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.

- material or substance to be processed

2. Labor Relations – defines the status, rights & duties and the institutional mechanisms, that
govern the indiv & collective interactions of EERS, EES, or their representatives.

- mechanism that processes the substance

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 self-employed 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 workers guaranteed by the Constitution

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 the Rs/promote the welfare of workers

 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 dev’t
 Govt shall increase the salary scales of the other officials & EES
 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.

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 don’t deserve.
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

 Act #1874: EER’S 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 Year’s 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.

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 decree’s 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
EER’s 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 workers, whether agricultural or non-
agricultural.

- 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 & ½ 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 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

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 through homestead patent:

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 life’s 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 Blessing…The Worst Crime” – Frederick Taylor

- 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 Overseas”—Ph Star

RA 6657 Comprehensive Agrarian Reform Program

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 land-
sharing
- 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

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.

Scope: all public & private agricultural lands, incl. other lands of the pub domain suitable for
agriculture

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

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 Act’s effectivity, any sale, disposition, lease, mgt contract or transfer of position of
private lands executed by the orig landowner in violation of this Act 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
- upon recommendation by the Provincial Agrarian Reform coordinating
Committee, may declare certain provinces/regions as priority land reform areas

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

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% 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

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

Incentives for voluntary offers of sale – addt’l 5% cash

Priority of Qualified Beneficiaries

1. Agricultural lessees & share tenants

2. Regular farmworkers
3. Seasonal farmworkers
4. Other farm workers
5. Actual tillers/occupants of public lands
6. 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.

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 worker-
beneficiaries 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

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

- 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
- 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

Added Exception to Retention Limits

- 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

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 (Francisco’s
son), and Federico (Francisco’s 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 “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

Issue 1: WON petitioners are tenants of the land

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
latter’s 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

For a tenancy relationship to exist, all of the ff essential requisites must be present:

1) the parties are the landowner & the tenant

2) the subj matter is agricultural land
3) there is consent bet the parties
4) the purpose is agricultural production
5) there is personal cultivation by the tenant
6) 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 Francisco’s 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 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, 13th 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;
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 country’s 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;
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 of the regional offices of DOLE

- 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 self-employment 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. Public EEnt offices

2. Private recruitment entities
3. Private EENT agencies
4. Shipping or manning agents or representatives
5. The POEA
6. Construction contractors if authorized to operate by DOLE and the Construction Industry
Authority
7. Members of the diplomatic corps although hirings done by them have to be processed
through the POEA
8. 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

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 of the mandatory period for resolution of cases

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

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 work-related  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 one’s earning capacity

Disability benefits by seamen – a matter governed not only by medical findings but by law &
contract
- shall be paid beginning on the 1st 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
physician’s 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

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 worker’s 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 worker’s 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 RECRUITMENT & PLACEMENT ACTIVITIES

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;
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 Code’s 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).

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 POEA’s 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 non-holder 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 worker’s 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
2. The offender undertakes either any recruitment activities devided under Art 13 (b) or any
prohibited practices in Art 34

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.

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 Imprisonment Fine

Simple 5 yrs 12-20 yrs P1-2M
Economic Sabotage 20 yrs Life P2-5M

Note: Max penalty if the person illegally recruited is less than 18 y/o or committed by a non-
licensee or non-holder of authority

Absence of receipts evidencing payment, not fatal to prosecution’s 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

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:

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

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 post-secondary
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

Art 59: QUALIFICATIONS OF APPRENTICES

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;
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 latter’s 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 OF APPRENTICESHIP AGREEMENT

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 DOLE’s 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 EER’s
premises
2. By the apprentice:
a. Substandard or deleterious working conditions w/in the EER’s 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 MARITIME SERVICES, INC.

FACTS:

Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow
Navigation Co., Inc., under a POEA-approved 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 twenty-three  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 non-
impairment 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. Petitioner’s 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-à-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-à-vis local workers with fixed-period 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) v 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 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 she’s 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 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 company’s
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 – non-agricultural 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 non-agri 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
vessel’s patron/master

iv. Employer’s 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 officialregular 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 EER’s 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 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 EER-EE 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 employer’s 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 employer’s 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 employer’s
business;
b. to the extent of the worker’s investment in equipment and facilities;
c. the nature and degree of control exercised by the employer;
d. the worker’s 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 of employment
i. id card
ii. vouchers of salaries
iii. sss registration
iv. memorandum

 Absence of EE’s 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 contractor’s 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
g. 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.
h. 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 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

i. 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 EE’s presence at the place of work or if the
interval is too brief to be utilized effectively & gainfully in the
EE’s own interest.

Pre/Postliminary Activities
j. 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
ER’s benefit

Waiting Time
k. whether waiting time constitutes working time depends on the circumstances on
each particular case
l. controlling factor is WON time spent in idleness is so spent predominantly for
the ER’s benefit or for the EE’s
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 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 EE’s
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 ER’s premises and must hold himself in
readiness for a call to action ENT.
m. 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
n. 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
o. EE cannot use the time effectively for his own purposes is working while on
call.
p. Not on call: EE is not required to remain on the ER’s premises but is merely
required to leave work at his home or w/ company officials where he may be
reached
q. 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

r. 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 worksiteworking time
b. Travel that is all in a day’s work – time spent by an EE in travel as part of his
principal activityhrs worked
c. Travel away from home – travel that keeps an EE away from home overnight
worktime when it cuts across the EE’s workday

Lectures, Meetings and Training Programs – not worktime if:

a. Attendance is outside of the EE’s 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 premiseshrs 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

s. 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

t. must be at least 60minutes time-off for regular meals
GR: not compensable
Exceptions:
1. where the lunch period or mealtime is predominantly spent for the ER’s benefit
(considered overtime) ;or
2. where it is less than 60 minutes (but not less than 20minutes) must be with full pay when:
1. where work is non-manual (does not involve strenuous physical exertion);
2. 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 perevent serious loss of perishable goods
c. 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 EE’s request

u. 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. EE’s 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 worker’s 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

PAL’s 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 EE’s 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 wagelegal

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 24-hr 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
 EE’s 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 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 firm’s safety committee that
work beyond 8hrs is w/in the limits/levels of exposure set by DOLE’s 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 weekOT)
2. EE’s 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: EE’s 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
- 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: EE’s 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. EE’s 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 EE’s 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 EE’s 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 REST DAY, SUNDAY OR HOLIDAY WORK

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
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 EE’s 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 EE’s 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
a. If unworked – no pay, unless there is a favorable company policy, practice or
CBA granting payment of wages on special days even if unworked
b. If worked
i. 1st 8hrs – plus 30% of the daily rate of 100%
ii. excess of 8hrs – plus 30% of hourly rate on said day
c. Falling on the EE’s rest day and if worked
i. 1st 8hrs – plus 50% of the daily rate of 100%
ii. 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 Year’s 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 Special Day

Compensable even if Not compensable if
unworked subj to certain unworked
conditions
Limited to the list Not exclusive since a law or
enumeration ordinance may provide for
other special holidays
Rate is 200% of the regular Rate is 130% of the regular
rate if worked wage if worked

Addtl Compensation for Work on a Rest day, Sunday or Holiday

Day Rate of Addtl Compensation
Work on a scheduled rest day 30% of regular wage
No regular workdays and no 30% of regular wage for
specific rest days work performed on Sundays
& holidays
Work on Sunday when it is 30%
his established rest day
Work on special holiday 30%
Work on special holiday 50%
falling on scheduled rest day
Work on regular holiday 260% of regular wage
falling on scheduled rest day

Art 94. RIGHT TO HOLIDAY PAY

Holiday pay – a day’s 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

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 ERnot 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 non-commutative; 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
Mandatory Art 95 Voluntary grant (ER’s policy
or CBA)
Intended to alleviate the Intended to afford a laborer a
economic condition of the chance to get a much needed
workers for it acts as rest to replenish his energy
replacement for regular and renew his efficiency
income that would not be
earned during such instance
Cannot be waived Must be demanded in its
opportune time; silence is
waiver
Commutable 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 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 – shall include obsolescence

 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 – shall NOT include any profit to the ER or to any person affiliated w/ the
ER
WAGES SALARY
Compensation for manual Denotes a higher degree of
labor, skilled/unskilled, paid ENT, or a superior grade of
at stated times, and measured services, and implies a
by the day, week, month, or position or office
season
Indicates considerable pay for Suggestive of a larger and
a lower and less responsible more permanent or fixed
character of ENT compensation for more
important service
Has a less extensive meaning Compensation of clerks,
than salary; being ordinarily officers of pub corps, and pub
restricted to sums paid as hire offices
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 SUPPLEMENTS
Include articles or services
for the benefit of the EE or
his family but shall NOT
include tools of the trade or
articles or service primarily
for the benefit of the ER or
necessary to the conduct of
the ER’s business
Wage-deductible Not wage-deductible
Benefit/privilege part of the Benefit/privilege given to the
laborer’s basic wages, EE w/c 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 Seamen’s 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 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 laborer’s & his family’s 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 respondent’s 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 day’s wage for fair day’s 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 foreign-hires 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 Industrial Work

Work on the soil and its When the harvests are
harvests processed into finished
product or transformed to
another product
Lower rate Higher rate
(Agricultural EEs) (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

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
EE’s mode of living (A person’s 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 agro-processing, trading and
services, whose total assets including those arising from loans but exclusive of the
land on w/c the particular business entity’s 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. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS

So 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. 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 13th 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 stationif 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 EE’s
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-and-file 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 &
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 ER’s 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 addt’l 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: EE’s 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 EE’s 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 addt’l income to EEs not
already rcving the samenot 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, mid-year bonus, profit-sharing payments and other
cash bonuses amounting to not less than 1/12 of the basic salary. When an ER pays less than
1/12 of the EE’s 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 EE’s 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
salesman’s 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 addt’s 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 commissions he received each trip not included in 13THMP

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 excess of May be performed either w/in
the normal working hrs of 8 or outside 8 hrs in a day
in a 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 & ER’s 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 when the Common where the output
job/work to be performed is may easily be counted or
in bulk/volumes w/c are measured
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.

# 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 13thMP 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 piece-work 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. Paid on piece-work
2. Paid on takay
3. Paid on pakyaw
4. 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 DOLE-
approved 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 DOLE’s approval so ast to protect the worker’s 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
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 ER’s 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 addt’l 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 check-off 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.

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 EE’s disposition of their wages.

Summary of Rules on Payment of Wages

What must ✓Legal Tender.
be paid ✗ promissory notes, vouchers, coupons,
tokens, tickets, chits, or any other obj other
than legal tender
When Once every 2 weeks, or
Twice a month at intervals of at least 16
days
Where At or near the place of undertaking
How 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 & contractor’s 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 self-org, 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 principal’s 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:
a) To respect EE’s 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 LABOR-ONLY

CONTRACTING
The ER/principal is merely The ER/principal is treated as
an indirect ER, by operation direct ER of the contractor’s
of law, of his contractor’s EEs in all instances
EEs (contractor is deemed agen of
the ER)
The law creates an ER-EE The statute creates an ER-EE
relshp for a limited purpose, relshp for a comprehensive
i.e. to ensure that the EEs are purpose, i.e. to prevent a
paid their wages circumvention of labor laws
The principal becomes The principal becomes
solidarily liable w/ the solidarily liable w/ the
contractor in the even the contractor not only for unpaid
latter fails to pay the EEs wages but also for all the
wages and for violation of rightful claims of the EEs
labor standard laws. The under the LC AND
liability, however does not ANCILLARY LAWS
extend to the paymt of
backwages or separation pay
of EEs who are illegally
dismissed
Permissible Prohibited by law
Presence of substantial None
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

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 Principal’s 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 contractor’s
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
contractor’s 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 contractor’s 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.

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 engaged not
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

Effect of Nonregistration:
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 ER’s 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 ER’s business; and
3. Filing of claims by workers.

Art 111. ATTORNEY’S FEES

Rules:
1. In cases of unlawful withholding of wages, the culpable party may be assessed atty’s 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, atty’s fees w/c exceed 10% of the amt of
wages recovered.

Concepts of Atty’s 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 atty’s fee may not exceed 10%,

 but bet lawyer & client quantum meruit may apply.

Quantum meruit – as much as he deserves.

Basis:
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 Atty’s 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 atty’s
fees to cases of unlawful withholding of wages only. What it explicitly prohibits is the
award of atty’s fees w/c exceed 10% of the amt of wages recovered.

Non-lawyers not entitled to Atty’s Fees

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 atty’s fees. Entitlement to atty’s fees presupposes the
existence of ER-EE Relshp, and this cannot exist unless the client’s 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 atty’s fees.

PAO lawyers are disqualified from being awarded atty’s fees.