overload work
Work rendered in May be performed
excess
of
the either
w/in
or
normal working hrs outside 8 hrs in a
of 8 in a day
day
Proportionate 13thMP
- an EE who has resigned or was dismissed
at any time before the time for payment of
the 13thMP is entitled to this monetary
benefit in proportion to the length of time
he worked during the year.
unless
otherwise stipulated in the CBA
Distressed Employer exempted from paying
13thMP upon prior authorization from the Sec of
DOLE
Difference of opinion in the computation of 13thMP
is a nonstrikeable issue. a strike held on this
ground is illegal.
Govt Employees not covered by 13thMP
Seafarers not covered by 13thMP; because
they are contractual, not regular EEs. Their
ENT is governed by their Contract of
Enlistment w/c was approved by the POEA. It
does not provide for 13thMP.

Art 101. PAYMENT BY RESULTS (Piecework)

The Sec of Labor shall regulate the
payment of wages by results, including
pakyao, piecework and other noontime
work, in order to ensure the payment of
fair & reasonable wage rates, preferably
through time & motion studies or in
consultation w/ reps of workers & ERs
orgs.
Workers paid by results workers whose pay is
calculated not on the basis of time spent on
the job but of the quantity & quality or the kind
of work they turn out. (nontime work).
- stress is placed on the unit of work
produced or the quantity thereof
- a uniform amount is paid per unit
accomplished
Categories of Piece-rate workers
A. As to presence of control

1. those whose time & performance is

supervised by the ER;
piece-rate workers, esp when they
work in company premises (shoes,
handicraft, garment)
2. those whose time & performance is
unsupervised by the ER.
Pakyaw & takay basis commonly
practiced in the agricultural industry
(planting, harvesting per hectare of
land)
Pakyaw
Piece-rate
More
aptly
used Common where the
when the job/work output may easily
to be performed is in be
counted
or
bulk/volumes
w/c measured
are
difficult
to
quantify
*Payment by result is not determinative of EE-ER
Relship. It is merely a method of compensation
and does not define the essence of the
relation.
Basis of Output Rate; Process to set the
Standard
1. On petition of any interested party, or
upon its initiative, the DOLE shall use all
available reps of ERs & workers orgs, to
determine whether the EEs in any
industry/enterprise
are
being
compensated in accordance w/ the min
wage reqmts
2. The basis for the establishment of rates
per pc, output or contract work shall be
the performance of an ordinary worker of
min skill/ability.
3. An ordinary worker of min skill/ability is
the average worker of the lowest
producing group representing 50% of the
total # of EEs engaged in similar ENT in a
particular
establishment,
excluding
learners, apprentices & handicapped
workers employed therein.
4. Where the output rates established by the
ER do not conform w/ the standards
prescribed herein, or w/ the rates
prescribed by the DOLE in an approp
order, the EEs shall be entitled to the diff
bet the amt to w/c they are entitled to
receive
under
such
prescribed
standards/rates and that actually paid
them by the ER.
B. As to Rate of Payment
1. Those who are paid piece rates w/c are
prescribed in Piece Rate Orders issued by
DOLE
# of pieces x rate per pc
- these workers are not covered by the Rule
on Hours of Work (no premium & OT pay)
2. Those who are paid output rates w/c are
prescribed by the ER and are not yet
approved by the DOLE.
39

# of pcs x rate per pc as determined by

the ER.
a.) If the resulting amt is than the
statutory min daily rate in rel to the
# of hrs worked, the worker will rcv
such amt.
b.) BUT, if the amt is less than the
applicable legal rate, it is possible
that the rates per pc are not in
accordance w/ the standards. In
that case, the ER is required by law
to pay the difference.
Entitlement of Piece-Rate Workers to NSD
and SIL
a. Unsupervised no OT/SIL
b. Supervised entitled to OT/SIL
- The yearly commutation/cash conversion of the
SIL should be based on their average daily
earnings earned during the yr by the actual
number of working days or the statutory min
rate, whichever is higher.
GR: the amt earned during the year may
exclude COLA, OT pay, and premium pay,
holiday pay, NSD and company fringe benefits
there is agreement to the contrary
Illustration of the computation
Total wages earned for 1 yr 12 = ave
monthly earning
AME 30*** = Daily Earnings
DE x 5 = five-day incentive pay
*** should be the actual days of work in a
month
Entitlement to Holiday Pay
- shall not be less than his average daily
earnings for the last 7 actual working days
immediately preceding the regular holiday.
Provided however, that in no case shall the
holiday pay be less than the applicable
statutory min wage rate
Entitlement to 13thMP
GR: PD 851 exempts from payment of 13 thMP ERs
of those who are paid a fixed amt for
performing specific work, irrespective of time
consumed in the perf thereof,
except where the workers are paid on piecework basis (those who are paid a standard amt
for every pc/unit of work produced that is
more/less regularly replicated, w/o regard to
the time spent in producing the same) in w/c
case the ER shall grant the 13thMP to such EEs.
The piece-rate worker should have rendered at
least 1 month work/service during the calendar
yr.
Not Entitled to HP,ND, SIL, 13thMP
1. Field personnel
2. Unsupervised employees
3. Engaged on task/contract basis
4. Purely commission basis
5. Paid a fixed amt for performing work
irrespective of the time consumed
Not Entitled to OT Pay

1.
2.
3.
4.

Paid on piece-work
Paid on takay
Paid on pakyaw
Paid on task basis if their output rates are
in accordance w/ the standards under Sec
8 Rule 7 Book 3, or where such rates have
been fixed by the Sec of Labor

Benefits Payable to Piece-Rate Workers

1. Statutory minimum wage (MW)
2. Yearly service incentive leave of 5 days w/
pay (SIL)
3. Night shift differential (ND)
4. Holiday pay (HP)
5. Meal & rest periods (Meal/rest)
6. Overtime pay (conditional) (OT)
7. Premium pay (conditional) (PP)
8. 13thMonth pay (13th)
9. other benefits granted by law, by
indiv/CBA or company policy/practice
(CBA)
BWC Guidelines Summary
The rate-per-pc to be paid to a worker
should be submitted to DOLE for approval.
DOLE decides whether the outpu-and-pay
proposal of the ER fairly & reasonably
meets the legal MW, based on the output
of ave. workers doing same products
under comparable conditions.
If DOLE approves the proposal it becomes
the standard (quota). Because the DOLEapproved standard is presumed fair &
reasonable, a piece-rater who does not
reach the quota will earn less than the
legal MW and not w/ the pay formula. In
such case the ER need not make up the
diff bet the legal MW and the wage
actually earned.
On the other hand, if the outpu-and-pay
scheme has not been approved by DOLE,
or does not conform w/ DOLE-issued
orders, then the ER may be required to
pay the shortfall bet the actual earning
and the prescribed MW.
The piece-rate pay formula needs DOLEs
approval so ast to protect the workers
right to be paid or to earn at least the MW,
and at the same time, to help the ER
obtain the corresponding work ouput.
Ch 3 PAYMENT OF WAGES
Art 102. FORMS OF PAYMENT
Proof of Wage payment ER has burden of proof
The IRs require every ER to keep a payroll. Among
other things, it must show the length of time to
be paid, the pay rate, the amt actually paid,
and so on. AND the EE should sign the payroll.
ER cannot pay his workers by means of:
1. Promissory notes
2. Vouchers
3. Coupons
4. Tokens
5. Tickets
6. Chits
7. Any obj other than legal tender
40

Even when expressly requested by the EE.

GR: Payment by legal tender
: Payment by check or money order may
be allowed if the same is:
1. Customary on the date of effectivity of the
LC;
2. Necessary because of special circs as
determined by the Sec of Labor;
3. Stipulated in the CB; or
4. Where the ff conditions are met
a. There is a bank or other facility for
encashment w/in 1km radius;
b. The ER, or any of his agents or
reps, does not rcv any pecuniary
benefit directly/indirectly from the
arrangement;
c. The EEs are given reasonable time
during banking hrs to withdraw
their wages from the bank w/c time
shall
be
considered
as
compensable hours worked if done
during working hrs; and
d. The payment by check is w/ the
written
consent
of
the
EEs
concerned if there is no CBA
authorizing the payment of wages
by bank checks.
Art 103. TIME OF PAYMENT
GR:

1. At least once every 2 weeks; or

2. Twice a month at intervals not exceeding
16 days.

1. In case of force majeure or other circs

beyond the ERs control, payment must be
made immediately after such occurrence
has ceased.
2. If engaged to perform a task w/c cannot
be completed in 2 weeks and in the
absence of CBA or arbitration award:
a. Payment shall be made at intervals
not
exceeding
16
days,
in
proportion to the amt of work
completed;
b. That final settlement is made upon
completion of work.
Art 104. PLACE OF PAYMENT
GR: At or near the place of undertaking
:
1. When payment cannot be effected at or
near the place of work by reason of
deterioration of peace & order conditions,
or by reason of actual or impending
emergencies caused by fire, flood or other
calamity
rendering
paymt
thereat
impossible;
2. When the ER provides for free transpo to
the EEs back and forth; and
3. Under any other analogous circs.
Prohibition: No ER shall pay his EEs in a bar,
night or day club, drinking establishment,
massage clinic, dance hall or other similar
places or in places where games are played w/

stakes of money or thins representing money

except in the case of persons employed in
such places.
Requisites for Payment thru Banks (Wage
Rationalization Act)
1. There must be written permission of the
majority of the EEs concerned in an
establishment;
2. The establishment must have 25/more
EEs; and
3. The establishment must be located w/in 1
km radius to the bank
Requisites of Payment thru ATM
1. The ATM sys of paymt is w/ the written
consent of the EE concerned;
2. The EEs are given reasonable time to
withdraw their wages from the bank
facility w/c, if done during working hrs,
shall be considered as compensable hrs
worked;
3. The sys shall allow the EE to rcv their
wage w/in the period & the amt prescribed
under the LC;
4. There is a bank/ATM facility w/in 1km
radius from the workplace;
5. Upon the request of the concerned EE, the
ER shall issue a record evidencing paymt
of wages, benefits & deductions for a
particular pd;
6. The ATM sys of paymt shall neither result
in diminution of benefits & privileges of
the EE nor shall the latter incur addtl
expenses in the process; and
7. The ER shall assume full responsibility in
case the wage protection provisions of law
& regulations are not complied w/ under
the arrangemt
Art 105. DIRECT PAYMENT OF WAGES
GR: Wages shall be paid directly to the workers to
whom they are due.
: Exceptions
1. Payment through another person
a. In case of force majeure rendering
such payment impossible provided
said person is under written
authority given by the worker for
the purpose;
b. When authorized under existing
law,
including
payments
for
insurance premiums of the EE and
union dues where the R to checkoff has been recognized by the ER
in accordance w/ a CBA or
authorized in writing by the indiv
EEs concerned.
2. Payment through the heirs of the
worker
- in case the worker has died, ER may pay
wages of the deceased worker to the heirs
of the latter w/o the necessity of intestate
proceedings.
41

Procedure
1) Claimants shall execute an affidavit
attesting their relshp to the
deceased and the fact that they are
his heirs, to the exclusion of all
others (Affidavit of Next of Kin);
2) In case of a minor heir, affidavit
shall be executed on his behalf by
his natural guardian or next of kin;
3) Affidavit shall be presented to the
ER who shall make paymt through
the Sec of Labor or his rep;
4) The rep shall act as referee in
dividing the amt paid among the
heirs; and
5) Payment of wages under this Art
shall absolve the ER of any further
liability w/ respect to the amt paid.
3. Payment through a family member of
the workers family
- where the ER is authorized in writing by the
EE to pay his wages to a member of his family
Summary of Legal Prohibitions on Wages
1) Payment of wages in non-cash form;
2) Payment of wages in night and day clubs,
bars & other similar places;
3) Non-diminution of wages; and
4) Non-interference by the ERs in the EEs
disposition of their wages.
Summary of
What
must be
paid
When
Where
How

Rules on Payment of Wages

Legal Tender.
promissory notes, vouchers,
coupons, tokens, tickets, chits,
or any other obj other than
legal tender
Once every 2 weeks, or
Twice a month at intervals of at
least 16 days
At or near the place of
undertaking
Directly to the EE

Art 106. CONTRACTOR OR SUBCONTRACTOR

Types of Contractors under the Law
1. Job Contracting or Subcontracting an
arrangement whereby a principal agrees to put
out or farm out with a contractor or
subcontractor the performance or completion
of a specific job, work or service w/in a definite
or predetermined period, regardless or
whether such job, work, or service is t be
performed or completed w/in or outside the
premises of the principal
Existence of Trilateral Relationship
-under this legitimate contracting the ff
CONTRACTS exist:
a. Contract for specific job, work or service
bet
the
principal
&
the
contractor/subcontractor; and
b. Contract
of
ENT
bet
the
contractor/subcontractor and its workers.

Hence, the PARTIES involved are:

1. Principal;
2. Contractor/subcontractor; and
3. Contractual workers
Laws applicable between:
1. Principal & Contractor Civil Code &
pertinent commercial laws
2. Contractor & his EEs Labor Code &
special labor laws
3. Principal & contractors EEs no EE-ER
Relationship
BUT ER-EE Relship will exist bet the
Principal & the Workers where the
contracting
arrangement
is
not
legitimate, as in labor-only contracting
Elements of Independent Contractor Job
Contracting
1. The sub/contractor carries on a distinct
and independent business and undertakes
to perform the job on his own account and
under his own responsibility, according to
its own manner and method and free from
the control & direction of the principal in
all matters connected w/ the performance
of the work except to the results thereof;
2. The sub/contractor has substantial capital
or investment in tool, equipment and
machineries, work premises and other
materials necessary in the conduct of his
business;
3. The agreement bet the principal and
sub/contractor assures the contractual EEs
entitlement to all labor & health
standards, free exercise of the R to selforg, security of tenure and social & welfare
benefits;
4. Must be properly registered as such in
accordance w/ DO #18-02. (The absence
of registration only gives rise to the
presumption that the contractor is
engaged in labor-only contracting a
presumption that can be refuted.)
2. Labor-only Contracting an arrangement
where the sub/contractor merely recruits,
supplies or places workers to perform a job,
work or service for a principal, and ANY of the
ff ELEMENTS is present:
a. Lack of substantial capital/investment
AND performance of activities directly
related to the principals business
(confirming element); or
b. The contractor does not exercise the right
of control over the performance of the
contractual EE (confirming element);
c. The arrangement is merely to recruit,
supply or place workers to perform a job,
work, or service for a principal (Essential
Element)
LOC = Essential Element + either or both
confirming element/s
Labor-only contracting is wrong & prohibited bcoz
it is an attempt to evade the obligs of an EEr:
42

a) To respect EEs R to unionize;

b) R to ENT standards;
c) R to security of tenure
Substantial capital capital stocks and
subscribed capitalization in the case of corps,
tools, equipment, implements, machineries
and work premises, actually & directly used by
the sub/contractor in the performance or
completion of the job, work or service
contracted out.
- the law does not require both substantial
capital and investment in the form of tools,
equipment, machineries, etc.
Right to control refers to the right reserved to
the person for whom the service of the
contractual
workers
are
performed,
to
determine not only the end to be achieved, but
also the manner & means to be used in
reaching that end
Insular life v NLRC: exclusive servicing
esp springing from a regulation issued by the
Insurance Commission, and not from an
intention by the alleged ER, does not
necessarily mean being under the control or
ENT of the entity being served. The relship
may still be classified as independent
contractorship because the element of control
is absent.
- EEs may resign from their jobs to
become contractors to their former ER, but the
latter should cease controlling the means &
method
of
doing
the
work
allegedly
contracted, otherwise, the result is LOC.
Summary of Prohibited Labor Contracting
1. Labor-only contracting;
2. Contracting that terminates the ENT of
regular EEs, or reduces their work hrs, or
reduces/splits a bargaining unit, if such
contracting out is not done in GF & not
justified by business exigencies;
3. Contracting w/ a Cabo person/s or labor
group w/c, in the guise of a labor org,
supplies workers to an ER w/ or w/o any
monetary or other consideration whether
in the capacity of an agent of the ER or as
an ostensible independent contractor;
4. Contracting w/ in-house agency;
5. Contracting because of a strike/lockout;
6. Contracting that constitutes ULP under Art
248.
JOB CONTRACTING
The ER/principal is
merely an indirect
ER, by operation of
law,
of
his
contractors EEs

LABOR-ONLY
CONTRACTING
The ER/principal is
treated as direct ER
of the contractors
EEs in all instances
(contractor
is
deemed agen of the

The law creates an

ER-EE relshp for a
limited purpose, i.e.
to ensure that the
EEs are paid their
wages

ER)
The statute creates
an ER-EE relshp for
a
comprehensive
purpose,
i.e.
to
prevent
a
circumvention
of
labor laws
The
principal
becomes solidarily
liable
w/
the
contractor not only
for unpaid wages
but also for all the
rightful claims of
the EEs under the
LC AND ANCILLARY
LAWS

The
principal
becomes solidarily
liable
w/
the
contractor in the
even the latter fails
to pay the EEs
wages
and
for
violation of labor
standard laws. The
liability,
however
does not extend to
the
paymt
of
backwages
or
separation pay of
EEs who are illegally
dismissed
Permissible
Prohibited by law
Presence
of None
substantial capital
or investment
Note: The principal shall be SOLIDARILY liable w/
the contractor in the event of any violation of
any provision of the LC, including failure to pay
wages. This will not prevent the principal from
claiming reimbursement from the contractor.
Note: The principal shall be deemed the ER of the
contractual EE in any of the ff cases as
declared by competent authority:
1. Labor-only contracting; and
2. Contracting arrangement falling w/in the
prohibitions
Art 107. INDIRECT ER any person,
partnership, assoc or corp w/c not being n ER,
contracts w/ an independent contractor for the
perf of any work, task, job or proj.
4 Features of Legitimate Contracting
1. Parties a principal (contractee) enters
into a contract w/ a contractor, or if the
principal is himself a contractor, he enters
into contact w/ a sub-contractor. A
contracted job may be subcontracted,
partly or wholly, unless prohibited in the
contract.
2. Specific job the contract calls for the
performance or completion of a specific
job, work or service;
3. Period such job, work or service is to be
performed or completed w/in a definite or
predetermined period; and
4. Location the contracted job, work or
service may be performed or completed
inside or outside the premises of the
principal
43

An independent contractor is one who exercises:

1. Independent ENT;
2. Contracts to do a pc of work accdg to his
own methods; and
3. Is not subj to control of ER result
The labor contractor is legit if:
1. He is a job contractor; and
2. Is properly registered w/ DOLE as the
same
Judicial Notice of Job Contracting
- The Court has already taken judicial notice
of the general practice adopted in several
gort & private institutions and industries of
hiring independent contractors to perform
special services. These services range from
janitorial, security and even technical or
other specific services. While these
services may be considered directly related
to the principal business of the ER,
nevertheless, they are not necessary in the
conduct of the principal business of the ER.
A manpower company may be a LOC in one
case but an independent contractor in another.
Coca-cola Bottlers Ph v Hingpit:
Lipercon was adjudged to be a LOC in a previous
case (Guarin v Lipercon), for lacking the
substantial capital. But not so in the present case,
where it has been able to establish its characted
as an independent contractor. Aside form hiring
its own EEs and paying the workers their salaries,
it also exercised supervision & control over them,
w/c is the most important aspect in determining
ER-EE Relshp.
Art 108. POSTING OF BOND
- An ER or indirect ER may require the
sub/contractor to furnish a bond equal to
the cost of labor under contract, on
condition that the bond will answer for the
wages
due
the
EEs
should
the
sub/contractor, as the case may be fail to
pay the same.
- Where the ER fails to require the contractor
to post a bond, the ER must answer for
whatever liabilities the contractor may
have incurred to his EEs. This is w/o
prejudice to its seeking reimbursement
from the contractor for whatever amt it will
have to pay the EEs.
Art 109. SOLIDARY LIABILITY
The provision of existing laws to the contrary
notwithstanding, every ER or indirect ER shall
be held responsible w/ his sub/contractor for
any violation of any provision of the LC. For
purposes of determining the extent of their
civil liability under this Ch, they shall be
considered as direct ERs.
The existence of ER-EE Relshp is a precondition to
entitlement to labor standards & labor relatios
Rs.

Extent of Principals Liability in Legitimate

Contracting
- solidarily liable in the event of any violation
of any provisions of the LC
1. For wages and money claims if the
sub/contractor fails to pay the wages of
his EEs in accdance w/ the LC, the ER
shall be jointly & severally (solidarily)
liable w/ his contractor to such EEs to
the extent of work performed under the
contract, in the same manner & extent
that he is liable to EEs directly
employed by him.
He cannot escape this liability even
if he has paid the workers wage rate in
accordance w/ the contract w/ the
contractor. The EEs are not privy to the
contract. Also, the labor standard
legislations are considered written in
every contract. Similarly, legislated
wage
increases
are
deemed
amendments to the contract. Thus, ERs
cannot hide behind their contracts in
order
to
evade
their
or
their
contractors liability for noncompliance
w/ the statutory min wage, w/o
prejudice to his R to recover whatever
amount he paid from the contractor.
2. a) Reimbursement the joint & several
liability of the contractor & the principal
under Arts 106, 107 & 109 of the LC is
mandated to assure compliance of the
provisions including the statutory min
wage. The contractor is made liable by
virtue of his status as the direct ER; and
the principal is made the indirect ER of
the contractors EEs for purposes of
paying the EEs their wages should the
contractor fail to do so.
- where no ER-EE Relshp
exists
bet
the
parties,
as
to
reimbursement bet the principal & the
contractor, the RTC has jurisdiction
b) Payment before Reimbursement
but one may seek reimbursement only
AFTER it has paid the EEs.
c) For Other Violations qualified or
limited liability; if the liability is for
failure to pay the min wage, or the SIL,
or other benefits derived from or
provided for by law, the principal is
equally liable w/ the contractor as if the
principal were the direct ER.
BUT, if the liability is invested w/
punitive character, such as an award for
backwages & separation pay because of
an illegal dismissal of the contractors
EE, the liability should be solely that
of the contractor in absence of proof
that the principal conspired w/ the
contractor in the commission of the
illegal dismissal.
44

Rights of Contractual EEs (EEs of a legitimate

contractor)
1. Safe & healthful working conditions;
2. Labor standards such as SIL, rest days,
OT Pay, holiday pay, 13thMP, &
separation pay;
3. SS & welfare benefits;
4. Self-orgs, CB and peaceful concerted
action; and
5. Security of tenure.
Certain conditions required expressly stipulated in
the ENT Contract
1. Specific description of the job, work or
service to be performed by the contractual
EE;
2. The place of work and terms & conditions
of ENT, uncluding a statement of the wage
rate applicable to the indiv contractual EE;
and
3. The term/duration of ENT, w/c shall be
coextensive w/ the contract of the
principal & contractor or w/ the specific
phase for w/c the contractual EE is
engaged, as the case may be.
The
sub/contractor
shall
inform
the
contractual EE of the foregoing terms &
conditions on or before the 1st day of his
ENT.
Security of Tenure:
a. in cases of termination of ENT prior to the
expiration of the contract bet the principal
& the sub/contractor, the R of the
contractual EE to separation pay or other
related benefits shall be governed by
applicable laws & jurisprudence on
termination of ENT.
b. Where the termination results from
expiration of contract bet the principal &
the contractor, or from completion of the
phase of the job for w/c the EE is
engagednot entitled to separation pay.
however, this shall be w/o prejudice to
completion bonuses or other emoluments,
incl retirement pay as may be provided by
law/contract bet the principal & the
contractor.
Security of tenure requires procedural due
process for termination of ENT.
No security of tenure for casual EEs.
Registration of Contractors
Requirements:
1. Submission of annual reports
a. Sworn undertaiking that the sss,
Home
Devt
Mutual
Fund,
PhilHealth,
EEs
Compensation
Commission
(ECC),
and
BIR
remittances
2. They are subj to routine inspection by the
DOLE

GR: The absence of registration gives rise to the

presumption that the contractor is engaged in
LOC,
But, if the contractor directly supervises the
workers & imposes disciplinary action, he
qualifies as a legit contractor despite
nonregistration w/ DOLE.
Art. 110. WORKER PREFERENCE IN CASE OF
BANKRUPTCY
- Workers shall enjoy first preference as
regards their unpaid wages & other
monetary claims, any provision of law to
the contrary notwithstanding.
- Unpaid wages earned by EEs before the
declaration of bankruptcy or judicial
liquidation of the ERs business shall be
given first preference & shall be paid in full
before other creditors may establish any
claim to share in the assets of the
employer.
- Not only unpaid wages, but also other
monetary claims to w/c even claims of the
govt must be deemed subordinate.
n/a in case the ER-corp is under
rehabilitation.
Conditions:
1. Formal declaration of insolvency or
bankruptcy;
2. General judicial liquidation proceedings of
the ERs business; and
3. Filing of claims by workers.
Art 111. ATTORNEYS FEES
Rules:
1. In cases of unlawful withholding of wages,
the culpable party may be assessed attys
fees equivalent to 10% of the amt of
wages recovered.
2. It shall be unlawful for any person to
demand or accept, in any judicial or admin
proceedings for the recovery of the wages,
attys fees w/c exceed 10% of the amt of
wages recovered.
Concepts of Attys Fees
a. Ordinary reasonable compensation paid
to a lawyer by his client for the legal
services he has rendered.
b. Extraordinary indemnity for damages
ordered by the court to be paid by the
losing party in a litigation, and is not to be
paid to the lawyer but to the client, unless
they have agreed that the award shall
pertain to the lawyer as an addtl
compensation or as a part there of.
GR: Awarded attys fee may not exceed 10%,
but bet lawyer & client quantum meruit may
apply.
Quantum meruit as much as he deserves.
Basis:

Effect of Nonregistration:
45

1. The time spent & the extent of services

rendered or required;
2. The novelty & difficulty of the questions
involved;
3. The importance of the subject matter;
4. The skill demanded;
5. The probability of losing other ENT as a
result of acceptance of the proferred IBP
chapter to w/c the lawyer belongs;
6. The amt involved in the controversy and
the benefits resulting to the client from
the services;
7. The
contingency
of
certainty
of
compensation;
8. The character of ENT, whether occasional
or established; and
9. The professional standing of the lawyer.
2 Kinds of Cases where Attys Fees may be
Assessed:
1. Cases arising from unlawful withholding of
wages; and
2. Cases arising from CBAs.
3. Claims for death benefits (Heirs of
Aniban) : Art 111 does not limit the award

of attys fees to cases of

withholding of wages only.
explicitly prohibits is the award
fees w/c exceed 10% of the amt
recovered.

unlawful
What it
of attys
of wages

Non-lawyers not entitled to Attys Fees

2
GR: Although the law allows non-lawyers to
appear before the NLRC or any Labor Arbiter,
this does not mean that they are entitled to
attys fees. Entitlement to attys fees
presupposes the existence of ER-EE Relshp,
and this cannot exist unless the clients rep is
a lawyer.
Union Service Fee non-lawyers may represent
their org or members. The said labor
federations & local unions have a valid claim to
attys fees.
PAO lawyers are disqualified from being awarded
attys fees.

46